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Troika policy: social consequences cannot be ignored
The weakening of collective agreements, high levels of unemployment and the violation of fundamental social rights were the main social consequences in Greece, Cyprus, Portugal, and Ireland, the four countries subject to the Troika's programmes, said employment MEPs and experts at a public hearing on Thursday.
Speakers recognized the need to reduce public deficits but pointed out that the policies implemented did not produce the expected economic growth and competitiveness.
“The social side cannot stay out of the Troika programmes analysis. Millions of citizens are victims of those programmes. In order to avoid a fracture between institutions and citizens, there is a need for a democratic dialogue,” said the rapporteur, Alejandro Cercas (S&D, ES).
The aim of the labour market reforms was to regain competitiveness through direct intervention, such as wage cuts and structural reforms suc as changes in collective bargaining arrangements, said Thorsten Schulten from the German Institute for Economic and Social Research (WSI).
However, the results was that collective agreements were weakened, experts said, pointing to the decline in sectoral agreements and the increase in company agreements. For example, in Portugal, the number of employees covered by agreements fell from 1.9 million in 2008 to 328,000 in 2012.
Speakers said Greece, Cyprus, Portugal, and Ireland, the countries subject to Troika policies each suffered a hike in their unemployment rates, with a disproportionate impact on young people, leading to emigration, which more than doubled in all those countries. Many small firms have also disappeared.
The charter of social rights from the Council of Europe was violated, said Peter Stangos from the European Committee of Social Rights and the number of citizens at risk of poverty is increasing.
What policies for the future?
For Raymond Torres, Director of the Institute of Labour Studies at the International Labour Organisation (ILO), there is a need to change perceptions, such as the idea that labour regulation harms the economy, and suggested involving the ILO in the Troika's policy-making. Budgetary adjustments need to be favorable to job creation, monetary union has to go hand in hand with social policy and a regular evaluation mechanism is needed, he added.
“Several mistakes were made and one of them was an incorrect estimation of the situation. Things could have been done better. Reduced deficit, reforms but also encouraged economic growth are the three main pillars,” said José Silva Peneda, President of the Economic and Social Council of Portugal and a former MEP.
Procedure : own-initiative
Committee vote: February 2014
In the Chair: Pervenche Berès (S&D, FR)