Brexit and migration: a Swiss view

Vasco Pedrina

Just as in the Swiss vote on the mass immigration initiative two years ago, the issue of migration – together with the social consequences of radical neoliberal policies – was decisive for the outcome of the Brexit referendum. The results in the former heartlands of industry and of the Labour Party speak volumes. The argument was that the European Union (EU), with its free movement of people, was solely responsible for the pressure on wages and for growing social inequalities in the country. Is that really the case?

Of course, following Brexit, the EU authorities would be well advised to take stock and steer a new course – a social one again, at long last – if they really want the EU to survive this great watershed. People are not against the EU as such, according to this year’s Eurobarometer, but they are against an EU that, through extreme measures such as the fiscal pact or unmitigated freedom of establishment, sets off a downward social spiral while only a small minority of the already well-off reaps the benefits of this type of integration.

The UK’s role in the expansion of Europe
But what is the truth about the UK’s responsibility for the current mess? The British like to overlook or forget just who, in 2004 – and with no ifs or buts – favoured opening up the EU to Central and Eastern Europe, allowing free movement of people with as few social requirements as possible and doing without any transitional arrangements when the EU expanded eastwards. And just who was against any kind of flanking measures to the free movement of persons to avoid wage and social dumping[1]. Tony Blair (like a good pupil of Margaret Thatcher), Gordon Brown and David Cameron all, without exception, preached such a policy for decades on end. 

Using the CETA to move towards a social and environment-friendly globalisation

Reiner Hoffman

Economic globalisation has accelerated enormously. With the advances in information technology and international trade policies, it now permeates almost every sector of the economy as well as our whole way of life. At the same time, tariffs and technical trade barriers have been massively dismantled through wide-ranging market liberalisation, and worldwide competition has been ratcheted up. This has resulted in tenfold increase in global trade and investment flows since the end of the 1980s.

The positive benefits of global linkages have infiltrated so much of our everyday economic and cultural lives that we cannot imagine the world without them. The gains in prosperity are enormous. The downside of it, however, is that stronger competition has massively increased the pressure on pay and working conditions. This applies to Germany and the other member states of the European Union (EU); this does not exclude the disastrous working conditions in the Third World countries and the BRICS (Brazil, Russia, India, China and South Africa) states. More and more, the workers are bearing the brunt of the increased competition and social standards are coming under growing pressure. Unimpressively, the increased prosperity has been most unevenly distributed. While the wealthiest one per cent of the world population is clearly profiting from globalisation, the incomes of large portions of the middle class in the industrialised countries are stagnating and the poorest of the world population are seeing their real incomes decline.

What next, after Tsipras dashed Schäuble’s hopes for a Grexit?

Frank Hoffer

A Greek government forced to bow to the impossible, a referendum brushed aside, the Franco-German partnership damaged, European compromise diplomacy replaced by ultimatums, the euro in limbo, large parts of Europe swept by anti-German fear and resentment and another €83bn sunk into a doomed “rescue package”. Not quite how successful policies are supposed to play out.

The worst thing about German policy is not that it is harsh and uncompromising towards the “reform-shy” Greeks, but that it is wrongheaded. Instead of sustainable debt restructuring and support for real investment in order to gain the time and acceptance needed for difficult and sometimes lengthy structural reforms, the Greeks have once again been prescribed more of the same: keep cutting till you collapse. Pursuing this failed policy with Swabian thoroughness and Prussian rigour has made Wolfgang Schäuble a popular figure at home and an unloved German martinet abroad. In Europe, this policy has done much to destroy confidence in, and respect for, Germany.

Thank You Greece

Maria Helena dos Santos André

In a time when in Paris Marine Le Pen is “Ante Portas”, when xenophobic populists are marching through the streets of Dresden, when in London the UKIP sets the tone for an ever more Anti-European hysteria, and when in Helsinki the Finnish government becomes the most ardent proponent of more austerity for Greece, for no other reason but the fear of a success of the “real Finns” at the next ballot box, the Greek people have given a clear signal, voting against more austerity and for the European values of democracy, the welfare state, tolerance and inclusive societies. 

They have rejected the ruling by European and international technocrats. They have said no to their national oligarchic establishment that has led the country to the current situation. But they also resisted the Siren calls of Golden Dawn. They have given their confidence to an untested party, with no experience in government, a party that has presented an electoral programme proposing better governance, more democracy, greater social justice and an end of austerity policies that have destroyed the economy and created unprecedented hardship while the public debt (and the private one) continued to increase. The Greek voters have sent a clear message to the rest of Europe: they want to be part of Europe, they can’t bear more austerity; they need a sustainable solution to their debt problem; they want to be a respected partner in the European Union and play an active role in the common search for a Greek and European recovery.

