Check against delivery

Mr Commissioner, President,

I would like to thank you for allowing me to speak at the end of this two-day conference on employment, an issue which is our number one priority.

The tone and content of a number of speeches yesterday morning, particularly those of the presidents, give me hope that the misery and social destabilisation caused by unemployment is finally starting to resonate politically, in the hearts and minds of those at the helm. This is long overdue.

It is a first step, but there is still a long way to go. Laws still need to be changed and, most of all, action still needs to be taken. In this respect, we will be keeping a close eye on the annual growth survey and the recommendations to Member States.

Yes, investment must be encouraged in sectors with high employment potential.

Yes, the issue of youth unemployment is a priority, although we are still waiting for specific proposals on the issue of internships and an employment guarantee for young people.

Yes, we need to tackle barriers to female employment and prevent older workers from being sidelined.

But no, it is not labour law, social dialogue or pension and healthcare schemes that are killing off the recovery. What is killing off the recovery is the impact of austerity plans, the hundreds of billions of euros in simultaneous or successive budget cuts, rises in VAT and reductions in social benefits.

But no, it is not labour law, social dialogue or pension and healthcare schemes that are killing off the recovery. What is killing off the recovery is the impact of austerity plans, the hundreds of billions of euros in simultaneous or successive budget cuts, rises in VAT and reductions in social benefits.

Since 2009, workers and households have paid more than their fair share. Under pressure from the EU, a number of Member States have cut their social security budgets, limited access to or reduced social benefits and raised their retirement age. Several have lowered the minimum wage and sought to weaken collective bargaining and the institutions that support social dialogue; they have challenged the role of the trade unions, made labour markets more flexible and relaxed the rules governing collective and individual redundancies.

I have read the – admittedly leaked – letter written by the Troika to Greece. One of their recommendations is that the Greeks should be asked to work a six-day week. Such an intervention is totally unjustifiable, both in its form and its content.

To overcome the crisis, they want social and employment policies to become the variables that are adjusted.

And yet, the record of austerity policies in 2012 remains dire, with economic recession, ever-increasing unemployment, and a crisis that has spread to the very heart of the eurozone. Even the public debt crisis is worsening due to the absence of growth. Urgent questions must therefore be asked about the impact of structural reforms and austerity plans on economic activity, employment and unemployment in Europe. We need to change course.

That is why, in our opinion, this conference should have included one further topic, namely: What coordinated policies should Europe adopt to promote economic recovery? – naturally with the participation of DG ECFIN and the ECB. The workshop would have focused on how to create the jobs of the future in social services in recession-hit countries and those implementing drastic austerity plans, how to develop the green economy and how to promote employment among women, young people and older people against a backdrop of mass unemployment.

I would now like to say a few words about wages.

Reduced labour costs equals competitiveness and increased exports: the formula recurs like a leitmotif. Not a day goes by without the Commission, the ECB and Europe’s finance ministers drumming out this mantra, even though the formula is far from proven.

Reducing unit labour costs by 15% in Greece has not revived the country’s exports; in fact, exports were much stronger before the crisis, at a time when wages were rising. Exports in Spain and Portugal have bounced back, although not enough to offset the collapse in domestic demand linked to austerity programmes. But even this recovery is now stalling as austerity in some countries kills off exports in others.

The structural reforms implemented in Germany in the 2000s are not an example to be followed blindly. Germany’s current competitive edge is due less to the reduction in labour costs than to the specialised nature of its industry, which is perfectly tailored to the needs of emerging economies. Reduction in labour costs is not the cause of economic success, as its primary aim is to boost profit margins. The Commission itself acknowledges this fact in its document.

We must therefore stop perpetuating the belief that wage competitiveness equals growth, investment and strong export performance. A competitive, job-creating European economy must be based, not on wage and tax competition, but on competition in product quality and innovation, on energy efficiency, the careful use of resources and, last but not least, a system of wealth redistribution that strengthens social cohesion.

We must therefore stop perpetuating the belief that wage competitiveness equals growth, investment and strong export performance. A competitive, job-creating European economy must be based, not on wage and tax competition, but on competition in product quality and innovation, on energy efficiency, the careful use of resources and, last but not least, a system of wealth redistribution that strengthens social cohesion.

Allow me to add a few words about the minimum wage, a topic on which Professor Pissarides spoke at the beginning of the conference. Professor Pissarides has won the Nobel Prize for Economics and is a professor at the London School of Economics. These are impressive and humbling credentials and no doubt I should hold my tongue, but I’m afraid I just can’t help myself. He told us that if minimum wages exist, they should be very low. Nowhere in the examples produced by the ILO is there any evidence that minimum wages have destroyed jobs. I would have liked to ask Professor Pissarides what he considers an acceptable minimum wage, one that guarantees a decent standard of living. According to the Council of Europe, a minimum wage needs to be 60% of the median wage in order to be considered fair. And yet the Council of Europe is made up not of hyper-radical trade unionists but of government representatives.

Also, just imagine going up to a worker earning the minimum wage in one of the countries where the Troika has been let loose, a worker who has their life to live, their rent to pay and their children to raise, and telling them that their wages are too high. It would be nothing short of immoral.

The European Trade Union Confederation has tabled a proposal for a European Social Compact, which I strongly urge you to read.

The European Trade Union Confederation has tabled a proposal for a European Social Compact, which I strongly urge you to read.

The Compact, which is to be debated at all levels, must be based on three pillars: social democracy (in particular respect for collective bargaining), economic governance that promotes sustainable growth and high-quality jobs, and finally economic and social justice. However, we are neither able nor willing to sit around a discussion table if the conditions for our doing so are that we accept the necessity of wage reductions and consider social protection and public services as relics of the past.

Using the crisis to try to dismantle social dialogue, collective bargaining and labour law would be an historic mistake. It would mean giving citizens and workers the impression that their social heritage, built up steadily over a number of decades, is now being squandered by Europe. And all because of a banking crisis, let us remember, that cost European governments at least €4,500 billion in state aid to banks between October 2008 and October 2011.

The ETUC is particularly well placed to gauge all of the dangers associated with rising unemployment and inequality, the emergence of a European precariat and, ultimately, a profound and growing sense of social injustice. Feelings of injustice, anger and doubts about the value of the European project are becoming increasingly interlinked, and this loss of trust is being – and will continue to be – reflected in the voting booth.

The urgency of the ETUC’s proposed European Social Compact is not dictated by the specific interests of any one trade union, but by the need to safeguard the idea that social progress is at the very heart of the European project.

Commissioner, I would like to thank you for taking the initiative to hold a high-level conference on employment. It is the issue that should be the objective of all European policies.

Thank you for your attention.

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