‘Liberalisation’ in the European Union – a wake-up call for workers and trade unions.
The Irish Ferries dispute provided a stark example of the kind of onslaught on wages and conditions workers can expect if the proposed EU Services Directive is implemented across the bloc.
Irish Ferries announced plans to replace nearly 600 Irish seafarers with sweated labour from Eastern Europe at considerably lower rates of pay. The company ignored Ireland’s minimum wage legislation by registering its ships in Cyprus and the government claims nothing can be done about it. This provoked huge protests across Ireland and even Taoiseach Bertie Ahern was wringing his hands about the injustice of the situation. Yet the Irish government is supporting the introduction of the EU Services Directive which would institutionalise the disgraceful antics of Irish Ferries into EU law and accelerate such ‘social dumping’.
Exploiters’ charter
The aim of the Services Directive is to introduce ‘free-market’ competition to all economic services operating within the EU, including health and education. Under the Directive’s “country of origin” principle, service providers would be allowed to operate according to the laws of their country of origin rather than those of the country where the service is being provided – setting in train a further race to the bottom in terms of pay and conditions.
This will allow companies registered in EU member states with minimal labour standards to undercut pay and conditions secured by workers in other member states. The Directive would allow a British company to re-establish itself in a poorer member state and then return to operate in Britain to implement lower standards. In a perfect example of what this would mean, the European Commission has attacked Scandinavian-style collective wage agreements following a court case over a Latvian firm operating in Sweden which refused to abide by such laws, on the basis that they breach EU laws on ‘free movement’.
During a visit to Stockholm, internal market commissioner Charlie McCreevy attacked such agreements before the forthcoming European Court of Justice (ECJ) case where the principle of ‘free movement’ is to be tested for the first time.
"If member states continue to shield themselves from foreign company takeovers and competition, then I fear that the internal market will begin to dissolve.
"The question here is whether or not Sweden has implemented article 49 in the treaty on free movement," Mr McCreevy said.
Understandably, the Swedish TUC, which in the 2002 referendum backed euro membership when the people rejected it, has indicated that it will now withdraw support for Swedish EU membership altogether if the eurofederalist European Court of Justice rules against collective bargaining legislation.
This is just the latest example of the EU’s neo-liberal agenda including demands for the privatisation of vital lifeline ferry services in Scotland run by Caledonian MacBrayne, the privatisation of postal services across Europe and the continuing ‘liberalisation’ of rail services through the implementation of so-called ‘rail packages’.
However, these directives have been drawn up away from the public eye by eurocrats and industrialists grouped in the EU employers federation (UNICE) and the European Round Table of Industrialists (ERT) to promote the free movement of goods, services and labour across the EU regardless of the consequences.
ERT
A simple Google search of the ERT will show that this corporate-based group has been at the forefront of the drive for further EU integration for over twenty years. It was set up in the early 1980s to kick-start further integration within the EEC.Wisse Dekker of Philips and the EEC Industry Commissioner Etienne Davignon drew together a group of leading European CEOs into the ERT with the objective of “relaunching Europe”.
Dekker argued: “If we wait for our governments to do anything, we will be waiting for a long time. You can’t get all tied up with politics. Industry has to take the initiative. There is no other way”.
The ERT today has 50 members including companies like DaimlerChrysler, Ericsson, Fiat, Nestle, Renault and Siemens. Membership is personal and strictly invitation only.The ERT may sound like another pressure group lobbying Brussels. However, it was formed with the express intention of furthering EU integration and shaping it to benefit those European-based transnational corporations.
The group has consistently supported the removal of national vetoes and other forms of "fragmentation" within the EU. The ERT is distinctive from other lobbying groups, as it does not bother with detailed legislation: "We don't deal with national issues. We only talk about the overall questions". It is also distinctive in its ability to gain access to major players in the EU, both at national and supra-national level. The ERT's website boasts that: "At European level, the ERT has contacts with the European Council, the European Commission, the Council of Ministers and the European Parliament.
"Every six months the ERT strives to meet the government that has the EU presidency to discuss priorities.
"At national level, each member communicates ERT's views to its own national government and parliament, business colleagues and industrial federations, other opinion-formers and the press."
In short, the ERT's aim is to set the agenda at the highest levels of the EU, most notably the European Commission. Evidence of the last two decades suggests that it has been extremely successful. For former Commission president Jacques Delors, the ERT was "one of the main driving forces behind the Single Market".
In late 1984 the European Commission put forward a package of proposals to remove trade barriers within the EEC and creating an internal EU market, eliciting little enthusiasm from either member governments or much of the business sector. However, in January 1985 Wisse Dekker published Europe 1990: An Agenda for Action, which proposed eliminating trade barriers, harmonising regulations and abolishing fiscal frontiers within the EEC by 1990. Europe 1990 was part of an ERT document Changing Scales, which was sent to EEC heads of state. The plan laid out in precise terms the steps needed in four key areas - elimination of border formalities, opening up of public procurement markets, harmonisation of technical standards and fiscal harmonisation to open up a European market in five years.
The Dekker paper, the plan for a single market, was an internal Philips project led by Dekker's government affairs representative in Brussels, Coen Ramaer.
