Europe

European Union’s neo-liberal ’Lisbon agenda’

www.socialistworld.net, 24/03/2004
website of the committee for a workers' international, CWI

In crisis but still a threat to workers

Per-Ake Westerlund, cwi, Sweden

European Union‘s neo-liberal "Lisbon agenda"

In March 2000, the European Union summit in Lisbon adopted the US economy as their model. It was before the so-called ‘new economy‘ was exposed as a myth and before the stock market bubble burst. The assembled mainly social democratic prime ministers and presidents agreed that the US economy was superior on everything - growth, job creation, attracting investment etc.

The result was that the ‘Lisbon Agenda‘ aimed for massive privatisation and deregulation. A detailed timetable was set up for every field, from deregulation of telecommunications to employment policy. The overall target was to make the EU into “the most competitive region in the world“ by 2010.

For four years, the ‘Lisbon Agenda‘ has been used as a whip to introduce worsening conditions for pensioners and workers in the member countries. However, the process has been slowed down by massive protests on the part of workers and people in general. The enthusiasm among politicians has further cooled with the poor results of the process itself. Instead of boosting growth, Lisbon‘s neo-liberal policies have aggravated an already poor performance. EU-wide, GDP growth for 2003 was just 0.8 per cent.

The big three

In the run up to the EU summit of 25-26 March 2004, there is a certain feeling of panic among politicians and economists. The Berlin summit of Schroeder, Blair and Chirac – the leaders of Germany, Britain and France – called for the Lisbon process to be stepped up. They want a special commissioner in the EU for economic and labour market ‘reforms‘. Pensions, health and employment ‘reforms‘ were also specifically mentioned. The ‘big three‘ requested the Commission to focus on ‘industry and competitiveness‘.

For the upcoming summit in Brussels, the ‘Centre for European Reform‘ in London has produced its “Scorecard IV – The status of economic reform in the enlarging EU“. The concern of this lobby group of neo-liberals is that European Union politicians have lost their enthusiasm for both the Lisbon agenda and for enlargement. On the latter, it is obvious that virtually none of the governments of the present EU still present enlargement as something positive. Following silence on the subject in the last few months, enlargement has become something West European countries now have to defend themselves against.

No alternative

On the Lisbon agenda, it is clear that governments are alarmed by the struggle of the working class. At the same time, they do not have any alternative. The attacks on workers, pensioners, women, youth and immigrants in the Lisbon agenda will therefore continue, albeit probably at a slower pace.

“Even the most enthusiastic proponents of the Lisbon agenda can only describe the EU’s performance over the last twelve months as mediocre“. This is how the ‘Scorecard‘ summed up the present situation. Growth was 0.8 per cent and the number of people in work did not grow. On the other hand, “Germany deserves special credit for its Agenda 2010 package of labour market measures, which included cuts to unemployment benefits, the lessening of employment protection laws and reform of its job-seeking agencies“. France is praised for pushing through “painful“ pension reforms. Denmark, Finland and Sweden generally “score well“, according to these neo-liberals, and “Britain, Ireland, the Netherlands and Spain, are highly committed to the Lisbon process“. Criticism is mainly directed against Italy, where Berlusconi has failed to live up to the hope of these right-wingers.

The “key elements of the Lisbon agenda“, according to the Scorecard, are: - “Liberalisation“ - meaning creating a single market for energy, finance and telecom , “Reducing market-distorting state subsidies“, ensuring “that small firms face a more benign environment“, “reducing the burden of pensions on state finances“ and continuing labour market reforms. As with most EU decisions, talk about “sustainable development“ for the environment and people are added to camouflage their real character.

Privatisation

Increased spending on research and development (R&D) is one Lisbon target. The increases since the year 2000, however, have been small and the EU still trails far behind the US and Japan. The EU want a bigger share of R&D to come from private sources, with the EU Commission advocating tax cuts for companies to encourage them to invest in R&D.

Telecom is one ‘success‘ of the Lisbon Agenda. The goal was to break up and privatise the former state monopolies. This has taken place, with the reduction of tens of thousands of jobs. But what about the promise of lower prices? “Local call prices have not fallen as much as expected and were no lower in 2003 than in 1997…And in several member-states including Belgium, Greece, Spain, Italy, Austria, Portugal and Sweden local call prices have risen over recent years“, says the Scorecard. Cuts in prices would in fact be more likely if there were no shareholders demanding bigger profits from the privatised companies.

Gas and electricity are supposed to be fully ‘liberalised‘ by 2004 for companies and 2007 for households. In Sweden, we have seen the consequences already, where electricity now is traded in the same way as shares. The prices (meaning costs to the consumer) can differ from one day to the next, but in general they have increased dramatically over the last few years. The energy sector‘s profits, on the other hand, have increased more than most other sectors.

Water is next. “The Commission is turning its attention to water supplies. The EU’s water sector has a turnover of 80 billion euros a year – more than the gas sector“. In Ireland, a mass campaign, led by CWI members, in 1996 defeated water charges. That kind of campaign will now be needed in other EU countries.

Victory for dockworkers

Another, more recent, victory over neo-liberalism has been the struggle of the dockworkers. All over Europe, dockers have been out on days of action, including strikes, against open tenders for cargo handling. Such a system would have meant replacing dockworkers with temporary workers from different agencies competing for the contract. Jobs would be lost and safety standards undermined. After another new day of strikes and demos, the European parliament in November 2003 voted down the proposal.

The same parliament, however, wants to speed up “full competition“ in railway transport. Some governments, including France, have opposed it: “They point to the sorry state of the British rail network as evidence of the dangers of rapid liberalisation“. The French government is of course not on the side of railway workers. They advocate the same path as the British government – only slower - to avoid both rail chaos and political repercussions.