Lessons learned for a European Minimum Wage Campaign

Stan De Spiegelaere

Ferdi De Ville

With the upcoming European elections, political parties on the left like the Party of European Socialists, the European Left and the European Green party are paying lip service to the call for a European minimum wage policy (European Green Party, 2010; European Left, 2014; PES, 2012). Such a policy would serve as a first step in the development of a more social Europe, enhance the legitimacy of the Union and could contribute to a wage-driven growth model for Europe. In this column we do not go into detail about the economic and social aspects of such a policy, but focus on the campaigning for a European minimum wage. A European minimum wage policy would mean a radical shift in the policy orientation of the Union and by consequence, the campaign for such a policy will be long and exhausting. Luckily, the European left can learn from two very recent and largely successful minimum wage campaigns in Europe: Germany and Switzerland. In Switzerland the campaign is still running while in Germany the current coalition is planning to implement a legal minimum wage in 2015. 

I want Council Houses in my Neighbourhood

Frank Hoffer

Sitting in nice wine bars or cosy restaurants in superbly gentrified inner city areas, the chattering liberal middle class expresses its disgust about the xenophobic under-classes turning against migrants and voting for right-wing populist parties. Being a member of the chattering class myself I fully share these feelings. The populist migrant bashing makes me furious. A Portuguese lady comes once a week cleaning our house, a Moroccan craftsman does all repair work at our place, a French lady does the ironing, the Bangladeshi dish washer helps to keep prices down in the local Italian restaurant, the coffee at work is served by migrants from Africa, and workers from Eastern Europe clean my office. Thanks to the housing bubble only well-to-do middle class people can afford to live in our neighbourhood, our kids go to a private school and, being a well-paid civil servant at the UN, cheap migrant workers do not compete for my job. Indeed, I have the great pleasure to work in a diverse multicultural and multiracial environment of similarly well-paid and privileged people. Actually I am an “elite migrant” myself who left his own country out of choice to take on exciting jobs in other countries. In short it is easy and cheap for me to be the nice and tolerant cosmopolitan criticising dumb xenophobia as I have all the benefits and none of the disadvantages of mass immigration.

The Crisis, Structural Reform and the Fortification of Neoliberalism in Europe

Christoph Hermann

The European Commission President, Jose Manuel Barroso, recently made the recommendation that fiscal consolidation (read “austerity”!) must continue in Europe, and that the European Union (EU) member states “should now intensify their efforts on structural reforms for competitiveness”. He specifically highlighted the need for comprehensive labour market reforms as “the best way to kick-start job creation”.[1] The call for structural reform to supplement austerity policies is not new. A number of EU member states have introduced far-reaching institutional reforms during the crisis – several of them under pressure from the European Central Bank, the European Commission and the International Monetary Fund. Structural reforms differ from regular austerity measures since their main goal is to change the country’s institutional framework to allegedly boost economic growth.

In the following paragraphs we summaries major structural reforms that we have found in eleven EU member states that were strongly affected by the crisis.[2]

Austerity and Resistance: The Politics of Labour in the Eurozone Crisis

Andreas Bieler[1]

Europe is haunted by austerity. Public sectors across the European Union (EU) have been cut back and working class gains from the post-war period seriously undermined. In this article, I will assess the causes of the crisis, its implications for workers and discuss the politics of labour in response to the Eurozone crisis. 

The underlying dynamics of the Eurozone crisis

Current problems go right back to the global financial crisis starting in 2007 with the run on the Northern Rock bank in the United Kingdom (UK) and reaching a first high point with the bankruptcy of Lehman Brothers in 2008. Two major consequences of the crisis can be identified. First, states indebted themselves significantly as a result of bailing out failing banks and propping up the financial system. Second, against the background of high levels of uncertainty financial markets froze. Banks and financial institutions ceased lending to each other as well as industrial companies. Countries too found it increasingly difficult to re-finance their national debts. The Eurozone crisis, also known as the sovereign debt crisis, commenced. 

Swiss Referendums on Top Salaries and Minimum Pay

Andreas Rieger

On 2 March 2013 a referendum in Switzerland came out in favour of tougher rules on the setting of managers’ remuneration. 68% of the voters wanted to put limits on “rip-offs” – in other words, the millions handed out in bonuses and severance payments (golden parachutes) to top managers. Coming up are further referendums on limiting top incomes and setting a legal minimum wage.

