European Union: “Speed up the Lisbon Agenda”

Frustrated leaders want to step up privatisation and deregulation

Increase the speed of the "Lisbon Agenda", with broader and deeper deregulations and privatisations. That is the firm advice for the European Union from the High Level Group, led by former Dutch Prime Minister Wim Kok. Basically, it means more of the same recipe that has already deepened the present crisis. Added are proposals modeled on the attacks from European big business, that workers should work longer for less pay,

With an economic growth of only 1 per cent in the eurozone in the third quarter of this year, desperation is growing among politicians and capitalists in the EU. In Germany and France growth was only 0.4 per cent.

The High Level Group (HLG), includes both capitalist leaders and leaders of the trade union bureaucracy, for example Wanja Lundby Wedin, the leader of the Swedish LO (the main trade union federation). The purpose of their report is to give politicians and capitalist better arguments for continued neo-liberal policies. "Far more emphasis must be placed on involving European social partners (read: trade unons) and engaging Europe’s citizens with the case for change".

The Lisbon Agenda is presented as a defence of "longstanding European concerns to advance social cohesion, fairness and environmental protection…At risk — in the medium to long run — is nothing less than the sustainability of the society Europe has built." In other words, privatisations, cuts and reduced wages are actually intended to protect those suffering from these measures!

And the threat, we are told, is not from politicians or companies in Europe:"Competitor countries and regions are moving on as well, threatening Europe’s position in the global economic league table…Europe faces a twin challenge from Asia and the US…The need for reform has to be explained especially to citizens who are not always aware of the urgency and scale of the situation… the clear message must be: if we want to preserve and improve our social model we have to adapt: it is not too late to change." This is the way they hope to cover up the European Union’s neo-liberal offensive.

The Lisbon programme

The programme presented by the HLG is summarised by themselves in three points: Firstly, increasing Europe’s attractiveness for researchers and scientists. Secondly, the free movement of goods and capital and urgent action to create a single market for services, and thirdly, creating an environment more supportive of businesses. To make this more attractive, they sugar it with phrases on improving education and the environment. To reassure the capitalists, however, the HLG underlines that, "Commitment to social cohesion and the environment" should be viewed, "As a means of growth rather than a claim on it".

The content of the Lisbon Agenda is hardly mentioned in the HLG report, only the oft-repeated promises that it will increase economic growth, create jobs etc. In a similar way, the euro is referred to as a "success" without reference to the poor economic results.

Results of deregulation

The HLG, however, outlines a timetable: "Liberalising markets and network industries, notably gas and electricity (2007); postal services (2006); rail transport (2008); and airspace; completing the internal market for financial services (2005)."

In these fields, Sweden has been a pioneer, deregulating and privatising these sectors several years ago. In a recent survey, the results are shown to be contrary to all the promises. Five of six sectors had much higher price increases than the Consumer Price Index (CPI). Prices for rail travel have risen more than twice as fast as the CPI since deregulation in 1988. Since electricity was deregulated in 1996, the CPI has increased 9 per cent, but electricity prices by 86 per cent! Postal services are 80 per cent more expensive, compared to a 14 per cent rise in the CPI since 1993. The cost of deregulated dental care has doubled.

Longer hours, lower wages

The HLG also focuses on the labour market. It makes the point that:"The employment rate rose from 62.5 % in 1999 to 64.3 % in 2003", adding, "Although

not only full-time employment". In fact, a big share of the new jobs are part time and temporary. The EU has no chance of reaching the target of 70 per cent employment in 2010. The HLG wants to, "Remove obstacles to the employment of low-paid workers", meaning creating low-paid jobs with no security.

The HLG denies that the aim of the Lisbon Agenda is to copy the US. However, a number of comparisons are made between the EU and the US. Productivity is lower in the EU, and the gap is growing. But a closer look shows that this is: "Attributed more or less equally to a lower investment per employee and to a slowdown in the rate of technological progress". The difference in productivity is mainly concentrated in the wholesale and retail trade and financial services sectors.

