Debates of the European Parliament 1

10-03-2011 EN Debates of the European Parliament 1 THURSDAY, 10 MARCH 2011 IN THE CHAIR: MIGUEL ANGEL MARTÍNEZ MARTÍNEZ Vice-President 1. Opening of the sitting (The sitting was opened at 09:00) 2. Media law in Hungary (motions for resolutions tabled): see Minutes 3. Respect of national wage and retirement-setting mechanisms (debate) President. – The first item is the Commission statement on respect of national wage and retirement-setting mechanisms. Johannes Hahn, Member of the Commission. – Mr President, I would like to thank honourable Members for this opportunity to dispel some widely held misunderstandings regarding the Irish programme. The S&D Group’s question that gave rise to this statement raises honourable Members’ concern that certain economic policy conditions set out in the Memorandum of Understanding of the Economic Adjustment Programme for Ireland are in legal conflict with Article 153(5) of the Treaty. That paragraph excludes the adoption of provisions in the field of pay under Article 153, that is, in the field of social policy. However, the Economic Adjustment Programme for Ireland is not a social policy programme and is not adopted under Article 153. It is a financial assistance programme set up, together with the Irish Government, to restore domestic and external confidence and remove the harmful feedback loops between the fiscal and financial crisis. Therefore, it is grounded in Article 122(2) of the Treaty, which allows for Union financial assistance if a Member State is seriously threatened with severe difficulties caused by exceptional occurrences beyond its control. The role of the MOU is to specify the economic policy conditions that serve as a benchmark for assessing the Irish policy performance during the financial assistance programme. The Member State has full ownership of these economic policy conditions and their implementation. These conditions are commitments of the Member State that are undertaken by the state itself. It is not EU action in the respective fields. Indeed, many of the conditions, such as the minimum wage reduction, were already included in the Irish Government’s national recovery plan that was published on 24 November 2010, before the start of the programme. The aim of the conditions relating to labour market policy is to create jobs and to avoid long-term unemployment in Ireland amongst the most vulnerable groups. The minimum wage reduction is part of this wider package of measures and needs to be seen together with activation policies and efforts to modernise the benefit system. When evaluating the reduction in one of the highest minimum wages in the European Union – it is, for instance, the second highest in the eurozone – and although there was significant wage adjustment in the economy, with the minimum wage, in common with wages in general in Ireland, falling by 3% in real terms in 2008, followed by a rise of 0.3% in 2009, it should be noted that most of the labour market adjustments took the form of job losses. In fact, the 2 EN Debates of the European Parliament 10-03-2011 minimum wage cut only restored the status quo prevailing before 1 January 2007, i.e. before the crisis. The other condition mentioned in the question is an independent review of sectoral collective bargaining. The motivation of the review is to discuss the fairness and efficiency of employment conditions for both employees and employers across sectors. I would like to highlight the fact that Ireland has a long-standing tradition of tripartite consultation on economic and social policy and that the successive pacts between the government and the social partners since the 1980s have been widely recognised as major factors in the success of the Irish economy. The review is an opportunity for the social partners to voice opinions and shape policy, and its announcement was welcomed as such. I am fully confident that the review will be carried out by the Irish Government in a way that recognises the importance of social dialogue, includes all the social partners, and complies with Community law. Finally, the conditions in the Memorandum of Understanding with regard to structural reform are not only about the labour market. They also contain important measures to open up product markets such as overly regulated sectors and professions. These reforms could have a major effect on customer prices and productivity, which support the purchasing power of households. Gay Mitchell, on behalf of the PPE Group. – Mr President, I would also like to thank the Commissioner. Yesterday, a new national government for recovery was voted into power in Ireland. Fine Gael and Labour are part of the PPE and S&D groups respectively in this Parliament. One of the issues high up on the agenda of the new programme for government will be the renegotiation of elements of the EU/IMF programme of support to Ireland. At present, many Irish people fear that the conditions agreed by the then government in the EU/IMF programme of support are too stringent and place a heavy burden on ordinary