E.R.1. Emergency resolution on the financial and economic crisis

EPSU affiliates recognise that:

1. During the last weeks, the profound impact of the economic and financial crisis on Europe’s working men and women, our families and the communities in which we live has become ever more apparent. Unemployment is rising rapidly in Europe, pushing millions of workers into poverty. The progress made to reduce poverty in Europe, and globally through the Millennium Development Goals, has been undone in a few months.

2. Large groups of public service workers are threatened with job losses, wage freezes and wage cuts. Several governments, local authorities and other public bodies have proposed in the past weeks to open up collective agreements that foresaw wage developments over the next 2 or 3 years. Public sector pay and pensions are attacked, losing sight of the fact that the vast majority of workers are low and middle-income earners who deliver essential services to Europe’s populations and businesses. Public service workers are the unsung heroes and heroines who are called upon in employment services, tax offices, ministries, training bodies and other government agencies to help address the crisis. Given that many women work in healthcare, education and social services, imposed pay restraint on the public sector is likely to undo years of work to reduce pay gaps.

3. Public service workers have taken to the streets to demand alternatives and an end to the neo-liberal policies that brought us in this mess. EPSU affiliates have participated in these actions in Belgium, France, Germany, Greece, Hungary, Italy, Latvia, Lithuania, Portugal… The May actions coordinated by the ETUC drew massive support for its New Social Agenda for Europe, and showing the anger of workers that are paying the price for a crisis we did not cause.

4. The current crisis underlines that capitalism is unstable. It has been a serious political mistake to weaken public services over the last 30 years by liberalization and by commercializing and privatising these services. Public services under public ownership and control provide stability to the economy. The dismantling of public banks, financial de-regulation and weak oversight has contributed to this instability. The deregulation of labour markets is another part of the same set of policies, and has resulted in more workers in precarious jobs. Temporary workers have been the hardest hit. The same set of policies led to an increase in inequalities. The rich 1% of populations saw its share of national income grow in many European countries, the US and elsewhere.

5. The financial and economic crisis goes together with a deep environmental crisis. Our natural environment is polluted, scarce resources such as water are depleted and global climate change is a serious threat. The economic crisis risks that we turn our backs on the environment. Instead, it should be used as an opportunity to move towards sustainable economic growth.

6. The EU and global policy consensus of the last 25 years was based on the idea that free markets will deliver progress. Powerful business lobbies and corporations have fought tooth and nail to prevent social and environmental regulation, including through collective agreements. More than ever it is clear that these same lobbies and corporations will not lead us out of the crisis; nor will they voluntarily take measures to protect the environment and improve living and working conditions. Bankers and business leaders are still defending their bonus schemes, corporate pay-outs and golden parachutes, and only massive public outcries can force them to do otherwise. Politicians need to assume their responsibilities, also as employers in the public sector. They should take up that responsibility for the sector, for the delivery of services and for overall society by adding resources to save jobs, maintain and develop the quality of services for citizens. Working-conditions and working environment must be secured in the public sector. Earlier crises have shown that they lead to reduced health for employees and a reduction in health in general. Society must not let that happen again. Demands on, and expectations of, public services will grow and proper funding will be needed.

The 8th EPSU Congress:

7. Agrees that the public sector is central to getting us out of the crisis through investment in public services and public infrastructure. This will benefit all, stabilise the economy, reduce inequalities, maintain demand and employment, and contribute to future environmentally sustainable economic growth. Public authorities and public employment agencies promote active labour market policies. Public services play a key role in protecting people from the worst effects of the economic down turn. Investment in healthcare, education and a Green and Social new deal will increase the long-term prospects of societies to recover from the crisis, reduce poverty and bring us on a path to environmentally sustainable growth. Demand on public services such as education and health and social services already high due to demographic changes, will increase further in times of economic crisis. Investment in such services will lead us out of the depression. Cutting the funding to these services, reducing personnel and lowering standards are the wrong medicine and endanger the quality of public services. On the contrary we need to maintain and develop our quality public services. The European Commission’s response to the crisis has so far failed to make the case for the public sector and for a Green and Social New Deal. EPSU calls on the European institutions to review the role of the public sector in a recovery plan for the European economy.