“Business environment“

The EU has been planning to have a single financial market by 2005. This goal seems more and more unrealistic. The Scorecard points to some of the national tensions involved over the so-called takeover directive. “German businesses and politicians have fought hard against this proposal, fearing that prominent German companies such as Volkswagen could become vulnerable to foreign takeovers“. As a result, member states can opt out of this proposal.

For all the talk about supporting small businesses, these plans mean the destruction of local companies when transnationals get free access across borders. “In January 2004, the Commission embarked on an equally ambitious plan to create a single market in general services, such as retailing, travel, leisure and information technology“. The threat will be greater in the new member states: 50-70 per cent of workers are employed in small or medium sized companies in Eastern and Central Europe.

The EU also aims to “make it easier for firms to send workers abroad on a temporary basis“. A serious challenge will be posed for trade unions to fight for union contracts for all.

As well as the aim of making the EU as a whole ‘more competitive‘, the member states also compete among themselves to offer the best environment for transnational companies. That includes competitive tax cuts, the worsening of workers‘ rights and lowering of state subsidies. The neo-liberals, of course, are campaigning against this state aid. Yet in the year 2001, “The EU 15 provided subsidies worth 86 billion euros, or 0.99 per cent of EU GDP, compared with 82 billion in 2000.“ Interestingly, the increase was a result of previous neo-liberalism: “The UK was responsible for the bulk of this increase, as it bailed out its struggling rail track operator.“ The capitalists are against state subsidies in general, but of course gratefully accept them themselves. The state also has to save businesses which represent a ‘national interest‘, as when the Swedish state bailed out the banks in 1991-94. Taxpayers, mainly workers, have carried the cost for neo-liberal experiments, as well as for capitalist crisis.

The Commission, just following its instructions, has ruled that the French energy giant, EdF, should pay back 1.2 billion euros to the French state. At the moment, however, the leading politicians seem to think that their policies have gone too far. At the summit in Berlin, the ‘big three‘, advised the Commission to go easier on leading national companies. Health, education and postal services are other areas where governments want exemptions from EU and Lisbon competition rules. Still, that would leave the bulk of public sector jobs open for procurement, meaning private companies could take them over.

Unemployment

Full support for capitalist globalisation and attacks on workers’ rights have not produced any of the promised results. In 2003, unemployment increased from 7.7 per cent to 8.0 per cent in the EU. Instead of dealing with unemployment, the Lisbon agenda stresses employment targets, with the aim of reaching 70 per cent employment in 2010. This is completely unrealistic. With 64.3 per cent employment now, “The EU-15 would need to create 15 million extra jobs, and the EU-25 a total of 22 million, to meet the Lisbon employment target“. The member states in Eastern and Central Europe, joining on 1 May, have an average unemployment rate of 15 per cent.

In November 2003, the EU set up an expert group, led by former Dutch Prime Minister, Wim Kok, to propose measures to increase employment. Their proposals include ones “to make labour market regulations simpler and more flexible; to re-design social security systems to make working worthwhile“. In other words, lower level of social benefits and less job protection for workers. Portugal and France get some praise in the Scorecard for policies in this direction.

Pensions

Under the headline “Modernising social protection“, the Scorecard brings up some of the worst attacks on the welfare state, which are, at the same time, policies which have created widespread resistance. The Lisbon agenda wants to increase the effective retirement age by five years, to 65, by 2010. Pensions will be based more on private savings and thereby on a lower level for workers. In Greece, Austria, France and Italy, these proposals have provoked mass struggle, including general strikes. Italy‘s prime minister, Berlusconi, even proposed a ’Maastricht on pensions‘, i.e. common EU rules and targets, as a way to get around national opposition.

Pensions will continue to be a battlefield. “Germany is also planning to enact curbs on generous civil service pensions – a step that the French government has so far shied away from“. Privatisation and cuts in pensions have gone a long way in the new member states. Many of them are following the Swedish pensions ‘reform‘, when a pension based on the 15 best yearly earnings was replaced with a pension based on 40 years, as well as the compulsory privatisation of a part of the pension.

Poverty is increasing in the EU, as a direct result of cuts and lower wages. 55 million people, or 15 per cent of the population in the 15 EU countries, were at risk of being in poverty in 2001, according to the EU Commission. Britain, Belgium and Poland are mentioned in the Scorecard as countries with a high decree of jobless households.

Twelve crucial months

“The next twelve months are therefore crucial for the credibility of the Lisbon reform process,“ is the conclusion of the Scorecard. The neo-liberals fear a slowing down of privatisation and deregulation. The final verdict on Lisbon in the Scorecard is a poor ‘C’”.

“Any softening of the targets would imply that the EU lacked ambition for its economic reform agenda“. Yet, they also warn against including “modernisation of healthcare systems“ in the Lisbon Agenda, making it too extensive.

The air of crisis surrounding the Lisbon discussion reflects the doubts among leading capitalists and politicians about which course to embark on. The bed of roses promised in 2000 has not and will not materialise. On the contrary, crises have followed.

The EU has been formed out of necessity for European capitalism. It is an alliance of European big business, against capitalist competitors in the US and Asia and against workers and welfare states on the home ground. It is these objective needs which have pushed the politicians to try and hold the EU together. At the same time, the inability of capitalism to consistently develop economies and the national interests of the capitalist classes themselves as well as the struggles of the working class against them, all create crisis and stagnation. The Lisbon process will achieve none of its stated aims to create jobs etc, but it will still play a role in the attacks on workers‘ conditions.