Effects of EMU on industrial relations debated

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In August 1998, the Institute of Labour of the Greek General Confederation of Labour organised a meeting to discuss the effects of EMU on the labour market in Greece, at which contrasting views were aired.

On 24 August 1998, the Institute of Labour of the Greek General Confederation of Labour (INE/GSEE) held a meeting on the effects of EU Economic and Monetary Union (EMU) on the Greek labour market. Speakers began by referring to the conditions of high unemployment and the gradual increase in poverty in EU Member States. Some pointed to the benefits of reduced capital costs that will emanate from introduction of the single currency, the euro. These speakers did not think that the participating countries' loss of the ability to conduct exchange-rate policy would have serious consequences; in their view, structural changes are necessary to bring about greater labour market and product flexibility, and these changes will allow Greece successfully to meet the conditions for joining EMU.

In contrast, other speakers maintained that the lack of an "anti-cyclical" policy and the inflexible implementation of the EMU "stability pact" will make it difficult to intervene to cope with recessions in the EU. They also stated the need for a common fiscal policy to deal with the "non-symmetrical shocks" that may arise from the different structural characteristics of national economies within EMU. These speakers were of the opinion that, whereas each country currently has its own currency, and given that exchange and monetary policy are the tools for adjusting national economies to the demands of globalisation, membership in EMU will deprive national governments and central banks of this possibility. Adjustment to international competition will then be carried out by redistribution of income, to the detriment of labour, because wages will be converted into an "adjustment variable" instead of exchange parity.

Finally, the second group of speakers believe that in the long run the position of the Greek economy can be improved only by increasing the productivity of labour. This is because the unequal rates of productivity increase in the Member States could in the long term lead to concentration of production in certain areas, and a corresponding weakening in other areas. In the case of Greece, the long-term trend of labour productivity is a slow rate of increase. The productivity gap between Greece and the other countries of the EU can be reduced only in the long term; first, because this gap is very wide (whether taken as an absolute level or as a rate of change); and second, because the long-term upward trend of productivity is a figure which is extremely resistant to change. If Greece's rates of productivity increase are not improved, it will be facing the danger of slow growth when it joins EMU.

Certain other speakers stressed that the run-up to EMU will have an unsettling effect on labour relations and social policy because, according to the dominant view, unemployment will be reduced by cutting labour costs. This third group of speakers underlined the need for a Europe-wide interface of the trade union movement, in order to deal with problems jointly.