This week's European summit will see the first exchanges of
fire in what promises to be a gruelling battle over the economic and social
role of the European Union.
The protagonists are already well entrenched. On one side
are the forces of light – the followers of European Commission president
Jacques Delors, whose imaginative white paper on competitiveness, growth and
unemployment will be discussed in Brussels. Delors believes that Europe, with
20 million out of work already, is facing ever-increasing unemployment unless
there is concerted Europe-wide intervention to create jobs. The white paper,
Tackling the Challenges and Moving into the 21st Century, proposes a package of
measures for infrastructural investment (in communications – both
information technology and transport – and
energy), research and development, and the skills of the workforce. On
information technology, Delors suggests EU spending of Ecu20 billion (£15
billion) a year for the rest of the 1990s; on transport and energy, his target
is Ecu250 billion (£190 billion) of investment by the end of the century.
Instead of cutting wages and pruning unemployment benefits
to "price people into jobs", Delors argues for a "European
social pact" whereby unions agree that gains from increased productivity
should be ploughed back into investment. Workers should be given the
opportunity of retraining throughout their lives. Meanwhile, new types of
enterprise should be created between public and private sectors to develop a
new "social economy", producing socially useful noncommercial goods
and services (such as inner-city renovation, home helps for the elderly,
child-care for working mothers and so on) and creating some three million jobs.
Ranged against Delors and the interventionists are the usual suspects: the
British government and Unice, the European employers' confederation. They
believe that the key to
European economic recovery is labour market deregulation
and reduced employment costs. Unice's report, Making Britain More Competitive,
published on Tuesday, calls for cuts in employers' social security contributions
for young and low-paid workers and relaxation of rules on maximum working
hours, minimum wages and making workers redundant. The ideological affinity
with the Tory policies that have done such damage in the past 14 years in
Britain is striking.
The stark difference between the two approaches to EU
economic and social policies makes it almost inconceivable that this week's
summit will reach any consensus – and, in the short term at least, the predominance
of right-wing governments among EU members means that the best that Delors can
hope for is a request to put his proposals in more detail. Although he has the
backing of the Belgian EU Presidency, the EU's big guns – Germany, France, Italy and Britain – are
either worried about the costs of his proposals or (in the case of Britain)
vehemently opposed on dogmatic grounds.
In the longer run, however, the prospects for something like
the Delors plan being put into practice are rather better. To begin with, his
proposals are not in fact far removed from what the mainstream European
Christian Democratic right would like to do: the reason that German Chancellor
Helmut Kohl is currently unenthusiastic about them has less to do with
ideology than with the burden of debt with which reunification has saddled his
country. An improvement in Germany's economy, expected some time in the next 18 months, could work wonders for Christian
Democrat dithering over the Delors plan, although its author might well have
retired by then.
Just as important, the political balance in the EU is by no
means set in stone. Both Italy and Germany face general elections in the coming
year that seem likely, as things currently stand, to result in left-leaning coalitions
coming to power.
Last weekend's Italian local elections show that the
former-communist Party of the Democratic Left (PDS) is now the only coherent
national political force: many political commentators reckon that
it is set to be the core of the government that takes office after elections
likely in the spring. In Germany, although the Social Democrats (SPD) are not
performing as well as they would like, the popularity of Chancellor Kohl's
Christian Democratic Union has plummeted, particularly in the east of the
country, and there's a possibility of an SPD-CDU "Grand Coalition"
taking power next autumn. With both PDS and SPD in government, the
laissez-faire labour market deregulation approach so beloved of the British
Tories would have far less purchase.
Of course, this cannot be taken for granted: expectations of
shifts to the left in Europe have all too often been dashed in recent years,
and a Franco-British laissez-faire bloc could seriously damage the prospects of
the Delors plan even with left-leaning governments in Germany and Italy.
Neither should anyone underestimate the widespread fear in the European
establishment that, faced with growing competition from the newly
industrialising countries of the far east, Europe has no option but to cut
wages and employment costs by any means necessary.
But at least there are grounds for cautious optimism. The
Delors plan is far from perfect. It falls well short of the sort of
counter-cyclical Keynesian expansionism that Europe so badly needs, and it
does nothing to address the democratic deficit in EU macro-economic
policy-making: it is designed to be implemented by the unelected Commission
after approval in secretive intergovernmental bodies. Nevertheless, it is a
crucial first step towards the pan-European pro-growth macro-economic policy
that is our only hope of tackling unemployment. As such it deserves all the
support the left can give it.
