Published on March 21st, 2014 |
by Vittorio Trevitt
Image © Bruxelles5 2010
The European austerity drive and its foreign policy implications for progressives
Since the global financial crisis of 2008, Europe has entered what one may call an age of austerity, in which cuts to wages, benefits, and long-established labour rights have taken precedence over improvements in social welfare provision and crucial spending in essential services such as health and education. The effect of such policies is evident in countries such as Spain, Portugal, and Italy, which have experienced rising levels of poverty and unemployment in the wake of higher taxes, government cuts to public sector jobs and curtailments in social welfare benefits which many depend on for a decent standard of living. So far, such policies (aimed at reducing budgetary deficits) have only increased hardship without there being any signs of an economic turnaround anytime soon. The fact that over 50 percent of people under age 30 are unemployed in Greece and Spain raise the spectre of a lost generation missing out on the opportunities that their parents once had or hoped that their children would enjoy.
The mass protests which have taken place across the EU in the past few years, rallying against cuts to public services and calling for governments to do more to create jobs, demonstrates the extent of public anger to austerity and raises calls for a change of economic policy on a pan-European level.
Britain has been no less affected by this chain of events. The Coalition Government is imposing various cuts on the welfare system, as characterised by the notorious decision to cap benefit rises to 1 percent a year until 2015 (well below the rate of inflation) as a means of finding savings. Not only do such policies inflict greater misery upon the poorest members of our society, but by choking off demand through reductions in purchasing power, they also prevent any chances of a long-term recovery by restraining demand. Within the EU, there are already concerns over the long-term implications of a continued emphasis on austerity, with the centre-right president of the European Commission José Manuel Barroso noting that the austerity programme “has reached its limits in many respects,” while Enrico Letta, until recently the prime minister of Italy, declared the austerity programme to be “no longer sufficient,” and called for a stronger emphasis on the encouragement of growth.
The economic situation in the EU is crucial to Britain as a foreign policy issue, since any economic policy decisions made in the European Parliament will also affect the UK. Local residents here in my home city of Brighton and Hove have experienced the effects of austerity at first hand, with support services reductions for the homeless, care home closures, welfare cuts that have contributed to a rise in child poverty, and hospitals being forced to make efficiency savings (involving staff redundancies) are amongst the numerous measures inflicted upon local residents at this uncertain time in our country’s history.
A potential progressive government here in Britain should make the formulation of a pan-European economic stimulus programme a key part of British foreign policy, and enable Britain to take the lead amongst EU member states in making stimulus and expansion, not austerity and restraint, the key policy aims of the EU as a whole.
As a means of combating austerity, progressive politicians in Britain should promote, on a pan-European level, the harmonisation of the various welfare regimes currently in place. There exist discrepancies amongst the EU in the level of welfare provision, with northern European countries relatively generous in the provision of public housing, social assistance for the indigent, subsidised healthcare, and pensions. While southern European countries, on average, tend to be fairly generous in the latter two, they are far less so in the first two. This is partly the reason why countries like Greece have been particularly affected by rising poverty, with many people lacking unemployment insurance coverage forced to turn to private charities for assistance.
Encouraging a convergence of welfare services and ensuring that there is an equal amount of social support for all categories of the population in each member state will provide a more effective safety net for those who are unemployed. In addition, British progressives could encourage a widening of subsidised childcare services and tax credits across the EU, making it easier for parents to enter the workforce while combating the problem of low pay.
British progressives should also work with their partners in the European parliament in bringing about a convergence in the provision of minimum wages across the region. Seven EU member states currently do not have a national minimum wage, while there remain variations between countries in the adequacy of those rates. British progressives should encourage the formation of an EU-wide minimum wage, set perhaps somewhere between 60 percent and 66 percent of average earnings. This would not only provide greater protection for EU workers, but also stimulate what one might call “the real economy,” with consumers provided greater wealth to boost consumption and increase demand.
As long as EU member states continue to pursue a path of relentless austerity, regardless of the human cost involved, we will continue to see the infliction of ever-greater misery upon people already struggling to get by, both in our local communities and across the EU as a whole. An alternative strategy based on the creation of more effective minimum wage and social security systems aimed at promoting greater social cohesion and encouraging consumer spending to stimulate economic growth, would be a step in the right direction. The choice is there, but the will to implement it is not. Progressives here in Britain and across the EU have an historic opportunity to make that choice a reality.
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