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Full employment, good work and strong public services for the people

Alternatives to unemployment and precariousness in Europe

 

AFTUS
Attac Europe
EuroMemorandum
IPE
PRESOM

DECLARATION OF LJUBLJANA
Third Alternative Ecofin in Ljubljana, 3/4. April 2008

At the same time that the European Council for Economic and Financial Affairs (ECOFIN) met in an informal meeting behind closed doors few kilometres from here, trade unions, groups of civil society and critical scholars have organised a public conference on the current economic and social policies of the European Union. In this ALTERNATIVE ECOFIN we have made it clear that, contrary to the official view, the Union is in critical social and political difficulties. This is mainly due to the choice of policies which are harmful for the majority of the people in the Union and benefit only a small but powerful minority. We have challenged the assertion that there is no alternative to this increasingly neo-liberal policy and have presented and discussed proposals for alternatives in various fields. We insist that broad public discussion must go on and this will contribute to the emerging of new relations of forces and power which are needed for a change towards a policy for a democratic, social and sustainable Europe.

1. Insecurity, precariousness and rising poverty amidst new economic weakness and financial turbulence - The crisis of the EU

The ALTERNATIVE ECOFIN comes at a time when the modest economic recovery between 2004 and 2007 is coming to an end. The international financial turbulence, which originated in the US, has led to a significant tightening of credit conditions in Europe, and the full extent of its impact is still not clear. During the years of the upswing, registered unemployment has slightly fallen and employment has risen. But at the same time – in spite of the upswing from 2004 to 2007 – living conditions have not improved for the majority of people in the EU while for many they have actually deteriorated. The wage share in GDP has continued to fall and real net incomes have also diminished in many countries. Working conditions have become more precarious through involuntary part-time work, fixed term labour contracts, and longer working hours. Social exclusion and poverty – in particular child poverty - have reached scandalous proportions given that Europe is the second richest region of the world, while the number and wealth of millionaires and billionaires has continued to rise. This is also true for the new Central and Eastern European member countries which have entered the EU recently. Their macroeconomic catch-up process has been accompanied by an increasing social polarisation. The scale of the social division in Europe has been emphasised by the recent revelations about the prevalence of tax evasion by the rich and most favoured layers of society – particularly in the economically most advanced countries. These developments have contributed to the increasingly wide- spread feeling that the European Union in its present shape does not serve the interests of the people of Europe but it is rather a project of elites for elites. This impression is reinforced by the fact that the new reform-treaty is not being submitted to the people for a broad discussion and but more or less secretly pushed through a parliamentary ratification procedure.

2. The crisis is home-made –Counter-productive pillars of the Lisbon strategy

The crisis of the EU is not the inevitable by-product of globalisation or the result of the “worldwide financial crisis”. It is in the first place the consequence of a long-term strategy of social counter reform. This strategy was initiated in the late 1970s and, after gaining enhanced momentum at the beginning of the 1990s, was further reinforced in the famous Lisbon strategy of March 2000, and reconfirmed in 2005 – in spite of its obvious failure to meet its declared objectives. The main pillars of this strategy are, firstly, an all-embracing policy of market opening, unleashing competition and deregulation within Europe and also at a global scale (embraced in the so-called “Global Europe – Competing in the world” Strategy),, secondly, the lack of active macroeconomic policy for sustainable growth and full employment and, thirdly, the partial privatisation of existing social security systems. In spite of later additions, a policy for ecological restructuring plays no serious role in the Lisbon strategy.

The policy of universal market-opening transforms competition from a useful and efficient tool for the promotion of economic and technical progress within a common framework of social and political rules into an overarching social imperative which includes competition of rules and social standards. This leads, as can already be seen, to intense social dumping between member countries, to ruinous tax competition, and to a race to the bottom in labour and environmental standards. The subordination of social services and health care to competition under the rules of the single market leads to lower standards and higher prices for the majority of people and more privileges for the better offs. The further opening up of labour markets under the logo of “flexicurity” aims at reducing job protection, wages and social benefits while holding out the vague perspective of lifelong learning. It is remarkable that, in a document discussed at the current official ECOFIN meeting, the extent to which standards of employment protection have been reduced is regarded as a measure of good policies – because such standards are regarded as obstacles to employment. At the same time, a further liberalisation of financial markets, as envisaged by the EU, will create more opportunities for financial speculation and enhance the pressure of financial investors upon firms -- and employees – to give priority to ´share-holder value´. It will also put more pressure on governments to lower taxes in order to attract financial investors.

The lack of active macroeconomic policies is totally counter-productive. It delivers the economic and social development of the EU to the incalculable risks of the world economy – instead of contributing to the stabilization of the world economy via macroeconomic policy. The macroeconomic part of the Integrated Economic Policy Guidelines of the EU is nothing more than a statement of market fundamentalism, and it completely fails to recognise the crucial need for political action. Monetary policy – undoubtedly an essential tool of controlling economic activity – is completely left to the European Central Bank (ECB), an independent entity beyond democratic control with the exclusive mission of ensuring price stability without any responsibility for growth and employment. This differs fundamentally from goals set for the US Fed in the Federal Reserve Act which specifies that monetary policy should be commensurate with the economy´s long run potential to increase production, so as to promote effectively the goals of “maximum employment, stable prices, and moderate long-term interest rates.” The quality of fiscal policies of member states is dominated by the Stability and Growth Pact and oriented towards balanced budgets instead of active contributions to the provision of public goods, to economic stabilization, social redistribution and ecological restructuring. At the same time, tax competition is undermining the revenue basis of member states which are thus forced to further cut their public expenditures and privatise public services. The budget of the EU is so small, that it is virtually negligible for policies for a social Europe.

