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ISSUE 53 page 2

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Good EU employment policies scuppered by bad economic ‘diktats’ say unions
 THE RELATIONSHIP BETWEEN THE EUROPEAN COMMISSION and the European Trade Union Confederation (ETUC) seems to be fluctuating under the pressures resulting from the economic slump.  While elements of the new Europe 2020 programme, such as the ’Youth on the move’  and ‘New skills for new jobs’ initiatives have won praise from ETUC leaders, the intervention of the EU and the International Monetary Fund (IMF) in the financial affairs of Greece and Ireland  have provoked accusations of economic ‘diktats’ coming from Commission officials bent on lowering wages and pensions in those countries. According to General Secretary John Monks, there are reports indicating a ‘policy of detailed interference in labour markets... [which]...  tramples all over pious Commission statements about the autonomy of the social partners’. Although the emphasis on youth unemployment in Europe 2020, including a 6-month time limit on being without a job or training, and the commitment to the creation of quality employment are welcomed, the unions say it could all be undermined by the concentration on cuts in pay, pensions, benefits and public services which  ‘could well drag the economy into a new recession and higher unemployment’. The ETUC is particularly worried by the proposed new ‘Economic Governance’ rules that would impose heavy penalties on countries using the Euro who failed to keep to the Commission’s guidelines



on debt ‘which could reduce member states to quasi colonial status’.
The economic row has overshadowed commitments by Laszlo Andor, the Commissioner for Employment, Social Policy and Inclusion to reduce poverty through the use of the three structural funds in regional policy. Total funding in this area will total €350 billion in the period 2007-2013 and Andor wants this money to be used to help the 84 million people who are estimated to be directly affected by poverty in the EU, ‘This is not acceptable in the 21st century’ he said. He highlighted the European Social Fund (ESF), worth €75 billion, ‘ESF funding plays an important role in supporting people to get back on track – for example, by helping them to integrate into the labour market... Every year the ESF supports training for several millions of Europeans’ he continued. He also praised Member States, such as Austria, Belgium and Germany, who have used short-time working schemes and general flexibility  to sustain jobs during the financial crisis. However unions will be less keen on his belief that governments should now start withdrawing economic stimulus measures. ‘The EU needs a coordinated policy for the common development of demand in order to foster growth and employment simultaneously’ retorted Jozef Niemiec, the ETUC’s Confederal Secretary.

A hopeful logo & image on the Europe 2020 employment web site



Bargaining round-up
GERMAN METALWORKERS ARE REAPING THE REWARD for the enduring strength of the country’s manufacturing sector. Following a year when basic pay rates were not increased, although a one-off payment of €300 was made, the deal between the IG Metall union and employers prescribed a 2.7% raise in April. However companies had the option to either bring forward or delay the increase by two months. With the German economy booming and predictions of future skilled labour shortages as unemployment reaches its lowest level since 1991, firms such as Porsche and Audi want to retain core staff and attract new recruits. They, and other firms in the sector, hope to gain a reputation as good employers by using some of their now record profits to bring the rise forward to February with Siemens also throwing in a special bonus of €1,000 per worker.
EASTERN EUROPE HAS BEEN THE SITE OF much investment from multi-national companies in recent years including from some based in East Asia. Cultural differences have been blamed for a dispute in Hungary between Hankook, a Korean tyre manufacturer, and the VDSZ union. After setting up in 2006, Hankook received about €100 million from the Hungarian government but then was fined €100,000 for illegally employing 32 Korean workers. Despite interventions from a former South Korean Prime Minister and ICEM, the international union federation, the company refused to negotiate with unions, dismissing a VDSZ official, and would not provide facilities for reps. After a further fine from the labour inspectorate they became more conciliatory and set up a separate union office at the plant, instituted a ‘cafeteria benefits’ system, praised the performance of the work force and started a training programme at the local college. It is though that Hankook plan to expand to the tune of 700 new jobs by the end of next year.
ITALIAN EMPLOYERS AND TRADE UNIONS were in complete accord when they met recently to formulate their demands of the government. Aiming to boost the economy and employment the social partners came up with a ‘social pact’ containing proposals to extend the 80% of wages guarantee which the state gives to the newly-redundant to the whole of their period of unemployment, to institute a tax break for those firms that negotiate wages at local level and for companies in the less developed south of the country as well as a special fund to encourage smalll businesses (SMEs) to innovate.  The pact was agreed by all the union confederations includng the left-leaning CGIL which has often refused to sign previous deals.

EU deal on hedge funds, but bank levy still contentious

THE NEW STRUCTURE FOR FINANCIAL MARKET regulation in the EU, or some of it, will finally come into existence this year. The European Systemic Risk Board (ESRB) and European Insurance Occupational Pensions Authority (EIOPA) will start operations in Frankfurt, London will get a European Banking Authority (EBA) and Paris a European Securities and Markets Authority (ESMA). As we reported in issue 51 the ESMA has the power to prohibit Credit Default Swaps and similar complicated financial transactions (worth $615 trillion at the end of 2009) if it believes the there is an ‘emergency situation’ in the financial markets. However the EBA still appears to be hamstrung due to the failure of Member States to agree on how to raise a levy on commercial banks to fund it. The original idea of the European Commission was for an EU-wide pot of money, provided by a tax on banks, to be held in case of failures so that governments would not have to fork out as in the recent crisis. After various objections were raised by Member States there appears to have been no further progress.
Over in the hedge fund department however things are looking brighter after MEPs voted to accept a compromise deal with the Council of Ministers. Stumbling blocks such as licences for fund managers from outside the EU and ‘passports’ for the Europe-wide operation of hedge fund and private equity firms were got over by allowing national authorities to register them until the ESMA is fully operational in 2018.  The Socialist group in the European Parliament gave itself a pat on the back for inserting a clause that stops funds handing out money to investors for two years after the takeover of a company. ‘It will prevent gross vulture-like behaviour of funds that cash in what money they can from companies they have just bought’ said Evelyn Regner MEP. Altogether 72 specific new powers were given to the ESMA. According to the group spokesman a long-cherished aim of the Socialists has been achieved ‘The Socialists and Democrats were the first to blow the whistle on the activities of speculative funds. We warned about them well before the whole crisis blew up’ insisted Udo Bullmann.

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