Trade Union Recipe For A Strong Economy And Workers’ Rights

Veronica Nilsson

The Commission’s latest so-called Country Specific Recommendations on strengthening the European economy show a slightly greater emphasis on social issues: a welcome (if inadequate) shift, in trade union eyes. This translates into more flexibility on budget deficits, and recognition of the importance of education and training, quality public services and access to affordable childcare.

The Commission also identifies some of the worst examples of workers’ exploitation, such as the abuse of fixed-term employment contracts in Poland (one of the highest proportions in the EU), the lack of social protection for self-employed people in the Netherlands, or the seven million ‘mini-jobs’ in Germany.

And yet the underlying narrative remains the same old story. Despite opposition from the European Trade Union Confederation (ETUC) and national unions, the message is still: austerity, structural reforms and deregulation.

This approach has already brought precarious jobs, lower wages, lack of investment and growing inequality. It has also undermined collective bargaining and social dialogue, even though these are known to be a vital ingredient in successful economies. The Commission is once more pushing for the decentralisation of bargaining and meddling in the role of employers and trade unions to agree on wages and working conditions.

It is not a lack of flexibility that is damaging EU labour markets, but the escalation in precarious work, fixed-term, involuntary part-time contracts and bogus self-employment. The recommendations fail to tackle the growing share of contracts of less than one month in France, for example, or job insecurity in Cyprus, where almost 95% of workers on temporary contracts want permanent employment – choosing instead to attack the cost of labour.

Underemployment is widespread across Europe. New figures from Eurostat reveal that over ten million workers in the EU are in involuntary part-time jobs, two-thirds of them women. Almost one-quarter of the one-in-five EU workers employed part-time say they would prefer a full-time job. The problem is most acute in southern Europe, where the proportion of underemployed part-time workers rises from 46% in Portugal and 54% in Spain to 68% in Cyprus and 72% in Greece.

The impact of precarious work

Work is changing. The growing range of non-standard employment contracts in the EU now covers on-demand, on-call, casual and agency work, job-sharing, lending and pool arrangements, and crowd-sourcing. The Commission itself admits these generate uncertainty, fewer working hours, less social protection and lower autonomy, and could result in “multiple disadvantages” in working conditions, pay, training and career opportunities. And, whereas it was once thought that precarious work could be a springboard into a decent job, research now points to “low transition rates from temporary to permanent regular contracts”. In other words, there is little hope of escape for people doing rotten jobs.

Crowdworking platforms hire online freelance workers on demand. But an ILO survey in May 2016 found widespread low pay, underemployment and unfair treatment. Transnational crowdworking platforms should be treated as employers and compelled to comply with national employment regulations. Workers operate not in a ‘cloud’ but in their own countries.

Another accelerating trend is the collaborative economy. In its recent Communication the Commission values this growing sector at €28 billion, and claims it could add between €160bn and €572bn to the EU economy. But workers are covered by a patchwork of rules which “may create uncertainty as to applicable rights and the level of social protection”.

Eurofound last year mapped these ‘new forms of employment’ and called for stronger worker protection, either through legislation or collective bargaining.

Digitalisation could bring new jobs, more flexible work organisation and new forms of collaboration. But the potential threats include massive loss of medium-skilled jobs, a blurring of the boundary between work and home life, higher surveillance, greater inequalities and weakening of trade union organisation. The ETUC has called for a permanent European Forum to shape the future of digitalisation in consultation with social partners.

More investment needed

The Country Specific Recommendations fail to acknowledge the scale of investment needed in Europe to create jobs and to maintain and improve public services – especially to help refugees to integrate into European labour markets and society.

Exceptionally, the Recommendation to Germany acknowledges that “weak domestic investment hampers potential growth” and concludes that “increased investment would raise Germany’s growth potential and help sustain the recovery in the euro area”. However, for the most part, the Commission focuses more on making things easier for business, even if that means lowering regulatory standards for workers.

Investment in Europe is still below pre-crisis levels, comprising a diminishing share of GDP, and especially in the public sector it has been dropping since 2009 (see figure 1).

Figure 1

Source: Eurostat

The Commission claims its Juncker investment plan is working. But we see little evidence that funds are going to the countries and sectors where they are most needed. That is why we maintain our demand for governments to invest 2% of GDP annually for the next ten years in creating jobs, greening economies and boosting social standards.

A wage rise

The ETUC was disappointed to see the Commission renewing its attack on higher minimum wages, especially in France and Portugal, and failing to encourage wage growth in countries where statutory minimum rates are still too low. Our research shows that in Italy and the Nordic countries, where minimum wages are set by collective agreement, there are fewer low-wage workers. We want a minimum wage of 60% of the national median, which would benefit 16% of EU workers, but so far only France and Luxembourg have achieved this.

The ETUC is convinced that workers in the EU need an overall wage rise to restore growth through internal demand and tackle the inequality that is threatening the stability of societies.

So we are backing a campaign to win higher wages across the EU. Fairness would dictate that as productivity rises, workers should receive a consistent share of the wealth created. But this has not been the case in Europe for decades. Since the end of the 1970s, the share of wages as a proportion of GDP has been falling in the euro area (see figure 2).

Figure 2

Source: European Commission AMECO database, Morgan Stanley Research

According to research by the European Trade Union Institute (ETUI), the only countries where real wages have outstripped productivity gains by more than 2% since 2014 are Hungary and the Baltic States. By favouring sector or company-level rather than national productivity as the benchmark, the Commission risks increasing national wage inequalities.

The trade union movement’s recommendations to both the Commission and the Member States can be summarised simply: adopt policies to achieve recovery and sustainable growth through social justice and equality, boost internal demand and offer a fair deal to workers and their families. That would be the best way to restore trust in Europe and roll back the tide of nationalism gathering force across the continent. With the Brexit debate threatening to split the EU apart no matter what the outcome, trade unions are looking for a positive vision of Europe’s future.

Veronica Nilsson

Veronica Nilsson is acting general secretary of the Trade Union Advisory Committee to the Organisation for Economic Co-operation and Development.