The Promised Recovery in Europe Won’t Save Workers
Europe continues to be wrecked by an economic crisis that threatens further unemployment, recession and outright social turmoil. Much time has been devoted to detailing the potential disaster in the weeks ahead as Spain faces a potential banking meltdown and Greece struggles with a major political crisis following the collapse of the post-dictatorship ruling consensus. I, however, wish to dwell on what the alleged salvation will look like for countries at the epicenter of the global financial crisis.
It is worth examining Estonia first, a country that has received the fawning praise of the most neo-liberal of policy advocates. The country has experienced a painful “internal devaluation”, a euphemism for policies that are unrepentant class warfare against workers. Unemployment soared and wages crashed in 2008 and 2009 from austerity policies. Having experienced a massive economic contraction of 14.3% in 2009, the economy saw a recovery in 2010, a recovery that is still being promised to countries like Greece and Portugal who’ve wielded similar austerity policies against workers and the wider public.
But that light at the end of the tunnel isn’t what it’s made out to be. While Estonia’s unemployment rate has fallen from over 18% to 12.1% in 2011, It has since stalled around the 12% mark compared to the pre-crisis level of 4.7%. It’s only a partial recovery as unemployment remains stuck between crisis peak and pre-crisis low. We can see a parallel story in the U.S. which hasn’t even faced Europe’s twin monetary and financial crisis:
For countries like Greece and Spain with unemployment rates above 21%, with still more contraction and austerity to come, the promised recovery will have a resemblance to the ongoing crisis. What growth there will be will materialize in bonuses for executives while the recovery in employment will be minimal as companies rely on existing work-forces and internships so profits aren’t dented. High unemployment, reduced wages, and hollowed out public services make up the new normality from which future recessions will start.
It isn’t hyperbole when pundits warn that younger generations will experience a reduced standard of living from that of their parents. The middle class is being phased out. After all, in a country like Greece the middle class was built out of the public sector that is now being dismantled by the IMF and European Union. In Spain and Portugal the dismantlement of the middle class is achieved through labor reform laws that enable further downsizing and increased work hours for those who aren’t laid-off. Under the Tory government in the United Kingdom there is a workfare program that gives companies free labor from the ranks of the unemployed. In nearby Ireland, the country’s low corporate tax rate was left untouched while the Irish public endures a new property tax to bailout out their rotten banking sector. All of this amounts to a one sided class conflict in which the wealthy annex more of the economy by socializing loses and generating new profits through free labor or reduced wages.
Economic growth and competitiveness will remain the buzzwords of political and economic discussion, but to make a real difference in the standard of living of working people we’ll have to find new objectives. The much sought economic alternative isn’t in a political party or a collection of tents. It’s the class leverage of workers to shape policy in their own flagrant self-interest.