European social partners discuss economic recovery plan for EU

In the debate about the measures needed to face the current financial and economic crisis, the European social partners have expressed their views. While BusinessEurope, representing the employer side, calls for a renewal of the European social market economy, the European Trade Union Confederation proposes a ‘new green deal’ seeking ‘to end “casino capitalism” and base growth and jobs on sustainable investment, fair wages and distributive justice’.

European Economic Recovery Plan

In response to the current financial and economic crisis, the Council of the European Union expressed its approval of the European Commission’s European Economic Recovery Plan at its summit on 12 December 2008. The plan has earmarked €200 billion for economic recovery, which is equivalent to 1.5% of the EU’s gross domestic product (GDP). The main portion of this amount – €170 billion or 1.2% of GDP – would come from the Member States’ national budgets, while the rest would be sourced from the EU budget and the European Investment Bank (EIB). However, the debate about the specific measures to be taken has only begun.

BusinessEurope proposes to rebuild social market economy

While the social partners on the employee and employer side both agree that the current crises need a complete rethinking of economic policies and cannot be solved by taking a ‘business as usual’ approach, their specific proposals differ fundamentally.

In an address to the European Economic and Social Committee on 22–23 January 2009, the Director General of BusinessEurope, Philippe de Buck, underlined the need ‘to rebuild the European Social Market Economy’. Mr de Buck acknowledges that the current crisis in the financial sector ‘has to a large extent a private business origin. It was not driven by regulation’. However, he insists that certain elements should not be questioned, particularly market economy principles and the role of the European Central Bank (ECB). Hence, his specific proposals do not differ that much from the ‘business as usual’ approach: reaffirming the principles of the market economy, carefully using the flexibilities embedded in the Stability and Growth Pact, strengthening the role of the ECB, and reducing non-wage labour costs. A more controversial factor is Mr de Buck’s call for the rebalancing of flexicurity: ‘we need more than ever security for companies and more flexibility for workers.’

Trade unions call for ‘new green deal’

In its response to the crisis, the European Trade Union Confederation (ETUC) referred to a term used by the new President of the United States (US), Barack Obama, in his presidential campaign – namely, the proposal for a ‘new green deal’. This proposal is part of the Resolution on a European Recovery Programme (129Kb PDF), adopted by ETUC’s Executive Committee on 5 December 2008.

ETUC’s Secretary General, John Monks, explained the background of this proposal in an interview with the information website EurActiv on 8 December 2008.

I would like to think that all are investing in what some are already calling the New Green Deal, taking the old Roosevelt package and adding sustainability to it. There is an opportunity to reorient European economy towards sustainability. The areas that I would like to come out more strongly are investment in renewable energy, sustainable engines and new lifestyles. Make Europe genuinely the world leader in environmental engineering, in reducing carbon emissions and sustainability. It is an opportunity we must seize.

As part of the ‘new green deal’, ETUC is calling for a supplemental investment programme worth another 1% of GDP. This programme would be aimed at ‘investing in the development of new industries, rational and sustainable energies, European networks and social housing’; it would also encompass a European low-carbon economy adaptation fund in order to accompany the transitions imposed on workers who lost their jobs due to climate change measures.

A closer look at these proposals reflects the traditional preoccupations of trade unions – such as the call for financial aid for workers affected by the transition to a low-carbon economy. Sustainable investment, fair wages and distributive justice are inextricably linked. The ‘new green deal’ is also being viewed as a ‘new social deal’. However, as the example of the car industry illustrates, the call for a ‘new green deal’ is not only a new label for classic trade union claims. In its response to the climate change package adopted at the European Council on 11–12 December 2008, ETUC argues that ‘delaying the introduction of strict standards for CO2 emissions from cars will not solve the serious crisis the automotive industry is experiencing at present’.

Commentary

Both BusinessEurope and ETUC promote a rethinking of economic policies in the wake of the current financial and economic crisis. However, a closer look reveals that most of their proposals reflect traditional employer and trade union preoccupations. Hence, both sides are a long way off from the new thinking that they demand from others. Nevertheless, at least ETUC’s call for a ‘new green deal’ is a departure from traditional trade union thinking, as the unions have for a long time viewed policies to reduce CO2 emissions and promote renewable energies as a threat to industries that are a stronghold of trade unionism. By linking the ‘new green deal’ to a ‘new social deal’, they are offering an original contribution to the current debate. The common effort to develop a sustainable and environmentally friendly economy can now be viewed as a new common ground for social dialogue, which may be able to overcome traditional differences between the social partners.

Stefan Lücking, Technical University Munich

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