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Article by: Cristina Bermejo, Youth Secretary, Comisiones Obreras
Translated by: Ben Engel
The dreadful financial crisis of 2008, caused by irresponsible and uncontrollable greed and by insatiable banks, has sparked an economic and social crisis with serious repercussions in EU member states. This is seen in reduced economic growth, increased unemployment, severe austerity measures, higher rates of job loss, more unstable jobs, generalised cuts in salaries and subsidies and a reduction in retirement rights… Thus, we, the workers, are paying a high price for the folly of the financial world, where salaries and bonuses are still sickeningly high.
The so-called “bail-outs” of Greece and Ireland have led the EU to put pressure not only on these countries, but in general, to cut salaries and pensions, and to introduce a greater degree of “flexibility” (i.e. weaken collective negotiation and labour laws) in their job markets.
The recent “Competitiveness and Convergence Pact” passed by the European Commission will provoke additional cuts to social spending and public investment and are the precursor to new adjustment plans. The lack of a strong and coherent policy on the part of the European government, as well as the problem of sovereign debts, also serves as an excuse for the European institutions to push forward an aggressive programme of structural reform, of a genuinely neoliberal nature, which sets up an entire agenda of cuts to rights and social provisions. Never in the history of the EU and the European institutions which preceded it, has such a phenomenon been seen before.
For those at the helm of the EU’s political institutions, economic growth and the creation of jobs are secondary objectives, and subordinate since the drastic turn European policy experienced last May. This is to say nothing of such issues as environmental sustainability, which is at great risk of fading into the background because of economic difficulties and political weakness, when it should be one of the foremost issues, especially in light of Japan’s recent nuclear disaster.
The proposal of “economic governance” of the Euro Zone and of the EU is unacceptable because it is centred – obsessively so – on the aim of reducing public deficits and pushing forward “structural reforms” in areas, such as collective negotiations and labour markets, pensions and other social provisions, which the EU has little expertise in dealing with. On the other hand, aspects which are essential for economic government – especially in countries with a common currency – like standardised tax, make no appearance in the objectives of the aforementioned governance.
Previously, the verdicts of the European Court of Justice – the Laval, Viking, Rüffert, and Luxembourg cases etc. – establishing the primacy of freedom of movement and establishment of capitals over the rights to strike and to collective negotiation, and the protective value of the Right to Work, opened the way for salary and labour dumping, with the European authorities showing no willingness to remedy the problem.
Never before in the EU has it been so clear that government is servicing the interests of the economic powers, in particular of the financial capital, and to the detriment of the values which inspired the European Social Model. The continuous submission of democratic governments to demands, real or supposed, from the financial markets, constitutes a serious deterioration in democracy. It must be stressed that these markets are very much conditioned to the advantage of profiteers; and also that the opinions of a number of risk assessment agencies which should be totally discredited for their huge mistakes and complicity in creating the financial investment bubble, whose bursting sparked the crisis we are suffering.
2. How did the crisis and the resulting policy of cuts come about?
– Generalised increase in unemployment across Europe, with rates as high as in Spain (20%), with especially high numbers of youths unemployed (in Spain: 30-40%, double the European rates), the group most affected by the crisis, along with women and immigrants.
– Weakening of social protection:
Reduction of unemployment benefit (in Spain, the 426e subsidy has been cancelled), imposing further requirements to access it
Freeze in pensions and immediate obligation (unnecessary in the short term) to review all pension systems (raising of retirement ages, an increase in the calculated number of working years necessary to earn minimum pensions, introduction of private financing systems…)
Lowering or cancelling other social benefits (Dependency Law, the baby cheque…)
Education: lower budgets (GB: reduction in grants/loans, increase in university fees)
Health: e.g. Reduction of doses of medicines; budget cuts: privatisation and an attempt to introduce co-payment in health (Cataluña)
– Bending of working conditions
Freezes and reductions in salaries (up to 1.5% of the average in the EU: Ireland, Greece, Romania, the Baltic Countries), with salaries in the public sector suffering the harshest cuts
Weakening of collective negotiation, breaking of salary agreements reached with the unions, and changing working conditions (working day, hours, geographical mobility, functions…)
Imposition of labour-related changes at a legislative level (Reform in Spain: reduced cost and greater ease in firing, changes in hiring practices with increase in temporary contracts, non-compliance with rights established in convention…)
Interference by the States and by the EU itself with the autonomy of negotiation by social interlocutors (trade unions and businesspeople) to agree on working conditions (e.g. productivity rather than inflation as a reference point for salaries). Guarantees are therefore lost, not only of the right to negotiation, but also to undertake collective action.
