Post_8 November 14th 2012:General strike and demonstrations

The Executive Committee of the European Trade Union Confederation (ETUC) called for a Day of Action and Solidarity, across Europe on 14 November in order to mobilize the European trade union movement behind the ETUC policies set out in the ‘Social compact for Europe’.[1]

About forty trade unions from 23 countries responded to the first “anti-austerity day”, a day of protests across all Europe against austerity measures in the Old Continent.[2]

Here there are some initiatives taken by trade unions in different European countries.
Some have suggested the strike, others different types of events.

Spain:
CCOO – UGT – USO: general strike             
Portugal:
CGTP + public services of UGT: general strike
Greece:
GSEE – ADEDY: 3 hours general strike (general strike of 3 hours)
Bulgaria:
PODKREPA: Podkrepa has organized open forums in several large Bulgarian cities against austerity and for job quality.
Malta:
GWU, CMTU, FORUM: The three Maltese Confederations, the Forum of Maltese Unions (for.U.M.), the General Workers Union (GWU) and the Confederation of Malta Trade Unions (CMTU) will be jointly organizing a Half-Day Seminar on the 14th. November where the Press was invited. The emphasis was be on Jobs and Solidarity and not to Austerity Measures.
Mr. John Bencini (FOR.U.M.), Mr. Tony Zarb (GWU) and Mr. William Portelli (CMTU) were the main speakers.
This was the first time that all three confederations were unite for a common cause.
Latvia :
LBAS: LBAS has organized political and media action on the issue of youth unemployment. A delegation of young trade unionists and trade union leaders met the speaker of the Parliament to discuss about youth employment and education.
Italy:
CGIL: General strike of 4 hours
UIL: Action centered on the education
CISL: This trade union organized actions, at the local level, to promote the proposals contained in the Social contract for Europe of CES. The federation of public services has organized a gathering in front of the Chamber of deputies in Rome to protest against budget cuts.
Finland :
SAK, STTK, AKAVA :Take political and media action to call for the respect of workers’ rights in Europe.
Activities included meeting with the Prime Minister and Ministers of Finance and Labour.
Common demands were delivered to the European Commissioner for Economic and Monetary Affairs Olli Rehn and Members of the European Parliament.
France:
CGT – CFDT – UNSA – FSU – SOLIDAIRES : Demonstrations on all the territory for the employment  and the solidarity in Europe. 25 demonstrations in France.[3]

ETUC General Secretary Bernadette Ségol commented: "Europe’s leaders should recognize the full magnitude of yesterday’s European mobilisation. Some 50 trade union organisations from 28 countries participated actively in this day of action. It is impossible to pursue the path of austerity, which is a total failure. According to a recent report by the International Labour Organisation (ILO), the austerity measures implemented in Greece are leading to violations of fundamental rights. We need to change course immediately. The social situation is urgent."[4]

 In this day and in the most of  European Union States  were present not only trade unions but also students, workers and common people that it is contrary to this type of measures.

We must remember that in the recent months there have been many demonstrations against the crisis, as we can see in the two videos below,

Greece http://www.guardian.co.uk/world/video/2012/oct/18/greek-police-demonstrators-athens-video

http://www.guardian.co.uk/world/video/2012/sep/26/greece-general-strike-austerity-video

 

Spain: http://www.guardian.co.uk/world/video/2012/sep/27/spains-anti-austerity-protest-video

but none has reached the size of that of Wednesday!

Demonstrations were numerous and not without clashes; for example riot police arrested at least two protesters in Madrid and hit others with batons, in Rome[5] students pelted police with rocks in a protest over money-saving plans for the school system^[6] , demonstrators in Athens clash with riot police during the general strike in protest.

