Trade unions on the frontline in the cost-of-living crisis

As the cost of living soars, defending the living standards of workers and their families has become the primary concern of trade unions.

On Friday, European Union energy ministers will meet in emergency session, to discuss measures to mitigate high energy prices and the state of preparedness for the winter. They must take decisive steps to tackle this crisis: immediate action is needed to support families unable to buy food or heat their homes.

Gas prices have risen seven-fold, with a knock-on impact on the cost of electricity. This in turn generates price hikes across the economy. Overheads are higher than ever and energy-intensive, industrial companies are facing growing operational difficulties. The severity of the impact hits each sector differently, from hospitality to manufacturing. But many businesses are already confronting unmanageable increases in running costs, adding to the risk of closures and job losses.

The crisis is now, not sometime in the future. The challenge is to stem the rising cost of living, protect jobs and incomes and share the burdens in a socially just way. Over the summer the European Trade Union Confederation and its national affiliates have proposed urgent measures to tackle this cost-of-living crisis.

Failing to keep pace

The figures are frightening. By July, the EU inflation rate was 9.8 per cent (8.9 per cent in the euro area)—the highest since EU records began. And that overall figure masks huge differences between member states, with inflation in Estonia running at more than 23 per cent and its Baltic neighbours not far behind. By contrast, wage rises have totally failed to keep pace, averaging just 3.8 per cent across the EU so far in 2022. The European Commission has confirmed that prices, not wages, are driving inflation.

At the same time, European companies have increased their profit shares and pay-outs to shareholders. Big corporations, especially in the energy sector, are raising prices for consumers and industry while accumulating massive profits. In August, for example, BP reported that its second-quarter profits had more than trebled, to a 14-year high of €9.3 billion, generating a 10 per cent increase in dividends.

But statistics fail to describe the real stress and hardship among workers across Europe, unable to imagine how they will pay rocketing fuel, food and rent bills this winter. In most EU countries the average annual energy bill is now more than a month’s pay for a minimum-wage worker, based on energy prices for July 2022. In the Netherlands, it requires 48 days’ work to cover it; last year it was 28 days. In four countries—Slovakia, Greece, Czechia and Italy—the average energy bill is now more than a month’s wages even for a worker earning the average salary. While these data refer to July, the crisis facing workers is now even worse, due to more recent increases in the cost of energy, food and other basics.

Six-point plan

That is the reality trade unions are already seeing. The ETUC has responded by setting out a series of urgent measures to tackle the crisis in a six-point plan.

First of all, wages must rise to meet cost-of-living increases and give workers a fair share of higher profits and productivity. Besides the need for minimum wages to be adequate in light of the increased cost of living, strong collective-bargaining systems are key to securing fair pay and must be promoted, in line with the minimum-wage directive. Increased wages and enhanced collective bargaining should be treated as essential tools for a managed and fair way out of the crisis, not as a spanner in the works.

But more will be needed, and quickly, to address the scale of the crisis. Government intervention is vital. Just as during the pandemic, targeted financial support must be offered to vulnerable people who simply cannot make ends meet. A warm home and enough to eat are basic human rights and must be guaranteed to everyone across Europe, with a ban on utility disconnections.

Since the end of 2021, most EU member states have made some provision to assist households, including direct transfers, reduced value-added tax on energy bills or retail price regulation; several have also offered support for businesses. Capping energy bills at an affordable level should be a priority, applied across Europe for as long as the crisis lasts. Also essential is a watertight tax on the excessive profits of energy producers or utilities, with steps to prevent companies and shareholders speculating or profiteering from the crisis.

Anti-crisis measures are necessary at national and European levels. European leaders must urgently agree appropriate supports, such as those provided under the SURE instrument to guarantee employment during the pandemic. SURE aimed to underpin the public expenditure needed to counter the social and economic impact of Covid-19. The cost-of-living crisis threatens to be just as severe and requires a massive effort to protect incomes and jobs in industry, services and the public sector. Support for struggling companies is needed, on condition they maintain jobs and work with trade unions.

Just transition

The dramatic evolution of the crisis, in the wake of Vladimir Putin’s invasion of Ukraine, demonstrates the EU’s failure to invest sufficiently in green energy and ‘just transition’—leaving Europe dependent on Russian fossil fuels—and the need to reform the EU energy market. Energy ministers must agree to accelerate the roll-out of the European Green Deal, on the basis of a strong, just-transition legal framework guaranteeing the creation of secure jobs delivered through social dialogue. Climate action is a major part of the solution to energy supply and affordability.

Energy ministers also need to reassess the entire way the EU energy market works. The trade union movement has long criticised market ‘liberalisation’ rules, which have only contributed to the crisis. The EU should now ensure that energy, and its transport and distribution infrastructure, are treated as a common good and not a market commodity.

Europe must learn the lessons of previous crises and avoid mistakes such as freezing pay, undermining collective bargaining, raising interest rates or returning to the failed austerity agenda.

Trade unions have a vital role to play in the design and implementation of measures to tackle the cost-of-living crisis and must be included in decision-making. This calls for more than talking shops or box-ticking exercises. It means a robust social dialogue which involves trade unions fully—at national, sectoral and company level­—in managing change and developing negotiated, fair and tailor-made solutions.

Across the EU, national unions have already been busy, through collective bargaining and pressing for government action. For example, in July, French trade unions put forward joint demands to their own government, stressing the need for priority actions to increase wages, pensions and income support. In Czechia, the trade union confederation, ČMKOS, organised a national rally in Prague this month, protesting at the massive drop in real incomes and demanding that workers should be able to live in dignity.

In the United Kingdom, the Trades Union Congress is planning an ‘autumn of action’. Next week the TUC Congress will debate ways to combat the cost-of-living crisis, including a motion which calls for the TUC to ‘facilitate and encourage industrial coordination between unions so that workers in dispute can most effectively harness their union power to win’.

Workers and their unions throughout Europe will not stand by while living standards are attacked. Trade unions are expected to escalate and co-ordinate their actions in the coming weeks.

Credibility at stake

The EU and national governments cannot look away. Working people in Europe have just come through a harrowing period of lockdown during the pandemic and now face a new and equally dangerous threat to their wellbeing. The credibility of the EU is at stake and the need for action is urgent.

Next week the commission president, Ursula von der Leyen, will make her State of the Union speech. Working people and trade unions across Europe will be listening carefully. We need a European Union that defends living standards and protects workers and vulnerable people all across Europe. The European institutions must take urgent measures to end the cost-of-living crisis and the ETUC six-point plan provides a solid basis for doing so.