How the EU crisis hit countries saved the German and French mega-banks from bankruptcy and still pay the costs

László Andor, Member of the EC in charge of Employment, Social Affairs and Inclusion, had a trip to Košice (Slovakia) where he visited Hrebendova 5 kindergarten located in the Romani borough of Luník IX. Peter Pollák, Plenipotentiary Minister of the Slovak Government for Roma Communities, crouched on the left, in the front, talking to a schoolgirl, in the presence of a member of the press, Tomáš Minárik, the interpreter, László Andor and Anna Klepáčová, director of Hrebendova 5 kindergarten, standing in the background from left to right. After the politicians went away the usual misery returned to this rundown region. (EC Audiovisual Services, 23/04/2014).

The European Commissioner for Employment, Social Affairs and Inclusion László Andor, speaking in a Conference on working conditions yesterday in Brussels, revealed that during the past few years the working conditions in the EU have greatly deteriorated, despite the ambitious targets set for the 2020 EU Strategy.

According to Eurostat data:

*Around 60% of temporary employees in 2012 wanted but could not find a permanent job.

*Only just over half of the respondents — 53% — say working conditions in their country are good, while 57% say working conditions have deteriorated over the last five years.

*Findings tend to confirm an increase in work intensity. Stress clearly emerges as the most important perceived risk at work (for 53% of working respondents).

*Dissatisfaction regarding workload, pace of work and long working days (more than 13 hours) is more widespread than other issues such as lack of interest in the tasks or inadequate rest periods on a weekly or annual basis.

*Regarding work organisation and work-life balance, 40% of respondents declare that they are not offered the possibility to use flexible working arrangements.

*In the area of health and safety at work, less than one in three workers declared that there are measures in place at their workplace to address emerging risks, or directed to older and chronically ill workers.

In countries with high unemployment rates like Greece and Spain the labour market has collapsed. Deregulation and poor observance and enforcement of the remaining protective labour rules have led to unseen before practices. Wages below legal minimums, longer working hours and reduced leave days have become the standard.

Diverging, not converging

The Commissioner had more to say. He elaborated on the growing dualism of the EU labour market and the widening discrepancy of working conditions between north and south countries. Nevertheless, he avoided to use the north-south division and rather utilized the core and periphery diversity. Whatever the right term might be to better describe the growing divergence between the north and the south of the EU, the truth is that the economic crisis and the austerity cure followed to overcome it have exacerbated the differences between the rich and the poor EU countries.

Happy north miserable south

Up to 94% of workers in Denmark express satisfaction with them! In the south, in Greece and Spain in particular, the response reflects a sometimes far lower quality of employment. 82% of respondents in Greece and 76% in Spain feel working conditions are bad in their country. What Andor had to say about that was that “A variety of factors can explain this divergence in satisfaction levels. These include not only the social and economic context influenced by the crisis but also more structural features in terms of social dialogue, social policies and labour law, which may be stronger or weaker depending on national situations across the EU”.

What the Commissioner avoided saying was that the austerity policies imposed on Spain and Greece, to cure the symptoms of economic crisis, has destroyed any possibility that the EU south could overcome those deep structural differences in the foreseeable future. Andor also avoided going deeper in analyzing the causes of the crisis in the EU south.

The poor subsidise the rich

He didn’t say a word about the German and the French banks which were reimbursed by the Greek and the Spanish taxpayers in full for their quite imprudent loans to the real estate sector, the consumers and the corrupt governments. In reality, the German and the French mega-banks ‘invested’ hundreds of billions in Greece, Ireland, Portugal and Spain and pocketed huge returns for as long as the bubbles swelled. When the bubbles burst in 2010, Berlin and Paris managed to ‘persuade’ Madrid, Athens, Dublin and Lisbon to reimburse the German and the French banks in full for their risky placements.

In reality, those countries accepted to cover 100% those imprudent and risky ‘investments’ in their territories by German and French mega-banks. The poor Greek, Irish, Spanish and Portuguese tax payers borrowed heavily to do this and now their children are out of work and their grand-children will still be burdened with those obligations. When the crisis came, the poor were forced to subsidise the rich.

It’s all politics

In short, Germany and France used their political weight and their control over the EU decision-making bodies like the Commission and the European central Bank, and forced Ireland, Greece, Spain and Portugal to accept this arrangement. No negotiation took place to share the cost of supporting those German and French mega-banks and save the European financial system from a complete collapse. The poor of the south reimbursed the rich of the north for their imprudent and risky investments in their territories.

Unfortunately, the EU Commissioner had nothing to say about all those burning issues. He restricted himself in observing the consequences, without elaborating on the causes. Berlin and Paris insisted even in shaping the European Banking Union in their favour by not accepting to undertake an increased share of the losses and the liabilities their own banks have created.