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The Enforcers of Austerity


The plebs must suffer.

That’s the chilling message – admittedly expressed in less cogent terms – that powerful businessmen have delivered to senior political figures in Brussels behind closed doors.

I’ve got hold of briefing notes prepared for a lunch discussion between a group of chief executives and José-Manuel Barroso, the European Commission’s president, on 19 February this year. One of the businessmen’s key demands was that the austerity cuts undertaken across the EU should be made “more enforceable”.

Representing such firms as Ericsson, Fiat, Telecom Italia, the software giant SAP and the chemicals manufacturer Solvay, these high-flyers all belong to the European Roundtable of Industrialists (ERT). The brevity of their notes does not conceal their determination to crush ordinary people.

During that lunch, the industrialists argued that the Brussels institutions should have a bigger say in dictating how each EU government spends its taxpayers’ money. The ERT knew that it would be listened to.

Before the financial crisis erupted in 2008, the likelihood that nominally sovereign nations would send their budgets to an unelected bureaucracy for prior scrutiny seemed remote. This week, however, Barroso sounded jubilant as he noted that such checking of budgets has now taken place for the first time. Echoing his dining companions in the ERT, Barroso warned against “reform fatigue”. After acknowledging that “huge sacrifices” had been made, he contended that more are necessary.

It is noteworthy that Barroso hasn’t offered to give up his pension or his severance pay when he steps down from heading the EU executive in October 2014. Instead, it is the little people who will be making all the sacrifices.

I got a taste of the “reforms” we can expect in the foreseeable future from an ERT paper from December 2012. Marked “confidential”, the paper argues that the EU should pursue objectives at marked variance with those set by trade unions (or “some social partners,” as the ERT calls them).

“Modernising labour market policies and education systems is not about a ‘race to the bottom’, as some social partners claim, but rather a ‘race to the jobs of the future’ before leadership is claimed by other regions of the world,” the paper states.

A serious reading of the ERT’s demands indicates that the “jobs of the future” will be precarious. It advocates, for example, that the Union’s governments should “ease employment protection” by reducing payments to workers undertaking training or making a transition from one job to another. And it wants “wage evolution” to be dictated by factors like “international competitiveness” – this can only be viewed as an assault on indexation schemes such as the run by Belgium, where pay rises are guaranteed when the cost of living increases.

The ERT is adept at using code. In June, its chairman Leif Johansson (day job: running Ericsson), told EU governments that industry was “confronting a competitiveness battle that threatens the immediate and long-term ability of Europe to maintain a vibrant, innovative manufacturing base”.

His prescription for fighting this “battle” is to ensure that corporations are involved in education “at all levels”.

If taken literally, this means that big business should have a say in what songs the effervescent staff may sing at the créche my baby daughter attends. Though Johansson hasn’t gone that far (yet), the ERT has argued that industrialists should have a role in managing and setting the curricula for schools and colleges. It has also argued for greater use of “public-private partnerships” in scientific research. That is code to giving big business a greater say in running universities.

Back in 2000, ERT bigwig Gerhard Cromme argued in favour of the “privatisation of all schools, subjecting them to market forces and thereby encouraging competition. Schools will respond better to paying customers, just like any other business.”

It should go without saying that schools are not “like any other business”. Teaching children to read and write, to share and articulate is quite different to churning out biscuits or assembling computer chips. In civilised countries, children with learning difficulties are not discarded on the basis that they are too slow for the rat race.

The ERT’s fingerprints can be detected on several initiatives which have shaped recent European history. Indeed, the EU’s fixation on “competitiveness” – a euphemism for destroying labour standards and the welfare state – largely originated with recommendations made by the roundtable in the 1990s. The ERT’s intention was to transform this continent’s economic policies so that they resembled the rawer version of capitalism found in the US more closely.

If you think that there is nothing particularly untoward about lunches between businessmen and politicians, then I recommend you take the following course of action: call Barroso’s office and ask to meet him for a pizza. Assuming you are not super-rich, I suspect you might find it difficult to fix a date. And yet the European Roundtable of Industrialists has no such problems. So whose voices are heeded the most?

David Cronin is the author of the new book Corporate Europe: How Big Business Sets Policies on Food, Climate and War, published by Pluto Press.

A version of this article was first published by EUobserver.

A version of this article  was first published by EUobserver.

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