Social Europe is a con

A speech delivered RMT president Alex Gordon to a conference in Dublin in October 2011 organised by the People’s Movement on the crisis engulfing the European Union exposing how EU claims about a ‘social Europe’ was a Trojan horse used to introduce a deeply anti-social EU. The current economic crisis has starkly exposed the reality that EU structures do not protect workers or public services.

The escalating Eurozone crisis reveal the most powerful member states protecting their debt-laden banks by demanding vicious austerity measures in the eurozone states starting with Ireland, Greece and Portugal and spreading rapidly across the entire EU.

Along with cheap credit-fuelled growth and EU-funded infrastructure required to build a single market, the illusory concept of ‘Social Europe’ launched 25 years ago is disappearing before our very eyes, while attacks on workers’ rights and industrial relations cultures gather pace across Europe driven by the EU institutions; the Commission, the ECB, the EFSF and – the latest incarnation – the European Stability Mechanism.

Jacques Delors evangelised for ‘Social Europe’ when he became president of the European Commission in 1985. He made a famous speech at the 1988 TUC, claiming that the completion of the Single European Market would deliver a social model compatible to trade union aspirations in Britain. Trade union leaders largely accepted this untested and unfounded mantra, not least because this period was marked by the historical defeat of organised labour across Europe.
Yet under the ‘Social Europe’ model proposed by Delors, the post-war Keynesian Welfare State model focussed on full employment and stimulating demand was gradually dismantled and replaced with an alternative that prioritised price stability over jobs and focused on wage moderation and labour market ‘reform’ as the main route to maintain competiveness.

In some cases, such as in Italy and in Germany, this change in direction was pursued using the corporatist arrangements of the Keynesian era (‘social partnership’). In other cases, most notably Britain, change came via direct confrontation between organised labour and the state. Yet, common to all was the use made of ‘Europe’ as the route via which the social bonds and obligations of the Keynesian ‘Golden Age’ were given up.

Privatisation policies and the liberalisation of financial markets across Europe all came about as a result of decisions by national governments. Yet these policies were subsequently implemented under the aegis of the European Single Market and with the help of the European Commission in order to limit the possibilities for opponents to mobilise at the national level.
Looking at the pillars of so-called ‘Social Europe’ – Germany and the Netherlands – statistics show exactly how these countries in reality used ‘anti-social growth models’ . The German government used ‘social partnership’ to secure wage moderation from unions in its export industries, which was critical to the country’s economic success since the end of the downturn of the early 2000s. Similar policies were pursued in the Netherlands, the country with the lowest unemployment in Europe, but also with the highest proportion of workers on fixed (i.e. not permanent) term contracts.

This anti-social growth model has propped up the Eurozone’s average annual GDP figures but created conflicts between member states able to achieve such internal competitive devaluations and others, in the Eurozone’s periphery (e.g. Ireland), where credit-fuelled growth led to wage inflation.

These asymmetries are reflected in figures for household disposable income as a percentage of annual growth provided by the OECD. The average figures for the 2000-2008 period are Germany (0.6%), Netherlands (1%), Spain (3.1%), Ireland (2003-2008 – 3.8%).

The project of Economic and Monetary Union (EMU) was a conscious extension of anti-social Europe: by preventing countries from using currency devaluation to regain competiveness all pressure for adaptation was transferred to labour market factors.

In the conditions of today’s crises, with fiscal resources tied up in bank bailouts, the reality of this transfer has begun to bite. Labour market reform is the main tool available to policymakers today, with predictable consequences politically and socially. Protests from Athens to Madrid, have become a regular feature in 2011, whilst policymaking at the European level, isolated from the protests and complaints of national populations, has intensified.

‘Anti-social Europe’
Any evidence of ‘Social Europe’ is being rapidly replaced by a distinctly ‘anti-Social Europe’ characterised less by social partnership than by social dumping as EU rules and ECJ judgements drive a race to the bottom in terms of jobs, wages and conditions.
As new European TUC general secretary Bernadette Segol admitted in June 2011: “cuts in salaries, cuts in public services and weakening collective bargaining rights are all on the agenda”.

Yet the ETUC once spent a lot of energy promoting alleged benefits of ‘social Europe’ and the entire European project. ETUC spokesman Alfons Grunheber-Pilgram said 20 years ago: “There is a mutual interest in getting this idea of European Union across. The European Commission needs the trade unions to implement European Economic and Monetary Union”.
So where did it all go wrong?

In order to explain the crisis of ‘social Europe’, we need to explore and understand where it came from and what it was designed to do. The genesis of ‘social Europe’ can be found within the 1987 Single European Act (SEA), which was backed by EU leaders including Tory Prime Minister, Margaret Thatcher.

This so-called Act established a Single European Market with four ‘fundamental freedoms’, the free movement of goods, services, labour, and capital. As a way to bypass national opposition to free movement provisions, the Act replaced the rule of unanimity with qualified majority voting in the Council of Ministers.

