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The European Trade Union Institute held its annual ‘European Dialogue’ in April and chose the theme of economic inequality and its link to prosperity or the lack of it. Fittingly Nobel prize winner Professor Paul Krugman, a trenchant critic of austerity, gave the keynote speech in which he detailed the share of wealth that was garnered by the famous top 1% and even more relevantly the top 0.1%, over the course of the last hundred years. He pointed to a large U-shape which represented the fall in the percentage of wealth going to the rich from the second World War until the 1980s and its subsequent rise. This graph was intimately linked, he showed, to that of debt as the non-rich tried to borrow their way out of poverty, or to satisfy their aspirations. We are now back to the level of inequality experienced in the 1920s. The recent financial crash and economic depression was largely due, he said, to everybody trying to pay back what they owed at the same time. He gave the period of 1945 to 1975 as an example of how public policies that favoured workers could reduce inequality and stimulate growth but warned that the polarised state of politics in the U.S.A. and the drift to the right in Europe made it hard to reproduce these.
On the current EU scene Prof. Krugman believed that the recent ‘Juncker plan’ for economic expansion lacked resources and policy shifts by the IMF and ECB had not been matched by the European Commission. While U.S. social democrats had found a renewed strength and, to some extent, President Obama had carried out the right policies, the weakness of the left in Europe had prevented measures such as higher taxes, re-regulation of finance, increasing minimum wages and improving collective bargaining laws and social security. On Greece he was of the view that the country should never have adopted the euro as its currency as devaluation was not an option when the financial crisis hit. However the five years of ‘internal devaluation’ which has led to the only decrease in private sector wages in the EU should enable it to gradually pay back its debts but only if the IMF-ECB-EU troika eased back on austerity and forgot about further ‘structural reforms’.
EU-wide unemployment insurance?
Other conference speakers included the former EU employment commissioner Laszlo Andor, Reiner Hoffmann, chair of the German trade union confederation DGB, and Maria Rodrigues MEP from the Socialists and Democrats group. They discussed the idea of European unemployment insurance. Its benefit would be felt as an ‘automatic stabiliser’ for the economy. In other words when unemployment rises during a slump the loss of spending power is at least partially made up by increased state benefit payments. However when an individual country gets into serious trouble the temptation is to reduce these. With an EU-wide fund, though, Member States with healthy economies would effectively subsidise the benefits in those with problems until they recovered. As Mr.Hoffmann pointed out some regions of Germany have much higher unemployment levels than others but a nationally run benefit system balances this out. According to Mr.Andor the Commission has been working on such a scheme since 2011. Although he acknowledged different models of social insurance existed across the Community it should be possible for an EU element of insurance benefit to be topped up by Member States as they saw fit. Maria Rodrigues advocated a similar plan with the difference that national levels of benefit would be topped up by the EU rather than the other way around. Without this she believed there would be a ‘race to the bottom’ as national governments attempted to out-do each other in attracting employers by progressively cutting labour costs. She also wanted a ‘New Deal’ plan of spending to kick-start the EU economy as had previously been put forward by the DGB (see issue 63).
Workshop rundownAs well as the main speeches the conference included a series of workshops which dealt with topics such as European wage policy, worker participation, the crisis of European democracy and quality in higher education as well as the ubiquitous economic inequality. Bernadette Ségol, General Secretary of the ETUC made the case for greater trade union membership and higher minimum wages as particularly helpful to women workers, hardest hit by the crisis. Roman Zitzelsberger, an official from German union IG Metall, outlined how wage restraint had saved jobs between 2008 and 2011 while money from unemployment benefit had funded temporary posts.. Since then IG Metall had won €6.5 million in wage rises for their members. However he believed that a long-term plan was needed and co-operation between trade unions to create a demand-driven EU market. John Evans, who sits on the Trade Union Advisory Committee of the Organisation for Economic Co-operation and Development said that the OECD now had the reduction of inequality as an aim whereas 15 years ago it believed that ‘a rising tide lifted all boats’. This had now been disproved as rising worker productivity had seen real wages go down and an 8% reduction in the share of new wealth going to labour. Half of this was due to the decline of unions but he was of the opinion that this trend could be reversed as had happened in the past.