Brussels, 29/10/2009
I read the other day an apt quotation by the ancient Roman playwright, Platus, who remarked “I am a rich man as long as I do not repay my creditors”. Or as many bankers might express it – “we are rich men as long as we get almost free money and guarantees from Governments.”
Anyway, thanks largely to their irresponsibility, we have lost 7% of European GDP in 18 months, EU unemployment is rising, perhaps, up to 12% by the winter’s end, with young people, its disproportionate and blameless victims. There is already wide pressure to pronounce the end of the crisis and cut public spending. EU Finance Ministers met after the recent G20 in Pittsburgh and launched a co-ordinated exercise to plan exit strategies from the current high levels of public spending. That EU Governments act prematurely and choke off the recovery is the ETUC’s biggest worry at the present time. (A premature move by the US Congress to balance the books in 1937 killed the recovery then and the recession did not end until World War Two.) Despite general calmness in Pittsburgh about the stimuli packages, some EU Governments are clearly planning savage cuts in public expenditure.
Yet if we have a normal recovery, the debt will diminish remarkably quickly; “and if we don’t, it won’t and won’t need to” (Samuel Brittan FT Oct2). “Don’t exit, don’t panic” is the ETUC message to the Council and the Commission. There is realism around. France announced that it would be 2014 before it expected to be back within the rules of the Stability and Growth Pact.
This is not just a question for national governments. It is a European issue because of the clear dangers that a country which exits too early seeks to transfer its problems to its neighbours. By cutting public spending in the absence of a revival of the private sector, it places its hopes on exports to other countries which are maintaining high spending levels.
I mentioned earlier the special problems of the young. This is a bad time to be leaving school or college and we believe that young people should be at the heart of the new European recovery plan with a Youth Guarantee scheme.
We are disappointed that there has not been more commitment and agreement from the Council on the plans which the Commission drew up for the so-called jobs summit last May. First the Council scaled down the summit and then they have kept a tight rein on the way that EU monies are spent. There seems to be an emphasis on national, rather than European responses. If as Juan Somavia said recently, “it’s billions for the bankers and pennies for the people”, that is a recipe for unrest.
I warn the Council that if they proceed in the direction of national, not European solutions – then there will be consequences. On the union side, we will be under increased pressure to maintain our support for the free movement of labour. We saw earlier this year strikes in Lincolnshire about British jobs for British workers, and these highlighted the risks of nationalistic responses to rising unemployment, and the problem which exists in the single market where workers from poorer countries can undermine conditions of the indigenous workers, a concept described, unattractively, in Eurospeak as “social dumping”.
It has long been the ETUC’s ambition to achieve, whether by directive or by agreement under the Social Protocol of the Maastricht Treaty, protection against social dumping and allowing workers of the EU to be undermined by another member state operating on lower standards.
But we have pursued these objectives pragmatically recognising that while there are widely varying standards of living and of productivity in Europe, uniformity on all main points was not possible. Yet the tensions in that debate are rising and there is a real risk of protectionism developing in the trade union ranks, a tension increased by recent ECJ decisions on posted workers. Running a single market with free movement across 27 national industrial relations and social security systems is not a stable arrangement and the crisis is causing yet more instability. This makes it important that the EU acts on our concerns on posted workers and on a social progress protocol, setting out a better balance between market freedom and rights.
The ETUC campaigned in Ireland for the Lisbon Treaty and did so unconditionally. There were no ‘ifs and buts’ in our position. But we need progress in these areas if we are to keep worker support for free movement of labour and combat the nationalistic impulses and British jobs for British workers – type feelings in many countries.
Finally, as the Governor of the Bank of England said last week – never has so much been owed by so few to so many – meaning the banks and the debts they have run up. More effective financial regulation and taxation is not an option, it is a necessity – if we are to minimise the chances of a repetition of the scandalous behaviour which has caused this huge recession. The ETUC wants the EU to lead the way in the debate on transaction taxes, progressive taxation, and maintaining effective welfare states, and wants it to start this week.