TUC supports Greek unions' General Strike: cuts won't create growth

Solidarity with Greek trade unions

General strike

20 May 2010

The TUC has expressed solidarity with the unions' General Strike in Greece today (Thursday). We believe that cutting back on public spending will reduce the growth that Greece needs to overcome its financial problems in the medium term, as well as increasing inequality and hurting the people least able to cope.

Background

The TUC believes that a solution to the crisis in Greece and the wider EU can only be resolved through a pan-European drive to encourage economic growth. Imposing massive cuts to public services, public sector wages and pensions on a country in return for a bail-out that addresses only the symptoms of the crisis is a very unwelcome return to the policies that caused serious structural problems in the developing world during the 1980s and 1990s.

The cuts being proposed by the EU threaten to push Greece into years of recession which will not only cause enormous hardship but will also damage the health of the country's public finances and hence further limit the capacity of the Greek Government to honour its debts. The risk of such a spiral has already been one factor behind the market's negative reaction to the bail-out package.

It is clear that the harshness of the cuts package is being driven by a xenophobic mood which claims the Greeks are getting their just desserts for a 'Mediterranean lifestyle'. Such ill-informed and prejudiced viewpoints should play no part in economic initiatives of such significance. In fact, the Greek economy has made major productivity gains in recent years and Greeks work some of the longest hours in Europe.

Solving the crisis

Instead, it is vital that the EU as a whole identifies a programme designed to boost growth across Europe to allow economies to grow their way out this crisis. At the heart of such a programme must be an honest acknowledgement that the European economy has become unsustainably imbalanced with countries such as Germany, Austria and the Netherlands depressing domestic demand in order to pursue aggressive export led strategies, while other countries have allowed demand to rise to purchase those exports often on the back of rapidly growing levels of personal debt.

A genuine resolution to the current financial crisis goes hand in hand with the creation of a meaningful growth path for all European economies which will allow nations such as Greece to develop an export market in those countries where demand has been held down. Only then will tax revenues rise in a consistent fashion thus allowing deficits to be reduced in a sustainable manner.

It is also important that EU governments continue to explore multilateral revenue raising ideas such as a financial transactions tax which could play a significant part in helping countries reduce their deficits while protecting services and wider economies. And as the Greek trade unions have pointed out, tax dodging by the richest members of society must be addressed, because of its revenue-generating impact but also because it is a matter of basic social equity.

Finally, it is of the utmost importance that Greek trade unions, and trade unions in any nation facing similar crises, are involved in a process of dialogue with employers and government to identify ways forward. Only through such consensus building can socially just and politically sustainable solutions be found.