This highly neo-liberal policy was a recipe for unprecedented mass privatisation and its architects were the EU employers’ federation (UNICE) and larger corporations from across the EU plus Norway, Switzerland and Turkey grouped in the European Round Table of Industrialists (ERT).

ERT members (by invitation only) are “chief executives and chairmen of major multinational companies of European parentage”, including DaimlerChrysler, Fiat, Nestle, Renault and Siemens as well as UK firms like BP, Rio Tinto and Rolls Royce. Its remit is to promote further EU integration to benefit European-based transnational corporations.

In 1983 Wisse Dekker of Philips and former EEC Industry Commissioner Etienne Davignon drew together a group of leading European corporate executives into the ERT with the objective of “relaunching Europe”: “If we wait for our governments to do anything, we will be waiting for a long time. You can’t get all tied up with politics. Industry has to take the initiative. There is no other way,” Dekker argued.

Member states and much of the business sector had already rejected attempts by the European Commission to remove trade barriers within the EEC and create an internal EU market in 1984. However the newly appointed European Commission president Jacques Delors delivered a speech to the European Parliament closely matching Dekker’s proposals which would become –with the help of Margaret Thatcher – the Single European Act.

To sweeten this neo-liberal pill, Delors proposed a largely symbolic Social Charter to ensure support for the entire project from trade union bureaucracies across Europe, particularly in Denmark and the UK. Large parts of the labour movement fell for this con trick following Delors’ infamous address to the 1988 British TUC Conference promoting a ‘euro-federalist’ vision wrapped up in the language of ‘Social Europe’.

Delors told BTUC delegates that the EU was the alternative to mass unemployment, privatisation and endless Tory attacks on the working class in Britain. In exchange for signing up to the ‘euro-federalist’ project, Delors offered British trade unions a sympathetic ear in Brussels and a share in the economic benefits of EU membership.

ERT boss Keith Richardson went along with this charade at the time: “If politicians feel it is important to get the chapter referring to the desirability of full employment and they think it will help public opinion, we don’t really object – providing of course that it remains related to aspirations,” he said.

In fact, the Single European Act unleashed a corporate, free-fire zone for finance sector-led turbo-capitalism, while at the same time hypocritically lauding the supposed superiority of the ‘European Social Model’ over Anglo-American free-market libertarianism. This included promoting the increasingly complex contracts, instruments and credit vehicles based on speculation and gambling, which are currently unravelling across the European banking sector (UniCredit, Dexia, Deutsche Bank, PNB Paribas, etc).

The UK was already the most liberalised economy in Europe and the alleged benefits to workers of ‘social Europe’ failed to materialise as over one million British manufacturing jobs have disappeared since 1997 alone. In Germany, the jobless total passed five million and French unemployment ballooned to over ten per cent.

Moreover, the Single European Act should be seen as fundamental part of the process of slowly and irreversibly centralising power to Brussels on a huge scale. The Maastricht Treaty, which formally proposed introduction of the single currency, was followed in 1996 by the Stability and Growth Pact, which established strict convergence criteria for joining the euro.

This pact represented a Thatcherite, economic strait-jacket that enforced cuts in public spending on member states. Since then, the Amsterdam and Nice treaties and the EU Constitution, now renamed as the Lisbon Treaty, all centralise economic, political and legal powers within the EU without any democratic mandate.

The ERT was clearly not satisfied with these steps and in January 2001 the European Commission formally launched plans for a Services Directive to force wholesale deregulation of entire industries. EU commissioner, Fritz Bolkestein claimed it was time to end the sector by sector process of liberalisation: “when so many of the necessary changes are common to a wide range of services… Some of the national restrictions are archaic, overly burdensome and break EU law. Those have simply got to go,” he said.

Bolkstein declared: “Article 49 of the Treaty of the European Union says that all restrictions on the freedom to provide cross-border services within the Union are prohibited”.
The final genesis of Bolkestein’s Services Directive had begun and companies would be given the opportunity to undermine the best national conditions and wages and drive them down to the lowest levels.

For instance, a German company would be able to exercise its activities throughout the EU, including in Germany, with one branch operating from the Netherlands and another one from Belgium – depending on where the conditions generate most profit.

Accordingly, the German building union IG BAU warned of a wave of service provider relocations to countries which impose the lowest legal requirements and export them back home.

A number of rulings by the European Court of Justice highlight just how the internal market batters down minimum trade union standards won at a national level.

One case concerns a Latvian construction company, Laval, which was refurbishing a school in Vaxholm, outside Stockholm, using Latvian workers on low rates of pay.

The Swedish Building Workers Union (SBWU) demanded that a local collective agreement that covered Swedish building firms should be in place.

However, Laval refused and referred to a Latvian agreement instead which paid about a third of the Swedish wage and did not provide adequate insurance.

As this was a clear case of ‘social dumping’, unions began industrial action by blockading the site.

