Revitalising social Europe

Frances O’Grady, TUC General Secretary, addressed the Institute for International and European Affairs in Dublin on Friday, 25 October. You can here a podcast of her speech on their website.

She shared her views on the European response to the financial and economic crises; the need for a stronger social dimension to European integration; and what could be done to bring about a citizens’ Europe. Ms. O’Grady has criticised the current uncertainty around the UK’s relationship with Europe and has called instead for the Government to use EU membership to rebuild and rebalance the British economy.

Check speech against delivery

Thank you.

It’s great to be here in Dublin.

The last time I was here was for a commemoration of the Dublin lockout and the workers in their great struggle against William Murphy.

An employer who perhaps makes Jim Ratcliffe of Ineos in Grangemouth look like a big softy.

But one of those moments in history that reminds unions that you can lose a battle but go on eventually to win the war.

Then, as now, of course, they were fighting for:

• The right to organise.
• The right to a fair wage.
• The right to basic standards of decency at work and in society.

Fast forward a century, and I believe we are at another such crossroads.

Right across Europe – from Dublin to Athens, Madrid to Paris – working people are increasingly questioning the legitimacy of a European political elite that seems out of touch with reality, semi-detached from the lives of ordinary Europeans, in hoc to the interests of global finance.

A year ago, Eurobarometer – which measures public attitudes across the continent – found that, for the first time ever, more European citizens considered the EU to be undemocratic than democratic.

A deeply worrying development.

And, I would argue, a product, not just of Europe’s institutional flaws, but also the real lived experience of EU-sponsored austerity, privatisation and liberalisation programmes.

From the UK government’s sell off of Royal Mail – otherwise known, as we say in the TUC, as selling tenners for fivers– to the price hikes and blatant profiteering of the Big Six energy companies, the public blames Brussels and Westminster in equal measure.

Many have lost trust that the political class - European or domestic -  is willing or able to stand up for the public interest against global big business, or that it can provide protection against the harsher winds of globalisation.

In Britain, our complex relationship with Europe is entering a new and dangerous phase.

Earlier this year, David Cameron promised an in-out referendum on our membership of the EU if he is re-elected in 2015 on the basis of a renegotiated treaty.

The aim is to repatriate workers’ rights – pregnancy, agency, working time – and not with a view to improving them.

A stance driven more by a need to manage discontented right wing backbenchers and alarm at the threat posed by the UK Independence Party than any national interest.

But a political game only made possible by a rising tide of anti-EU sentiment in the UK and an appeal to certain other governments in the EU that more UK opt-outs are the price of keeping Britain in.

Whichever way you look at it, the reality we face is this.

The European project as we know it – a dynamic single market counterbalanced by good public services and generous workplace rights – is fraying around the edges.

Back in 1975 when the campaign on Britain’s membership of the EU was at its height my dad was a shop steward in a car factory. Like most trade union activists then he was against what he called the Common Market. I remember him having a sticker on his moped that read something like ‘Vote No to the Rich Man’s Club’.

I was a teenager and like all good trade unionists’ daughters, I decided that I’d make up my own mind. Now I don’t claim to have been a typical teenager, not least because I set about finding out more about the arguments for and against EU membership.

Anyway, somehow, in the process, I came across a photograph of some women workers from think Belgium. They were on strike and holding up a banner demanding Article 119.

It took me a while but I worked out that they were on strike for equal pay – still a novel concept then (and not universally applied now) but a fundamental right that could be claimed by all workers across the EU. A vision of workers across Europe enjoying the same minimum rights and protections that would ensure employers could not compete by undercutting labour.

It inspired me.

And, of course, that was precisely the vision that Jaques Delors famously used to win over the Congress of the British TUC back in 1988.

The idea that workers would not be mere pawns in the rich man’s club but instead could benefit from a social market designed to balance the power of capital with rights and protections for labour.

That bargain has held our continent together since the 1950s but is now in grave danger of unwinding.

And the real political question is how has this been allowed to happen?

The answer lies partly in the crisis in social democratic thinking and political organisation.

Over three decades, as globalisation grew and neoliberalism dominated, many social democratic parties began to lose confidence in their own ability to shape markets to suit society’s needs.

Of course the value of redistribution of wealth held true but it became redistribution to the poor from the slightly better off. In Britain today, millions of low-paid workers are dependent on billions of pounds worth of tax credits funded by the taxpayer to get by.