At the other side, the Chancellor of Germany Angela Merkel said that it’s important to listen the protesters' demands but it’s necessary go forward[7] in this direction.

 http://www.guardian.co.uk/world/video/2012/sep/26/greece-general-strike-austerity-video

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[1] http://www.etuc.org/a/10446

To see the Social Compact Document visit http://www.etuc.org/a/10049

[2] http://it.euronews.com/2012/11/14/sindacati-europei-uniti-qual-e-la-loro-forza/

[3] http://www.etuc.org/IMG/pdf/TableauActions.pdf

[4]  http://www.etuc.org/a/10575

[5] http://www.corriere.it/cronache/12_novembre_14/sciopero-generale-cortei_d14300b6-2e2c-11e2-9c24-e6f239e4fed7.shtml

[6] http://www.reuters.com/article/2012/11/14/us-spain-portugal-strike-idUSBRE8AD00020121114

[7] http://it.euronews.com/2012/11/15/europa-in-piazza-merkel-necessario-andare-avanti/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+euronews%2Fit%2Fhome+%28euronews+-+home+-+it%29

Post_ 7 Spain

The explosion of worldwide economic crisis in 2008 has revealed a greater fragility of Spain compared to other countries. That's because Spain hasn’t created over the decades solid economic foundations of production, and because of the strong unbalance on the the tertiary sector (more than 60% of companies: tourism, transport, trade, telecommunications, financial and insurance services), which has suffered especially from the crisis. After 15 years, at the end of 2008,  GDP shrinks and in February 2009  Spain (as well as Greece, Irleand and Portugal) officially goes into recession. The building, which during the boom years had a major role in tow the spanish economy, during the crisis had a real paralysis. Prices for square meter collapsed and the sale of real estate became very difficult (almost half million of houses built have not been sold ). The crisis has also impacted on tourism, which however didn’t fall because of competitive prices compared to the European average. There is also an exponential growth of social spending.  Former Prime MInister Zapatero was alleged to have bet  too much on the construction industry trying to counter the crisis, financing many public works, not actually necessary (roads, parks, flowerbeds), which allowed the construction companies to go ahead, but without producing neither real wealth nor work for the future. In addition, the premier sought to deny until the last the severity of the economic situation, always speaking of a transitional slowdown. He was forced to resign six months before the end of his mandate because of the collapse of popular support with resulting unprecedented triumph of Partido Popular at early elections in November 2011. In the 2012 the financial crisis and the housing bubble put in serious trouble the economic situation. Banks and Government of Rajoy is forced to turn to EFSF (European Financial Stabilty Facility) to recapitalize Spanish banks. Unemployment raches stellar levels, around 25%, and youth unmployment (relating to young people under 25 years of age) exceeds 50% , these are signs o fan economy in recession as well as the flight of capital abroad and the steady increase in interest rates of government bonds up to 7% and then the spread increase over the German Bund.

The remedial measures taken to limit the damages: cuts and taxes

To combat this trend, in july 2012 the Government operates numerous and important cut: immediate suppression of thirteenth month's salary for state workers as well as reduction of holidays, cuts in unemployment benefits and pensions, increases of VAT from 18 to 21%. Popular protests against these measures are significant, because peoplerebel against the idea of having to pay to repair the crash of financial institutions generated by real estate companies.  The state does not have the means to remedy this deficit and thus tries to reduce costs and increase the tax burden on citizens. In the eyes of the world one of the most powerful images of Spanish crisis is the endless protest of miners in the region of Asturias, in the north of the country, who are asking the Minister Soria to respect the pact between the government and unions which provides aid throughout the 2012 for the mining sector, to achieve the progressive closure of mines not earlier than 2018. The cuts due to the crisis instead would lead to an immediate closing of structures, creating more unemployment in an area not among the richest in the 

peninsula.

Possible strenghts to be leveraged for shooting: exporting and innovation

In front of this almost catastrophic situation, there is anyway a downside positive the Iberian financial sector has proved relatively solid in the subprime crisis (which instead was catastrophic for the United States) and, in addition, many companies have been able to expand significantly in Latin America, China and India. In addition, innovation in several areas (renewable Energy, hi-tec, biotechnology, pharmaceuticals) has reached in Spain excellent levels of development and can be one of the key points for a re birth based on something more concrete than inflated construction investments that has played  a major role to push the country into recession.

Post_6 Crisis,crisis,crisis!!

There is one word that is on everybody's lips in the European Parliament in last years..

