Beyond Technocracy: The Intersection of Society, Politics, and Technology
Not a Matter for Technocrats
Reforming EU Economic Policy Governance
Reform of economic policy governance is currently in full swing in Brussels. The European Commission outlined its first reform proposals in November last year. Concrete legislative initiatives will follow in the first half of 2023. While this issue might seem a little arcane, it is not. It is nothing less than a readjustment of Member States’ financial policy-making.
A Fraught Situation
From a trade union perspective, another consideration is key to the upcoming reform process. In the context of Covid-19 and the energy crisis, debt levels have increased substantially in many Member States. That means the pressure to consolidate will increasingly weigh heavily on national budgets for the foreseeable future. Meanwhile, the European Central Bank (ECB) has recently implemented historically unprecedented monetary policy tightening, and the end is still not in sight. This has already considerably increased Member States’ refinancing costs.
Furthermore, inflation rates in the euro area are increasingly drifting apart, especially between Eastern and Western Europe. This could hinder the functioning of a single monetary policy. Therefore, the currency union situation is fraught, and a new currency crisis can’t be ruled out.
The Troika’s austerity drive had fatal social consequences. Memories of the last Eurozone crisis remain vivid, especially of the following austerity policy imposed by the Troika, comprised of the European Commission, the ECB, and the International Monetary Fund (IMF). Trade unions are adamant that a technocratic institution like the Troika should never again be able to pressure the Member States into cutting pensions and public sector wages or undermining collective bargaining coverage. Therefore, a reform of EU economic governance must effectively rule out a rigid austerity policy this time.
Naturally, any currency union has to have rules to ensure that Member States pursue a sustainable budgetary policy. After the financial crisis, however, they went too far. The Troika’s austerity drive had fatal social consequences. And it didn’t even achieve the aimed-at budgetary consolidation because the so-called structural reforms stifled economic growth. Economic studies have also shown that the Euro system – in other words, the currency union’s institutions and rules – has imposed enormous macroeconomic adjustment pressures that have fallen on ordinary workers’ shoulders. This affects not only so-called Programme countries receiving financial aid from the European Stability Mechanism but also many core countries of the currency union.