European trade unions: Austerity is going too far

[June 04, 2010]  BRUSSELS (AP) -- European government budget cuts to combat the region's debt crisis are going too far and could trigger an economic depression, trade unions warned Friday.

The head of the European Trade Union Confederation, John Monks, said there was "quite a bit of social unrest in some countries" over harsh reductions in state spending, which include cuts to public sector salaries, pensions and benefits.

Workers are planning protests and possibly work stoppages across the European Union on Sept. 29, when EU finance ministers will hold a meeting.

Almost all 27 EU nations are trying to curb spending and reduce debt to contain a financial crisis that threatens Europe's currency union and has sent stocks -- and the euro -- sliding in recent weeks.

Monks expressed concern after attending a meeting between workers' representatives, Europe's major employer federation and EU Commission President Jose Manuel Barroso.

He said he'd asked for the talks "out of despair and alarm at the prospects for growth in Europe as all countries, not just those in distress, move to cut their budgets, move to reduce public expenditure."

"We're seeing cut, cut, cut in all the countries simultaneously which is what they did in 1931 and that caused the Great Depression," he told the Associated Press. "The cost will be in jobs, the cost will be in pay levels for people in the public services in particular, and pensions."

Greece's budget cuts, which it was forced to accept in return for a euro110 million ($134.95 million) rescue package from the European Union and the International Monetary Fund to save it from bankruptcy, are "too tough," he said.

"Spain and Portugal, if they do apply for the euro rescue fund, the terms there are as bad as they are for Greece. They're too tough, too hard," he said.

"They would be helped if the stronger economies had a greater emphasis on growth but if they're all cutting at the same time -- which is the prospect now in Europe: Italy, Britain, Germany have all declared and France is thinking about it -- if they all do it, the prospects for some of the smaller economies are grim," he said.

The EU's Barroso stressed that governments could not abandon current efforts to reduce swelling debt and deficit because there is now "an emergency situation from a financial point of view."

"Only if we are serious about getting our house in order, only if we really do our best to work for a sustainable future, will we be able to re-establish confidence in our economy and growth," he told reporters.

Failing to combat debt would make it hard to maintain Europe's expensive state welfare and health programs in the long-term, he warned.

"Without determination to act now we put our European model of society at risk," he said.

Monks said he did not yet know how many unions or workers would join the protest day in September, which will center on a demonstration in Brussels outside a meeting of EU finance ministers and call on them to prioritize economic growth ahead of budget cuts.

Bernard Thibault, the head of France's main union federation CGT, said French, Italian, German, Spanish, Belgian, Romanian workers' groups had already launched protests against "a similar political logic" of less public spending, lower welfare and pension benefits and higher retirement ages.

"Austerity is dangerous," he told the AP. "It provokes exclusion, it can be suicide for economic productivity."

Philippe de Buck of BusinessEurope, which represents some 20 million companies in the region, said widespread protests were irresponsible and could harm the economic recovery.

"The last thing we need is continuous social unrest because this is a way also to undermine confidence," he said. "What would be a big mistake is to make the companies the victims of stoppages and social unrest at the moment we are in a full recovery."

[Associated Press; By AOIFE WHITE]

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