EFSF leverage: concern for employee rights

The European Union of Independent Trade Unions (CESI) is watching the development of the international financial and Euro debt crisis with great concern. The general exultation over the successful summit on 26th October is mixed with scepticism. This is not only due to the announced Greek referendum but also with regard to the consequences of massive purchases of state bonds by non-European states. “We must be careful not to pawn our social model en passant,” CESI vice president Romain Wolff warns. The financial and fiscal expert from Luxemburg sees risks in a massive involvement of foreign investors in the bonds to be secured by the European Financial Stability Facility (EFSF). “How high will the political price be?” Wolff asks.

In principle, investors from outside Europe are very welcome, Romain Wolff says. The economy is dependent on close integration into the global economy and the European welfare model is based on this economic linking. Direct foreign investments are therefore a mainstay of the EU domestic market. Here, existing jobs would be secured and new ones created. However, the leverage of the EFSF volume with the aid of foreign investors is quite different in terms of quality. “Direct investments in markets are one thing; multi-billion entries into state bonds of over indebted Euro states are another. The question emerges of the political and economic dependencies ultimately arising as a result,” Wolff says.

“We must look closely at who wants to invest in us,” Wolff stated. The investors concerned are largely state funds from China and the Gulf Emirates. “However, they do it neither purely out of charity nor in order to secure the European sales market.” The CESI vice president fears that state funds controlled by dictatorial regimes and with huge strength due to their financial power will sooner or later gain influence over the political orientations of the borrowers. “In the long term, I think our European social model is in danger, which – with all the differences in the detail – displays certain common elements when compared with states under authoritarian governments.” Wolff considers very specific trade union rights to be at risk. “By global comparison, we Europeans are unique with our participative management. Pluralistic and democratic employee participation is far from being the rule. We must take care that our states do not become so dependent that we gradually lose these rights and many social achievements.”