People’s Tribunal on EU Economic Governance and the Troika

Brussels, 16 May 2014

Impact of austerity on poverty Impact of austerity on poverty and social exclusion in the EUand social exclusion in the EU

Fintan Farrell

European Anti Poverty Network

Outline of the Presentation

What is EAPN?

The economic, financial and poverty crisis in 2009-2010

The impact of the Troika

The negative effect of EU economic governance

EAPN’s proposals for a sustainable recovery

Conclusions

What is the European Anti Poverty Network - EAPN?

Independent Network of NGOs committed to fight against poverty and social exclusion, with and for people in poverty.

Started in 1990 – key actor in poverty programmes and development of social OMC.

Receives financial support from the European Commission (PROGRESS / EaSI)

29 National Networks and 18 European NGOs as members (6000+ organisations)

Participation of people with direct experience of poverty must be part of the solution.

The economic, financial and poverty crisis

2009-2010 Main focus of the recovery packages – focused on growth and competitiveness, little regard for social impact

Major cuts to social inclusion and social protection budgets, as well as services

Rising unemployment, proliferation of low-quality jobs, erosion of working conditions, increased in-work poverty

Indebtedness, financial exclusion, homelessness Not all in the same boat – those most vulnerable were

hardest Social NGOs see their funding cut, while demands on their

services and support increaseMore information: Social Cohesion at Stake – The Social Impact of the Crisis and

of the Recovery Package, EAPN, December 2009, access here.

The economic, financial and poverty crisis 2009-2010

The social impact is getting worse – recovery means austerity, which makes the poor pay and undermines a sustainable recovery

Fiscal stability is sought at the expense of social cohesion – Governments are making it worse!

Income, services, inclusive employment – massive setbacks and cutbacks, as the situation worsens

NGOs squeezed to address increasing demands with less funding and support

There are alternatives – restore the core values of the European project and use Europe 2020 to drive an inclusive recovery

More information: Is the European project moving backwards? – The Social Impact of the Crisis and of the Recovery Policies, EAPN, February 2011, access here.

The impact of the Troika

Troika – European Commission (EU); International Monetary Fund (IMF); European Central Bank (ECB) or World Bank – not just a Eurozone concept! Also in RO, LV, HU…

Provide loans below market rates (but at a profit) to sovereign states who are shut out of financial markets, in return for fulfilling specific conditions expressed in legal Memoranda of Understanding (MoUs)

EAPN Report: Lifeboat or life sentence? The Troika and emergency assistance programmes and their impact on poverty and social exclusion, December 2013, can be consulted here.

The impact of the Troika

Public spending cuts - shrink budgets, staff and competencies in public administration; cuts and reforms in health and social services, housing and education; cuts in welfare cash benefits and in eligibility; increase in conditionality, especially working age;

Tax “reform:” mainly regressive and consumption-based (eg, VAT);

Privatization and deregulation: of state assets, including state owned enterprises, liberalisation; deregulation and price rises or new user charges - e.g. medicines and transport;

Labour market deregulation, weakened trades unions: Cuts to public sector wages; weaken collective bargaining; cuts in real value of minimum wage; “conditionality” tightened for unemployed;

Increased risk of poverty & social exclusion: high and rising inequality; poverty and material deprivation on the rise; labour market segmentation; in-work poverty.

The negative effect of EU economic governance

Europe 2020 targets far from being reached – the situation for some is worse than in 2010, ie 10 million at risk of poverty and social exclusion poverty (114 million to 124 million).

Social objectives not prioritised in the European Semester, and undermined by the relentless pursuit of macroeconomic objectives, without social impact assessment;

Fiscal Compact, Two-Pack, Six-Pack – contain negative provisions for social rights, and directly promote poverty.

Unprecedented levels of external surveillance – Troika, but also budgetary review in October of each year, under the Two-Pack

Lack of transparency, democratic participation and stakeholder involvement – in the European Semester, and the Troika process.

Social Investment strategy proposed, but unclear yet how it will function in practice, and whether it will restore balance to objectives.

EAPN’s proposals for a sustainable recovery

Put the financial economy at the service of people Prevent a further slide into stagnation or “double dip” recession Challenge pay inequality and invest in quality jobs Support adequate minimum income and social protection Support social investment and quality services Support social and territorial cohesion Support tax justice through progressive taxation Build a social and sustainable future for all Put forward a European social and green New Deal Reinvigorate democratic values and participation

Further EAPN action, proposals and analysis

Europe 2020 and the European Semester- National Reform Programmes – annual analysis reports (2011, 2012, 2013, 2014 upcoming)- Country Specific Recommendations – annual implementation report and shadow proposals (

2012, 2013, 2014) Impact of the crisis and of the austerity measures- Crisis reports (2009, 2010) and policy conference (details and conference report here). - Re-engaging Hope and Expectations. Getting out of the crisis together – alternative

approaches for an inclusive recovery, March 2012 – read here.- Lifeboat or life sentence? The Troika and emergency assistance programmes and their impact

on poverty and social exclusion, December 2013, can be consulted here. Working in Alliances- EU Alliance for a more Democratic, Social, and Sustainable European Semester – read the joint

CSR report and check out the launch event (EAPN-led project financed by the European Commission).

- (Joint Social Conference) Alter Summit – for a democratic, ecologic, social and feminist Europe

- Spring Alliance – Social Platform, ETUC, CONCORD, European Environmental Bureau

Thank you for your attention!

For more information, please consult

www.eapn.eu

Or contact

Fintan.Farrell@eapn.eu

Amana.Ferro@eapn.eu