Since the turn of this century, remuneration packages for top managers in Switzerland have soared to several million francs. The CEOs and Chairmen of public companies, particularly the major banks and pharmaceuticals firms, have been pulling in sums that are really only comparable with those in the USA. Ten years ago, this was already causing strong public discussion. The debates grew even fiercer when the million-franc payouts continued through 2009, despite the financial crash and the collapse of previously good business results.

The Troika and Multi-Employer Bargaining

Thorsten Schulten

How European pressure is destroying national collective bargaining systems
Collective agreements that extend beyond the immediate workplace or company level are rightly seen as one of the unique institutional features of the European social model. No other world region has any comparably well-developed system of multi-employer collective bargaining in which agreements cover not only entire industries but in some cases apply even nationally. The existence of collective agreements with such extensive coverage is one of the reasons why a clear majority of employees continue to be covered by collective bargaining in Europe. By contrast, in countries and regions in which the predominant level of bargaining is at the workplace or company, only a minority of employees have their employment conditions secured by collective agreement.

Although the past two decades have seen a shift to a greater decentralisation of collective bargaining in Europe, the core features of multi-employer collective agreements have remained remarkably stable in most European countries. In Western Europe, only the UK, beginning in the 1980s under Margaret Thatcher, has undergone a fundamental change from a system in which industry level bargaining played a major part to one that is overwhelmingly characterised by workplace bargaining. After 1990, the UK was joined by a number of Eastern European countries in which it has not been possible to construct a system of industry or national level bargaining. However, aside from these cases, multi-employer collective agreements, embracing a number of workplaces or even sectors, have remained the dominant constitutive feature of collective bargaining in Europe.

The ECB’s Misleading Visualisation of the Euro-Crisis

Carlo D’Ippoliti

Two recent articles on the Global Labour Column deal with the European crisis (one specifically with the Italian case). Economists are still divided over the identification of the ultimate causes of the euro-crisis, but a mix of the two leading theses seems to be the most plausible explanation. On the one hand, the Eurozone is a failing attempt at sharing a common currency (the euro) without having a common governance of the economy. Thus, several economists note that the European Union (EU) “federal” budget is tiny in comparison to the task of managing aggregate demand, while common bonds and mutualisation of public debts is off the table; others question the strictly monetarist mandate of the European Central Bank (ECB), whose Statute (or better the mainstream interpretation of it) prevents the ECB from buying European sovereign bonds and mandates to only focus on the growth of consumer prices. On the other hand, a second explanation looks at the growing divergence of the European economies, in particular the sustained Balance-of-Payments imbalances that produced the accumulation of excessive foreign debt in the deficit countries (derogatorily called GIPSIs after the initials of Greece, Ireland, Portugal, Spain and Italy) and huge, possibly nonperforming loans vis-à-vis the GIPSIs in the ‘core’ European countries (Germany, the Netherlands, Austria, Finland).

A Marshall Plan for Europe

Michael Sommer

Proposal by the Confederation of German Trade Unions (DGB) for an economic stimulus, investment and development programme for Europe 

For historical reasons Germany has to be careful with giving advice to other countries. Even more so at the moment considering Germany’s dominant position within the European Union (EU). A ‘know-it-all’ manner is particularly problematic when the advice given is bad - the German government’s insistence on austerity measures as a response to the European crisis is not only unsuccessful in economic terms but socially unfair to a level that endangers democracy and the European integration process as a whole. This is a process for which Germany has a special historic responsibility. Despite some anti-European tendencies that have also evolved here and the media portraying the German population as being tired of rescue packages, the vast majority of the German population is in fact supportive of the Euro. This is a development that is remarkable but cannot be taken for granted. As German trade unionists we know from painful experience of the fascist destruction of the German trade union movement 80 years ago that an economic crisis that does not receive an adequate response has incalculable risks including political dislocations through to fascist dictatorship and war.

Italy from Recession to a new Socioeconomic Identity

Paolo Borioni

The historical sources of the Italian crisis[1]
The Italian economic crisis has global as well as domestic roots. As Italy depends on industrial exports, the country has been deeply affected by the global crisis, and even more so by the depressive results of the EU’s austerity measures.[2]  Mario Monti’s technocratic government has also added to depressive austerity: the Italian internal market shows a negative growth, below -2% in 2013, adding to Italy’s need for exports.

