ETUC REPORT ON THE FUNCTIONING OF THE · PDF fileTHE FUNCTIONING OF THE TROIKA : MAIN...
Transcript of ETUC REPORT ON THE FUNCTIONING OF THE · PDF fileTHE FUNCTIONING OF THE TROIKA : MAIN...
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THE FUNCTIONING OF THE TROIKA : MAIN MESSAGES FROM
THE ETUC REPORT
Athens, March 2014
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THE PICTURE THAT EMERGES….
• … IS A PICTURE OF A COUNTRY BEING TAKEN OVER
• NOT A « SILENT » TAKEOVER….
• …. BUT AN OPEN AND HOSTILE TAKEOVER …..
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ONE KEY AIM : « THE SANCTITY OF DEBT »
• ALL EXTERNAL DEBT IS TO BE REPAID
• AND TO MAKE SURE DEBT WILL BE REPAID, LIVING AND WORKING STANDARDS NEEDED TO BE CUT MASSIVELY
• ALL STANDS IN THE WAY OF THIS POLICY HAD TO GO
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FIRST THING TO GO: ECONOMIC RATIONALITY • DANGERS OF AN OBSESSIVE POLICY OF FISCAL AUSTERITY WERE WELL
KNOWN…
• …. BUT WERE BEING IGNORED
• CONSEQUENCE: VICIOUS CIRCLE OF CUTS, ECONOMIC COLLAPSE, MORE CUTS
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AUSTERITY ON A MASSIVE SCALE….
0
5
10
15
20
25
30
Greece Portugal Ireland Spain UK Italy Euro Area France Netherlands Finland Belgium Austria Germany
Total of fiscal cuts from 2010 to 2014, in % of GDP (1)
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….TRIGGERING ECONOMIC COLLAPSE
-35
-30
-25
-20
-15
-10
-5
0
5
10
Portugal Greece Cyprus Ireland
WHAT HAPPENED TO ECONOMIC ACTIVITY SINCE ENTERING THE TROIKA REGIME (includes 2014 forecast)
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SECOND THING TO GO: ALL THAT IS SOCIAL
0
5
10
15
20
25
30
Portugal Greece Ireland Cyprus
UNEMPLOYMENT RATES
year before troika entering 2013
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SECOND THING TO GO: ALL THAT IS SOCIAL
0
5
10
15
20
25
30
Portugal Greece Ireland
Anchored poverty rates (2008)
year before troika entering 2011
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THIRD THING TO GO: WAGES AND COLLECTIVE BARGAINING SYSTEMS • THE TROIKA « LOGIC »: A DEVALUATION OF WAGES HAS A DOUBLE
DIVIDEND: IT KILLS DOMESTIC DEMAND AND IMPROVES COST COMPETITIVENESS;
• EXPORT LED GROWTH IS TO SAVE THE ECONOMY FROM THE EFFECTS OF AUSTERITY
• IMPORTANT: THIS IS NOT JUST ABOUT SQUEEZING WAGES DOWN AT THIS PARTICULAR MOMENT IN TIME ….
• … BUT ALSO ABOUT WEAKENING THE SYSTEMS OF WAGE FORMATION THEMSELVES SO AS TO MAKE MONETARY UNION ‘FIT’ FOR FUTURE SHOCKS
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THIRD THING TO GO: WAGES AND COLLECTIVE BARGAINING SYSTEMS • ALSO, THIS IS NOT JUST ABOUT THE « DECENTRALISATION » OF COLLECTIVE
BARGAINING • BUT ALSO ABOUT PUTTING INTO QUESTION THE PRINCIPLE OF COLLECTIVE
BARGAINING BY REPRESENTATIVE TRADE UNION • REFORMS SUCH AS:
• FREEZING MINIMUM WAGES • CUTS IN MINIMUM WAGES • CUTS IN PUBLIC SECTOR WAGES • REVERSING HIERARCHY IN LEVELS OF COLLECTIVE BARGAINING • MAKING A LEGAL EXTENSION OF BARGAINING AGREEMENTS MUCH MORE
DIFFICULT • CREATING A LEGAL VACUUM WHEN THE BARGAINING CONTRACT COMES TO AN
END • SUBSTITUTING REPRESENTATIVE TRADE UNIONS WITH « GROUPS OF WORKERS »
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EVOLUTION OF NOMINAL AND REAL WAGES PER EMPLOYEE SINCE START OF TROIKA PROGRAM AND UP TO 2014
-1
-17
-3,7
-13,6
-3,7
-16,8
-5,1
-15
-18
-16
-14
-12
-10
-8
-6
-4
-2
0
Portugal_ Greece Ireland Cyprus
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Number of published collective conventions in Portugal
50
100
150
200
250
300
350
2007 2008 2009 2010 2011 2012 2013
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FOURTH THING TO GO: AUTONOMY OF SOCIAL DIALOGUE • A WIDESPREAD MISPERCEPTION THAT SOCIAL DIALOGUE WAS TRIED
BUT THAT SOCIAL PARTNERS (TRADE UNIONS) FAILED TO REACH AN AGREEMENT
• NOT SO
• IN SEVERAL CASES (GREECE,PORTUGAL), A CONCENSUS BETWEEN SOCIAL PARTNERS WAS REACHED
• TROIKA, HOWEVER, DECIDED IT WAS NOT ENOUGH, IGNORED THE SOCIAL PACT AND PUSHED THROUGH ITS OWN IDEAS OF DEREGULATION
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FIFTH THING TO GO: TRUST AND SUPPORT FOR DEMOCRACY…
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...AS WELL AS SUPPORT FOR THE EUROPEAN PROJECT
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WHAT HAS THE TROIKA TO SHOW FOR ALL OF THIS? • HAS MARKET CONFIDENCE BEEN RESTORED ?
• HAVE PUBLIC DEBTS BECOME MORE SUSTAINABLE?
• HAS ECONOMIC GROWTH POTENTIAL BEEN INCREASED?
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Spreads only falling after Draghi intervention, not because of fiscal cuts
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Public debt ratio’s continue to increase
50
70
90
110
130
150
170
2009 2010 2011 2012 2013
Gross Public Debt since start of Troika Regime (% of GDP)
Portugal Greece Ireland Cyprus
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HAVE FUTURE GROWTH PROSPECTS BEEN IMPROVED? • MASSIVE EMIGRATION OF (MAINLY YOUNG SKILLED) PEOPLE DOES
NOT BODE WELL FOR POTENTIAL GROWTH
• EUROPEAN POLICY MAKERS DO NOT BELIEVE THIS THEMSELVES, SEE THEIR ESTIMATES OF STRUCTURAL UNEMPLOYMENT
2007 2013
GREECE 10,1 19,3
PORTUGAL 9,3 15,3
IRELAND 6 12,9
SPAIN 11,7 23,2
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TO CONCLUDE
• ONE KEY CONCLUSION: WE HAVE TOMAKE SURE TROIKA CAN NEVER HAPPEN AGAIN IN EUROPE/MONETARY UNION • WAKE UP DG EMPLOYMENT AND SOCIAL AFFAIRS
• APPEAL ON THE ILO AND COE
• EP TO USE ITS RIGHT TO ACCESS ECJ TO INTRODUCE COMPLAINTS AND TO MAKE SURE EU TREATY AND SOCIAL AQUIS ARE NOT ‘JUST A PIECE OF PAPER’
• SOCIAL RECOVERY PLAN FOR TROIKA COUNTRIES TO REFIX FAIR WAGES
• ECB OUT
• SOCIAL PARTNERS IN ESM ADVISORY BOARD