Chianciano, 15-17/07/2009
It is always a pleasure to visit the CGIL and the beautiful region of
Tuscany – the CGIL’s equivalent of the Costa Smeralda. Only a bit more
dignified, I hope.
The setting in which we meet is glorious. But the background is grim and
grey – more like British weather than Italian summer sunshine, more
Manchester than Milan. The Italian economy is set to shrink by 7% and
the same downsizing is evident across Europe. The only dimensions
which are growing are unemployment and public debt.
We know what caused this crisis. As President Lula said – it was the
guys with blue eyes in New York, London and Zurich, and some other
financial centres. These centres used to regard the Italian banking systemas provincial and old fashioned.
Now with all their innovations – dodgy mortgages and credit derivative
swaps which Warren Buffet labelled as weapons of mass destruction, real estate bubbles, wild speculation – they have resembled nothing more than a bunch of medieval alchemists chasing fool’s gold.
No-one is immune. Everyone is affected. The resulting recession is world
wide. The cost is equal to that of a major war. We, and our children, will
still be paying off the debts incurred in 2030.
No-one is immune. Everyone is affected. The resulting recession is world
wide. The cost is equal to that of a major war. We, and our children, will
still be paying off the debts incurred in 2030.
The ETUC response to the crisis is three pronged.
Firstly we are proposing a New Social Deal. We are demanding the same
kind of support for the real economy as banks have obtained. Firms doing useful things must be kept going and helped towards more sustainable technologies. Jobs, wherever possible, must be saved. Governments must spend to compensate for falling demand from the business sector and from workers and their families. And they should do it in a coordinated way with European wide schemes. Solidarity demands that the stronger help the weaker in this crisis. No-one in the EU should be left to walk alone.
As Juan Somavia of the ILO warned recently, social unrest will
mount if the perception is ‘its billions for bankers but pennies for the
people’.
Our call for a New Social Deal, a bigger EU-wide recovery plan, was at
the centre of our recent European Action Days. Following on the united
May 1 demonstrations in France, which were a big success, and big
demonstrations elsewhere on May Day, at least 350,000 trade unionists
took to the streets of Madrid, Brussels, Berlin and Prague to raise the callfor a New Social Deal.
But it was not just jobs that mobilised the workers. There is wide and
deep outrage about the conduct and greed of many in the leadership of the world of financial services. They encouraged short-term, reckless
speculation. They ignored much of the productive economy. Sometimes
they ‘looted’ from their shareholders as they played roulette on the
markets and clocked up their bonuses.
Well, we say ‘never again’ can the world economy be run like a badly
organised casino. Never again casino capitalism.
Out of the wreckage must come a strongly regulated financial sector,
much more directed to sustainable, longer term investments. And it must
be accompanied by progressive taxation, not the flat or low taxes which
have so benefitted the ultra rich.
Well, we say ‘never again’ can the world economy be run like a badly
organised casino. Never again casino capitalism.
Out of the wreckage must come a strongly regulated financial sector,
much more directed to sustainable, longer term investments. And it must
be accompanied by progressive taxation, not the flat or low taxes which
have so benefitted the ultra rich.
The strongest shoulders must bear the
heaviest burdens. Yet at the moment, it is workers who are paying for the crisis with our taxes, our pay and our jobs.
So, we must therefore not allow a return to business as usual of Wall
Street and the City of London, and risk a repeat of the past two years.
If there is a year in history we should use as our guide, it is not 1931 but 1945 when western European countries pulled together to rebuild the
damage caused by war. Although they were bankrupt, countries started to
rebuild their economies and, at the same time, build welfare states and
public services; governments were not timid in the face of big business. If
they had been, they would have been ejected from power. Italy and CGIL
were in the centre of those debates. We must be in the centre of all these
debates.
At the G8 in Aquila last week, the big issues were mostly ducked. There
is no real co-ordination on economic policy, not even in the EU.
