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25 September 2014

Europe at a crossroads: time to choose another direction

Europe is at a crossroads, and if decision-makers fail to take the right policy direction, focusing on people, jobs and growth and avoiding the errors of the past five years, the European Union itself will be at risk.

That was the overwhelming consensus from the first top-level plenary session of the ETUI-ETUC Conference in Brussels, which opened on Wednesday 24 September.

Setting the scene, ETUC General Secretary Bernadette Ségol highlighted the disastrous impact of post-crisis austerity policies across Europe: 25 million unemployed and 24% of the population suffering poverty or social exclusion, while European companies have paid out record-high dividends to shareholders in 2014.

European Parliament President Martin Schulz took up the theme of growing inequalities across Europe. “Achieving social justice is one of the fundamental goals of politics,” he declared, citing the warning from the World Economic Forum that the growing gap between rich and poor is likely to cause global damage in the coming decade.

He called for increased wages to stimulate demand and spark growth, with the introduction of a statutory minimum wage in each EU state.

Incoming Economic and Financial Affairs Commissioner Pierre Moscovici confirmed that the next five years will be decisive for the EU. The recent European elections demonstrated that citizens want urgent action to deliver sustainable prosperity. Underlining the dangers of Japanese-style stagnation, he warned: “If we don’t gather momentum we will have low growth for a long time to come.” The incoming European Commission faces a historical mission: restoring trust in the EU. “Let’s be ambitious and mobilise in order to defend Europe,” he concluded.

Several speakers highlighted youth unemployment as a major threat to Europe’s future. Over 20% of young Europeans who want to work, cannot find a job, stressed Martin Schulz. “Young people are paying for a crisis they have not caused, and this is threatening the social fabric of our communities. Youth unemployment is the biggest challenge facing Europe today.” Across the EU, over 7 million young people are not in employment, education or training.

Outgoing Employment Commissioner László Andor insisted that the Commission’s Youth Guarantee has been an important initiative, channeling funds into jobs for young people. Belgian trade unionist Claude Rolin – newly elected to the European Parliament – called for more investment in education, research and development, to create quality jobs. He picked out long-term unemployment as a major problem, and suggested Europe should set a target of a 50% reduction by 2020.

The economic crisis has created a “social emergency”, conceded László Andor. Europe must now reconstruct its business model, which caused the crisis, addressing the under-regulation of the financial sector and lack of industrial policy. Efforts so far have failed to channel resources into the real economy, to help enterprises grow and employ more people.

Social progress in the single market cannot be left to “an invisible hand”, and the social partners must play a major part in governance, for example of the economic cycle – the European Semester. Social dialogue has to be rebuilt in countries where it has been undermined by austerity policies.

Other speakers agreed on the important role of the social partners. The countries that are doing well are those with strong social partner cooperation, pointed out Helge Berger from the IMF. “Social dialogue is not a cost, it’s an economic strength,” said Pierre Moscovici.

Gilbert Houngbo from the International Labour Organization referred to the key role of trade unions in shaping the EU and its social dimension, which must remain as strong as the economic one if political unity is to be maintained. “The economic and social dimensions of integration are slipping out of balance, and the consequences are serious for Europe and its global partners.”

Europe has to choose whether to carry on down the road of sacrificing social priorities, or to ensure that creating more and better jobs goes hand in hand with fiscal and monetary policies. Recovery is in danger of stalling, he warned, “It is essential in the ILO’s view to take the social and employment route.”

Tax fraud and tax avoidance are holding back the EU economy, costing Europe €1 trillion a year: €2,000 for every citizen. If 98% of citizens pay taxes in their country of residence, why should multinational companies get away with paying minimal taxes in the country of their choice? demanded Martin Schulz. Taxes should be paid where profits are made.

Inequality has undermined the security of European democracy, concluded Martin Schulz. “It is time for the EU to show it is protecting its citizens and strengthening the social dimension.”

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