2013 12 – Revitalising Social Europe

Speech by Frances O’Grady, TUC General Secretary, to the Institute of International & European Affairs, Dublin, 25 October 2013.

Friends, colleagues, distinguished guests . . . comrades. Good afternoon. It’s great to be here in Dublin. Doubly so in a year when the city – and indeed the whole of Ireland – has been commemorating the centenary of the lock-out. A seminal moment not just in Irish history, but in the industrial and social history of the twentieth century. When ordinary people refused to bend the knee to a reactionary establishment, joining together to fight for elemental human rights.The right to organise. The right to a fair wage. The right to basic standards of decency at work and in society.

Fast forward a century, and I believe we are at another such crossroads. Right across Europe – from Dublin to Athens, Madrid to Paris – working people are increasingly questioning the legitimacy of a European political elite that seems out of touch with reality, semi-detached from the lives of ordinary Europeans, in hock to the interests of global finance.

A year ago, Eurobarometer – which measures public attitudes across the continent – found that for the first time ever more European citizens considered the EU to be undemocratic than democratic. A deeply worrying development. And I would contend a product not just of Europe’s obvious democratic deficit; but also of the way in which EU-sponsored austerity, privatisation and liberalisation programmes have been foisted onto member states.

In Britain, our complex relationship with Europe is entering a new and dangerous phase. Earlier this year, David Cameron promised an in-out referendum on our membership of the EU if he is re-elected in 2015. A stance that frankly owes more to party management, a desire to repatriate social and employment rights, and alarm at the threat posed by the UK Independence Party than it does to the national interest. But indicative nonetheless of a rising tide of anti-EU sentiment on the other side of the Irish Sea.

Whichever way you look at it, the reality we face is this. The European project as we know it – a dynamic single market counterbalanced by good public services and generous workplace rights – is fraying around the edges. The bargain that has held our continent together since the 1950s is in grave danger of unwinding. At stake: one of Europe’s crowning achievements, its distinct and popular social model.

And the argument I want to put to you today is this. Europe cannot afford to turn its back on social democracy. We need a Europe run not for the bankers and bond market vigilantes, but for its citizens and workers. And that demands bold, radical, imaginative thinking. Not more navel gazing about EU structures, but a fundamental change of mindset.

We need to rethink and re-imagine the European social and economic model for a new age. Those of us on the left cannot afford to retreat into an ideological comfort zone. Rather than nostalgia for the past, we need to look forward. Defining the contours of a post-crash settlement for Europe: greener, stronger, fairer. A new model that is attuned to the central challenges facing us: climate change; energy scarcity; rising inequality; social and demographic change; an industrial landscape that is being reshaped at huge speed. And built with the democratic consent of ordinary citizens.

Before I describe the political and economic journey we need to take, I want to put the debate about social Europe in its proper context. And I want to begin by highlighting the scale of the problems now staring us in the face. Quite simply, Europe is facing its gravest crisis since World War Two.

It’s now five years since Lehman Brothers collapsed, and we’re still grappling with the fall out. The crash, the recession, the eurozone crisis, the sense that economic power is shifting inexorably from west to east – all have rattled the European body politic to the core.

And our ageing societies, the challenges of mass migration and the rise of political extremism – notably on the right – have further accentuated our collective feeling of profound insecurity. The narrative we increasingly hear about Europe is one of soup kitchens, young couples moving back in with their parents, the poor going without medicine, horrific murders committed by fascist thugs. Be in no doubt: a huge social crisis is engulfing Europe.

Two weeks ago, the Red Cross published a major report underling the scale of the poverty, inequality, social exclusion and mass unemployment afflicting many EU countries. The headline statistics spoke for themselves. A 75 per cent increase in the number of Europeans using food banks since 2009. The suicide rate among Greek women more than doubling. And even in Germany, more than five million people losing their middle-class status.

Equally disturbing are the facts about Europe’s jobs crisis. Across the continent, the jobless rate is 12 per cent. More than 26 million people are now without work. Some 11 million have been unemployed for more than a year. And nearly 6 million under-25s are without a job. In Spain, well over half of all young people are unemployed.

