MEP’s, ILO and Council of Europe point the finger at Troika mistakes

9 Jan 2014, keywords : ,

The Employment and Social Affairs Committee of the European Parliament today (9th January) held a hearing on Employment and social aspects of the Troika (ECB, European Commission and IMF) operations with regard to euro area programme countries. The results of the hearing will contribute to a report by Alejandro Cercas MEP on the actions of the Troika in financial assistance programmes, with an emphasis on employment and social aspects. CESI met with Mr Cercas yesterday to underline the damage inflicted upon public services and public sector workers by the measures proposed by the Troika.

MEP’s, ILO and Council of Europe point the finger at Troika mistakes

The hearing was called to investigate the actions taken by the Troika in the context of the crisis, which has led some countries to request financial assistance, received in return for national reforms. The actions have raised many concerns amongst citizens; not only in terms of democratic accountability and a fundamental lack of transparency in how the Troika operates, but also the high economic and social price which citizens are now paying.

Representatives from the International Labour Organisation (ILO), the Council of Europe and the Economic and Social Council (CES) in Portugal all gave their point of views to a busy room on the repercussions of the work carried out by the Troika. The consensus in the room, supported by a majority of MEPS present, was that too many mistakes were made in terms of assessing the impact of reform policies.

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One such mistake, pointed out by José Silva Peneda, President of CES Portugal, was the disregard for public sector workers when reforms were being carried out. In his words, the “pain and sacrifice were greater than the results obtained by these actions”.

The Director of the International Institute of Labour Studies ILO, Raymond Torres, underlined that the negative effects of the Troika’s actions had been underestimated. Reforms happened too fast and without care, in particular in terms of how the social partners were dealt with.

Thorsten Schulten from the German Institute for Economic and Social Research focused on how the actions of the Troika had weakened collective bargaining in the programme countries. Furthermore, these countries have experienced a dramatic decline in collective bargaining coverage. Mr Schulten pointed out that the models employed by the Troika were similar to models advocated by the European Commission in its Labour Market development 2012 report, only achieved by different means.

MEPs across the board spoke out about the issue recalling experiences in their respective countries in terms of the Troika’s legacy: spending cuts, low consumption, privatisation, brain-drain low demand, low growth, persistent debt and a greater democratic deficit than ever before. Thomas Mann MEP (EPP, DE) reminded others that it was important that household debts be brought into check, but conceded that reforms which are backed by citizens are important.

The report’s author, Alejandro Cercas (S&D, ES), called for the ILO to become more involved, together with the European Parliament, in future EU responses in terms of economic policies. In reponse, the ILO Director admitted that it had not been properly consulted by the Troika, otherwise a more balanced approach may have been taken.

CESI recently visited Mr Cercas, the MEP drafting the report, to underline the importance of a strong and well-functioning public sector, in particular in times of economic crisis. We were also given the opportunity to stress the central role which effective social dialogue must play when reforms of this type are being carried out.