citizens who have had to bear the brunt for the mistakes of the banks – both Irish and European – and the government. We should note that the new government has agreed to reverse the reduction in the minimum wage. We know, however, that recovery cannot happen without pain. Ireland went down a similar road in the 1980s. Many of the difficult conditions as laid out by the EU/IMF programme are necessary if we are to restore healthy public finances. We must prune the tree in order to allow growth. I welcome the Commission’s support for an interest rate reduction as stated by Commissioner Rehn. This should come about as soon as possible and I urge the Commission to really look at this at an early date. The Commissioner emphasised that all measures are weighed up against their effect on growth, competitiveness and the sustainability of public finances in the long run. I accept that; we cannot carry the entire burden we have been asked to carry at once. The Irish people have taken their responsibilities in this matter; in fact, they have taken other people’s responsibilities as well, because we were given no alternative. What they have done is not just for Ireland but also for Europe and the eurozone in particular. We do not need the straw to break the camel’s back. Please give the Irish people the tools; we will do the job ourselves, but please do not expect the Irish people to carry a burden that they are not capable of carrying. So I ask the Commissioner to bear those comments in mind in particular in the days and weeks ahead. 10-03-2011 EN Debates of the European Parliament 3 Stephen Hughes, on behalf of the S&D Group. – Mr President, this memorandum requires an EUR 1 per hour reduction in the minimum wage in Ireland and a review, as we have heard, of the system of collective pay agreements which protect the low paid. I do not believe that this interference can be justified. The Treaty requires the Commission to promote social dialogue, not undermine it. Article 152 requires respect for the autonomy of social partners, not this type of interference, and Article 153 expressly excludes EU action in the field of play. The Commission cannot pick and choose the hierarchy of articles in this respect. The memorandum goes on to insist on cuts in social welfare, the roll-back of key public services, and reductions in public sector employment and public sector pensions. How can those demands be justified in relation to a Treaty that requires the Union to aim to eliminate inequalities, promote a high level of employment, guarantee adequate social protection and fight against social exclusion? The only honest answer to that is that these things cannot be reconciled, and the problem is that these things have now, as a result of the Annual Growth Survey, become the general rule. The people will reject the idea of a Europe based only on austerity. They will not tolerate the far-reaching implications for social policies with lower wages, lower employment protection, weak social standards, reduced public services and the imposition of higher retirement ages. If we want to continue to swell the ranks of anti-Europeanism, then carry on, Commission. If not, please stop this nonsense now. Marian Harkin, on behalf of the ALDE Group. – Mr President, the Commissioner is telling us that the Memorandum of Understanding was drawn up under Article 122, part 2. I would like to ask the Commissioner what happens when one article of the Treaty is in direct contradiction with other articles in the Treaty; as Stephen Hughes has asked, how do we decide on the hierarchy? It is in contradiction with Article 153. It is also in contradiction with Article 9, the social clause, which I have quoted many times in this Chamber when speaking about the Irish austerity package, where it says that in defining and implementing all its policies and activities, the Union shall take into account requirements linked to the promotion of a high level of employment and the fight against social exclusion, etc. And what about Article 28 in the Charter of Fundamental Rights, under which workers have the rights to negotiate and conclude collective agreements and, in the cases of conflicts of interest, to take collective action to defend their interests, including strike action? Many Irish workers would see that they are in that position at the moment. How do we deal with the contradiction between the different articles in the Treaty? Another question for you, Commissioner: are you stating that the Memorandum of Understanding was entirely the responsibility of the Irish Government and that the Commission acquiesced or agreed? Finally, let us assume here you have the power to do all of this – and you are telling us you have; why then was there no effort to reduce or eliminate bank bonuses? Why was there no effort to ensure that those at the top of the salary scale paid their fair share? Why is it that one euro was deducted from the minimum wage? I agree entirely with what Stephen Hughes has said: this fuels anti-European sentiment.

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