Transcript The ETUC and the Deep Recession

The ETUC and the Deep
Recession
Dublin, November 2009
[email protected]
Understanding the nature of this
crisis
• This is not the usual downturn of the business
cycle, not a ‘temporary’ phenomenon….
• … it’s the economic model which has been
pursued over the past decade(s) that is in deep
trouble.
• ‘Casino capitalism’ or a model of double
deregulation:
– Financial market deregulation …
– and labour market deregulation …
– …as two sides of the same mirror
Share of 1% highest income
earners in total income
30
25
Australia
United Kingdom
Sweden
France
United States
Canada
20
15
10
5
19
15
19
20
19
25
19
30
19
35
19
40
19
45
19
50
19
55
19
60
19
65
19
70
19
75
19
80
19
85
19
90
19
95
20
00
0
Excessive household debt loads
The name of the game that is going
on is debt deflation
• To summarize : ‘If we can’t increase
wages, let’s increase debt’ (Greenspan).
• Two consequences of all of this:
– We can no longer rely on (private sector)
indebting itself to drive aggregate demand
debt deflation
– It’s even the opposite: Debt deflation is drawn
out process and will drag down aggregate
demand dynamics for several years to come.
The jobs crisis is still in front of us
• Huge loss of GDP (7%)
• Jobs losses would
amount to 5% by end
2010
• Lisbon Strategy put ten
years back : It took more
than ten years to build the
knowledge sector (3 to
4% of all jobs) but only 2
years to destroy the same
amount of jobs.
ETUC response :One central idea
• No return to business as usual
• No return to the same policies that got us
into this mess
• Change the economic paradigm.
• New motors of demand instead of ‘bubble
driven’ growth.
Promoting an understanding of the
real causes of the crisis
• A set of ETUC ‘declarations’
– London declaration (October 2008)
– Different Executive Committee resolutions
– Policy demands of the European
manifestations
– New Social Deal proposed at the Mini Jobs
Summit
– Paris mid term conference and declaration
Proposing a different policy
approach
• A sustained and ‘European’ relaunch of the
economy : 1% of GDP over three years to invest
in European projects
• Public and European money for public
investment (Common Eurobond, backed up by
the ECB).
• European solidarity to defend ourselves against
continuing financial market irrationality (‘The IMF
has no business in Europe’) (EU balance of
payment fund/ EU budget).
• Organise distributive justice : EU adressing tax
competition ( the real ‘ fiscal exit’ strategy).
The European Recovery Initiative
in practice
Automatic stabilizers : Misleading
Cumulated fiscal policy effort over
2008-2010 compared to 2007
25 24
20
16
15
12
10
10,9
10,3
8,6
5
0
US
UK
Euro
Area
GE
FR
IT
Proposing a different policy
approach
• Common European principles for wages:
Downwards floors in wage dynamics to
prevent deflationary spirals. Strenghten
the role and importance/coverage of
collective bargaining.
• Europe for financial market reform.
Will wages resist (euro area level)?
Wage dynamics and output gaps
10
8
% of GDP
6
4
Output gap
2
Wages per head
0
92
93
94
95
96
97
98
99
0
1
-2
-4
-6
years
2
3
4
5
6
7
8
9
10
Looking to forge a new social
concensus
• Efforts to forge a joint ‘crisis’ declaration in
the European Social Dialogue
• Failure to do so:
– Imbalances or inequalities ?
– Cutting social contributions at a moment we
massively need the welfare state
– ‘Damaged trust’ : We can not afford not to be
precise.
Joining up ranks
• Organise ourselves by mobilising the
instrument of cordination of collective
bargaining.
• Strict coordination guideline : ‘No to wage
cuts or wage freezes’’
• Exchange information between trade
unions
• Going ‘public’
This has to end
• Goldman Sachs and its 20 billion bonuses:
• ‘We are doing Gods work’