Austerity will bring coordinated protest

New economic governance plans will damage rights of workers and bring people to the streets, claims John Monks

Economic Governance has become a major issue at EU level in 2011. On 12 January, by presenting the annual growth survey and the so-called "European Semester", the European Commission officially launched the economic governance process.

It is now up to the European Council to decide what the next steps will be. Discussions will be very tough and the trade union movement wants to have a voice. But these discussions are being concocted very quickly and few outsiders have been involved. The decisions are being taken in the commission, in the Council of Ministers secretariat and bilaterally between France and Germany.

The European Trade Union Confederation has long called for collective economic governance – we have always said that it is impossible to run a monetary union without greater economic coordination and cooperation, particularly in the way that fiscal policies are operating. The crisis of the single currency and the efforts to save Greece and Ireland has accelerated the discussions.

But the economic governance that has come about is not the one we want. On the contrary, according to plans on the table at the moment - it is more a case of austerity governance than economic governance.

The plans include very strict conditions on workers. They state that wages should be in line with the unit labour cost, indexation agreements - where they exist - should be abolished and the pension age should be raised to 67. In this context, the recent Franco-German proposals for a "competitiveness pact for Europe" focus on making indexation clauses redundant and putting a clause in the national constitutions to limit public debt.

Moreover, this obligation to pay off too much debt too quickly will not work. Under this plan, workers have to pay the full price of a crisis which started in the financial service sector and was not caused by indexation agreements or the pension age. Yet, as the financial crisis has proved, it is unrealistic to expect countries to be able to keep to the strict rules in exceptional circumstances such as those we are experiencing now.

The bad debts of the banks and their transfer to the public balance sheet have made it impossible for member states to keep to the current rules and unless there is an exceptional period of growth, some will still be in breach of the stronger rules by 2013.

The situation threatens democracy. Citizens will not tolerate this degree of interference from Europe and will not accept that the price of the euro is so high. We are on a collision course with the authorities. And if these proposals remain, ETUC will continue to oppose the austerity measures which are being applied generally across Europe.

On the other hand, we believe there are more attractive features that could be introduced in a proper economic governance scheme to tackling real problems like fighting unemployment, making the banks safer in the future, establishing a financial transaction tax, defining a major plan to help unemployed young people, issuing Eurobonds and so on.

Unfortunately, these positive ideas have not been taken into account so far. For all these reasons, ETUC will keep mobilising. We will be in the streets of Budapest on April 9. Other major national actions will also take place in some other capital cities. The European trade union movement is asking for a more constructive approach to economic governance, which should be growth friendly and not just make workers cheaper and more flexible.

We want to have negotiations on that and we say no to diktats from European leaders. Trade unions have no option other than resisting, protesting and appealing to the forces of democracy. If Europe overextends itself, the people who become popular will be the ones who refuse to succumb to imposed austerity from Brussels - and all European construction will be in danger.

John Monks is general secretary of the European Trade Union Confederation