Banking Crisis leading to a recession and Social Crisis

2. EDUCATION, A RESPONSE TO THE CRISISPublic services, austerity, alternativesJan Willem GoudriaanEuropean Federation of Public Service UnionsETUCE conferenceBrussels, 20 January 2011

4. Bucharest 14 January 2012Protests turn violent over proposed legislation that seeks to privatise health care (Private sector access to government funding while public services denied funding, proposals withdrawn by government, protests continue, more anger 19th)

5. EU • Banking Crisis leading to a recession and Social Crisis • Became a Public Debt Crisis giving rise to Austerity • Deeping the Social Crisis and causing a new recession ? • We are ending with a Democratic Crisis in the Eurozone/EU

6. Barroso: "Many member states need to show more ambition when it comes to fiscal consolidation," he said. The commission also described many of the proposed measures as "vague, lacking sufficient focus.“ (early 2011)

8. Greece and Austerity • A 5 year programme (19/20 October 2011 • Reducing public expenditure 14,32 Billion • 14,09 extra income through taxes – eg. Higher property tax, VAT from 19 to 23%, from 11 to 13 and from 5,5 to 6,5; levies on achohol, tabacco, fuels increase with 1/3 • IMF report December 2011 – revenues decrease • 700.000 civil servants see lower income (20%, some with 33%) • 30.000 civil servants non-active during 1year, reduce wage with 60% - dismissal after 1y • Only one in every 10 civil servants that retire in 2011 will be replaced. Only one in 5 coming years • All households pay 2x solidarity charge in 2012 of between 1 and 5% of income

9. Greece and Austerity • People with a pension of more then 1000 euro loses a 1/5 of the amount above this threshold • Taxfree threshold from 12.000 to 5.000 euros. • Health case savings 300 million (2011) and another 1, 81 billion from 2012-2015 • 1976 schools closed or merged • Social security savings 1,09 billion euro; 1,28 in 2012; 1.03 in 2013, 1,01 in 2014, 700 million in 2015 • 50 billion to be get through privatisation (harbors, airports, water company, power company, telecom, oil company sale of mine, moterway land rights • All negotiations and arbitrations are deferred for undetermined period. Private sector can force through wage reductions and dismissals

10. Greece and Austerity • The economy is projected to shrink by about 6 percent in 2011 (and shrunk in 2009 and 2010), and unemployment has reached 16½ percent of the work force. (IMF figures) • Projected to shrink in 2012 • Crime, prostitution, HIV infections, homelessness increase • Schools, hospitals close.

11. Latvia – a success ? • 24% loss of its output – the worst in the world for the crash of 2008-2009 – and official unemployment shoots up from 5.3% in 2007 to more than 20% in early 2010. (If underemployment is counted 30%) The success: Unemployment is now back down to 14.4%, and the economy is growing – an estimated 4% for 2011 – but sustainable ? Links with others • For 13 countries over the last 20 years, the average loss of GDP following devaluation was 4.5% of GDP. Three years later, the average country was 6.5% above its pre-devaluation peak. • Latvia, by comparison, did not devalue, and, three years later, is still down 21% from its pre-crisis GDP • 200.000 people left (Brain drain – 10% of workforce)

12. 2011 Feb 20th - Trichet : "une bêtise" d'augmenter les salaires Gerard van den Broek Geheimebriefaan Italie/ Lettre secrète à l'Italie

13. The impact of the crisis in the public sector • Severe constraints on public budgets has resulted in: • Reductions in public sector employment • Cuts in pay and pensions • Cuts in social protection, coupled with increases in direct and indirect taxation, and increases in pension age • Ongoing cuts are affecting employees working for the general interest, in health, social security, education, culture and arts, environment, justice and prison services through to providing energy and waste services. • Threats to the autonomy of collective bargaining and democratic accountability arising from EU/IMF conditions

14. EU developments Economic Policy and Institutional Changes • EU financial supervisory authories • European Semester (annual growth survey and recommendations) • EuroPact plus • Legislative measures (6-pack) • Programme Countries (Greece, Ireland, Portugal) • EFSF to become ESM • Role for the IMF (Latvia, Roumania, Hungary, Ukraine, etc. ), • SPIV (getting Chinese money) • Increased role for the ECB (not just monetary – secret letters) • Task Force on Greece. • Spain & Italy forced to take measures. Italy to be monitored • Increased economic coordination with Euro-summit institutionalised • Permanent Euro WG President, “reinforced surveillance beyond 6 pack” • Commissoner with enforcement powers • New Treaty proposed Democracy?

