Monday’s Eurogroup statement on competitiveness puts structural reforms at the centre of the solutions to improve Europe’s current economic performance. IndustriAll Europe warns against another wave of austerity that would only deepen the current restructuring crisis. Europe needs investments with social conditionality to ensure good industrial jobs in a productive economy.
The Eurogroup’s statement comes at a time when more and more companies are announcing plant closures, and jobs cuts across Europe. The big European companies in the automotive sector, which counts 14 million workers along the value chain, have been in the headlines over the past weeks. But announcements are also reaching us from the steel, aerospace or energy sectors. We fear a cycle of restructuring reinforcing itself, unless policies that promote investments with social conditionalities come in place. Now is the moment to invest, not to cut.
Judith Kirton-Darling, industriAll Europe’s General Secretary said: “We are very concerned about the Eurogroup’s statement that places a disproportionate emphasis on structural reforms. We know from the last 2008-09 financial crisis what this means: Austerity, so cuts in public investments, in public services, and attacks against labour rights, against collective bargaining and against trade unions. We see that the Letta and Draghi reports got through to the policymakers, but unfortunately not the clear message that Europe’s social model must be preserved, and that competitiveness should not come at its expense, on the contrary.”
“It’s concerning to see how the issue of demand keeps falling off policymakers’ radar. The ongoing cost-of-living crisis continues to erode workers’ purchasing power across Europe. The recent OECD Employment Outlook shows that real wages are still below 2019 levels in some Member States, while the gap between wage growth and food prices remains wide. This translates into low demand that hinders economic growth and jeopardizes the recovery. Nobody will buy an electric car when they can barely make ends meet. On top of that, everybody speaks about productivity these days, but nobody addresses the disconnect between productivity and wages, as productivity increases have not been translating into workers’ pay for a while now” explains Judith Kirton-Darling.
Isabelle Barthes, industriAll Europe’s Deputy General Secretary added: “The Eurogroup’s statement completely misses the impact of the mislead tight monetary policy of the past years, as a big part of the current stagnation can be explained by the massive interest rate hikes. Inflation has gone down as quickly as it went up, and central banks’ hawkish approach might have been too hastened. The OECD’s Trade Union Advisory Committee (TUAC) explains that the tight monetary policy has had some immediate effects on demand, but not on mortgages, and we are yet to see the effects come in: higher interest payments, and an additional squeeze on household and corporate finances that will further drag down demand, investment, and growth.”
“We are very worried about the Eurogroup’s call for structural reforms and labour market flexibility during the ongoing wave of restructuring. We cannot help but wonder whether some policymakers are not trying to make it easier for companies to lay off workers, instead of protecting jobs. We know that unemployment stagnated in Europe, despite the recent difficult economic outlook, which is probably a positive result of the short-time work schemes. However, companies will not keep holding on to skilled workers if the recovery will keep being delayed. Therefore, we need policies that can prevent the ongoing restructuring wave of turning into a tsunami wiping through our economy.” explains Isabelle Barthes.