• The Main Stages of a Declared Ambition

  • By Francis Wurtz | 10 May 11 | Posted under: European Union
  • Talk at the Kossuth Klub – Transform! – Le Monde Diplomatique Conference on Poverty and Exclusion in Europe Budapest, November 4-6, 2010

    The subject of poverty and exclusion in Europe is at the heart of a controversy which has been raging in many countries in recent years over the choice of the economic model that should be adopted by the European Union to put an end to the scandal of mass poverty. In his contribution to the Conference on Poverty and Exclusion in Europe organised by the Kossuth Klub, Transform! and Le Monde Diplomatique, Francis Wurtz said: I will address the subject from three viewpoints. First, I will re-outline the main stages of the declared ambition of all those who have promoted the construction of Europe over the past half-century: namely to put an end to poverty. I will then dwell on the main elements of a diagnosis of failure – precisely of the many attempts to eradicate poverty without calling into question the free-market economic model on which the present European construction is based. Finally, I will highlight the obstacles, which, to my mind, must be removed in order to tackle the deep causes of the plague that everyone declares they want to combat.

    From the outset, the European Community proclaimed its desire to promote social advancement. The Treaty of Rome included the promise of “social and economic progress” and, with this in mind, the European Social Fund was set up in 1957, purportedly to sustain employment and the education of workers.

    In 1975, the first programme to fight poverty was initiated. It was a pilot programme whose aim was to studies to help better understand the phenomenon of poverty in order to promote it. The Council of Ministers defined as poor those “persons or families whose resources are so limited as to prevent them from benefiting from an acceptable minimum life style in the member state in which they live”. The programme was to cover the period from 1975 to 1993. It was not seen through to completion as, very quickly, Great Britain and Germany challenged its legal foundation in the name of subsidiarity, which assigned responsibility in social matters not to the European Union but to each member state.

    In 1992, the Council of Ministers published two documents. One encouraged states to recognise “the elementary right of persons to have sufficient resources (…) to live in a manner compatible with human dignity”. The other stressed that the notion of a “European social model” was acquired by dint of joining the EU, and it pronounced itself in favour of orientations thought to be aids to reaching this goal.

    In 1997, the Treaty of Amsterdam gave a legal basis to the struggle against social exclusion by including among the “goals” of the European Union and member states “the improvement of living conditions and adequate social protection”. The same year, the first “open method of coordination” (OMC) was implemented. This signified organising among all the member states, in the fields that came within their competence, a process of emulation and collective appraisal of the measures taken, in order to favour convergent action and sustainable commitment of all the states to common goals.

    In addition, throughout this period concrete measures were taken, and continue to be taken, with an aim to meet the basic needs of persons in great difficulty. For example, foodstuffs are allocated to humanitarian organisations. Rather than agreeing to tackle the causes of poverty, only its most revolting effects are dealt with. Countries such as Romania, but also Spain, Italy or France received this help. Others refused, particularly those which advocate a reduction of the Common Agricultural Policy budget. (For example, for 2011 the quantity to be allocated has already been included in the budget: 1,500 tons of butter, 100,000 tons of powdered milk, 3 million tons of cereals … which amounts to some 480 million Euros.)

    However, in 2000 the Lisbon Strategy 2000-2010 (which is completely unrelated to the Lisbon Treaty) was adopted, strongly affirming the ambition “to give a decisive impulse to the elimination of poverty” by 2010 and “to ensure the active social inclusion of all”. The existence of 55 million poor in the 15 countries of Europe was declared “unacceptable”.

    Indicators were set up to assess the progress accomplished on a regular basis. For example, the rate of monetary poverty (income) and non-monetary poverty (living conditions, deprivation); the rate of poor workers; the situation by age bracket … Difficulties were encountered. For example, assessing the level of income at which one is considered poor varies greatly from one country to another, not only in the absolute, which is normal, but also relative to the median income in the different countries. The proposed maximum limit was 60% (considered poor are those whose income is less than 60% of the median income of their fellow countrymen). But in some countries the rate applied was only 50% or even 40% of the median income – which automatically lowers the number of poor people inventoried in the country.

