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Public services, austerity, alternatives Jan Willem Goudriaan European Federation of Public Service Unions Brussels, 5 May 2012.

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Presentation on theme: "Public services, austerity, alternatives Jan Willem Goudriaan European Federation of Public Service Unions Brussels, 5 May 2012."— Presentation transcript:


2 Public services, austerity, alternatives Jan Willem Goudriaan European Federation of Public Service Unions Brussels, 5 May 2012

3 8 Million Members in 275 Trade Unions in 47 countries in Europw, 60% women, member ETUC local and regional government (municipalities); central government and EU administration health and social services utilities (electricity, gas, water, waste) About EPSU


5 Bucharest 14 January 2012 Protests 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to privatise health care (Private sector access to government funding while public services denied funding, proposals withdrawn by government, protests continue, more anger 19th)

6 BILD: The French President said that Europe should learn from the German model… Draghi: …he’s right. Long before him I said that Germany is a model. The old European welfare state model is in fact dead, because it had to make debts far too often. The Germans have re-invented it – with no excessive debts. BILD: Do you have a message for the people of Germany? Draghi: Keep it up! ILO (2012) Germany is contributing to problems of the Eurozone. Wage deflation, growing inequalities, low wage economy. Other economies have to refer to wage - downward spiral.

7 The impact of the crisis on 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. Privatisation, PPPs, commercialisation of PS lead to corporate welfare Quality of services and the general interest effected and long term negative consequences Threats to the autonomy of collective bargaining and democratic accountability arising from EU/IMF conditions

8 Denmark Nominal freeze of several social benefits (unemployment, student financial aid, welfare) and foreign aid; reduction in duration of unemployment benefits; cuts in salaries of ministers by 5 per cent (around 2 billion Kroner); introduction of ceiling on family benefits; higher excise duties on unhealthy foods and tobacco 2010–13 Estonia Increase of VAT (2 percentage points) and excise taxes; reduction in social benefits (health, pensions); operating spending cuts; (temporary) increase in second pillar pension contributions; land sales; discretionary spending cuts 2011–14 France Cuts in public pensions, healthcare and public administration; raising of retirement age (from 60 years to 62 years by 2017); increase in taxes on capital; increase in top income tax rate by 1 percentage point 2010–13 Germany Yearly consolidation of €25 billion from additional taxes (banks, air traffic, nuclear power; total around €8 billion); cuts in spending on social security and labour market policies (around €8 billion); cuts in military and administrative expenses (around €5 billion) 2010–14 Greece Elimination of tax exemptions; increase in property taxes; higher excise tax on cigarettes and alcohol; higher tax on mobile telephones and petrol; special levy on profitable firms and on high-value real estate; 10 per cent reduction in general government expenditure on salary allowances; public sector recruitment freeze in 2010 and partial replacement of retiring civil servants; reduction in operating costs and subsidies for pension funds; significant reduction in the number of public sector special committees; amalgamation and drastic reduction in the number of the public bodies/entities linked to local authorities 2010–14 Hungary Introduction of 16 per cent flat rate of income tax over two years; cuts to the public sector (reduction of wages, elimination of certain benefits); six- year tax for financial institutions; reduction of bureaucracy for investors; ban on foreign exchange mortgages 2011–13 IrelandTax increases and spending cuts (public sector wages, social welfare benefits2009–10 Italy Public sector hiring freeze and public sector wage cuts (for civil servants with gross salary above €75,000); cuts in healthcare spending; strengthening of efforts against tax evasion; reduction in transfers from central to regional and local governments 2010–12 Latvia Increase of VAT (3 percentage points); introduction of capital income tax; increase of personal income flat tax rate (3 percentage points); broadened base for property tax; public sector wage cuts; pensions cuts; structural reforms in public administration; education and healthcare (revenue vs. spending consolidation in the ratio 20:80) 2009–10 Lithuania Cuts in salaries of politicians; reduction in military appropriations; scrap indexation of minimum wages; revision of maternity leave allowances; rationalization of public expenses; increase of personal income tax flat rate to 20 per cent; increase of excise taxes (fuel, tobacco, gambling); introduction of a corporate tax on agricultural entities 2009 onwards Netherlands Consolidation effort of €18 billion until 2015 (around 3 per cent of GDP), with cuts concentrated in social security reforms (tighter eligibility criteria for childcare allowance, disability and unemployment benefits), development cooperation and military spending 2011–15 Portugal Reduction in public sector pay and hiring (15 per cent reduction of central government services and managerial positions compared with 2010); increase of VAT and taxes on high-income earners; freezing of pensions, except for the lowest pensions; special contribution on pensions above €1,500; reform of the unemployment benefit system. 2010–13 Romania25 per cent reduction in public sector wages; 15 per cent reduction in pensions and unemployment benefits SloveniaAnnouncement to reduce budget deficit by investment cuts (rather than public sector cuts) Spain Cut in public sector jobs (13,000 jobs) and pay (salary cuts of 5 per cent for civil servants and of up to 15 per cent for ministers and mayors); introduction of new income tax; scrapping of newborn benefits; reduction in public investments by €6 billion; cuts in public pensions; sale of public sector assets: one-third of public enterprises shall be closed or sold off 2010–13 Turkey Introduction of the “fiscal rule bill”, including cuts in social security, local and provincial administration and unemployment benefits and levies for firms with floating capital 2010 onwards United Kingdom Emergency measures: abolition of the Child Trust Fund and cutting of employment programmes (Young Person’s Guarantee fund), civil service recruitment freeze. One-quarter of higher revenues shall be achieved by tax increases: increase in VAT (2.5 percentage points) 2010 Table 1. Overview of fiscal austerity measures (source ILO)

9 The European Central Bank’s secret Italian letter “The Italian Government has decided to pursue a balanced budget in 2014 and, to this purpose, has recently introduced a fiscal package. These are important steps, but not sufficient” “a) A comprehensive, far-reaching and credible reform strategy, including the full liberalisation of local public services and of professional services is needed. This should apply particularly to the provision of local services through large scale privatizations.” (For context – Italian people voted NO to privatisation of local municipal services in a Referendum in June 2011)

10 EU developments Economic Policy and Institutional Changes EU financial supervisory authories European Semester (annual growth survey and recommendations) EuroPact plus Legislative measures (6-pack) and new 2 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

11 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

12 Reasons for optimism


14 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

15 .


17 A European Struggle – new EU ? Local and national resistance as part of European approach for change Coordination at EU level – EU mobilisation Support for actions Continued discussion in union movement on stronger coordination of collective bargaining to confront precarious work, low pay, (youth) unemployment And to resist attack on right to strike (Monti II) Coalition building

18 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


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