Katherine Duffy EAPN Troika Task Force 15 November 2012

Sub-Group members 1. Greece (Nikos Ntasios) 2. Ireland (Philip O’Connor) 3. Portugal (Sandra Araújo) 4. Romania (Sebastian Nastuta) 5. Spain (Graciela Malgesini) 6. UK (Katherine Duffy) Situation Troika (EU 1981; € 2000) Troika (EU 1974; € 2000) Troika (EU 1986; € 2000) Troika, non-€ (EU 2007) Non-Troika, € (EU 1986; € 2000 ) Non-Troika, non-€ (EU 1974) 2

1. Why did the “bail-out” states need it – what were the types of unpayable debt and why? 2. Is “bail-out” what is actually happening? 3. What is the specific impact on states of Troika intervention programmes? 4. What difference to policy options does it make being a member of the Eurozone? 5. What is the role of the European Commission in the nature of the policy frame in which states may act? 6. What is common and what different in the austerity responses of the states and why? 7. Internally, are we all “in it together” or are some groups suffering more from the crisis and response to it? 8. In the context of Europe 2020 and the AROPE target, what are the likely outcomes for poverty in 2020? 3

We wanted the sub-group to assist EAPN to 1. Reach a common understanding of the situation in countries getting emergency financial assistance from the Troika 2. Take a common position on what are the priorities for protecting people who are poor and disadvantaged 3. Present an informed position in public/policy arenas 4

 We had three meet meetings in 2012  July 13, September 22, November 15 ↓  The first draft report is based on the input from the first two meetings’ draft country fiches  Final report is likely to be January

 The emergency assistance states (Greece, Ireland, Portugal plus Romania) suffered as well as gained from entry to the EU. The Eurozone Troika 3 also suffered from entry to the Euro (as did Spain) →→ →→  Deindustrialisation, unbalanced development (also UK), capital inflows, consumer booms at low “German” interest rates, EMU entry at overvalued exchange rates (e.g. Greece), trade and budget deficits  The emergency assistance countries were all amongst the lowest tax regimes  The sub-group’s states were developing/ expanding their public sectors in the their boom years to 2007  Real incomes were rising and inequality was reducing to 2007 (except UK, real incomes stopped increasing after 2003 and inequality was rising, but more slowly under the Labour government  Their development models may have clashed in timing with Northern retrenchment – e.g. German wage stagnation, therefore uncompetitive 6

 Greece, Ireland, Portugal: deep recession (fixed currency and fiscal consolidation)  The Eurozone framework was designed for northern states; ditto the fiscal compact  The Troika conditions for deficit and debt reduction put a heavy fiscal squeeze for up to a decade on countries furthest from the rules  Troika programmes are similar to other austerity programmes in the EU. The ratio of spending cuts to tax increases is at least 2:1 and 4:1 in UK  Troika loan rates of around 5% to re-finance deficits; not the 1% rates offered banks – without conditions  If loans are all repaid, the lenders will make a substantial profit  Romania & UK show that adjustment partly through currency devaluation can help a return to (anaemic) growth. Spain, not a Troika country but in the Eurozone is still shrinking  Non-Euro UK and Romania have committed to similar debt and deficit rules. 7

Public spending cuts  Heaviest burden borne by the welfare and public service budgets. Vulnerable are not spared  Low or no priority for poverty and social exclusion  Expectation of social safety net and commercialised public and social services  Public capital as well as current spending cuts  Cuts in regional and local government funding – centralisation of decisions and impact on politics 8

Re-commodification Tax changes  Increase in regressive consumption taxes (VAT) and user charges  Income tax raised by narrowing bands or not inflation adjusting  Race to the bottom on business taxes especially corporation tax but also payroll tax Privatisation  Especially in Greece and Portugal, state monopoly industries and land  UK and Romania already privatised; UK adding core social areas such as education and health and labour market integration  Troika countries being forced into privatisation  Impact on poor and vulnerable 9

Imposition of “flexible” labour markets  Wages and conditions reduced especially in the public sector  Minimum wages frozen or cut (Greece)  Creation of part-time and fixed contract jobs eased  Conditionality increased (rather than activation spending)  Centralised collective bargaining is being replaced by firm-level bargaining in emergency assistance countries though there is more resistance to interference with social partnership arrangements in Ireland. The UK government has begun to decentralise public sector bargaining without the Troika imposition 10

 Direct imposition on governments of fiscal consolidation through the Troika Memoranda and not only the Eurozone fiscal compact and related measures  Intensity of the fiscal squeeze given their debt and deficit positions  Interference in collective bargaining arrangements and privatisation  The constraints seem to prevent a social/ democratic development path in future. Already done in Romania 11

It does not directly measure  The rise in absolute poverty  The differing inflation rates faced by poor people compared to not-poor  The cuts to the social wage 12

Deadline late January 2013–got to circulate to sub- group as well? For internal EAPN audience?  Decide report length and format – maybe Question and Answer?  Re-write using documentary sources: MOUs and update reports, EC, Ecofin, IMF, E Parliament, CoE, ETUI, Friedrich Ebert Foundation, Euromemo, Michael Lewis, other docs referenced in country fiches plus “grey literature”  Recommendations for EAPN 13