Cost-of-living emergency: Europe needs radical steps

Measures advanced by trade unions, and trade union involvement, will be key to getting through this crisis.

On October 19th, European Union leaders met the social partners—trade unions and employers—at the Tripartite Social Summit for growth and employment. Far from a routine encounter, this autumn the participants confronted an energy crisis, a cost-of-living emergency for European citizens and a war on the EU’s doorstep. Protecting the economy, businesses and workers must be the priority in the coming months.

The meeting should have been an opportunity to celebrate the end of the pandemic, looking forward to a robust, sustainable recovery and substantial improvements in employment and working conditions. Instead, despite the ambitious investment plans of NextGenerationEU, we face the risk of a long and deep recession, largely due to the consequences of the war in Ukraine and the damaging speculation around the supply of energy and goods which have stemmed from it.

Workers’ rights in Ukraine

The European trade union movement fiercely condemned the invasion of Ukraine. We call on Russia to respect Ukraine’s territorial integrity, demanding the immediate cessation of military operations, dialogue and peace talks. We support all necessary sanctions to target not only the interests and assets of the Russian leadership and elites but also Belarus for its part in the military aggression and oppression of its people.

At the same time, we need to draw the attention of all European institutions to the fate of social dialogue and workers’ rights in Ukraine. A recent bill approved by the Ukrainian parliament and signed by the president, Volodymyr Zelenskyy, has banned social partnership, collective bargaining and the right of trade unions to organise in Ukrainian companies with fewer than 250 employees—covering more than 90 per cent of the economy. Social partners in Ukraine are moreover to be completely excluded from any discussion about reconstruction, opening the door to foreign multinational companies, cheap labour and corruption to take over the process of rebuilding the country.

This not only constitutes a clear violation of core International Labour Organization conventions. Even more importantly, it flies in the face of the values of a social-market economy and social dialogue, the foundations of the European social model.

Trade unions, both at European level and in Ukraine, strongly support the country’s accession to the EU. But this must be guided by full respect for the values of the union Ukraine seeks to join—particularly the rule of law and social dialogue.

Enormous strain

The crisis provoked by this dreadful war is bringing an escalation in energy prices, high inflation and disruption of supply chains, putting enormous strain on companies and jobs and pushing more and more people into poverty. We should not be misled by current figures showing a positive evolution in employment. Total working hours have already started falling and so have wages. Companies have been cutting back to survive—but when they are unable to go any further to accommodate soaring costs and economic recession, employment will collapse.

We appreciate the EU institutions’ efforts to implement European solutions, reviving the spirit of solidarity and cohesion we were able to engender during the pandemic. We need however to be aware that this crisis is not only about energy prices and supply but also general inflation and people falling very rapidly into poverty. Besides economic policies, this requires social support for employment and people’s incomes, and a just transition.

And yet, instead of solidarity we see nationalism and self-interest re-emerging, with the richest countries limiting support measures to their own citizens and businesses, while opposing any common instruments at EU level. This is unacceptable and damaging for working people everywhere.

Widening inequalities

Workers are the victims of this crisis, with falling wages and rising prices applying to everyday goods. This is widening inequalities, with low-paid workers and vulnerable people hit hardest.

Wages are not the cause of inflation. We expect employers, governments and the EU to take urgent measures to tackle the cost-of-living crisis through pay rises, emergency support for struggling families, a cap on prices, taxation and redistribution of excess profits and wealth. Wages must grow to meet the increase in the cost of living and ensure workers receive a fair share of profits and productivity gains, while measures to promote collective bargaining are the best way to achieve fair pay and a sustainable economy. We need a swift transposition of the minimum-wages directive in all member states, particularly through action plans to strengthen collective bargaining.

We demand additional support to target people struggling to meet their energy bills, put food on the table and pay the rent. Families in poverty cannot be expected to pay unaffordable bills and disconnection of vital services should be banned.

We urge the European Commission and the Council of the EU to agree on effective price caps, especially on energy bills, and to tax the excessive profits of energy and other companies. Nobody should benefit from exploiting this crisis, so steps must be taken to prevent profiteering, for example by curbing dividends and ending speculation in food prices.

We expect a radical reform of the functioning of the EU energy market. Governments need to recognise that energy is a public good. Public investment is needed to tackle the root causes of the crisis, such as under-investment in green energy and the damaging impact of privatisation.

Emergency instrument

Finally, we urge governments to develop national anti-crisis measures to protect incomes and jobs in industry, services and the public sector. The EU must allow all member states to take such steps, regardless of their ‘fiscal space’. We call on the commission and council urgently to implement a powerful emergency instrument at EU level, strong enough to protect companies and jobs as well as supporting people’s incomes, to finance social measures to cope with the crisis and to promote climate transition in a socially just manner.

This instrument should be based on the positive example of emergency measures agreed in summer 2020—particularly the SURE employment-support programme—but with a broader scope to tackle all the economic and social consequences of the war. REPowerEU and NextGenerationEU are fundamental instruments which we fully support but they are not appropriate for implementing social and employment measures.

Action must be taken urgently with the backing of enough fresh European resources. Financing can come from unspent allocations to existing programmes, but it may also require the EU taking on additional debt. When there is an emergency, emergency solutions are necessary.

The price of inaction or adopting the wrong responses—such as raising interest rates, freezing pay or returning to the failed austerity agenda—will be catastrophic. Trade unions, as always, are eager to assist in finding solutions to the crisis through social dialogue and collective bargaining, at European, national and sectoral levels. The social partners must be fully involved in the design and implementation of all measures if they are to succeed.