This nice video gives a good idea of what is one of the main issues that Institutions must face: even if said in different languages, the problem is the same in all the European Union!

Post 5_Russia and the EU

On 9th and 10th November an international workshop about the changes and perspectivity of contemporary Russia was held at the University of Padua. 

 

The European debt crisis is not only forcing the population of the continent to the immense sacrifices through harsh austerity measures but is also eroding the ability of Europe (and the U.S.) to exert political influence on many countries in difficulty. Of this power vacuum they are taking advantage of some states, such as Russia, China and Turkey, more dynamic economically and with a more aggressive foreign policy. Among them, to have higher interest on Europe is just Moscow.

Russia has joined the World Trade Organization (WTO). This is particularly important for adhesion to the EU: the EU is the main trading partner of Russia, which, in turn, is the third largest trading partner of the EU. For the first time, Russia and the EU will be bound by rules and obligations in multilateral reciprocal trade. ""Today's WTO accession is a major step for Russia's further integration into the world economy", said EU Trade Commissioner Karel De Gucht. "It will facilitate investment and trade, help to accelerate the modernisation of the Russian economy and offer plenty of business opportunities for both Russian and European companies. I trust that Russia will meet the international trading rules and standards to which it has committed." [1]

In the economic field the main reason for this approximation is due to the energy resources that Russia has, and Europe imports in massive quantities. But in addition to the exchange of gas and oil, the economic relations between the two areas are characterized by the increasing number of investments that Russian investors are buying in Western countries.

The global crisis has hit hard the Russia, but for a limited period. As of today, we can say that it is out of the crisis, but with a growth rate halved compared to the past decade.

Russia is trying to exert influence on some European countries such as Greece or Cyprus, that are in crisis. Russia is taking advantage of the lack of political will of the European Union, that it doesn’t seems so united. 

 

The conference was particularly interesting from the first to the last intervention.
Many improvements have been discussed and presented and ample space is given to the relationship between Russia and the European Union.

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[1] http://europa.eu/rapid/press-release_IP-12-906_it.htm.

Post 4_What does austerity mean?

According to Sophie Elmhirst austerity is a policy of deficit-cutting by lowering spending via a reduction in the amount of benefits and public services provided. This measure is often used by governments  to reduce their deficit spending and is often coupled with increases in tax[i].

The opinions about austerity are controversial, indeed more economists condemn this decision because in a period of recession and high unemployment  these restrictive measures are counterproductive  and, what is worse,  the austerity policies are applied indiscriminately in different situations-states, each of which represents a sui generis case, to be considered separately.                                                            

The economist Paul Krugman, Nobel Prize in 2008 and reporter for the New York Times, believes that public spending cuts inevitably lead to a reduction in the economic growth of a state. According to him reducing  public spending to reduce the deficit, in a crisis time, is not the best way, not only because aggravates the crisis, but does nothing to reduce the deficit. At the same time Krugman underlines that a weak economy reduces tax revenues and If everyone is trying to reduce their spending the economy can be trapped in what economists call the paradox of thrift, worsening the recession and the GDP fall[ii].

On the other hand we have the supporters of austerity policy who say that this is the way to realize a positive future expectations based on increased private consumption and a global economic recovery. These optimistic expectations have been denied by the International Monetary Fund, in fact in October 2012 announced that the implementation of austerity programs have been consistently overoptimistic, suggesting that tax raise and spending cuts have been doing more damage than expected[iii].

The European situation shows an increase of protest movements and other initiatives that ask a radical change of policies and the current orientation of many European governments in the economic and social issues. We are also seeing an European mobilization: workers and students  against austerity policies as pensions cuts, public services reduction and education spending decrease, mobilization  that give a continental dimension to the all forms of struggle that have taken place in Greece, Spain and Portugal. 

In conclusion we can report what John Maynard Keynes said in 1937: “ The boom, not the slumps, is the right time for austerity at the Treasury”[iv].

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[i] Elmhirst, Sophie (24 September 2010). "Word Games: Austerity". New Statesman. Archived from the original on 29 September 2010. Retrieved 29 September 2010.