An unthinkable situation in a modern industrial democracy. Friends, what we are up against is a ticking time bomb. A social disaster that will explode for years to come. Indeed, as the Red Cross report suggested, the really frightening thing is it could get worse. Allow me to quote: “The long-term consequences of this crisis have yet to surface. The problems could be felt for decades . . . the economic crisis is creating the conditions for a widespread social crisis.”

The Red Cross also talks of: “a growing gap in the distribution of resources – the rich becoming richer and the poor becoming poorer – and how the competition for shrinking resources could bring about growing xenophobia, discrimination and social exclusion, as well as abuse and domestic problems”.

Clearly, this is not a European future any of us want to see. As a continent with so many strengths – good healthcare and education; a skilled workforce; some of the best companies in the world; a tradition of social solidarity – we can do better than this.

But here’s the rub. The EU’s response to the economic and social crisis has been completely wrong-headed. Instead of addressing the root causes of our economic malaise, rather than getting to grips with worsening social conditions, Europe’s policy elite is simply making matters worse.

Their response to the crash – based on the fallacy that decent social protections are a luxury we can no longer afford – has been straight out of the 1980s free-market textbook. More labour market deregulation. Structural reforms that erode workers’ terms and conditions. Liberalisation of markets. Privatisation of services. And for southern Europe, near permanent austerity. Workers forced to swallow pay and pensions cuts to make their economies more competitive within the straightjacket of monetary union.

All this as hundreds of billions of euros are lavished on bailout funds for the banks. It’s as if there’s one rule for us – and no rules for them.

The harsh medicine administered by the so-called Troika – the Commission, the ECB and IMF – is slowly killing the patient. Stable bond yields and debt sustainability are important, for sure. But try telling that to the unemployed youngster in Madrid, the zero hours worker in London or the middle-class professional in Athens now living on the streets.

The worst of the eurozone turbulence may have passed, but growth is anaemic, demand has collapsed, and living standards are in freefall.  And not surprisingly, ordinary Europeans are getting pretty fed up. Not just with the Troika’s economic masochism. Not just with faceless technocrats administering structural reform without the consent of national electorates. But with the idea of Europe itself.

As I suggested at the beginning, the EU increasingly faces a crisis of legitimacy. Those in the corridors of power – especially in Brussels – need to understand this. If the EU is about little more than protecting the single currency at all costs, privatising services and keeping a tight lid on public spending, then popular support for European integration and the European ideal will diminish as surely as night follows day.

From the trade union movement’s perspective, Europe needs to rediscover the values that served it so well not just during the long post-war boom, but also through challenges posed by the Oil Crisis and the economic counter-revolution of the 1980s. Now is not the time to reject European social democracy, but to reinvent it for a new age. For us on the centre left, decent working conditions, decent services and decent welfare aren’t part of the problem, but part of the solution.

Of course we recognise that the world has changed. We know about the rise of China, India, Brazil and other emerging economic superpowers. We understand the rising health, pension and social care costs of our ageing population. And we know the EU cannot duck reform. But if Europe is to prosper in the decades ahead, we surely need to play to our strengths rather than seek to emulate American-style capitalism.

I see three central priorities for us. First, we need to rediscover our collective confidence in social democracy. Self-evidently, this is a huge challenge for the European left. The advance of US-style neoliberalism, the spread of non-productive financial capitalism, downward pressure on workers’ wages – all have taken their toll since the turn of the millennium.

Indeed social democracy hasn’t exactly been an electorally attractive proposition of late.                                                                                                                                                                                                                                                                                           In Germany, the SPD scored just 26 per cent in the recent election, a consequence perhaps of the structural reforms that took place during the 2000s. In Norway, the right was triumphant two months ago, despite the vast reserves built up in the country’s sovereign wealth fund.  And in Spain and Greece – as in Britain – conservatives now hold power.

Despite the financial crash, the left seems to have lost its self confidence: to intervene in global markets, to defend welfare systems, to stand up to overweening corporate power. But there are glimmers of hope. In France, a socialist President was elected last year on an explicitly anti-austerity platform. And in Britain, where we are now less than 18 months away from the most important election in a generation, the Labour Party is beginning to change the terms of the political debate.

