The PES Presidency unanimously adopted today a statement establishing a strong common position on European Economic Governance. The PES, which is the largest political force opposing the conservatives in the European Institutions, is determined to oppose any reforms which undermine social progress, jobs and economic growth. The reforms proposed by the conservative majority of Europe are the governance package, currently awaiting the opinion of the European Parliament, the so-called “competitiveness Pact” proposed by the conservative governments of France and Germany, and a draconian reform of the European rescue mechanism.

Speaking to member parties representatives, PES President Poul Nyrup Rasmussen said: “From my viewpoint, if we are not able to dramatically change these terrible reforms that conservatives are proposing, we will be  obligated to use our democratic right to oppose them”. “We will not put our name to  reforms that undermines workers’ right and will have catastrophic consequences for the economy”, he added.

The PES has developed alternative proposals to the reform of European economic governance, emphasising the joint need for job creation, growth as well as fiscal responsibility. The PES Leaders are set to meet in Athens on 4th and 5th March. The meeting, which will be jointly hosted by Mr. Rasmussen and Greek Prime Minister George Papandreou, will adopt a clear alternative to the rightwing austerity-only approach.

See full text of statement adopted below.

PES statement on European economic governance

PES Presidency, 24 February 2011

As the ideology of austerity and public budget cuts gains ground in Europe, the PES is instead committed to confronting the conservatives’ attempt to dismantle our social model and promote real alternatives to address the real problems of Europeans. The battleground for these competing visions for Europe is the reformof European economic governance. The radically conservative proposals of the European Commission are unacceptable to progressives. This legislative package introduces a culture of sanctions and punishment into European integration. It neglects our central concern for jobs and growth. It ignores basic principles of democratic accountability and subsidiarity. It disregards the role of social partners, the right to collectively bargain and indeed, the Charter of Fundamental Rights of the European Union. It will aggravate the problems it purports to solve.

The package is currently awaiting the European Parliament’s opinion. The S&D Group has tabled a number of amendments, which are clear red lines on what must be changed. Together, the socialist family is demanding strengthened European coordination to boost employment and growth. In the current political context – a right wing European majority set on implementing ‘austerity-only’ packages, we might not be able to change the proposed package.  However, we are in a position to provide clear and strong opposition. There are, however, already signs that a normal democratic process will not be allowed to take place.  The conservative-dominated European Council has expressed its desire to tie the hands of the Parliament by resorting to a “political agreement” at its summit in March. This, in plain English, equates to bullying.

Moreover, the French and German conservative governments are attempting to push a shameful deal through the European Council. Their proposal amounts to the principle that the price to pay for solidarity between countries is to abandon solidarity within countries.

This “competitiveness pact” would have far-reaching implications on fiscal and social policies. In line with the recommendation contained in the Commission’s proposals, the pact suggests in particular abandoning automatic indexation of wages, adopting budget balance rules in all eurozone member states’ constitutions, harmonizing corporate taxation and increasing the retirement age to 67 years. The pact would reduce competitiveness to cutting labour costs and wages, instead of emphasizing public investments in innovation, research and education. The pact would weaken our welfare states and reduce social protection, and be in clear breach of subsidiarity rules by circumventing social dialogue processes and interfering with national preferences.

The PES will not sign off on this deal. We will oppose any plan that we deem socially unacceptable and economically counter-productive.

The PES is pushing for a balanced reform of European economic governance. The most pressing challenge of this reform is building up defences against speculation and strengthening the position of governments against markets. Priority must be given today to designing the most efficient rescue mechanism for the eurozone. The PES has already proposed to consider the following actions: the European Stability Mechanism must be allowed to intervene directly on the market and purchase sovereign bonds; the level and quality of the guarantee it provides must be developed to reach the targeted stabilizing effect; the very logic of the conditionality it applies must be transformed, from imposing austerity to ensuring growth, jobs and responsible public finances; and the IMF participation to the stability mechanism must be reorganized.

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For further information please contact Brian Synnott on +32 474 98 96 75 (brian.synnott@pes.org)

The PES brings together 33 socialist, social democratic, labour and progressive parties in the European Union and Norway, a parliamentary group in the European Parliament (184 MEPs) and in the Committee of the Regions (247 members) - plus observer and associate parties and organizations from all over Europe. ECOSY and PES Women are respectively the Youth and the Women's organizations of the PES.