The decision of the German Government to seek to insist on a balanced
budget by 2012 will make it more difficult to have fiscal co-ordination in
the EU. So will the decision of the German Constitutional Court on the
Lisbon Treaty.
Although the decision has cleared Germany’s way to sign
the Lisbon Treaty, it has otherwise given a very restrictive verdict for the
future of European integration; in effect, it has made effective European
policy co-ordination unconstitutional in Germany on key issues,
including fiscal and social policy. The Court also gave a damning verdict
on the European Parliament which it defines not as a parliament but as an
assembly representing nations. The Court seems to have forgotten that
Germany is part of the euro area and that many nations share a common
currency.
A future German Government must address these issues.
The German court decision is one of a series of blows to the European
project. The European elections strengthened the centre right, and in
some countries, like my own, the far right did far too well.
The Left, generally, was in retreat with disastrous performances in the
UK, where a weak and unpopular Labour Government is struggling; in
France where the Socialist Party is badly divided; in Italy where political
responses to the Berlusconi government seem ineffective. Is this a crisis
of democratic socialism?
I think it is. Old style Soviet communism collapsed under the weight of
its internal contradictions – and now financial capitalism has had a heart
attack and is on life support courtesy of the taxpayer. The left rightly
does not want to go back to a Soviet type system, with massive public
ownership and a small market sector. But it is unclear what to do about
volatile and unstable capitalism.
The centre right has also moved in a populist and centrist direction, and
is, for the moment, occupying much of the political territory of the centre
left.
What now can be the distinctive position of the democratic Left – just
Keynesianist responses to the recession?
That’s part of it but I want to suggest that as our next area of work, we
take on the whole question of shareholder value driven companies. The
crisis has vividly illustrated the short-term spivishness of not just the
financial markets but of many of our leading companies. We need to
build in responsibility not just to shareholders but to workers,
communities, countries and the environment. We can’t do that at the
national level. Only the European level offers a chance for progress in
this area, and many others.
And we need to prepare our defences of the welfare state, social security
and public services. When the bills for the banks have to be paid, when
the economy starts to recover, we will see the centre right move to make
big cuts. We need to be mobilising now our case for higher taxes on the
rich and comfortable so that the broadest shoulders carry the heaviest
burden; not the weak and vulnerable.
That battle is coming. There are other issues too.
At a CGIL meeting last year in the Villa Borghese, we spoke about recent
legal cases in the European Court of Justice. This is becoming an even
more urgent subject. We must reverse the situation whereby the free
movement of posted workers by their employers has been judged to take
precedence over a trade union’s rights to enforce its collective
agreements. In four cases, the European Court of Justice has found
collective bargaining and the right to strike inferior to free movement of
posted workers. In football terms, the score is ECJ 4, ETUC 0. Now bad
employers have European permission to bring in workers from cheaper
locations to undercut collective agreements and local rates of pay.
Now, if that is not put right soon, with a Social Progress Protocol and a
revised Posted Workers Directive, unions will find it harder and harder to
live with the single market of the EU.
Our economic problems are certainly reminiscent of the 1930s. But we
must never allow our political problems to resemble that decade –
remember when nationalist dictators blamed foreigners, minorities and
migrants for their country’s problems, and waged war on their
neighbours.
The EU was formed to stop that recurring. It has been very successful:
including with the enlargement process. But it will be tested now like
never before, and we must step up our fight for closer union and
European integration.
The EU was formed to stop that recurring. It has been very successful:
including with the enlargement process. But it will be tested now like
never before, and we must step up our fight for closer union and
European integration.
I was in Ireland last week at the Congress of the Irish Unions urging a
‘yes’ vote to the Lisbon Treaty. I pay tribute to Giuliano Amato for his
powerful work on the EU constitution and European integration.
In Italy, in Europe, trade unionism and European unionism must triumph
over neo-liberalism and its companions, greed, nationalism, fascism and
racism. That’s our challenge.
So mobilise to fight the crisis. Put people first and, together, stand up for
a strong, powerful Social Europe.
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