Laval argued that this action was not in compliance with EU law and brought the case and the ECJ agreed with him.
While in Stockholm, EU internal market commissioner Charlie McCreevy made clear that the commission fully backed the Latvian company and the “social dumping” that it had created.
“If member states continue to shield themselves from foreign company takeovers and competition, then I fear that the internal market will begin to dissolve. The question here is whether or not Sweden has implemented Article 49 in the treaty on free movement,” he said.
However Swedish TUC (LO) vice-president Wanja Lundby-Wedin pointed out that industrial action is, by its very nature, an obstacle to the activities of a company and free movement.
“What, until now, have been regarded as fundamental rights of workers in all democratic states would be undermined in the name of free movement,” she said.

The Viking case involved industrial action by the Finnish Seamen’s Union against attempts by the employer to replace Finnish seafarers with cheaper Estonian labour.

The employer’s claim was based on EU law was that the industrial action had violated the employer’s rights to freedom of establishment and to provide services, as provided in the EU Treaties, Articles 43 and 49.

Both these cases highlight how EU Treaty provisions on free movement is being used as a battering ram against the trade union rights to take collective industrial action even if it is lawful under national law.

Alongside the free movement of services, EU rules demand the complete free movement of labour, moves that will have profound effects on all trade unions operating within the EU.

Following the accession of eastern European states to the EU, migrant labour has been rapidly moving west while capital and manufacturing jobs are moving east.

While western European countries experience a large influx of migrant labour east European countries are suffering population falls and an inevitable brain drain, leading to a loss of skilled labour and young people as well as an uncertain future of underdevelopment.

In more developed member states, wages have been under pressure in many sectors in a process known as ‘social dumping’, as cheap foreign labour replaces the indigenous workforce and trade union bargaining power is severely weakened.

These problems have arisen in Ireland, most notably in the Irish Ferries dispute, when the company replaced 600 Irish seafarers with labour from Eastern Europe at considerably lower rates of pay.

The Irish Congress of Trade Unions is demanding measures to protect particularly unskilled workers where social dumping is threatening jobs.

“It is an iron law of economics that an abundant supply of labour pushes down its cost. It is insulting people’s intelligence to pretend otherwise,” it said in a statement.

Across Europe, it is clear that we are witnessing large movement of capital eastwards as labour heads west. And this is happening in accordance to the principles of the single European market, which allow the ‘free movement of goods, capital, services and labour’, regardless of the social consequences.

Single market rules, therefore, truncate all forms of democracy, including rights to fair wages, working conditions, welfare and social protection and collective bargaining. These EU policies can only mean a continuation of mass migration and, ultimately, feed the poison of racism and fascism, the last refuge of the corporate beast in crisis.

To reverse this increasingly perverse situation, all nation states must have democratic control over their own immigration policy and have the right to apply national legislation in defence of migrant and indigenous workers.

The real question is social partnership or independent trade unions?
It is increasingly clear that EU policies represent a wholesale attack on welfare, education and social structures which trade unions and working class organisations have fought hard for over decades. So what should the response of the labour movements?

The EU strategy is clearly to use the free movement of labour, capital and services to undermine and destroy hard-won labour standards and our public services.

This neo-liberal drive will increase ‘social dumping’, displacing workers with cheap foreign labour and feeding racism and the far-right.

As a result resistance to the EU’s corporate agenda is appearing across Europe and there a growing level of unease among working people to EU rules that shift the balance of power massively to the employer and big business and away from elected parliaments.

Instead of promoting ‘social partnership’, we have to ask ourselves, how can workers’ have the same interests as private corporate entities that lobby EU institutions to make it easier to exploit staff and bring down wages?

Endless academic papers on the need for social partnership and declaring the end of class struggle cannot hide the fact that trade unions should not be in the business of promoting rules drawn up by big business.

These policies only favour corporate capital and the drive to maximise superprofits by exploiting cheap labour within the EU and around the world.

However, the European TUC, which is 80 per cent EU-funded, openly colludes with the commission and employers groups to promote this damaging corporate agenda. Is this really what European workers want?

Ultimately trade unions should exist primarily to represent their members’ interests, not to act as a conveyor belt for the policies of unaccountable and remote EU institutions.

The alternative is for trade unionists to develop their own democratic agenda based on the interests of their members and their communities. Trade unions have an important and legitimate political role to play as agents for social change, not as the neutered partners of corporate interests.

Millions of workers’ are finding the confidence to say no to ‘social dumping’ and yes to protecting national standards.

In order to protect jobs and our industrial base, RMT demanding that the government invests in manufacturing, training, research and development.

Manufacturing could create the wealth required to finance and develop the welfare state including a public health service that is free at the point of use, education and decent pensions.

All governments must have the democratic powers to control the flow of capital, jobs and people even if it offends neo-liberal EU rules, laws and directives designed to favour corporate capital. These are the fundamental rights of any modern, democratic independent nation.