    Nevertheless, the European Union has devoted financial means and has created legal instruments to carry out its actions against poverty. The ESF (European Social Fund) has been allocated 75 billion Euros for 2007-2013. A European fund for the adjustment to globalisation has been created to favour the reintegration of workers made redundant as a result of major restructuring plans. Once again, the cause of this restructuring, which in most cases is the race for financial profit regardless of the consequences for the people, is neglected. It is only a matter of softening the blow.

    It must be added that this Fund has only 500 million Euros at its disposal, taken from the unused credit of the previous year. The conditions for obtaining this help are thus very selective. As regards the legal instruments created by the EU at the same period (2000) we can quote the Charter of Fundamental Rights which stipulates:

    • “Human dignity cannot be violated. It must be respected and protected”
    • “In order to combat social exclusion and poverty the EU recognises and respects the right to social aid, the right to housing allowance and access to social services”.

    As for the Treaty of Lisbon, which came into effect a year ago, there is a “social clause” which makes provision for the assessment of the social impact of all the European policies. We can see that it is an experiment structured from start to finish, especially since the launch of the Lisbon Strategy 2000-2010, according to a clear principle – not to touch the free-market rules which cause poverty but to multiply the social buffers and safeguards. It is a strategic choice. It therefore requires an assessment, and appropriate conclusions must be drawn.

    Diagnosis of a failure

    • It is an established fact that 10 years after the launch of the Lisbon Strategy, not only has poverty not been “eradicated”, it has not even diminished. It has in fact increased.
    • The official count in 2008 (before the financial crisis) was 84 million people, an average of 17% of the population (20% in Great Britain, over 20% in Bulgaria, Romania), 1 European out of 6.
    • Of those who are considered poor or who “run the risk of poverty”, 70 million are in employment (according to statistics of the Council of Employment – Social Policy of 31/3/2008). These are the working poor.
    • 20 million of these poor are children (after social transfer); before social transfer (under threat today) the number is 30 million.

    Over and above these people, the social problem of poverty is spreading more and more.

    • 1 European out of 5 say they have in 2010 at least once been short of money to buy food, current consumer goods or even to pay their bills;
    • 3 Europeans out of 10 find it is “more and more difficult to cover the cost of health”;
    • 3 Europeans out of 4 believe poverty has increased in the country they live in;
    • the sharp rise in precarious labour has made a sudden fall into extreme poverty possible and given rise to anxiety about a fatal chain effect (in France, for example, 1 person out of 2 does not rule out the possibility of finding themselves homeless, on the street!);
    • The pay differential is such in the European Union that mobility is only possible in one direction: from countries with very low salaries towards the others. This reality induces widespread social dumping, competition between workers and strained relations with immigrant workers.

    (The wage for full-time employment in Hungary is 6 times less than in Germany; the minimum wage in Bulgaria is 13 times less than in Luxemburg æ 123 Euros against 1,642! – ; in 9 countries the minimum wage is below 300 Euros a month; Germany has created jobs at 1 Euro an hour.)

    Inequalities within the countries make poverty even more exclusional by breaking social cohesion, giving rise to a feeling of being downgraded, marginalised and stigmatised. In Germany, the most wealthy 10% own over 60% of personal goods, while the 70% poorest own 9%. In the new eastern Länder the average household capital of the inhabitants lost absolute value between 2002 and 2007 as a result of the property crisis and the increase in unemployment.

    This constitutes a serious failure for the European Union as a whole and its member states. This failure needs to be analysed in the light of the goals the European Union set itself, the means mobilised and the instruments it has installed.

    Obstacles to be overcome to tackle the deep causes of poverty

    To my mind, these are due to the way the present European construction is envisaged and in particular to three of the lines of force which have been exacerbated in recent years.

    • The European Union has given too much power to the markets, especially to the financial market (forbidding any “restriction” on the free movement of capital; the European Central Bank at the service of financial markets æ a “strong Euro” is attractive for capital but impoverishes the peoplesæ; a stability pact to cut down on public spending …).We saw in 2008-2009 where this free-market enthusiasm led. And yet if the supervision of this endless headlong rush has been stepped up, the logic at work has remained unchanged. It is a machine made to manufacture insolent wealth and scandalous poverty.
    • The European Union in its present form encourages competition between peoples (race for the lowest bidder in social issues, casualising labour, compulsory opening of government-owned firms to competition…). In such a pattern, based on social dumping, poverty is inevitably created.
    • The European Union has reduced the capacity of citizens and of all the parties involved in social life to resist and intervene (concentration of power at the summit, systems imposing restrictions, control, sanctions… to the extent of controlling national budget plans prior to their review by national parliaments).

