THE FUNCTIONING OF THE TROIKA : MAIN MESSAGES FROM THE ETUC REPORT - - PowerPoint PPT Presentation

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THE FUNCTIONING OF THE TROIKA : MAIN MESSAGES FROM THE ETUC REPORT - - PowerPoint PPT Presentation

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THE FUNCTIONING OF THE TROIKA : MAIN MESSAGES FROM THE ETUC REPORT Athens, March 2014 rjanssen@etuc.org THE PICTURE THAT EMERGES. IS A PICTURE OF A COUNTRY BEING TAKEN OVER NOT A SILENT TAKEOVER. . BUT AN OPEN AND

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THE FUNCTIONING OF THE TROIKA : MAIN MESSAGES FROM THE ETUC REPORT

Athens, March 2014 rjanssen@etuc.org

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THE PICTURE THAT EMERGES….

  • … IS A PICTURE OF A COUNTRY BEING TAKEN OVER
  • NOT A « SILENT » TAKEOVER….
  • …. BUT AN OPEN AND HOSTILE TAKEOVER …..
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SLIDE 3

ONE KEY AIM : « THE SANCTITY OF DEBT »

  • ALL EXTERNAL DEBT IS TO BE REPAID
  • AND TO MAKE SURE DEBT WILL BE REPAID, LIVING AND WORKING

STANDARDS NEEDED TO BE CUT MASSIVELY

  • ALL STANDS IN THE WAY OF THIS POLICY HAD TO GO
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SLIDE 4

FIRST THING TO GO: ECONOMIC RATIONALITY

  • DANGERS OF AN OBSESSIVE POLICY OF FISCAL AUSTERITY WERE WELL

KNOWN…

  • …. BUT WERE BEING IGNORED
  • CONSEQUENCE: VICIOUS CIRCLE OF CUTS, ECONOMIC COLLAPSE,

MORE CUTS

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SLIDE 5

AUSTERITY ON A MASSIVE SCALE….

5 10 15 20 25 30 Greece Portugal Ireland Spain UK Italy Euro Area France Netherlands Finland Belgium Austria Germany

Total of fiscal cuts from 2010 to 2014, in % of GDP (1)

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….TRIGGERING ECONOMIC COLLAPSE

  • 35
  • 30
  • 25
  • 20
  • 15
  • 10
  • 5

5 10 Portugal Greece Cyprus Ireland

WHAT HAPPENED TO ECONOMIC ACTIVITY SINCE ENTERING THE TROIKA REGIME (includes 2014 forecast)

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SECOND THING TO GO: ALL THAT IS SOCIAL

5 10 15 20 25 30 Portugal Greece Ireland Cyprus

UNEMPLOYMENT RATES

year before troika entering 2013

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SECOND THING TO GO: ALL THAT IS SOCIAL

5 10 15 20 25 30 Portugal Greece Ireland

Anchored poverty rates (2008)

year before troika entering 2011

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THIRD THING TO GO: WAGES AND COLLECTIVE BARGAINING SYSTEMS

  • THE TROIKA « LOGIC »: A DEVALUATION OF WAGES HAS A DOUBLE

DIVIDEND: IT KILLS DOMESTIC DEMAND AND IMPROVES COST COMPETITIVENESS;

  • EXPORT LED GROWTH IS TO SAVE THE ECONOMY FROM THE EFFECTS

OF AUSTERITY

  • IMPORTANT: THIS IS NOT JUST ABOUT SQUEEZING WAGES DOWN AT

THIS PARTICULAR MOMENT IN TIME ….

  • … BUT ALSO ABOUT WEAKENING THE SYSTEMS OF WAGE

FORMATION THEMSELVES SO AS TO MAKE MONETARY UNION ‘FIT’ FOR FUTURE SHOCKS

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THIRD THING TO GO: WAGES AND COLLECTIVE BARGAINING SYSTEMS

  • ALSO, THIS IS NOT JUST ABOUT THE « DECENTRALISATION » OF COLLECTIVE

BARGAINING

  • BUT ALSO ABOUT PUTTING INTO QUESTION THE PRINCIPLE OF COLLECTIVE

BARGAINING BY REPRESENTATIVE TRADE UNION

  • REFORMS SUCH AS:
  • FREEZING MINIMUM WAGES
  • CUTS IN MINIMUM WAGES
  • CUTS IN PUBLIC SECTOR WAGES
  • REVERSING HIERARCHY IN LEVELS OF COLLECTIVE BARGAINING
  • MAKING A LEGAL EXTENSION OF BARGAINING AGREEMENTS MUCH MORE