On research and development (R&D), the HLG makes the point that. "Too much US technological advantage is concentrated in defence and defence-related sectors". The HLG proposes: "Public support for R & D at the EU and national levels should be boosted, particularly on key technologies that drive economic growth, both to strengthen the science base and to increase the leverage effect on R & D investment by the private sector. Public-private partnerships should be facilitated and encouraged as a means of boosting investment". The latter should include "Europe-wide public-private partnerships". When companies in many countries are reporting record profits, they maintain that the state should still subsidise them, thereby further undermining public sector finances. On productivity, the HLG also campaigns for longer working time and more working days. The EU should be, "Providing the right legal and financial incentives for workers to work longer".

The Bolkestein threat

A major problem, in the view of the HLG, is that, "Europe remains fragmented into separate national markets…Intra-EU trade in manufactured goods has been shrinking since 2001, and it is the same story in services". That is why the HLG stresses the internal market of the EU. "The internal market permits those companies and sectors that have relative competitive strengths to build on their specialist advantages and grow. This becomes a self-reinforcing trend. Resources are used by those most capable of using them, who in turn can build up economies of scale so lowering costs and prices". Whether prices will go down remains to be seen, but the downward pressure on wages ("costs") is the main target.

The HLG proposes, "Legislation to remove obstacles to the free movement of services by the end of 2005" and to "open more sectors to EU-wide competition". The "Bolkestein directive" for the deregulation of all service activity in the EU (named after the Dutch EU commissioner, Fritz Bolkestein) is a key proposal in this field. It is based on the "country of origin principle". A company based in, for example, Slovakia could then compete with Slovakian wages in Germany or Sweden. The proposal is limited to the service sector, but that covers 70 % of economic activity in the EU.

The "climate for business" is of course never good enough, according to the capitalists. Now EU enlargement has brought in several new member states with lower wages and taxes. This is used to blackmail unions and workers in the older EU countries. The HLG is proposing, "Harmonisation of the corporate tax base throughout the Union".

The public sector

The HLG, "Supports the recent proposed reforms by the European Commission of the Stability and Growth Pact" which de facto abolish the risk of countries with high public sector deficits being fined by the EU. But that does not mean that the cuts are over. The demographic scare story – that, "By 2050… the numbers of those aged over 65 years will have increased by 60 %" – is used to demand further huge cuts in pensions and health care. Lower pensions are seen as "incentives" for older workers "to stay active longer". In general the HLG is promoting, "The modernisation of social policy, pensions and healthcare systems, promoting the adaptability of the labour market or even education systems", ie deeper and broader counter-reforms.

The future of Lisbon

The German prime minister, Gerhard Schröder, the British finance minister, Gordon Brown, and the French former IMF boss, Michel Camdessus, are among leading spokespersons in the EU showing impatience over poor economic results. They are all advocating a speeding up of the Lisbon process. The HLG report also reflects this dissatisfaction in leading circles: "There is little benefit in governments agreeing to measures in Brussels if they do not then show the same commitment when it comes to implementing those measures at national level."

The urgency is stressed: "Should the 2010 deadline be lifted? Again no." The HLG instead proposes a strong national touch upon the EU plans: "A partnership for reform constructed within each member state’s particular national context. a national action programme, setting out roadmaps, including milestones, about how it is going to achieve the Lisbon targets". The HLG wants: "League tables with rankings (1 to 25)", covering 14 indicators.

To unconsciously underline the problem they are facing, the HLG says that, "Europe’s leaders need to instil hope that tomorrow will be better than today". There is no way this will take place in a broad scale over Europe today. The hope for the capitalists instead lies in the role played by the trade union leaders in refusing to organise effective struggle, and in the lack of fighting socialist parties with a mass base.

Notwithstanding these shortcomings, the mass struggle of workers and youth against the neo-liberalism of the Lisbon agenda will continue. The slow rate of implementation of Lisbon by the politicians is caused by the fear of such mass protests, as well as by the lack of results from the measures taken so far. The HLG report, however, underlines that the programme of huge counter reform is still there, reinforced by EU enlargement. This Lisbon Agenda will remain a key battlefield for the class struggle in Europe.

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December 2004