The same Union that managed to create a common market with one common currency has the power to achieve much more. What is lacking, unfortunately, is the political will.
by Joseph Abela
Collage by the IotL Magazine
[dropcap]A[/dropcap]t the moment, the European Union is a union of sovereign nation states that benefit from various trade agreements, funding sources and common policies. However, the EU is failing to protect its largest demographic group—the working class. Be it the Troika imposing austerity on countries like Greece—the policy that hit the working class particularly hard—to pay for the risks taken by the owners of capital or inaction when it comes to saving drowning refugees, the current common denominator of the EU is the preferential treatment of capital over human life.
Here are a few suggestions on what the EU could do to break away from the suffocating grip of neoliberalism.
Decrease the Pay Gap
Since 1999 wages have increased by half the rate of the increase in productivity (measured by GDP). This means that we are working harder than ever and earning less.
As the statistics prove, increases in GDP do not indicate a better quality of life. Therefore, the EU should stop using this metric to measure a country’s success and instead focus on those at the bottom who are the main drivers behind GDP growth and the ones that benefit least from it. A more realistic metric should consider various factors such as the net annual income of the bottom 10%, air quality, health and education indices and life satisfaction. It is important to remember that the bottom 10% are most hit by the worst inflations, such as inflation in food prices.
The EU needs to create more jobs that pay a living wage. Increasing the minimum wage throughout the European Union is a necessary step but it will be useless without accompanying measures.
[perfectpullquote align=”full” bordertop=”false” cite=”” link=”” color=”” class=”” size=””] The excessive wages of boardroom executives are a robbery from the workers who produce the actual value.[/perfectpullquote]
In the Netherlands, CEOs were paid 171 times more than the average worker. The excessive wages of boardroom executives are a robbery from the workers who produce the actual value. The UK Labour party proposed to limit the pay gap to a 20:1 pay ratio for companies awarded public contracts. This type of legislation should be implemented on a Union-wide scale and extended even further.
This kind of pay ratio should apply to subcontracted workers such as cleaners. Using Deutsche Bank as an example, the lowest wage would be 145,000 euros since the top earner had an income of 2.9 million euros. As a consequence of this policy, wages for low income earners would increase and the wages of executives would decrease to reasonable figures.
Restructure the Financial Industry
The financial industry is geared to favour the ultra-rich. From trust funds to hoard their wealth and advantageous tax deals, the financial system gives an unfair advantage to the rich while the poor pay for the disaster that is left behind in the quest for profit.
The banking system must be urgently restructured. Big banks like HSBC laundered drug cartel money. European banks are also culpable for climate change by funding the fossil fuel industry. These large financial organisations need to be broken down into smaller institutions with the scope of forming regional development banks.
[perfectpullquote align=”full” bordertop=”false” cite=”” link=”” color=”” class=”” size=””]From trust funds to hoard wealth and advantageous tax deals, the financial system gives an unfair advantage to the ultra rich while the poor pay for the disaster that is left behind in the quest for profit.[/perfectpullquote]
Instead of using their knowledge to ensure profit for the rich, finance workers would focus on developing communities by directing investment towards sustainable energy sources and finance projects that contribute to the common good. These new investment banks would help workers who are seeking to form co-operatives by giving financial advice. While the profits of the financial industry would decrease on a global level, working communities will profit more from a financial industry prioritising their needs instead of extorting them through predator loan schemes and making the rich richer.
Boost Co-operatives
In a more democratic Europe, one of the roles of regional development banks would be aiding co-operatives. Worker ownership is one of the most effective forms of assuring that workers get compensated fairly for their labour and share in the profits. At the moment, profit goes to shareholders and all the decisions are executed by a board of directors selected by shareholders.
One of the proposals of the UK Labour Party aiming to boost workers’ ownership is to ensure that companies with more than 250 employees would create an ownership fund through which workers are paid in the form of shares (up to 10%). Thus, the workers would own up to a 10% stake in the company and would have shareholder rights, therefore influencing the way the company is run.
[perfectpullquote align=”full” bordertop=”false” cite=”” link=”” color=”” class=”” size=””]Worker ownership is one of the most effective forms of assuring that workers get compensated fairly for their labour and share in the profits.[/perfectpullquote]
Workers would also have extra compensation in the form of dividends on profit. A similar policy could be implemented EU wide to ensure better worker representation in large corporations.
Automation that Benefits Society
Worker ownership can help revive the industrial sector in various European countries. Instead of using automation as an excuse to fire workers, worker-owned companies will use automation to ensure that the mundane parts of the job are taken care of by machines while the workers can do more fulfilling activities within the company.
[perfectpullquote align=”full” bordertop=”false” cite=”” link=”” color=”” class=”” size=””]The free time produced by the rise in automation can lead to a shorter working week.[/perfectpullquote]
Productivity would still increase and the same profit can be used to invest in the community by providing paid internships which can lead to a permanent job. The free time produced by the rise in automation can lead to a shorter working week. Quoting from the report by the progressive think tank Autonomy: “Phenomena such as the rise of zero-hour contracts, the impact of automation, gender inequality, stagnating productivity, continued job polarisation and vast income inequality require more than just cosmetic changes.
The shorter working week is one measure that can be taken to face some of these problems.” Wages would not be reduced because the productivity lost due to one less work day [in the case of a four day work week] would be offset by an increase in productivity since work-related stress and burnout would decrease and automation can take the burden of increasing productivity.
The same Union that managed to create a common market with one common currency has the power to achieve much more. What is lacking, unfortunately, is the political will. While most policies outlined above may sound improbable, in the sense that few mainstream European politicians support them, the current system is the one that is doomed to fail. The current system will leave us drowning in the after-effects of climate change while the rich laugh at us while sipping champagne in their gated communities.