Conclusion: global loss of governance of the States and therefore of the populace, leading to the gradual destruction of the European Welfare State model by attacks on fundamental democratic rights and on the pillars of that welfare state (education, health, pensions…).
3. Trade union alternatives
The European Trade Union Confederation (ETUC), of which Comisiones Obreras is part, has just called for a Europe-wide New Deal to dig ourselves out of the crisis, founded on two fundamental pillars: the issuing of Eurobonds to combat the crisis of sovereign debts, and a plan for economic recovery through large-scale European investment projects. While these two proposals are fundamental, we are of the opinion that a far wider range of measures is needed. These should be adopted as the fruit of the Political and Social New Deal, which will involve the main European political powers, the leadership of the EU institutions and organisations representing European social interlocutors (Business Europe, UEAPME and CEEP, and ETUC).
A) Controlling the debt markets
This is the most important task. It would basically consist of:
Banning speculative operations
Creating a European Monetary Fund (EMF), sufficiently endowed, to act as an instrument of financial aid and rescue to economies which need it
Establishing a Financial Transaction Tax (FTT) to deter speculative movements, as well as raising a large amount of money for the public coffers
Eradicating tax havens
Regulating rewards and bonuses for the directorship of financial institutions
Putting measures in place to ensure transparency in all financial markets, including secondary ones
B) European economic recovery plan
This must be based on a plan for recovery of the European economies, based on investment in transport and energy infrastructures, communications networks, research, development and innovation, education and training, green technologies and industries, and funding of a “fair transition” to an economy low in carbon emissions.
The burden of financing these measures cannot fall once again on civilians by way of cuts to salaries and to social protection, but rather must perforce rely on progressive direct taxes (“Let he who has more pay more”), advocating a Europe-wide fiscal policy.
C) Labour-related measures
One of the European trade union movement’s priorities is to put an end to the imminent threat of salary and labour dumping caused by the jurisprudence of the ECJ, by allowing companies and workers to operate in one EU State with the same working conditions and salaries of another EU country, without taking account of the laws and conventions of the country where their economic and labour activity is being carried out.
Also, the Charter of Fundamental Rights from the EU Treaty should emphasise the rights to collective negotiation and to strike in their transnational dimension.
It is also essential in a trade union sphere to promote the growth of employment, but pushing for good, sustainable, jobs. During the 00s, around 19 million jobs were created in Europe. However, this increase was based on unstable contracts, with a third of these being part-time or temporary contracts, part of which were often filled by young people and women.
In this same period atypical contracts became widespread, such as “false freelance” contracts, grants for practices and apprenticeships, very short temporary contracts through temping agencies, etc. As a result, the challenge for trade unions in the next few years will be to guarantee the creation of jobs, understood as “decent work”, i.e. quality work, as opposed to the tendency towards instability which preceded the crisis.
Indefinite contracts must remain the norm.
A protection established by collective convention or by law must apply to all workers
All forms of work must be regulated either by collective conventions or by legislation, to put an end to unstable jobs, illicit employment…
The directive about movement of workers must respect their rights, and guarantee an atmosphere of faithful competition between countries, respecting salary conditions and the role of trade unions in Collective Negotiation
Attention must be paid to gender difference in order to close the salary gap between men and women, and promote equal opportunities which, in turn, favour the right of both to personal and family welfare
Supporting the introduction of a European minimum income, attending to the specific situation in each member state, but with a base of common principles
Pushing forward a national minimum wage to serve as a reference point for all workers.
I hope that, with the aid of this summary, where I have tried to provide a European perspective on the issues, you can hold a wider-ranging debate at the round-table consultations.