Italy was one the fastest growing industrialised European countries between 1950 and 1990, performing better than Germany.[3]  This was partly due to its newcomer identity characterised by low wages which helped competitiveness at the beginning of this period. The economic landscape was further marked by the presence of a few major enterprises (including Fiat, Pirelli, Olivetti) and big state-owned enterprises (Ansaldo-Breda, Fincantieri, Eni, Enel, etc.). Large companies provided long-term investment and innovation, facilitating the emergence of plenty of successful Small and Medium-Sized Enterprises (SMEs)[4]  in the so-called “third Italy”. The success of SMEs was founded on their embeddedness in a dynamic economy dominated by large firms, whose investment in research and technology also benefited SMEs.

The State as the Employer of last Resort

Cédric Durand

Dany Lang

The great recession the rich economies entered in 2007 has turned into social devastation in Europe. In France, there is every reason to despair the new rulers holding the reins since June 2012; indeed, the abandonment of workers’ collectives to their fate after half-hearted threats of nationalisation is only the tip of the iceberg. Policies implemented by François Hollande’s government include budgetary austerity on a scale unprecedented since World War II (60 billion euros’ worth of cuts planned over five years), the institutionalising of the European “golden rule” which limits structural deficits to 0.5% of GDP, a “competitiveness” plan which offers firms €20bn in tax credits (€7bn of which are to be funded by a VAT increase) without any counterpart, and the transposition into law of an agreement reached between employers’ organisations and minority trade unions aimed at increasing dramatically external number flexibility on the “labour market”. This profoundly neoliberal orientation is based on choices that need to be analysed.

Greece in the deadlock of the Troika’s Austerity Trap

Giorgos Argitis

On 27 November 2012, the Eurogroup reached a new “Greek deal” which once more discloses that there is no political will to address Greece’s debt crisis, as well as the country’s economic and social catastrophe. This fact increasingly makes Greeks think that the sovereign debt crisis incorporates significant geo-economic and geo-political interests at the expense of national sovereignty. Nonetheless, in the pure economic domain, there are two main aspects of the new agreement: first, the Troika’s condition that Greece has to adopt and apply a fiscal correction mechanism to “safeguard the achievement” of irrational and unrealistic fiscal growth and privatisation targets. This mechanism will institutionalise economic austerity and the impoverishment of Greek workers in the private and public sectors, and squeeze to zero the degrees of freedom for national economic policy-making.

The second aspect is the restructuring of creditors’ debt claims as a means for Greece to reduce its financing gap and borrowing needs. This decision, in conjunction with Greece’s public debt tender purchases, is hypothesised to bring Greece’s public debt back on a sustainable path by 2020-2022, which will facilitate the gradual return to market financing. The new agreement between Greece and the Troika is characterised by much fantasy, but little realism. The economic, social, and political environment in Greece remains fluid since uncertainty and lack of credibility continue to surround the course of economic policy-making in Greece and the Eurozone.

Europe at the Crossroads

Steffen Lehndorff

Looking at Europe these days some people (at least of my generation) may remember the lyrics of a famous song of the rock band AC/DC from the late 1970s: “I'm on my way to the Promised Land — I'm on the highway to hell.” More and more countries of the Euro zone are drifting into another recession, and some Southern European countries have been driven into an ever deepening economic depression which has lasted for four years already. The stranglehold of cutting public expenditures is not just blocking the road to economic recovery; this obsession with austerity makes it increasingly difficult to draw lessons from the economic policy failures in the pre-crisis period. These lessons, however, are desperately needed for any re-orientation of socio-economic models (or “growth models”) in the crisis-ridden countries, but equally in the allegedly “healthy” economies. Moreover, European countries are being directed politically into national egoisms which are about to drive the European project to the brink. Europe is being forced into a fiscal dictatorship which suffers from a fundamental lack of democratic foundations for economic governance at the European Union (EU) level and has already begun to interfere with fundamental democratic rights within member states. The complexity of the challenge to find a way out goes well beyond a more appropriate macroeconomic policy.

The economic crisis and job quality in Europe: some worrying trends and worse may be to come

Janine Leschke

Andrew Watt

The economic crisis has had a dramatic and lasting impact on labour markets worldwide. The recent ILO Global Employment Trends report spelled out the damage wrought in terms of the declines in employment and consequent rise in unemployment: globally the employment-to-population ratio fell by one percentage point and unemployment rose by 27 million persons.

