News

The ETUI Benchmarking Working Europe 2014 highlights that austerity policies implemented at European and national levels since 2010 to combat the crisis have actually worsened it, plunged some European economies into recession, and increased social inequality.

The Report points out that the imposition of austerity measures as the sole response to the crisis was ill-thought and damaged the European economy, its social models and business activity, workers and citizens, as well as the efforts of transition to a sustainable and low carbon economy. 

Imposed austerity by European creditors and the Troika contributed to an increase in unemployment, especially among youth, and alongside wage developments to the increase in precarious forms of work. The IMF had expressed doubts about the effectiveness of austerity measures as early as 2010. In addition to the unaddressed dissonance among Troika partners and European creditors, it is quasi certain that Europe will fail to meet the Europe 2020 targets.

Austerity combined with internal devaluation failed to deliver the expected results and left the European periphery with no possibility to exit the recessionary trend and pursue untenable budgetary stringency. Meanwhile public debts and unemployment levels continue to soar.

Austerity measures and internal devaluation in peripheral countries such as Greece, Portugal and Cyprus failed to promote the recovery of export-led growth and backed the collapse of domestic demand. In practice, these measures have exacerbated the crisis, prolonged the recession, and aggravated inequality in terms of access to credit for SMEs between the Eurozone core and the periphery.  The reduction in public spending, which is presented as a success by the EU Commission contributed to the stagnation of the economy and significant drops in both private and public investment, which in turn explains soaring unemployment.

Such misguided policies severely damaged the labour market. The ETUI Report identifies increased inequality between men and women and even, more pronounced inequality between full-time and part-time jobs, with women work ranging high in part-time arrangements. The least skilled suffered most from the employment crisis which has inflated the unemployed by 10 million between 2008 and 2013 (from 16.2 in 2008 to 26.1 million in 2013). The worst hit categories are young persons, migrants, particularly non-EU migrants, and low-skilled workers. The incidence of long-term unemployment is much higher than in the pre-crisis period.

Labour market developments have become chronic in nature and the transformation of full-time into part-time jobs, contributed to the increases in inequality and poverty incidence. Worsening labour market situations increase the risk of poverty and other forms of inequality. The aim of heads of state and government in the Europe

2020 Strategy is to raise 20 million persons out of poverty by 2020. To achieve this, Europe needs to deploy comprehensive social protection systems, increase employment rates and education and training provisions. Austerity policies and internal devaluation however go in the exact opposite direction with identified reduction in wages, labour market deregulation, and increased unemployment. The Report identifies an increase in the incidence of in-work poverty in new member states, peripheral countries, and European core and Northern countries. Another observed development is the greater increase in precariousness among skilled workers than among the less skilled.

At a time when workers and citizens are exposed to increased risk of poverty, the mechanisms of solidarity are being undermined by the imposed austerity and internal devaluation paradigm. Hidden behind the implementation of ‘structural reforms’ in the framework of the European Semester, the Report identifies telling developments: direct political intervention in national collective bargaining outcomes and procedures designed to ensure wage restraint, as well as the decentralisation of collective bargaining for example by enabling local-level agreements to fall below the terms of sectoral agreements or of provisions or minimum standards enshrined in law; the introduction of sub-minima wages for young people and the long-term unemployed; the relaxation of the rules governing redundancies and dismissals; the revision of rules governing atypical employment; the revision of unemployment benefit systems; and a weakening of occupational health and safety standards. 

The European policy response has been to dismantle a series of forms and institutions of social protection that constitute the European social model. This dismantling has led to increased precariousness within the labour force and the population at large, increased incidence of poverty, and even to violations of the fundamental rights of workers as enshrined in the EU Treaty and in other European and international treaties.

2014 will be crucial in revising the Europe 2020 strategy and the sole opportunity to enact a radical change of direction for a European Union that promotes upward convergence of the living and working conditions for all. Alternative proposals do exist such as the ETUC New Path for Europe and the demands to include social partners in economic governance processes, or the promotion of labour standards. The question remains whether the European political and economic elite will act upon these proposals and have the courage to admit that the current recipes to combat the crisis and regain growth have failed.

The full ETUI Benchmarking Working Europe 2014 can be accessed here:

http://www.etui.org/Publications2/Books/Benchmarking-Working-Europe-2014