Ed Miliband has certainly made a number of brave and correct calls. To put responsible capitalism on the agenda. To make the case for predistribution, or in plain English, decent wages and a fair labour market. And in his recent conference speech, to promise a 20-month freeze on energy bills if he is elected. Not just popular with the voters, but a signal that Labour will intervene in failing markets and challenge the primacy of big corporations. A huge political step forward from the neoliberalism-lite of the New Labour years.

So to what must be our second priority. That’s to level the playing field for all European workers. Ensuring that there is no undercutting, that people are paid the rate for the job in the country in which they work, and that we keep rules up to date to stop workers falling through legal loopholes.

If you have a single market, then the logical corollary is you need a single set of labour rules. And these should be based not around the lowest common denominator – as some on the right would have it – but on decent standards applicable to all workers. To me, that’s just plain common sense. It would stop good employers being undercut by bad ones. Prevent a race to the bottom and boost wages for low and middle earners. And mean workers having more money to buy goods and services from European firms.

Self-evidently, there’s a huge role for trade unions here. And that underlines the need for policy change to promote collective bargaining, worker representation on company remuneration committees and boards, and modern wages councils. It’s also vital that social protections once again inform policymaking at the highest levels. That’s why EU Treaties need to include a social protocol to guarantee respect for welfare and labour rights. Our third priority must be to change the collective European mindset on how we get ourselves out of the current mess.

With even the IMF warning against further austerity, we need to think about more durable solutions for the long term. The EU’s priorities must be the priorities of ordinary Europeans: growth, jobs and living standards.

Now Germany is often accused of imposing austerity on other nations, but it’s my trade union colleagues in the German DGB who have led the way in calling for a People’s Plan for Europe. A 21st century Marshall Plan to renew the continent’s infrastructure, decarbonise our economies and get people back to work. It’s a great idea – breaking the vicious circle of economic decline, shrinking demand and falling living standards. Unions believe such a plan could deliver huge improvements in critical areas.

Energy transformation and sustainable water management. Transport schemes, such as the Trans-European Transport Network. Education and training. Expansion of broadband. Economic regeneration, from support for SMEs to low interest loans to microcredit programmes. And investment in public services such as health, welfare, eldercare, childcare and social housing. To those who say this is political daydreaming, fantasy economics that will saddle Europe with yet more debt, I simply say this. There are plenty of ways in which funds can be found without creating difficulties for countries’ balance sheets.

There’s certainly a strong case for Eurobonds and we in the trade union movement have long championed the case for an international financial transactions tax on the trillions of euros traded daily in the equity and derivatives markets. One thing’s for sure. If we can keep pouring vast fortunes into the black hole that is the continent’s banking system, then we can surely find a fraction of that to finance the stimulus much of Europe is crying out for. Friends, renewed confidence in social democracy; a level playing field for all European workers; a People’s Plan for jobs and growth.

This is the positive, progressive agenda European trade unions want to see. Getting our economy back on track, tackling mass unemployment, restoring the spending power of ordinary citizens. In the long run, that’s not just the best way to deal with our debts and fund our unique social model. It’s also the best way of rebuilding democratic support for the European ideal. I’m an optimist, and I believe we can revitalise social Europe.

As I said at the beginning, Europe has historically balanced the interests of free trade, open markets and companies with those of citizens, workers and trade unions. That’s the vision with which Jacque Delors famously seduced the TUC when he addressed our Congress a quarter of a century ago. It’s a deal that has served our continent well, through good times and bad.

And its a bargain we urgently need to reactivate now, to help us meet the complex challenges of the 21st century.

I’ll finish by saying this.

Europe has been tested before. After the destruction of the Second World War. After the Berlin Wall came down in 1989. And after enlargement to the East almost a decade ago. But each time our continent succeeded in rising to these challenges because we had the courage to take the high road. Because collectively we refused to walk away from the social solidarity that has brought the diverse peoples of Europe together.

Today, in the midst of crisis, we must remain true to those same values – that core belief in a social Europe as well as an economic Europe. They’ve served us well in the past – and they can serve us well in the future too.

Thank you.

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