DIFFICULT

  • CREATING A LEGAL VACUUM WHEN THE BARGAINING CONTRACT COMES TO AN

END

  • SUBSTITUTING REPRESENTATIVE TRADE UNIONS WITH « GROUPS OF WORKERS »
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SLIDE 11

EVOLUTION OF NOMINAL AND REAL WAGES PER EMPLOYEE SINCE START OF TROIKA PROGRAM AND UP TO 2014

  • 1
  • 17
  • 3,7
  • 13,6
  • 3,7
  • 16,8
  • 5,1
  • 15
  • 18
  • 16
  • 14
  • 12
  • 10
  • 8
  • 6
  • 4
  • 2

Portugal_ Greece Ireland Cyprus

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SLIDE 12

Number of published collective conventions in Portugal

50 100 150 200 250 300 350 2007 2008 2009 2010 2011 2012 2013

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FOURTH THING TO GO: AUTONOMY OF SOCIAL DIALOGUE

  • A WIDESPREAD MISPERCEPTION THAT SOCIAL DIALOGUE WAS TRIED

BUT THAT SOCIAL PARTNERS (TRADE UNIONS) FAILED TO REACH AN AGREEMENT

  • NOT SO
  • IN SEVERAL CASES (GREECE,PORTUGAL), A CONCENSUS BETWEEN

SOCIAL PARTNERS WAS REACHED

  • TROIKA, HOWEVER, DECIDED IT WAS NOT ENOUGH, IGNORED THE

SOCIAL PACT AND PUSHED THROUGH ITS OWN IDEAS OF DEREGULATION

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FIFTH THING TO GO: TRUST AND SUPPORT FOR DEMOCRACY…

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...AS WELL AS SUPPORT FOR THE EUROPEAN PROJECT

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WHAT HAS THE TROIKA TO SHOW FOR ALL OF THIS?

  • HAS MARKET CONFIDENCE BEEN RESTORED ?
  • HAVE PUBLIC DEBTS BECOME MORE SUSTAINABLE?
  • HAS ECONOMIC GROWTH POTENTIAL BEEN INCREASED?
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SLIDE 17

Spreads only falling after Draghi intervention, not because of fiscal cuts

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SLIDE 18

Public debt ratio’s continue to increase

50 70 90 110 130 150 170 2009 2010 2011 2012 2013

Gross Public Debt since start of Troika Regime (% of GDP)

Portugal Greece Ireland Cyprus

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SLIDE 19

HAVE FUTURE GROWTH PROSPECTS BEEN IMPROVED?

  • MASSIVE EMIGRATION OF (MAINLY YOUNG SKILLED) PEOPLE DOES

NOT BODE WELL FOR POTENTIAL GROWTH

  • EUROPEAN POLICY MAKERS DO NOT BELIEVE THIS THEMSELVES, SEE

THEIR ESTIMATES OF STRUCTURAL UNEMPLOYMENT

2007 2013 GREECE 10,1 19,3 PORTUGAL 9,3 15,3 IRELAND 6 12,9 SPAIN 11,7 23,2

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TO CONCLUDE

  • ONE KEY CONCLUSION: WE HAVE TOMAKE SURE TROIKA CAN NEVER

HAPPEN AGAIN IN EUROPE/MONETARY UNION

  • WAKE UP DG EMPLOYMENT AND SOCIAL AFFAIRS
  • APPEAL ON THE ILO AND COE
  • EP TO USE ITS RIGHT TO ACCESS ECJ TO INTRODUCE COMPLAINTS AND TO

MAKE SURE EU TREATY AND SOCIAL AQUIS ARE NOT ‘JUST A PIECE OF PAPER’

  • SOCIAL RECOVERY PLAN FOR TROIKA COUNTRIES TO REFIX FAIR WAGES
  • ECB OUT
  • SOCIAL PARTNERS IN ESM ADVISORY BOARD