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BackThis week, OECD Secretary General José Ángel Gurría presented the OECD Report “Economic Challenges and Policy Recommendations for the Euro Area” in Brussels. The Report seeks to justify the current crisis policy and demands further neoliberal structural reforms from the countries of the euro area, among them Austria.
Angel Gurría: “Go structural” - structural reforms are the dictate of the moment!
Even though the failure of the current crisis policy becomes increasingly more apparent and that apart from the fact that sufficient empirical evidence has been gathered in the meantime confirming that the ruinous cuts imposed by the social states and the watering down of labour rights only aggravate the crisis, both in economic and social terms, the OECD in its Report demands more of the same failed recipes. According to the study, the main concern of the OECD is the so-called structural reform. During the crisis, the term has become a euphemism for neoliberal attacks on labour rights, collective agreements, as well as wages and pensions.
This is exactly where the demands made by the OECD are heading. Austria for example is faced with a request to further liberalise “network industries” (which include apart from energy and telecommunication also rail and postal services). Reducing job protection has been demanded for no fewer than eight countries of the euro area, among them Germany, France and crisis-stricken Portugal, whose massive attacks on collective agreements have been noticed already. This is justified by the explanation that this measure is aimed at furthering the separation between precarious and protected jobs. However, the thinking of the OECD resembles a one-way street to the bottom, where secure jobs are aligned to match insecure jobs - instead of the other way round.
What looks positive at first glance is the fact that the OECD encourages a number of countries to reduce the tax wedge on labour income. In reality, however, it links this proposal to the demand for more indirect taxes. Instead of raising taxes on the wealthy, the intention now is to increase mass taxes, which has a disproportionately large impact on lower incomes.
Finally, Greece is presented with the prospect of achieving major efficiency gains in the health sector. In view of the fact that in the meantime in Greece - as a consequence to the Troika policy - 40 % of the population no longer have health insurance and only last week all polyclinics of the country were closed, this claim seems to be rather cynical.
Presentation with “model pupils” of crisis policy
OECD Secretary General José Ángel Gurría presented the Report within the framework of a discussion with the President of the Eurogroup and Minister of Finance of the Netherlands Jeroen Dijsselbloem, the Portuguese Finance Minister Maria Albuquerque, the Spanish Minister of Economic Affairs and Competitiveness Luis de Guindos and the Irish Finance Minister Michael Noonan. Hence, the ministers of the three crisis states Spain, Portugal and Ireland were given the opportunity of presenting themselves as model pupils of a neoliberal crisis policy. Particularly remarkable was the statement of Spain’s Minister de Guindos, who suggested that in contrast to the past, where the devaluation of the national currency had led to inflation, the policy of “internal devaluation” to restore competitiveness did not have any negative “pay-offs”. At the end of the statements of the panel, a critical journalist asked the question whether the Minister of Economic Affairs would not regard 25 % unemployment as a “pay-off”.
Odd was also the time and again emerging question among the discussion participants how to handle the fact that the implemented reforms would not find a majority in the elections. However, whether a policy, which completely failed to find the approval of the population, would be adequate, was not discussed.
Finally, the contribution of the General Secretary of the European Trade Union Confederation (ETUC) Bernadette Ségol, who was sitting in the audience, has to be mentioned. Outraged about what had been said and the ignorance shown for the problems of the people she said: “Workers are not good at being economists, but they have understood that this crisis policy is a competition race to the bottom!”
Further information:
OECD-Report
Even though the failure of the current crisis policy becomes increasingly more apparent and that apart from the fact that sufficient empirical evidence has been gathered in the meantime confirming that the ruinous cuts imposed by the social states and the watering down of labour rights only aggravate the crisis, both in economic and social terms, the OECD in its Report demands more of the same failed recipes. According to the study, the main concern of the OECD is the so-called structural reform. During the crisis, the term has become a euphemism for neoliberal attacks on labour rights, collective agreements, as well as wages and pensions.
This is exactly where the demands made by the OECD are heading. Austria for example is faced with a request to further liberalise “network industries” (which include apart from energy and telecommunication also rail and postal services). Reducing job protection has been demanded for no fewer than eight countries of the euro area, among them Germany, France and crisis-stricken Portugal, whose massive attacks on collective agreements have been noticed already. This is justified by the explanation that this measure is aimed at furthering the separation between precarious and protected jobs. However, the thinking of the OECD resembles a one-way street to the bottom, where secure jobs are aligned to match insecure jobs - instead of the other way round.
What looks positive at first glance is the fact that the OECD encourages a number of countries to reduce the tax wedge on labour income. In reality, however, it links this proposal to the demand for more indirect taxes. Instead of raising taxes on the wealthy, the intention now is to increase mass taxes, which has a disproportionately large impact on lower incomes.
Finally, Greece is presented with the prospect of achieving major efficiency gains in the health sector. In view of the fact that in the meantime in Greece - as a consequence to the Troika policy - 40 % of the population no longer have health insurance and only last week all polyclinics of the country were closed, this claim seems to be rather cynical.
Presentation with “model pupils” of crisis policy
OECD Secretary General José Ángel Gurría presented the Report within the framework of a discussion with the President of the Eurogroup and Minister of Finance of the Netherlands Jeroen Dijsselbloem, the Portuguese Finance Minister Maria Albuquerque, the Spanish Minister of Economic Affairs and Competitiveness Luis de Guindos and the Irish Finance Minister Michael Noonan. Hence, the ministers of the three crisis states Spain, Portugal and Ireland were given the opportunity of presenting themselves as model pupils of a neoliberal crisis policy. Particularly remarkable was the statement of Spain’s Minister de Guindos, who suggested that in contrast to the past, where the devaluation of the national currency had led to inflation, the policy of “internal devaluation” to restore competitiveness did not have any negative “pay-offs”. At the end of the statements of the panel, a critical journalist asked the question whether the Minister of Economic Affairs would not regard 25 % unemployment as a “pay-off”.
Odd was also the time and again emerging question among the discussion participants how to handle the fact that the implemented reforms would not find a majority in the elections. However, whether a policy, which completely failed to find the approval of the population, would be adequate, was not discussed.
Finally, the contribution of the General Secretary of the European Trade Union Confederation (ETUC) Bernadette Ségol, who was sitting in the audience, has to be mentioned. Outraged about what had been said and the ignorance shown for the problems of the people she said: “Workers are not good at being economists, but they have understood that this crisis policy is a competition race to the bottom!”
Further information:
OECD-Report