But what have been the impacts on the quality of work? We can shed some light on this for the 27 member countries of the European Union using a Job Quality Index (JQI) developed at the European Trade Union Institute. We first calculated the JQI based on 2005 data; see here for the findings. We have now repeated the analysis based on 2010 data; by comparing the two sets of results we can see how job quality has changed on various dimensions over the five-year period and draw some conclusions about the impact of the crisis. The full results will be available shortly as an ETUI Working Paper; here we provide Global Labour Column readers with a brief analysis of the key findings[1] .

Measuring job quality: key features of the ETUI’s JQI

Whether one perceives one’s job as being of high or low quality depends, obviously, on a mix of both subjective and objective factors. And the mix is complex: how can, for instance, a clean and safe working environment be weighed against, say, autonomy at work or the fact that one is working the ‘right’ number of hours? The interested reader will find here a detailed description of the methodology underlying the JQI, our attempt to systematise the numerous factors impacting on job quality. For the purposes of this column the following basic features need to be borne in mind.

Europe’s lost Decade – Paths out of Stagnation

Hansjörg Herr

The Great Recession of 2008-2010 reflects an economic instability that had built up over the previous decades. Within the European Monetary Union (EMU), the crisis of the financial market-driven development model is overlaid by a largely homemade state debt crisis and an undefined integration goal. The western world, and more particularly Europe, is facing a lost decade.

The market radical globalisation project

The 1950s-60s may be counted among the best years of the young capitalist social order. This was because everyone could have a slice of progress. The dynamic consumer demand was based on a relatively well-balanced income distribution. Investment activity was high and stable, given the low level of economic uncertainty and the stable development of demand. Precarious employment relationships were just as rare as complicated financial market products or obscenely high managerial pay. The 1970s saw the start of a crisis that reflected an inability to adapt the prevailing economic model. The crisis led, notably in the UK and the US, to the election of conservative governments who embarked on a radical reshaping of the policy framework.

The Crisis: the Response of the European Trade Unions

Bernadette Ségol

The unanimous political response to the crisis across Europe today is that of austerity and budgetary discipline. Cutting pay and social welfare, attacking bargaining mechanisms and making employment contracts ultra-flexible: that is the current paradigm, the Berlin/Brussels consensus, offered as the only way forward.

This solution is not working and will not work. It stifles growth and blocks the way to job creation. We can no longer ignore its disastrous social consequences and the rise of nationalism in many European countries bringing into question our essential values based on solidarity.

We need to change the narrative.

Official voices are increasingly being raised against austerity, but mainly from outside Europe. The Organisation for Economic Co-operation and Development (OECD) and the International Labour Organisation (ILO) say that austerity without growth is a dangerous dead-end. International Monetary Fund (IMF) managing director Christine Lagarde has expressed concerns on behalf of the IMF. Even credit rating agencies – self-serving oligopolies that they are - have joined in the chorus.

But the message isn’t getting through to the finance ministers. While lip service is being paid in the European Council to the need to foster growth and employment, concrete proposals commensurate with the disaster we are facing are missing, in stark contrast to the sharp minutiae of the fiscal plans before us. The ETUC is for sound budgets. But the fiscal compact calls for a balancing social contract.

Minimum Wages in Europe: a Strategy against Wage-Dumping Policies?

Lars Vande Keybus

In numerous countries such as Ireland, Greece, Portugal, Hungary, and others, the European Commission (EC) - in cooperation with the International Monetary Fund (IMF) and European Central Bank (ECB) - has imposed a dramatic policy mix that consists of blind austerity, privatisation and wage cuts. Following the adoption of the notorious ‘six-pack’ in December 2011, it is clear that such policies will become a general rule all over Europe. The ‘six-pack’ sets up a structure in which the EC is granted a role as budgetary supervisor and punisher. The commission has the opportunity to almost automatically punish European Union (EU) members who do not follow recommendations to correct ‘excessive budgetary deficits’. The recommendations can range from adjustments in public sector pay, pension systems, indexation systems, unemployment benefits or privatisation schemes. Furthermore the ‘six-pack’ creates a new system of ‘macro-economic surveillance’. On the basis of a scoreboard consisting of a set of ten indicators covering the major sources of macro-economic imbalances, the EC can decide whether a member state suffers from an excessive imbalance. The commission can then provide recommendations and, if these are not thoroughly followed, it can prescribe sanctions. This strategy will ultimately lead to wage devaluation. In the absence of the possibility to devalue currencies, the EC is pushing for a strategy to devalue wages. This strategy is wrong and foolish for several economic and social reasons. But I would like to focus on the strategies to counter this policy.