Saturday, 21 December 2013

EU competitiveness pact: time for action!

Our politicians regularly tell us that we must work harder and longer, and for less pay, in order to be more “competitive.” We must reduce or give up our hard-earned social protections, pensions and unemployment benefits in order to be more competitive. We must be more “flexible,” which means we must sacrifice job security for ever more precarious and demanding work practicesin order to be more competitive.

Governments must observe “fiscal discipline,” rather than stimulating economies out of

recession, because such discipline makes us more competitive. Peripheral EU countries must surrender their sovereignty to the Troika in order to “regain competitiveness.” We must sign free-trade deals, such as the Transatlantic Trade and Investment Partnership with the United States, because that will make us more competitive. We must not “over-regulate” the financial sector, or impose “excessive” environmental restrictions on businesses, because to do so would be to make us less competitive.

The competitiveness dogma will not solve the present euro-zone crisis, as it is downward pressure on wages (and therefore consumer demand) and on government spending that has locked European economies into spirals of decline.

More fundamentally, this discourse is really about boosting corporate profits at the expense of the welfare of the population and of the environment. We have the option of distributing work and income more fairly, so that everyone has access to a decent wage and fulfilling work, as well as high-quality public services; but to do so requires that we redistribute income away from financial capital and corporate profits more generally and towards the mass of the population, towards public services and towards environmental protection.

The true agenda behind this talk of “competitiveness” will be evident at the European Council meeting on 19 December, which will debate a proposed new competitiveness pact. To help draft this pact the chancellor of Germany, Angela Merkel,


invited the president of France, François Hollande, and the president of the EU Commission, José Manuel Barroso, to a meeting in Berlin in March with fifteen members of the European Round Table of Industrialists, all of them chief executive officers of large corporations, two of whom were asked to chair a “working group on competitiveness.

The report of that group called for, among other things, reduced taxes, a rolling back of (limited) bank regulation, further erosion of labour protection, the streamlined facilitation of mergers and acquisitions, and privatisation. As Corporate Europe Observatory, put it, “the demands of the ERT appear to amount to nothing less than putting the European Union entirely at the service of corporations.”

The TTIP, if adopted, would constitute another contractual arrangement between member- states and the Commission—a form of “troika for all”—that would see the further weakening of national labour laws, downward pressure on wages, and more ERT-style “business-friendly” regulation (or the lack of it).

This last element will increase the likelihood of another economic crisis erupting in the future. To avert such a crisis we need more, not less, regulation, especially of the financial sector.

The TTIP also features yet more intrusive mandatory rules on the economic policies of member-states, building on the Austerity Treaty and related measures that serve to reduce democratic control over vital areas of economic governance.

The pact must be rejected, for three main reasons. Firstly, it would deepen the European economic crisis by further depressing domestic demand and government spending at a time when stimulus measures are desperately needed for recovery. Secondly, it would take still more economic policy tools out of the hands of national governments and transfer them to unelected technocrats. And thirdly, in line with the aggressive “competitiveness” agenda long pursued, it would further degrade the quality of life of workers by forcing them to work longer hours for less pay in conditions of ever greater insecurity while simultaneously cutting the public services on which they depend. This is being done in the name of “competitiveness,” but in reality it is for boosting corporate profits at the expense of ordinary people’s rights to a decent life.


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