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Since the financial crash of 2008 and subsequent economic depression four EU Member States have been visited by the infamous ‘troika’ which has demanded cuts and labour market reforms in return for loans to their banks and for the purpose of paying international creditors. As the consequences of this austerity policy have become more and more serious for the people of the countries concerned, the European Trade Union Confederation (ETUC) believe that it is time to hold those responsible to account and to prevent it ever happening again.
AT A SESSION OF THE EMPLOYMENT AND SOCIAL AFFAIRS committee of the European Parliament in January the ETUC presented a report based on submissions from trade unions in Member States which had received ‘bail-out’ funds. Although Hungary and Latvia required outside help at the beginning of the crisis in 2008, and Spain obtained a loan specifically for its banks, the report concentrates on Portugal, Greece, Ireland and Cyprus. These countries felt the full force of the recommendations of the ‘troika’ of the International Monetary Fund (IMF), the European Commission and the European Central Bank (ECB). Officials of this group typically visited ministries and demanded specific changes in both labour market practices and laws such as the cut in the minimum wage in Greece and the reduction in redundancy payments in Portugal. Often, as in these two instances, the social partners had already agreed more generous provisions but, under the threat of the withdrawal of ‘troika’ loans, national governments forced through huge cuts regardless. The very idea of collective bargaining was largely frowned on by the group’s experts: negotiations were decentralised from national or sectoral level to individual companies and firms were encouraged to deal with vague ‘associations of persons’ rather than bona fide trade unions.
As well as lowering standards in areas usually regulated by deals between unions and employers the ‘troika’ insisted on severe cuts in unemployment benefit, pensions, health care, education, etc. to reduce government spending. The effects of these measures can be divided into the social and the economic, though, of course, they are inextricably linked. Poverty has greatly increased in all four Member States including that of people in work as wages have fallen. Additionally inequality has worsened because certain groups such as young people and women have been harder hit by rises in unemployment and public sector lay-offs. Elements of the electorate have turned to extreme parties. As the submission from Greek unions put it: ‘Nationalism, racism, xenophobia and violence rush in to fill the gap left caused by the non-respect of democratic institutions and by the disintegration of the social fabric’. The population as a whole has lost faith in their government, the EU and democracy in general; there is now an approximate 40% gap in the figures of those satisfied between Southern and Northern Europe.
Even in terms of the strict economic criteria laid down by the ‘troika’ austerity has been a disastrous failure. The public debt of the Greek state which, arguably, kicked off the whole process has now reached over 170% of the country’s GDP, up from 130% in 2009. In all four countries interest rates on loans to new companies, the much-vaunted SMEs which are supposed to provide new jobs, have not generally decreased since 2007 and are now about double that charged in Germany. Greece has lost over 30% of its economic activity under the ‘troika’ and Cyprus’s GDP is forecast to have decreased by about 12% at the end of 2014 despite only entering austerity in April last year.
The ETUC report concludes by dealing with the lack of accountability of the ‘troika’ to the European parliament, the International Labour Organisation (ILO) and the Council of Europe. EU treaties, the European Social Charter and several ILO conventions have been broken by ‘troika’ activities, it says: ‘social principles laid down in the Treaty are simply treated as a piece of paper, whereas unfettered markets and business interests are enforced in all possible ways’, In order to remedy this the ETUC suggests that the European Commission prepare a detailed report on these breaches and propose measures to restore them. Allied to an Economic and Social Recovery Plan the unions recommend that the ECB plays no further part in labour market reform and that no extra measures be introduced without ‘in-depth hearings with the European Parliament’. Lastly the ETUC advocates the setting up of a Social Partner Dialogue Board with employers and the new European Stability Mechanism which will dispense ‘bail-out’ loans to Member States in future.