    In such a logic social policy is demoted to being a variable adjusted to suit the economic warfare being waged. European legal texts are the expression of this contradiction between declared ambitions and the logic of the economic system. Here are some examples:

    • I mentioned the Charter of Fundamental Rights. One of the articles recognises “the right of access to social services providing protection in the event of maternity, illness, industrial accidents, dependence or old age and also unemployment”. In fact, this article, like many others, is followed by an “explanation drawn up under the authority of the Presidium of the European Convention”, which stipulates: “the reference to social services applies to cases where such services have been created to provide certain benefits, but in no way implies that such services should be created where they do not exist”! (These explanations are addressed to the courts that may be referred to, and they must be taken into account by these courts.) 
    • In the Treaty of Lisbon the article which recognises the “specific task” of “Services of General Economic Interest” (SGEI), in the application of which a firm may be dispensed from respecting the rules of competition, concludes with the following safeguard: “the development of trade must not be affected (by the SGEI) to such an extent as would be contrary to the interests of the Union”
    • A similar safeguard is contained in the article on social policy: “the Union and the member states act, taking into account (…) the necessity to maintain the competitiveness of the Union’s economy”.
    • Likewise, in the article concerning social protection and the fight against social exclusion: “the European legislations adopted in accordance with the present article (…) must not perceptibly affect financial equilibrium”.

    In the jurisdiction of the European Court of Justice, freedom of capital is placed above workers rights:

    Thus the Netherlands were compelled to modify their system for assigning social housing because of a “manifest error” of public service. The income ceiling opening the right to this kind of housing (33 000 Euros for a household) was considered too high.

    In Lower Saxony (Germany) another ruling (Rüffert ruling) was made in favour of a Latvian firm, a subcontractor of a German building firm, which expected to pay its workers 50% of the minimum wage that applied in this sector in that region. This was done in the name of the freedom of any firm to contract its services in the same conditions as those in force in its country of origin.

    So there are fundamental measures in the present structure of the European Union that should be reviewed and made as restrictive as the goals set for public deficits – for example, today, fixed goals and a precise calendar for the elimination of poverty in Europe. If business circles do not wish to hear about such restrictive goals in the fight against poverty it is precisely because they fear it will eventually lead to a reappraisal of the free-market economic rules which they value above all. It is now up to the political decision-makers to act.

    The problem is that the main European leaders are hardly critical of the present European economic model. On October 15 José Manuel Barroso, President of the European Commission, and Hermann Van Rompuy, President of the European Council, welcomed 18 “philosophical” organisations. They waxed lyrical. According to the former, “the fight against poverty is a European priority”. He mentioned the “ethical” dimension of this fight but with no hint of self-criticism as regards a policy which has turned out to be unable to stem poverty. The latter said “we need an altruistic, interdependent and humanistic inspiration. We need values. The European Union is unity in diversity. Social exclusion is contrary to unity, consequently social exclusion is anti-European”!

    Most members of the European parliament are not exempt from this contradiction between words and acts. Thus, in October, when the Figueiredo Report on the fight against poverty was being discussed, everyone, or almost everyone, agreed to recommend that member states institute a minimum income higher than the poverty threshold. But when the three left-wing groups put forward a concrete proposal laying down a framework-directive in favour of such a provision, it was rejected. The new 10-year European programme – “European Union 2020” – which has replaced the Lisbon Strategy and which is now the official reference of the 27 member countries, has shifted the initial deadline set by the Lisbon Strategy back by 10 years. But this time the plan is less ambitious: no mention is made of eradicating poverty but only of reducing by 20 million the number of persons concerned.

    As the same causes produce the same effects, the odds are that if the obstacles I mentioned remain, the number of poor people among the population of the European Union will, by 2020, have increased dramatically. The citizens, those who play an active part in social matters, trade unions, other organisations and progressive political parties, have everything to gain by giving voice to the demand to reshape the economic rules and political practices in Europe so as to give social goals the place in effective decisions, which they have today only in the speeches of the top leaders. Let us hope that the year of the fight against poverty may help to create such a leap forward. The energy of the social movements on the scene throughout Europe at the present time gives us reason for hope.

Related articles