15. Economic governance will change • Monetary Union was not complete; new rules, new institutions • Which documents determine (2020 strategy) (COM – AGS) or EuroPact Plus (intergovernmental) • Binding following up on commitments (6 pack, 2 pack) • Public Services are attacked • See also results of the AGS 2011 • Consistency/coherence; absent reforms • Logic linked with EMU – a. reduce public expenditure – privatisation; b. decentralise wages c. PS were TUs are strong • For us Demand a debate – what works, what not, based on all data (see BE) e.g. Wages are moderated whereas COM says they are a problem. Look at the facts; New ideas - Take out Green investment e.g addresing climate change • Democracy debate – what political leadership – which view

16. Treaty on Stability Coordination Governance in the EMU • Balanced Budget Rule – compliance of transposition – jurisdiction of ECJ • Obligations to implement measures to correct deviations • Content and Format of budgetary and economic partnership programmes defined by the law of the Union • Coordination national debt issuance • Role of Commission, role of EP, nat. parliaments • Preamble: respect the role of the social partners in implementing the Treaty

17. ETUC on Treaty • ETUC rejects approach to impose ever stricter austerity. Fiscal discipline alone, in the absence of recovery and investment measures, is dragging countries into crisis. Employment and social justice are top priority today for millions of Europeans. • Treaty does not address challenges created by the crisis. New treaty may further strengthen the obligation of member states to adopt fiscal policies that will accentuate rigid economic rules. A fiscal compact must go hand in hand with a social contract for Europe. It must give priority to investments that promote a sustainable economy, quality jobs and social justice, while combating inequalities. • “Europe must not become synonymous with sanctions and rigid fiscal policies. It must be identified with prosperity and must offer prospects for the future." Debate and consultation are required. Process is not democratic • The ETUC calls for the adoption of a social protocol to the treaties that guarantees respect for fundamental social rights and social protection. A clause protecting the wage formation must also be adopted

18. Clear is that: • European economic governance remains - a challenge for the unions in the Eurozone and beyond • Public Services are attacked as economic governance is used to force austerity and a view of economy/ society (neoliberal, less welfare state) • Those that defend public services, welfare state and an alternative view towards sustainable economy are attacked

19. Reasons for optimism

21. Our Alternatives Address inequalities, macro-economic imbalances, greed and strengthen the public services Respect autonomy of the social partners and increase coverage by collective agreements Financial Transaction Tax at EU level; Wealthy; Tax Justice; Financial Regulations System of Eurobonds, European Public Bank Solidarity mechanisms to assist countries hit; to manage part of public debt EU investment programme (1% of GDP) in infrastructure, low carbon economy, public services Address precarious work and low pay

22. Belasting op FinanciëleTransacties/ Taxer les transactions financières

23. . Coalitions

26. EPSU • Central theme in our work • Continue monitoring, research • Impact on culture (libraries, musea...), women, labour inspectorates, environmental protection agencies, privatisation, 2011 AGS and NRP (ETUI) • Opposition to Austerity–Promoting Alternatives • Call for Joint Action 30 November 2011 • Statement (No to austerity Yes to Public Services Growth and Jobs, for alternative economic policy; respect for autonomy, collective bargaining; for a democratic & social Europe) • Make EPSU joint approach

27. EPSU Further Steps • Position on Recent Economic Developments • Support Community Method of Working (role of Commission, Parliament); Rejection of enforcer if no democratic steps; Legal analysis (role of ECB; strength of wage clause); Write off public debts through public audits • Integrate European Semester in our work (annual cycle) and Influence Annual Growth Survey • New one before end of November to be addressed by Council on 8 December • Work with others – EAPN... • Reflect on Coordinating influence Action and having an impact –next focus Spring Council,1 March 2012?

28. ETUC • Steering Committee 25/1 • Launch of Campaign – No deal without social contract; quality employment • Coordinated Action 29/2 ?? • Decentral focused on government 1-2 March is European Summit.

29. In Short • More and better jobs: Investment in an expanded European recovery plan • Stronger welfare systems to provide more security and avoid social exclusion • Stronger workers’ rights and an end to the dominance of the short-termist market principles. Priority to social rights and collective action • Better pay: stronger collective bargaining. • European solidarity as a protection against the excesses of financial capitalism

30. www.epsu.org