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09 January 2014

EP: 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 the four countries subject to the Troika's programmes, said employment MEPs and experts at a public hearing. (Includes comments from EP Groups.)

Speakers recognised 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).

Social Consequences

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.

Press release


ECON evaluation of Troika

ECON is currently preparing an own initiative report evaluating the structure, the role and operations of the 'Troika' (Commission, ECB and the IMF) actions in euro area programme countries. Many citizens in Europe are sensing a lack of accountability and transparency of the working methods of the Troika. An increasing number of petitions, complaints and other citizens' requests have been channelled to the European Parliament in this regard.

A delegation of ECON Committee embarked on delegations to ‘programme countries’, visiting Lisbon on 6-7 January, followed by Nicosia for meetings on 10 January. Meetings will be held with government and opposition representatives, social partners and central bank officials as part of the ECON evaluation of the Troika. The delegation will also visit Ireland on 16-17 January and Greece later in January at a date yet to be determined, next to high level hearings:

  • Hearing of Commission Vice-President Olli Rehn on 13 January;
  • Hearing with former ECB President Jean-Claude Trichet on 14 January;
  • Hearing with ESM Director Klaus Regling on 15 January.

The draft report which is meant to form the basis for discussions, rather than present conclusions at this early stage, will be presented at an extraordinary Committee meeting on 16 January.

Draft enquiry report on the role and operations of the Troika

Audiovisual highlights from the hearing

Responses:


Inquiry: how Parliament will evaluate the impact of Troika measures

The Troika carefully monitors if bailout countries carry out the reforms that have been asked for, but it is now time for it be scrutinised in turn. As there have been many concerns over how the Troika operates, the Parliament is conducting an inquiry. 

The EP's inquiry is headed by Othmar Karas, an Austrian member of the EPP group, and Liem Hoang Ngoc, a French member of the S&D group. Although it is being led by the economic committee, there will also be contributions from the budgetary control, employment and constitutional affairs committees.

Mr Karas, a vice-president of the Parliament, insisted that decisions on the aid programmes require democratic legitimacy: "The EU Parliament must co-decide on common European decisions. It is not sufficient to say national governments are democratically legitimised and that is why we do not need the EU Parliament any more. This would mean turning  the clocks in Europe back by decades."

Mr Hoang Ngoc said: "This enquiry has been set up to provide answers to all of those whose life have been affected by the Troika. Nearly four years on since the Troika was first established in Greece, there is a need to assess in a transparent and democratic way whether it was the best course of action, both in terms of methods and policies."

Press release, 13.1.14


EPP/Karas: EU treaty change needed to address Troika controversy

The EU needs to change its governing treaty to tackle economic crisis in a more balanced way, promoting growth while enforcing fiscal responsibility, says Parliament Vice President Othmar Karas. A member of the EPP Group, Karas says the treaty should give more power to the European Parliament to have a say in taking crisis measures. Karas is part of parliament fact-finding missions that began in Portugal and continue this week in Cyprus and Greece before going on to Ireland.

Press release/video


S&D/Swoboda: "Abolishing the Troikas could be a real victory for the Greek presidency"

Hannes Swoboda, president of the Socialists and Democrats Group in the European Parliament, said:

"The European Commissioners and President Barroso, who are in Athens today, should use the opportunity to witness the reality of living conditions in Greece. The brutal austerity enforced by the Troika has plunged almost half the people in Greece below the poverty line.

"The Troikas have failed and nobody has stopped them – because there is no democratic control. This lack of democratic legitimacy is incompatible with European values. We demand that the Troikas and their disastrous policies are phased out and that the European Commission takes full responsibility for any further programmes.

"I congratulate the Greek government on taking over the EU presidency and look forward to fruitful co-operation and progress on many important European issues. I urge the Greek presidency to highlight the reality of the failure of the Troikas – as opposed to the mirage of austerity that some leaders still want to believe in. If the Troikas were abolished during their presidency, this would be a real victory – for Greece and for Europe."

Press release


Troika bullied Cyprus and Portugal, MEPs say

"Both countries had very little room for manoeuvre in negotiating the terms of the bailouts. What they said basically was that 'a gun was held to our head', especially in Cyprus", Juergen Klute, a left-wing German MEP, told the EUobserver. "And the troika had very little interest in social measures, they were only concerned about cutting back the deficit", he added.

The German politician said his four-member European Parliament delegation found there was a lack of democratic oversight when it came to the work of the troika - made up of the European Commission, the European Central Bank (ECB) and the International Monetary Fund. "We are not saying that the reforms imposed on these countries were not needed, but we are criticising the way it was done - with basically no involvement of national parliaments or social partners", Klute said.

Full article © EUobserver.com, 13.1.14



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