With Dekker's support, Ramaer assembled four Philips experts and instructed them to:
"imagine yourselves to be dictators of Europe and that you have decided that the job must be done in five years.
“And they started out "but this is impossible! Be realistic!" And I told them that I couldn't care less if we were realistic or not.
Once they had picked up this idea, they found it fascinating. And they discovered that it could be done -- given the political will, of course" (Interview, September 24 1992).
Three days after Dekker presented his Europe 1990 initiative, the newly appointed Jacques Delors delivered a speech to the European Parliament closely matching Dekker's proposals. A few months later, Industry Commissioner Lord Cockfield published his White Paper, the basis of the Single European Act, which postponed the ERT's 1990 deadline for internal market completion until 1992. However, the ERT had achieved its main aim.
The ERT then set up a front group in 1987 to promote the creation of the single currency called the Association for the Monetary Union of Europe (AMUE) made up of bankers and ERT members. It set out to deliberately exclude all other interest groups, including trade unions and environmental or consumer organisations. As AMUE board member Viscount Etienne Davignon put it: “we don’t speak for everybody, we speak for ourselves. It (EMU) could only be effective if it was proposed by the people who were in favour, without the necessity to compromise”.
In the new millennium, the ERT has continued to press for further integration on its terms, calling for more powers to the European Commission. On January 11 2001, the European Commission launched plans for the wholesale deregulation of entire industries at a stroke. EU internal market commissioner Frits Bolkestein claimed it was time to end the sector by sector process of privatisation “when so many of the necessary changes are common to a wide range of services”.
Commission spokesperson Margot Froehlinger said this must be implemented because there had been “several complaints” from corporations about barriers to the expansion of their operations.
“We have come across all types of planning procedures which give discretionary powers to authorities which are clearly contrary to jurisprudence and are designed to protect local markets,” she said.
So the final genesis of the Bolkestein’s Services Directive had begun.
In 2002, the ERT told members of the convention on the EU’s future that a stronger Commission was "vital", since it was "the genuinely Europe-focused institution and the one most capable of articulating the common European interest above national and regional interests”.
The ERT is an extremely important player in moves pushing us towards a de facto United States of Europe. It has been able to achieve many of its aims in alliance with the European Commission, an undemocratic, bureaucratic and unaccountable body par excellence. The undemocratic nature of the Commission was succinctly outlined by former Commission president Dr Sicco Mansholt back in January 1973.
“The Commission proposes, the European Parliament gives opinions, the Council decides – and without more ado, the individual citizen is committed…the ordinary democratic decision-making processes as we know it in the individual state does not exist in the Community.”
Ultimately, the ERT is no friend of the rights of Europe’s peoples to democracy and self-determination. For the ERT, the bigger the “democratic deficit” within the EU, the better it is for them.
Social partnership
As successive European Commission presidents have made abundantly clear, the support and collaboration of labour and trade union movements where they are strong in EU member states is crucial to the EU project. To win this support, the idea of ‘social partnership’ was devised and the European TUC (ETUC) set up in 1973 to “promote the interests of working people at the European level and to represent them in the EEC institutions”. This coincided with Britain, Ireland and Denmark joining the EEC.
The ETUC was moribund until Commission President Jacques Delors came along and sold European Union in exchange for the Social Charter, which became a short toothless Chapter appended to the Maastricht Treaty in 1992. Meetings of the Commission, ERT and ETUC, which is 80 per cent funded by the Commission, are the basis of what is cosily named the “social partners”. In reality, this is the conduit by which policy decisions at the EU level are transmitted back to national TUCs and then onto national trade unions and downwards to branches and trade unionists.
The ERT was not bothered by the inclusion of the social chapter in Maastricht or the mention of employment levels in the Amsterdam Treaty. ERT Secretary General Keith Richardson dismissed these developments as a “large waste of time”.
“If politicians feel it is important to get the chapter referring to the desirability of full employment and they think it will help public opinion we don’t really object.
“It won’t help jobs, but it won’t do much damage providing of course that it remains related to aspirations,” he said.
Today, bureaucrats in Brussels oversee 100,000 pages of EU legislation which has primacy over national legislation and parliaments. It is the unelected and unaccountable European Commission and governors of the European Central Bank who are the legislature.
With such a setup and operation there is little if any room for working people to influence any of the decisions. Nor is there any way to change what is going on except to demand and make national governments ignore EU directives and policies and pass legislation on behalf of labour instead of capital. The age old struggle between labour and capital is still with us even though it takes on a different form. Instead of open conflict between capital and organised labour, we see the slow bureaucratic and undemocratic application of neo-liberal measures which gradually defang labour movements and national representative politics at the same time.
Rail privatisation
The damaging results of corporate deregulation and the slow implementation of unsuitable and unknown EU rules can be seen in the rail sector.
Brussels introduced the so-called ‘third rail package’ in December 2005, which orders member states to comply with various rail directives by 2010. These rules demand the break up of national rail networks in order for private operators to take over the running of services.
However, recent national rail strikes in France show that rail workers have not been reconciled to rail privatisation. This is despite the Commission’s institutional approach, based on stealth and secrecy, to opening up national markets to ‘liberalisation’ measures.
