"Europe's anti-social budget-cutting policy is the wrong way!"
European Council meeting 16-17 December 2010:
DGB trade unions' demands to the German Federal Government
Important elements of Europe's future course are due to be set at the European Council meeting on 16-17 December 2010.
The German Federal Government has a special responsibility at the Summit, being the main country putting massive pressure on countries like Greece, Ireland, Spain and Portugal in the European Council to cut their budgets.
Germany's "debt brake" is being upheld as a model for Europe, even though its sense as a budget policy instrument is disputed, both in Germany and the rest of Europe. Budget cuts are not the right way to recover from such a massive crisis.
We therefore call on the German Chancellor to refocus European policy on the lines of the following principles:
The European Council must set a course aimed at strengthening growth forces in the countries concerned, setting realistic targets for budget consolidation. At the same time demand needs to be boosted and import levels raised in countries with stronger
economies. Germany must work to ensure that all countries contribute to finding a long- term solution to the current crisis.
The call for a tightening of the Stability and Growth Pact must be withdrawn. In its stead the criteria for new borrowing must be made more flexible, taking the course of a
country’s economic development into account. Maintaining rigid borrowing limits in times of economic crisis is a sure way of stifling growth forces, thereby posing a threat to budget consolidation. The current high levels of public debt in several Member States are a result of emergency measures taken to overcome the economic and financial crisis.
Options other than the EU rescue fund need urgently to be developed. The €750 billion rescue fund burdens taxpayers first and foremost - and expires in 2013. As an
alternative, the DGB is calling for a European Bank for Public Bonds, installed by the Euro zone countries as a business partner to the ECB. It would be the job of such a bank to buy up public bonds issued by Euro zone countries, deposit them as collateral with the ECB, and to pass on ECB money then lent at favourable and reliable rates to Member States.
The Council must ensure that financial markets are properly regulated. This has not yet been done to an adequate extent, whether in the context of the directive on private equity and hedge funds or the directive on short-selling and certain aspects of credit default swaps. What is also urgently needed is an MOT for financial products and a European rating agency.
The Council and the Commission must not use the Stability and Growth Pact as a lever for intervening in national pension systems, accelerating the switch from PAYG to funded pension systems out of short-term budget consolidation considerations. The budget cuts in the countries concerned are leading to social division and social dislocation, with social security systems being eroded.
The concept of free collective bargaining needs to be firmly anchored in Europe.
Consolidation demands in the form of wage reductions represent massive
encroachments in national collective bargaining systems, and are in breach of the European Treaties. Furthermore, when redefining economic governance, care must be taken not to interfere with the autonomy of the social partners.
It must be ensured that creditor banks contribute to the financing of rescue costs, thereby putting a stop to the socialization of losses. Without a contribution from the banks there is a danger of banks continuing with speculative transactions, in the knowledge that
European taxpayers will pick up the tab. Governments are not private borrowers. They must not be at the mercy of the interests of banks, hedge funds and rating agencies and even less of insolvency proceedings. The current German proposal on insolvencies must therefore be withdrawn, as it punishes governments instead of regulating the markets.
This proposal can only be seen as a collective capitulation of Euro zone countries to the financial markets. Nevertheless Ireland must put a stop to tax dumping, raising its 12.5%
corporation tax rate to standard European levels.
