ETUC Resolution on The Worsening Crisis – Europe at Risk

Brussels, 01-02/06/2010

1. It was always evident that after the initial, generally positive EU and G20 reaction to the financial crisis of 2008, the next difficult task would be to arrange the exit from high public expenditure (the stimuli packages) towards more normal levels of public debt. The public deficit has risen from 2.3% of GDP in 2008 to 7.5% in 2010 with the public debt to GDP ratio rising from 61.6% of GDP in 2008 to 80% in 2010. Unemployment is forecast to reach 10.3% by the end of 2010. The European Commission originally envisaged this exit process getting underway in 2011 provided growth in the private sector would compensate for cuts in the public sector.

2. But events – especially speculators in the markets – have moved quickly and panicked governments. Premature exit strategies have been adopted by some European countries which appeared to be at risk of defaults. Greece, first, now Spain and Portugal have found themselves threatened in this way and join Rumania, Ireland, Iceland, Hungary, the Baltic States and now the UK, Italy and Germany in cutting public expenditure, welfare, and various labour conditions. The result in some countries is a wave of general strikes and social unrest.

3. The EU’s response to the strengthening crisis has been hesitant and uncertain. The eurozone was initially too slow to move to protect itself and its member countries in distress. The negotiations with Greece were protracted and unnecessarily humiliating for Greece; the terms eventually agreed were very tough, too harsh, and could well have killed the prospects of growth there for years. The ETUC recognises that the Greek government and people have no alternative currently to the bail out deal but considers that in due course, sooner rather than later, an extra element of growth and job creation be added to the

4. The terms of the Greek deal has provided much of the basis for the subsequent agreement of EU finance ministers on a large stability fund for distressed eurozone member countries. Again, the conditions for help are very tough, almost certainly designed to deter applicants by encouraging them to devise their own escape route from the high debts of this recession.

5. In these circumstances, the ETUC calls on the European authorities to match their insistence on tough exit strategies with new, entry strategies towards growth and lower unemployment. Funds have been made available in the eurozone for financial retrenchment and to support banks but the growth dimension has hardly been addressed.

The need for growth

6. The ETUC therefore reiterates its demand for a European Recovery Plan with New Green and Social Deals equivalent to 1% of European GDP to stimulate jobs, investment and growth. Europe needs huge investment in new clean technologies in the fields of energy, transport, and construction, among other sectors, and it needs new industrial policies to boost manufacturing in Europe. The myth that societies could become post industrial and live on services, especially financial services, has been comprehensively exploded.

7. A European Recovery Plan would also include

- robust regulation of financial markets – the German move on banning
“naked short selling” is a welcome move, as are the decisions of the
European Council and the European Parliament on hedge funds and
private equity;

- new sources of taxation, especially the long overdue introduction of a
Financial Transaction Tax (the “Robin Hood’ Tax), ideally G20-wide, but if
necessary at EU level;

- special long-term help for young people, the group perhaps hit hardest by the crisis with unemployment rates as high as 40% in some countries /regions;

- industrial policies which promote European manufacturing and accelerate the development of a low carbon, sustainable economy;

- a strengthening of Social Europe with the adoption of the key features of the Monti report on the single market but additionally to the Monti report include a Social Progress Protocol to be attached to the next EU Treaty;

- start a process of transformation of capitalism from the model, strongly
based on financial capitalism and rising inequality, which grew rapidly in
strength in the past 30 years, into a more sustainable, greener, longer term, more equal system where profits are made through making things, not gambling on socially useless financial instruments;

- new balanced economic and employment guidelines instead of the existing ones which put almost all the burden of adjustment on the deficit countries, and little obligation on the surplus countries to foster wage growth and internal demand.

The Threat from the Far Right}}

8. The ETUC is launching a new campaign for Growth, Jobs and Europe – and against nationalistic, racist forces in Europe. The economic policies of harsh cuts in a recession resemble those of the 1930s which led quickly in that decade from economic disaster to political catastrophe as the forces of nationalism, racism and militarism flourished. This must not happen again and the ETUC must take a prominent pact in ensuring that it does not.

9. History shows us that direction and that seems the dominant direction in the EU
today. Recent results and trends show a rightward move:

- the French regional elections where the National Front made gains;
- gains in Italy for the Northern League;
- victory in the general election in Hungary for the centre right with
nationalists entering the Parliament for the first time;
- the campaign – fortunately unsuccessful campaign – of the far right
candidate for the Austrian Presidency attracted the support of the
country’s biggest selling tabloid;
- in Belgium, the extreme right separatist Vlaams Belang has been accepted by some mainstream right parties, and separatist parties are tipped to do well in the forthcoming general election;
- in central and eastern Europe, the old enemies – Jews, Roma and national minorities – have become targets for the far right.

10. The ETUC is highly alert to this trend. In the 1930s depression, Europe steered more right than left with disastrous consequences.

ETUC Action
- A Growth Summit}}

11. The ETUC is demanding an emergency Social Summit to plan to inject growth into the European economy. Unions must stand ready to be militant against the unfair imposition of austerity packages but must also be prepared to share in the difficult processes of devising exit strategies where a fair burden falls on the broadest shoulders, the rich and the comfortable. This is the ETUC basic message – Don’t panic, don’t exit. But use social dialogue to discuss when and what to do and equip the EU to aid growth and job creation strategies.

- European Trade Union Mobilisation

12. On September 29, to coincide with a meeting of European finance ministers, the ETUC will organise a European Day of Action.

13. As European Governments move collectively to slash public expenditure, including jobs, pay and pensions, while the European economy is fragile and vulnerable to renewed recession, the ETUC is to mobilise a collective trade union response. This will be centred on a big demonstration in Brussels but the ETUC is calling on affiliates to take the maximum possible degree of action in all the countries of the European Union. This can include protest stoppages, demonstrations, meetings with Government finance ministers etc.

14. The ETUC is also supporting the ITUC world wide Day of Decent Work on October 7.