8. Supports the ETUC’s call for the immediate nationalization of insolvent banks whose bankruptcy would have a significant impact on workers, savings and the financial system and an increased investment in Social Europe - for example, strengthening of unemployment benefit systems, improving skills and lifelong learning, creating jobs in the social sector, supporting young people. This requires an expanded recovery programme, and massive public investment. The EU and European Banks should support the economies of New Member States and Central and Eastern European economies. EPSU supports the ETUC’s calls for increased spending by the European Funds (European Social Fund, Globalization Fund) and an increase in the European budget in light of the political choices and challenges.

9. Is concerned that the crisis also threatens the retirement security of workers. Many have seen their savings diminish in capitalised occupational pension funds. Employers and unions should negotiate how to build the reserves back up again, over a sufficient length of time and to prevent our pension funds playing a role in fuelling speculative financial movements. At the same time, we note that the economic crisis is being used to attack defined benefit schemes either by closing them to new entrants; shutting them down, especially in the public sector, replacing them by defined-contribution systems or seeking to increase retirement age. EPSU will be vigilant to defend workers’ pensions and resist imposed entitlement reforms.

10. Is critical of the way that some national governments have imposed cuts in public spending and public sector pay and the role of the International Monetary Fund (IMF), which has imposed draconian conditions on economies such as Latvia and Hungary, with the support of the European Commission and some national governments. These have led to severe reductions in pensions and healthcare spending. EPSU calls for financial support measures that are linked to the European Social Model, to the (re)distribution of wealth and reduction in inequalities, fair and progressive taxation, promotion of workers’ rights and equal pay and for a proper role for the trade unions in negotiations and consultations on how to respond to the crisis.

11. Underlines that the G20 should implement the ‘5 point plan’ of the global trade union movement as a clear roadmap to improved global governance and a guarantee that a crisis of this magnitude cannot happen again. The plan calls for:
- a coordinated international recovery and sustainable growth plan;
- rules for the global financial system;
- fighting the risk of wage deflation and reversing income inequalities through extending the coverage of collective bargaining and strengthening wage setting institutions so as to establish a decent floor in labour markets;
- a far-reaching international agreement on climate change at the COP15 in Copenhagen in December 2009; and
- a reform of the global institutions to ensure accountable global economic governance.
We expect the EU institutions (Council, European Commission and European Parliament) to play a leading role in realizing this roadmap.

12. Asks the EPSU Executive Committee to play an active role in formulating responses to the economic, social and environmental crisis and to cooperate with the Public Services International (PSI) to seek solutions at a global level.

13. Stresses that the European Central Bank (ECB), European Commission and Euro-zone Council, as well as the international institutions like the International Monetary Fund (IMF), must not attempt to consolidate public budgets and reduce public debts in 2010 and 2011, as this would hit public services users and workers a second time. EPSU and affiliated unions should work with the ETUC in developing their responses to these strategies. There cannot be a simple return to the model of neo-liberal orthodoxy, free markets, deregulation of labour markets and the corrupting culture of greed. Investment in quality public services must be maintained.

14. Demands that fighting the economic crisis should be the first priority of the new European Parliament and European Commission. But it cannot be ‘business as usual’. EPSU wants to see real change leading to economic, social and environmental progress. A substantial social and environmental agenda should be part of the measures that address the financial and economic crisis so that finance, economic, social and environmental policy reinforce each other. Fighting tax havens, tax fraud and corruption are to be top priorities in rebalancing Social Europe.

Adopted 9 June 2009

- The Financial and Economic Crisis, Consequences for the public sector and economy at large, an EPSU response - EPSU actions, adopted at the EPSU Executive Committee, 21 April 2009