The “modernisation” of the existing public social security systems for pensions and health care is basically an attempt to privatise these systems and to shift their basis away from solidarity and social responsibility for the elderly, sick or unemployed individuals towards the commercial logic of individual responsibility and insurance. This shift makes social security less reliable, less comprehensive and much more expensive for individuals and for society as a whole than public systems. It is exclusively in the interest of financial investors.

3. There are alternatives – Cornerstones for a social Europe

The neo-liberal policies of the European Union have not remained unchallenged, and during recent years criticism and resistance have increased. Examples of this are the controversies about the services directive, the rejection of the port package 2, and the failure of the European constitution, which was rejected after broad critical debate in France and the Netherlands.. Alternatives to neo-liberalism in Europe exist: the Scandinavian countries have largely maintained their welfare states while being more successful in promoting environmental protection. Citizens of these countries are obviously willing to finance public policies and institutions which guarantee them better living conditions. In our critical debates about the EU we have drawn on these models, as well as on new proposals for alternative economic and social policies which seek to promote the strengthening of a democratic and sustainable European social model. The five most important cornerstones of such a conception should in our view be:

 

  • a. A European macroeconomic policy framework for full employment with good work, ensuring that everyone able and willing to work has a job corresponding to his or her skills, with full job protection, social security and a wage or salary sufficient for an independent life. The main tools to achieve this objective are public investment programmes – for ecological restructuring, social housing, infrastructure etc. – and the reduction of individual working time. Shorter working time for everyone is a key alternative to longer working hours for one part of the population and zero working hours (unemployment) for the other part. Measures in this direction require a decision at the EU level binding all member states to its simultaneous implementation and a more employment friendly monetary policy and well coordinated fiscal policies on the part of the member states. For this purpose the Stability and Growth Pact should be abolished, and on the revenue side the ruinous tax competition must be terminated and replaced by close cooperation and a far-reaching harmonisation of tax policies together with an energetic common fight against tax evasion. This should include minimum tax rates for corporate profits applied on a common tax base and the universal application of automatic information exchange for capital income across borders in tax matters. On the European level a considerable increase of the European budget would help to overcome asymmetric shocks and facilitate regional catching-up and environmental restructuring. To stabilise economic development and social cohesion financial speculation should be severely restricted - through higher capital requirements, transaction taxes and limits to leveraged investments and trade in securitized loan packages. Financial markets should be stronger regulated so as to fulfil their necessary functions to provide finance for development.

  • b. A European strategy against poverty, social exclusion, discrimination and precariousness must go beyond the hitherto prevailing proclamations and rhetorical appeals. National action programmes against poverty should be re-emphasized. Instead of limits for public deficits limits for poverty rates should be agreed and minimum standards should be developed for social expenditure and services in particular areas like pensions and health care. It should become a rule that such minimum standards, which would initially vary between countries, should aim to converge on the level in countries with the highest standards. The EU should give incentives and support for anti-poverty measures of member states through transfers from the European budget.

  • c. The policies of universal liberalisation, deregulation and subordination of all areas of economic and social reproduction under the internal market and competition rules must be stopped. The EU needs a strong and democratic public sector which does not follow the imperative of profit and competition but the principle of solidarity and general interest. These principles must be formulated at the level of member states and follow different rules of organisation and different benchmarks for efficiency than the private sector. At the European level the public interest can and should be served through cooperation and common European projects, in infrastructure, research and minimum social provisions.

  • d. A determined ecological restructuring is needed which gives more power and thrust to the well sounding but partly only rhetorical packages of the EU in terms of climate and energy policies. Clear and binding limits must be set to the use of fossil energy sources, and objectives on energy saving must not only be formulated but also energetically implemented. EU Greenhouse gas emissions must fall on the basis of 1990 levels by 30% until 2020 and by 80% until 2050. The main emphasis should lie in the development of renewable energies, particularly wind and solar energy.

  • e. Instead of focussing its external economic relations on the aggressive neo-mercantilist “Global Europe strategy” the EU should aim at balanced current accounts with other industrialised countries and at a development friendly position towards developing countries. This implies a fundamental revision of the EU´s external trade policy by granting preferential access of these countries to European markets based on the respect and implementation of basic social and ecological rights. The EU should actively promote the universal fulfilment of labour, social and ecological standards. The EU´s external trade policy must also respect the right of developing countries to maintain border protection in key areas such as agriculture and basic industries for the building of strong domestic or regional markets. Therefore, we reject the Economic Partnership Agreements which are currently negotiated with the ACP countries as well as the other Free Trade Agreements which the EU has started to negotiate with several developing countries in Latin America and Asia.

 

4. A strong alliance to fight for a better life in Europe

Real changes to the prevailing policy in Europe and real moves towards a more equitable and better life for the people need good and convincing arguments. Some of these we have discussed in this ALTERNATIVE ECOFIN, and these discussions will continue. But real changes also require the force and power to transform good conceptions into political action. To achieve this a broad alliance of all forces is necessary which suffer from the present policy orientation: the employed, the unemployed and their trade unions, the pensioners and those affected by the privatisation of health care and education, ecological interest groups for a new energy and climate policy. Resistance and the struggle for alternatives is a matter for all citizens. One prominent current example of such resistance is the big European demonstration for higher wages which the European Trade Union Congress together with the Slovenian Association of Free Trade Unions will organise in Ljubljana on the last day of the meeting of the ECOFIN. We strongly welcome and support this demonstration as a signal to the European authorities that strong forces are developing for a fairer, more equitable and sustainable, and a more democratic European Union, in short, for a better life for the people in Europe.