[ii] NYT-Paul Krugman-The Austerity Agenda-May 2012

[iii] Brad Plumer (October 12, 2012) "IMF: Austerity is much worse for the economy than we thought" Washington Post

[iv] NYT-Paul Krugman-Keynes Was Right-December 2011

Post 3_Greece

After a decade of fast growth, the underlying weakness of the Greek economy was made evident in October 2009, when the incoming government announced that earlier fiscal data had been misreported. The fiscal deficit and public debt estimates for 2009 were revised to 12.5% and 115.1% of GDP respectively. Financial market reacted by increasing spreads on Greek bonds and by lowering credit ratings.

In an effort to bring public finances back under control, the government announced a first package of austerity measures in March 2010, and a tax reform in April 2010.

When these failed to placate the markets the government negotiated an unprecedented €110 billion rescue package with the European Commission, the European Central Bank and the International Monetary Fund. In return of The rescue package, the governments signed a Memorandum of Economic and Financial Policies which commits the Greek government to sweeping spending cuts and steep tax increases over three years, aimed to reduce the fiscal deficit below 3% of GDP by 2014.

The main policy changes were as follows:

-Direct taxes and contributions (e.g. Introduction of ‘Pensioners’ Solidarity Contribution’, i.e. a special tax on pensions).

-Indirect taxes (e.g. Excise duty on tobacco, alcohol and fuel increased by 30% or Increases in the standard rate of VAT from 19% to 23% ).

- Benefits and tax credits (e.g. the 13th and 14th monthly pension payments were abolished).

-Public sector pay (e.g. special allowances paid to civil servants were reduced by 20% and public sector wages frozen in 2010-2012 at their 2009 level).

Post 2_Austerity measures

This is the synthesis of a work made by European Commission about social effects of austerity measures taken in Europe after that the economic crisis has widely spread over the most of the countries.

The economic crisis and the austerity measures to counter it are widely expected to cause poverty and inequality to rise sharply. In this work it is taken into account the situation of four European welfare states which are among the worst hit by the crisis. However, the degree of fiscal consolidation they have set out to achieve varies, and so does the policy mix chosen to achieve it. This analysis addresses the question of how socially fair that policy mix is.

Which measures count as austerity measures?

In some countries explicit packages of reforms have been labeled as austerity measures. While mostly involving tax increases and cuts in social benefits and public sector pay, they may also include increases in some benefits or reductions in taxes for certain groups to be protected. In any case, the package as a whole can be easily identified. In other countries it is not so clear how policy would have evolved in the absence of the budgetary crisis.

The counterfactual.

The way in which the base scenario is simulated (i.e.”what would have happened in the absence of the crisis”) is critical for the evaluation of the effects of the austerity measures. It is also noticeable that the time periods not only span different lengths of time but also refer to different periods in times across countries, depending on the period in which austerity measures have been introduced. In each case the pre-tax and benefit income level and distribution is drawn initially from data from the recent, pre-crisis past.

Which measures can be simulated?

In most countries austerity measures take the form of some combination of: (i) reductions in cash benefits (and public pensions); (ii) increases in direct taxes and contributions; (iii) increases in indirect taxes; (iv) reductions in public services that have an indirect impacton the welfare of households using them; (v)  reductions in public expenditure that cannot be allocated to households (e.g. pure public goods like defense spending) and increases in taxes that are not straightforward to allocate to households; (vi) cuts in public sector pay (vii) cuts in public sector employment.

The eventual effect on the public budget will be the net effect of these changes.

These simulations are effectively measuring the effects of the austerity measures on populations with pre-crisis characteristics. This work do not attempt to model here behavioral or macro-economic effects.

Specifically, wider aspects of the crisis beyond the austerity measures are ignored, even though the latter may arguably aggravate the former, at least to some extend.

The European tax-benefit model EUROMOD

EUROMOD is a multi-country, Europe-wide tax-benefit micro simulation model that provides measures of direct taxes, social contributions and cash benefits as well as market incomes in a comparable way across countries.

For the full work of European Commission visit:  Http://ec.europa.eu/social/BlobServlet?docId=6726&langId=en