VERONICA NILSSON
SOCIAL EUROPE
1st May 2023
Having battled one crisis after another, a fresh round of austerity could be the last straw for workers.
Having battled one crisis after another, a fresh round of austerity could be the last straw for workers.
The Covid-19 crisis upended norms on social esteem—no longer monopolised by men in suits, now typically attached to women in uniforms
(Cryptographer/shutterstock.com)
In Britain the economist and commentator Grace Blakeley recently observed:
The problem for the government is that working people have been subject to so much suffering over the last decade that many feel they have little left to lose. When you can barely heat your home and put food on the table, not demanding wage increases in line with inflation seems like a greater risk than doing so.
Much the same could be said of the mood of many workers worldwide—including in Germany, the Netherlands, Italy and Canada where there has been an unprecedented rise in strike action for higher wages in response to the cost-of-living crisis. It is also true in France, even if worker fury is more directed at the pension ‘reform’ pressed by the president, Emmanuel Macron, which will force millions to work longer and pay more towards their retirement.
Series of crises
The current crisis is only the latest in a series since 2008. And working people are organising in unions because they don’t want to pay the price for another crisis caused by a greedy elite.
The latest, cost-of-living crisis was triggered by spikes in energy prices caused by sanctions against Russia’s brutal invasion of Ukraine—’triggered’ in the sense that inflation was subsequently driven by companies exploiting energy-related cost increases to add further price increases to boost their profits. That is not just a trade union view: it is expressed by the European Central Bank and the International Monetary Fund, among others. Economists are now discussing the profit-price spiral and ‘greedflation’.
Before there was the Covid-19 crisis. Many workers were required to continue their ‘normal’ work in what had become a life-threatening context. When the lives of the public were at stake, the nurses, shop workers, lorry drivers and cleaners who provided key services were rightly acknowledged as essential—rather than the far more highly remunerated business managers and bankers lionised in the era of the ‘heroic CEO’. Job losses were stemmed but not stopped by government support for businesses and real wages declined.
The period before the pandemic was dominated by the austerity following the financial crisis. The cuts in the United Kingdom were savage—precipitating the slowest recovery in recorded British history—and the fiscal straitjacket imposed on Greece, Spain, Portugal and other countries by the European Union Stability and Growth Pact caused damage from which workers have not yet fully recovered. Greece in particular is still worse off than before the financial crisis.
In Britain the economist and commentator Grace Blakeley recently observed:
The problem for the government is that working people have been subject to so much suffering over the last decade that many feel they have little left to lose. When you can barely heat your home and put food on the table, not demanding wage increases in line with inflation seems like a greater risk than doing so.
Much the same could be said of the mood of many workers worldwide—including in Germany, the Netherlands, Italy and Canada where there has been an unprecedented rise in strike action for higher wages in response to the cost-of-living crisis. It is also true in France, even if worker fury is more directed at the pension ‘reform’ pressed by the president, Emmanuel Macron, which will force millions to work longer and pay more towards their retirement.
Series of crises
The current crisis is only the latest in a series since 2008. And working people are organising in unions because they don’t want to pay the price for another crisis caused by a greedy elite.
The latest, cost-of-living crisis was triggered by spikes in energy prices caused by sanctions against Russia’s brutal invasion of Ukraine—’triggered’ in the sense that inflation was subsequently driven by companies exploiting energy-related cost increases to add further price increases to boost their profits. That is not just a trade union view: it is expressed by the European Central Bank and the International Monetary Fund, among others. Economists are now discussing the profit-price spiral and ‘greedflation’.
Before there was the Covid-19 crisis. Many workers were required to continue their ‘normal’ work in what had become a life-threatening context. When the lives of the public were at stake, the nurses, shop workers, lorry drivers and cleaners who provided key services were rightly acknowledged as essential—rather than the far more highly remunerated business managers and bankers lionised in the era of the ‘heroic CEO’. Job losses were stemmed but not stopped by government support for businesses and real wages declined.
The period before the pandemic was dominated by the austerity following the financial crisis. The cuts in the United Kingdom were savage—precipitating the slowest recovery in recorded British history—and the fiscal straitjacket imposed on Greece, Spain, Portugal and other countries by the European Union Stability and Growth Pact caused damage from which workers have not yet fully recovered. Greece in particular is still worse off than before the financial crisis.
Regressive policies
Despite inflation being driven by profits, and the absence of evidence that wages are to blame, some politicians and economic bodies, including the Organisation for Economic Co-operation and Development, are promoting regressive policies—such as supporting interest-rate increases, cautioning against wage rises and calling for more ‘flexible’ labour markets (which usually means more insecure work for less pay).
Restrictive fiscal policies are the last thing needed after a period of decline in the range and quality of public services in most countries. Education, childcare, long-term care and health services—and access to affordable housing—demand more expenditure, not less.
Moreover, public investment is urgently needed to save our planet from climate change and to abandon fossil fuels for clean, green energy. Investment is also required to equip working people with the skills for an era of digitalisation and artificial intelligence.
Postwar settlement
The OECD of all organisations should be alive to the dangers of the situation facing workers today. Set up after the end of World War II, it is celebrating its 75th anniversary this year.
The OECD is widely credited with the Marshall plan for recovery and is closely associated with the postwar settlement, when ruling elites were terrified by the fear that workers supported Communism. The result was nationalised industries, the birth of welfare states and important elements of workers’ democracy, including widespread collective bargaining and ‘social dialogue’ (of which the Trade Union Advisory Committee to the OECD is an example).
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That postwar settlement began however to be dismantled in the 1980s—with privatisation, tax cuts for the rich, attacks on trade unions and collective bargaining, allied to cuts in public spending and an explosion in CEO salaries. And with austerity, the pandemic and now a cost-of-living crisis caused by excessive profits, things really have gone too far.
Alarming growth
Even before the latest crisis, the social and political situation looked perilous. Certainly, decision-makers should show a lot more concern for those forced to live in poverty despite working long hours, spending a large portion of their income on basics such as childcare or unable to work because of lack of eldercare. But they should at minimum be concerned about the alarming growth of the far right and the threat it poses to democracy.
It takes little intelligence to grasp that the rise of populism has taken place against a backdrop of people feeling left behind: by globalisation, by delocalisation and outsourcing, by privatisation, by the decline of industry, public services, real wages and living standards—and by the parallel increase in inequality.
A fresh round of austerity to tackle inflation could be the last straw. What is needed instead is a new social settlement—a clear commitment to invest in a socially-just transition to a digital and carbon-neutral future, and in public services, social protection and jobs, while promoting social dialogue and collective bargaining.
That is what the OECD should be leading on in its 75th-anniversary year—along with every government and international organisation that cares about the future for working people and democracy.
Veronica Nilsson is acting general secretary of the Trade Union Advisory Committee to the Organisation for Economic Co-operation and Development.
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