In fact, the EU’s date of January 2006 for full ‘open access’ of rail freight competition has led to a hardening of attitudes amongst the four largest French rail unions representing the majority of rail workers.
French rail company SNCF’s freight reorganisation, introduced as a result of EU rail freight liberalisation rules, is being fought hard by rail workers. Recent strike action has produced strenuous denials by French ministers and SNCF president, Louis Gallois of any intention to privatise SNCF.
Mr Gallois said Europe's railways were all public companies except in the UK, “and the English experience is not a great reference”. Moreover, British railway consultant Robert Watson believes the EU may well have had an adverse effect on the rail system because "open access has destabilised the European railroad environment".
Brussels began the drive to privatise EU rail networks with the introduction of Council Directive 91/440/EEC on July 29 1991, which demanded an historically unprecedented liberalisation model instituting a “vertical split” separating rail infrastructure from operation of rail services. It stipulates:
operational autonomy for railway operators
separation of the infrastructure from service operations (as an absolute minimum - although not exclusively - for accounting purposes)
open access for international undertakings
introduction of track access charges
If this sounds familiar, it is because this was exactly the basis of British Rail privatisation by the John Major’s Tory government in 1996.
The statutory instrument that began the privatisation process, Railways Regulation 1992, was introduced under Section 2(2) of the European Communities Act 1972 in order to comply with directive 91/440/EEC.
This EU ‘liberalisation’ model has proved disastrous in many ways. The privatisation of rail infrastructure maintenance directly led to the catastrophic deterioration of track, causing the deaths of many passengers and rail workers. Private train operators’ record profits are siphoned from public subsidy, there is a perpetual squeeze on rail workers’ pay and ticket fares continue to rocket, making Britain’s railways the most expensive to use in Europe.
The poor operational safety and financial performance of the UK privatised rail sector arose as the direct outcome of the functional problems inherent in the “vertical split” model advocated in 91/440.
As research carried out for the Russian Department of Transportation noted, operationally the concept that train and track are as separable as aircraft and airport is invalid for several reasons:
The train is constantly physically connected to the track
The track is a limited, dedicated resource
As railway control technology becomes more sophisticated, train/track controls become more integrated
Best practice railway operations depend upon deployment of this advanced integrated train/track control and safety technology – separate train/track ownership makes it very difficult to develop and implement this technology
The idea that competing train operating companies can compete for slots in track use is also limited as train path scheduling on the fixed track infrastructure has limited flexibility – even advanced computer technology cannot easily generate alternative and new train path allocations.
This refusal to recognise these fundamental problems and to misinterpret functionality as ‘market failure’ is a long-term characteristic of European Commission thinking on rail ‘liberalisation’.
One reason for this could be that the role of various rail directives is to create a ‘market’ where one does not exist in order to remove rail networks from the public sector and into private hands. Once that has been achieved, private operators will be the main beneficiaries of the huge public subsidies all rail networks require to continue to operate.
The main financial problem of the EU “vertical split” model is that train operating companies cannot possibly absorb the true cost of the infrastructure. So this model relies on a valuation determined by low track-use charges which can be borne by train operating companies. This means that vital fresh investment is not coming into the industry as predicted and creates a barrier to the seamless investment required.
Therefore, the unelected European Commission is on a collision course with the elected governments of member states who increasingly see the Brussels model of rail privatisation as a recipe for compromising safety, social dumping and the inevitable decline of rail.
Social dumping
Brussels is using the free movement of labour, capital and services across the EU, enshrined in EU rules, to dilute and even destroy labour standards which have been hard-won over many decades by national labour movements.
For instance, tensions have been rising in Ireland since 2004, when Ireland joined Britain and Sweden in accepting workers from Eastern European countries newly admitted to the European Union.
Around 200,000 migrants, chiefly from Poland and Latvia, now work in bars and restaurants and on construction sites and farms, often for cash pay below the minimum wage.
The Irish trade union movement is now facing problems that arise from merging an Irish labour force of two million with an East European labour force of 70 million.
The Services Directive and other neo-liberal diktats will only entrench these exploitative developments in Ireland and Britain by increasing ‘social dumping’, displacing workers with cheap foreign labour and feeding misplaced racism and the far-right.
If the European Parliament adopts the services directive in February 2006, it will then go to the European Council of Ministers. If past performance is any guide, the British and Irish governments seem likely to back the Directive.
However, the French government is calling for the withdrawal of the “country of origin” principle and “the Directive must not undermine the rules applicable in France in the area of employees’ rights”.
Former German Chancellor Gerhard Schroeder has warned that “the contents of the directive put fear and horror into the hearts of people” while the Austrian Chancellor has stated that he could only support a directive text that would “prevent social dumping”.
The Norwegian government, which must implement EU directives as a member of the European Economic Free Trade Area, has also indicated it will veto the implementation of the Services Directive in Norway.
Therefore, even if EU institutions rubberstamp these anti-worker directives, democratic movements across the EU must campaign for their national elected representatives to refuse to implement such reactionary and damaging legislation.
