Commission sticks with austerity - with minor adjustments

(6 June 2013) {{At the end of last month the European Commission published a [communication->] on its [2013 country-specific recommendations->]. While it acknowledges some of the major negative effects of austerity, the Commission is not making any significant changes to policy.}} The overwhelming evidence points to [increasing poverty->], inequality and unemployment. The latest figures from [Eurostat->] show over 26.5 million workers unemployed across Europe, including 5.6 million under-25s. The focus continues to be on fiscal consolidation, with some flexibility in the deadlines for certain countries to meet their deficit targets. The communication also combines over-optimism about the economic outlook with an over-estimation of the impact of "structural" reforms on growth. There is nothing about the need for a European coordinated boost to investment as the main way to create sustainable jobs. More fundamentally an analysis by the ETUC (see below) homes in on the real failing in this process: {The whole point of having a European level policy approach should be about checking whether the 27 EU/17 eurozone different national policies are consistent with each other. Instead, the European Semester approaches individual member states in an individual way, presuming that the sum of all the individual parts will be the effective outcome for the whole of Europe. In that way, it is not the Europe of co-operation but the Europe of "competitive states" that is being promoted.} {{{Admitting mistakes, but where is the change in policy?}}} The communication includes a number of statements that appear to concede that austerity is not working and that "structural reforms" are not part of the short-term solution. {The impact on society of several years of low or no growth is far-reaching, with very high levels of unemployment and rising poverty in several parts of Europe...The dim prospect for labour market improvements in the short term will be a further test for the welfare systems of the Member States.} It also says that: "The issue of youth unemployment requires specific and urgent action." But despite these comments the communication makes no indication of any significant change in policy or what the specific and urgent action might be. {{{Wages again under the spotlight}}} An ETUC discussion note reveals that 12 countries are facing recommendations on wages or wage-setting systems (including the four countries under Troika programmes), with the main emphasis on downwards wage flexbility. The exception is Germany where the role of wages in supporting domestic demand is acknowledged but the recommendation talks about reducing taxes and social security contributions on low earners rather than increasing wages in general. The ETUC analysis warns of the risk of deflation as a result of wage moderation and falling real wages in several countries. It also criticises the way the Commission is promoting wage competition between Member States rather than coming up with a policy based on European co-operation. {{{Positive on tax but the same old story on public administration}}} The communication makes welcome calls for more initiatives to improve the fairness and effectiveness of tax systems along with the need to step up the fight against tax fraud and evasion. This is certainly in line with the demands in [EPSU's anti-tax fraud campaign->]. However, it contains the familiar old complaints about "red tape" and the need to reduce administrative burdens. More surprisingly the Commission makes the following statement about the public administration workforce without acknowledging in any way that the imposition of austerity across much of Europe has lead to across-the-board job cuts and arbitrary recruitment freezes that have undermined rational policies for developing the skills of public sector workers. {A skilled public administration workforce is important, particularly in times of crisis with its ensuing squeeze on public financing. What matters is not only the capacity to attract but also to retain good staff, thereby safeguarding the attractiveness of public administration. This requires first and foremost solid recruitment policies, promotion and career development schemes, the promotion of leadership, through inter alia learning and training.} The need for adequate levels of trained staff is exactly the point that EPSU makes in its anti-fraud campaign. The problem is that the evidence from [research commissioned by EPSU->] shows that the trend is to cut staff in this important area. {{{An increased role for social partners?}}} The communication is certainly more positive about involving the social partners. Until now there has been virtually no formal consultation with the social partners at European level and all the indications are that, with a very small number of exceptions, they don't have much of a say at national level either. The communication states that: "The social partners have a key role to play in helping to shape and deliver these policies", but it remains to be seen how the Commission and national governments will ensure that they can take up this role.

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