There was still interest in redistribution of power too – in the late ‘90s Will Hutton’s thesis of stakeholder capitalism drew some warm words from Tony Blair.

But under pressure from the costs of reunification, and dubbed as the sick man of Europe, by the 2000s the German model of codetermination was looking decidedly less attractive. The UK Labour Party’s eyes turned increasingly to Bill Clinton’s economics for guidance.

And for a while it seemed to work. After all, if you can’t beat ‘em, join ‘em. Weak regulation of the finance sector, shareholder supremacy and weaker unions all seemed fine as long as jobs and easy access to credit were plentiful.

I remember talking to someone who worked in the policy unit at number ten during the Labour years. He couldn’t get growing inequality and the fall in living standards that had kicked in long before the crash and, indeed, many economists now agree was a key driver of it.

The rest, as they say, is history.

But the big question today is how we move forward.

Whether we can begin to sketch out the contours of a post-crash settlement for Europe that is greener, stronger, fairer.

A new model that is attuned to the central challenges facing us: climate change; energy scarcity; rising inequality; social and demographic change; an industrial landscape that is being reshaped at huge speed.

We cannot rewind the tape. And our starting point is daunting.

Our ageing societies, the challenges of mass migration and rise of right wing political extremism have further accentuated our collective feeling of profound insecurity.

The narrative we increasingly hear about Europe is one of soup kitchens, young couples moving back in with their parents, the poor going without medicine, horrific murders of migrant workers by fascist thugs.

Two weeks ago, the Red Cross published a major report underlining the scale of the poverty, inequality, social exclusion and mass unemployment afflicting many EU countries.

The headline statistics spoke for themselves.

A 75 per cent increase in the number of Europeans using food banks since 2009.

The suicide rate among Greek women more than doubling.

And even in Germany, more than five million people losing their middle-class status.

Equally disturbing are the facts about Europe’s jobs crisis.

Across the continent, the jobless rate is 12 per cent.

Nearly 6 million under-25s are without a job.

In Spain, well over half of all young people are unemployed.

A ticking time bomb.

Indeed, as the Red Cross report suggested, the really frightening thing is it could get worse. Allow me to quote: “The long-term consequences of this crisis have yet to surface. The problems could be felt for decades . . . the economic crisis is creating the conditions for a widespread social crisis.”

The Red Cross also talks of: “a growing gap in the distribution of resources – the rich becoming richer and the poor becoming poorer – and how the competition for shrinking resources could bring about growing xenophobia, discrimination and social exclusion, as well as abuse and domestic problems”.

The situation has been made so much worse by the EU’s response to the crash which could have been taken straight out of the 1980s free-market textbook.

More labour market deregulation.

Structural reforms that erode workers’ terms and conditions, and the fundamental right to collectively bargain.

Liberalisation of markets.

Privatisation of services.

And for southern Europe, near permanent austerity. The Troika and governments may claim that the medicine is necessary and working, and that the evidence is that economies are recovering.

Stable bond yields and debt sustainability are important, for sure.

But trying telling the unemployed youngster in Madrid, the zero hours worker in London or the middle-class professional in Athens now living on the streets that the economy is getting better.

The worst of the eurozone turbulence may have passed, but growth is anaemic, demand has collapsed, and living standards are in freefall.

And not surprisingly, ordinary Europeans are getting pretty fed up.

If the EU is about little more than protecting the single currency at all costs, privatising services and keeping a tight lid on public spending, then popular support for European integration and the European ideal will diminish as surely as night follows day.

From the trade union movement’s perspective, Europe needs to rediscover the values that served it so well not just during the long post-war boom, but also through challenges posed by the Oil Crisis and the economic counter-revolution of the 1980s.

Now is not the time to reject the  European social model, but to reinvent it for a new age.

For us, decent working conditions, decent services and decent welfare aren’t part of the problem, but part of the solution.

Of course we recognise that the world has changed.

We know about the rise of China, India, Brazil and other emerging economic superpowers.

We understand the rising health, pension and social care costs of our ageing population.

And we know the EU cannot duck reform.

But if Europe is to prosper in the decades ahead, we need to play to our strengths rather than create a poor copy of American-style capitalism.

I see three central priorities for us.

First, political renewal.

The advance of US-style neoliberalism, the spread of non-productive financial capitalism, downward pressure on workers’ wages – all have taken their toll since the turn of the millennium.

Social democracy hasn’t exactly been an electorally attractive proposition of late.

