EMF Resolution: Ever greater austerity pushing us into social recession
In the context of sustained attacks on national debt in the bond markets, the extremely fragile economic recovery and high unemployment, especially youth unemployment, the European Commission and member states are pressing for the reinforcement of economic governance in the EU (and particularly in the euro area) with new enforcement mechanisms for non-compliant member states.
Better economic coordination to support the monetary union is essential. However, it is becoming increasingly clear that reducing public deficits and ‘belt-tightening’ has become the cornerstone of European economic decision-making. There is no real strategy based on growth on the table.
Europe urgently needs a strong full employment policy.
The proposals adopted by the Euro-zone Council on 12 March 2011, and proposed in the Commission’s first Annual Growth Survey, are of an unprecedented and extremely negative nature. In calling for pay cuts and sustained wage moderation across Europe, they challenge the decision-making process of democratically-elected governments and intervene in national social dialogue and collective bargaining procedures. The Commission has already intervened directly in Irish, Romanian and Greek private sector collective bargaining processes, leading to substantial cuts in social protection and minimum wages particularly for the lowest paid.
The reinforced Growth and Stability Pact will give the Commission and finance ministers new powers to police national budgets and policies, including the power to intervene in policies where they have no direct EU competences: i.e. wage formation, social protection, collective bargaining, labour law and labour market policies.
This means the further weakening of workers’ bargaining power and a direct reduction in socio-economic security. For some regions in Europe, this policy threatens a double-dip recession and significant social damage. As part of the new European Semester of policy coordination, member states must start introducing their national reform programmes in mid-2011 following the reinforced economic pact.
It should be remembered that the current crisis is not a wage crisis but due to financial under-regulation and speculation.
The EMF calls on its affiliates to mobilise in opposition to this attack on collective bargaining and fair pay.
The EMF calls urgently for an agenda based on investment, job creation and social cohesion, based on:
- Credible medium-term plans for debt stabilization/reduction by 2016/17
- Launch of euro-bonds as a tool to finance sovereign debt while reducing the spreads in public bond markets
- A coordinated investment programme mobilising savings surpluses in Europe through Eurobonds, to modernise European infrastructure, develop transnational networks and to promote sustainable development.
- An industrial policy able to develop new engines of growth and to create new jobs
- The ‘relaunched’ internal market must be accompanied by a social level-playing field to avoid social and wage dumping and a halt to the deregulation of the labour market to limit the exponential rise in precarious work
- A focus on direct and indirect labour costs alone cannot rebalance the eurozone. European metalworkers are totally opposed to all wage competition, deflationary wage policies and real wage cuts. The EMF calls for additional social indicators in the scoreboard for the excessive imbalance procedure, for instance on: inequalities, the incidence of low pay, the working poor, the share of labour income in overall GDP and unit profit rates.
- A better distribution of wealth and income in our societies is essential. To achieve this, the lowest incomes have to be addressed
- Proposed changes to pension systems and the automatic increasing of retirement age in line with average life expectancy must be reconsidered.
- A common European base and minimum rate for company taxation are urgently needed
- More has to be done to build a financial system that serves the real economy not vice versa, including a financial transaction tax, and strengthened regulation and supervision to end tax havens and tax evasion
- Europe needs the construction of a developed and functioning industrial relations system, including at its core macroeconomic governance structures, in which the European social partners play an active role.
On 15 March 2011 the EMF invited Members of the European Parliament to make filmed statements on economic governance.
The recording was made in the VoxBox in the European Parliament in Brussels. Statements were made by Sylvie Goulard (ALDE: FR), Thomas Händel (GUE-NGL: DE), Stephen Hughes (S&D: UK), Philippe Lambert (Greens: BE) and Olle Ludvigsson (S&D: SE).
The MEPs gave their views on the Commission and Council proposals on economic governance and alternative proposals promoting investment, solidarity and jobs. The format was a roundtable chaired by Peter Scherrer, EMF General Secretary.