Trade unions 'dare' EU to hold referendum on economic pact

The blueprint, drafted by commission chief Jose Manuel Barroso and EU Council President Herman Van Rompuy and discussed on Monday (28 February) in Brussels by diplomats, is a shopping list of demands including: keeping down wages across the eurozone; reducing public services; constitutional changes limiting government borrowing; and moving away from labour-based taxation towards consumption-based taxation.

One of the main elements in the four-page document, which was obtained and published by the FT, would require countries to "align" wages with productivity.

The commission and Council would monitor "wage and productivity developments", comparing unit labour costs across the EU for each major sector of the economy and against those in major trading partners - meaning those in, for example, the US and China.

If wage increases in particular countries begin to cause an "erosion of competitiveness" the country will have to "commit to address these challenges in a given timeframe."

The document also says that collective bargaining - negotiations between workers and employers - must be decentralised. Centralised bargaining occurs when instead of one workforce negotiating with one employer, groups of employees in the same industry bargain with all the employers in that sector.

An earlier version of the pact had proposed an end to the indexation of wages to inflation, a phenomenon that occurs in a handful of member states in certain sectors. Under the Barroso-Van-Rompuy plan, this is changed to say that such systems must be improved, but still ensuring price competitiveness.

The document explicitly demands wage restraint in the public sector to "further open sheltered sectors" and end the "closed shop" (where to be hired, one must be a member of a union).

Member states would also be required to: introduce changes to their constitutions to limit national borrowing; harmonise their corporate tax base; and link retirement ages to life expectancy.

Ensuring that member states stay in line, they would be monitored by the European Council on the basis of reports from the commission. The process would form part of the recently established European Semester, a centralised EU system of intervening in the drafting of national budgets.

The authors appear to be aware that some of the suggestions go beyond what the EU itself is legally allowed to do. They argue that the move: "requires a shift to a higher level of policy co-ordination, in particular in areas that fall under national competence.

The add: "[these changes] should involve a special effort going beyond what already exists and include concrete commitments and actions that are more urgent, more ambitious than those already agreed."

Although the document makes mention of "respecting national traditions of social dialogue and industrial relations" the proposals represent an unprecedented interference by the EU in the collective bargaining process.

Mr Goudriaan said the proposals cover issues that are the domain of workers and employers "and the EU institutions should keep their hands off them."

"The suggested proposals do nothing to get the many banks and their CEOs who engaged in speculation and short term greed," he said. He called the plan "a power grab by conservatives, neo-liberals and above all corporate interests to bury social Europe for good."

"How does a wage freeze for a nurse that takes care of elderly people foster economic growth and address youth unemployment?" he added.

"Yet somehow the exorbitant salary and scandalous bonuses of a banking, insurance or other company executive who cuts jobs and squandered away billions is supposed to assist Europe to grow out of our economic woes? There are no proposals in this pact to cut or tax these salaries."

In some countries, there has long been a tradition of the state staying out the wage-setting process, known as 'autonomous collective bargaining.' The unions fear the EU proposals will undermine these systems where they exist.

An Austrian trade unionist, Oliver Roepke of the OVB, told this website: "Since 1918, for example, in Germany, the only time the autonomous collective bargaining was abolished was under the Nazis."