In Germany, the SPD scored just 26 per cent in the recent election, a consequence perhaps of the structural reforms that took place during the 2000s.

In Norway, the right was triumphant two months ago, despite the vast reserves built up in the country’s sovereign wealth fund.

And in Spain and Greece – as in Britain – conservatives now hold power.

Despite the evident failure of neoliberalism given the financial crash, the left seems to have lost its self confidence: to intervene in global markets, to defend welfare systems, to stand up to overweening corporate power.

But there are glimmers of hope.

In Britain, where we are now less than 18 months away from the most important election in a generation, the Labour Party is beginning to change the terms of the political debate.

Ed Miliband has certainly made a number of bold and correct calls.

To put responsible capitalism on the agenda.

To make the case for predistribution, or in plain English, to tackle the root causes of inequality. This must include not just a minimum wage, or a voluntary Living Wage but rebuilding new forms of collective bargaining for a fair wage and a fair labour market.

And in his recent conference speech, he promised a 20-month freeze on energy bills if he is elected. A promise that was greeted with some hysteria from the government and the Big Six but which proved overwhelmingly popular with voters, sending a strong signal that Labour will intervene in failing markets and challenge the primacy of big corporations.

And he has also sent clear signals that, whereas New Labour had largely abandoned the notion of a mixed economy and was relaxed about creeping privatisation of public services such as the NHS, public ownership does matter after all.

So to what must be our second priority.

That’s to level the playing field for all European workers.

If you have a single market, then the logical corollary is you need a single set of labour rules.

And these  shouldn't be based not around the lowest common denominator – as some on the Right would have it – but on decent standards for all workers. The TUC has launched a campaign called Britain needs a pay rise. Europe needs a pay rise too. To us, that’s just plain common sense. To stop good employers being undercut by bad ones and put money in workers pockets as one of the best ways of boosting demand.

Self-evidently, there’s a big role for trade unions here. And that underlines the need for policy change to promote collective bargaining, worker representation on company remuneration committees and boards, and modern wages councils.

It’s also vital that social protections once again inform policymaking at the highest levels. That’s why EU Treaties need to include a social protocol to guarantee respect for welfare and labour rights.

Our third priority must be to change the collective European mindset on how we get ourselves out of the current mess. With even the IMF warning against further austerity, we need to think about more durable solutions for the long term.

The EU’s priorities must be the priorities of ordinary Europeans: investment for the future, sustainable growth, decent jobs, homes and living standards.

Now while the German government may stand accused of imposing austerity on other nations, my trade union colleagues in the German DGB through the ETUC have led the way in calling for a People’s Plan for Europe.

A 21st century Marshall Plan to renew the continent’s infrastructure, decarbonise our economies and get people back to work. It’s a great idea – breaking the vicious circle of economic decline, shrinking demand and falling living standards. Unions believe such a plan could deliver huge improvements in critical areas:

Energy transformation and sustainable water management.

Transport schemes, such as the Trans-European Transport Network.

Education and training, especially for our young people.

Expansion of broadband.

Economic regeneration, from support for SMEs to low interest loans to microcredit programmes.

And investment in public services such as health, welfare, eldercare, childcare and social housing on which economic success depends.

Of course the big question is how you fund it.

There’s certainly a strong case for Eurobonds and we in the trade union movement have long championed the case for an international financial transactions tax on the trillions of euros traded daily in the equity and derivatives markets.

This is the positive, progressive agenda European trade unions want to see.

Getting our economy back on track, getting young people into work, giving people the chance to provide a decent income for their families. In the long run, that’s not just the best way to deal with our debts and fund our unique social model. It’s also the best way of rebuilding democratic support for the European ideal.

I’m an optimist, and I believe we can revitalise social Europe.

As I said at the beginning, Europe has historically balanced the interests of free trade, open markets and companies with those of citizens, workers and trade unions.

It’s a deal that has served our continent well, through good times and bad.

And it’s a bargain we urgently need to reconstruct now, to help us meet the complex challenges of the 21st century.

I’ll finish by saying this.

Europe has been tested before.

After the destruction of the Second World War.

After the Berlin Wall came down in 1989.

And after enlargement to the East almost a decade ago.

But each time our continent succeeded in rising to these challenges because we had the courage to take the high road.

Because collectively we refused to walk away from the social solidarity that has brought the diverse peoples of Europe together.

Today, in the midst of crisis, we must remain true to those same values and give the people of Europe hope and confidence in a better future for all.