Austerity harms social dialogue, Commission report reveals

11 Apr 2013

A report published this week by the European Commission reveals the detrimental changes which have occurred to industrial relations across Europe as a result of the economic practices adopted by governments in recent years. Compared with the 2010 publication, the Industrial Relations in Europe 2012 report presents an outlook for social dialogue which is far from comforting.

Austerity harms social dialogue, Commission report reveals

Like all major economic and social difficulties over the last few years the deteriorating social dialogue takes its origins in the financial crisis. With governments committed to the course of fiscal consolidation, the Commission has seen the crisis produce unfavourable settings for social dialogue, a trend which is particularly pronounced in the public sector. As a result, the report states that “industrial relations in the public sector have almost certainly changed fundamentally”.

If industrial relations have changed, then it is also the public sector as an employer which as fundamentally changed. Tightening of the fiscal belts in governments throughout Europe has required reduced expenditure. The important point is what this reduced expenditure translates into in the real world. The report shows that this has meant cuts to salaries, pensions and jobs and states that “by their very nature, these measures have not always been enacted with the full consensus of trade unions.”

These are only the short term effects. The findings of the Commission study indicate that pay and working conditions are increasingly implemented in the public sector via a top-down approach. Yet such trends have highly damaging effects in the long term. Strategies develop which focus on cost efficiency rather than on important social aspects, such as working conditions.

As a result of governments´ obsession with short-termism and the ensuing limitations to public resources, doubts are being cast on whether or not the public sector can still be considered what the Commission refers to as a model employer.

In a similar context, a “Social Investment Package” was recently published by the European Commission highlighting the importance of investing in effective social policies.  As Commissioner Andor stated, “Social investment today helps to prevent Member States having to pay much higher financial and social bills tomorrow”. In this light, investment in education and welfare systems and a sound and performing public sector should be considered in the long term rather than the short term; as an investment rather than a cost. These are investments which will moreover bring economic and financial stability in the long run.

This week´s report also urges that social dialogue should not be considered as a preventative measure to widespread opposition in society, but must be viewed as a means of securing stability in reforms. In this sense, the report underlines the added value of social dialogue as a “relevant means of addressing the crisis and contributing to creating favourable conditions for growth and employment”. Social partners not only have a key role to play in protecting the public sector, but should be recognised as making a positive contribution to economic growth.

Klaus Heeger, CESI Secretary General underlined the importance of social dialogue: “Without the inclusion of social partners, the difficult and often harsh reforms imposed by governments will not be accepted by society. The impact of austerity throughout the crisis has proven this. In the coming months and years we need to see a reverse of these trends in social dialogue. Otherwise, not only is it the public sector that is in danger, but as the report points out, European economies at large are at risk.”