health and education systems that are being rescued . It is the banks, who had organised the lending of super profits to peripheral countries, which had been exposed to private and national debt in these countries. Especially German and French banks were heavily exposed to Greek debt, British banks to Irish debt (Rogers 2011), with much of this exposure having now been socialised through bond purchases by the European Central Bank (ECB). The bailout packages came at a high price, making support dependent on austerity policies including: (1) cuts in funding of essential public services; (2) cuts in public sector employment; (3) push towards privatisation of state assets; and (4) undermining of industrial relations and trade union rights through enforced cuts in minimum wages and a further liberalisation of labour markets. Hence, imposed austerity went also beyond direct cuts. Greece ‘has been forced to introduce new legislation in labour markets and to engage in ambitious privatisation’ (Lapavitsas 2012: 120). Labour market deregulation and making wage-setting ‘more efficient’ are clearly directed against trade unions’ involvement in social and economic decision-making at the national level. As part of the bailout package for Portugal, the government agreed to stop extending collective agreements automatically to the whole industrial sector in 2011. Unsurprisingly collective bargaining coverage has fallen drastically. ‘In 2010 a total of 116 industry level agreements ... were extended by government to cover all employees in the industry concerned. However, in 2011 this fell to 17 and in 2012 to 12’ (ETUI 2013). Hence, while in 2010, 1,309,300 employees were covered by collective industry level agreements, in 2012 it was only 291,100 employees. There have also been amendments to the Labour Code with the aim of creating greater flexibility for firms, thereby allegedly enhancing competitiveness and wage moderation. These changes have included reduced ‘pay for overtime by 50 percent’; further flexibilisation of fixed-term contracts by extending the ‘probationary ’ period from six months to a maximum of three years; and the relaxing of rules for redundancy and dismissal, especially for reasons revolving around economic circumstances (Clauwaert and Schomann 2012: 9, 11-2). Whilst some reversals on this front have been achieved, through legislation having been deemed unconstitutional, officials from the ECB, European Commission, and International Monetary Fund (IMF) (collectively now popularly known as the The real conflict here is between workers and big business, which takes place across the EU INTERNATIONAL union rights Page 4 Volume 22 Issue 2 2015 I t is often argued in the media that citizens of richer countries would now have to pay for the ‘profligacy’ of citizens from indebted countries. Cultural arguments of apparently ‘lazy Greek’ workers as the cause of the crisis are put forward despite the fact that Greek workers are amongst those who work the most hours in Europe (McDonald 2012). Rather than the result of Greeks living above their means, however, the crisis is a reflection of the highly uneven European political economy. While Germany and other countries of the European core have pursued a growth strategy based on exports, countries in the European periphery including Greece followed a strategy of demand-led growth often financed with loans from abroad. Nevertheless, it would be wrong simply to blame the Greeks for this situation. The super profits resulting from German export success needed new points of investment to generate more profits and state bonds of peripheral countries seemed to be the ideal investment opportunity with guaranteed profits, backed by sovereign states. The introduction of the Euro and the related low interest rates in peripheral countries, thus, facilitated this financialisation of the European political economy in favour of transnational capital . In a way, Germany has recycled its profits in the form of lending to peripheral countries. In turn, these credits to the periphery were used to purchase more goods in the core ensuring a continuation of the German export success. Hence, the recurrent distinction between credit- and export-led economies is misleading. Firms in core countries would not have been able to pursue export-led growth strategies, if global aggregate demand had not been supported by the real estate and stock market bubbles that occurred in the periphery as a result of...
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Aug 28, 2015
Jianjun Miao + 2
Open Access