Cyprus Mail
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EP slams EU role in troika bailouts

A draft opinion of the Committee on Employment and Social Affairs of the European Parliament has criticised the role of the Eurogroup and the European institutions participating in the troika (IMF, EC, ECB) over the social impact of the economic adjustment programmes in Greece, Ireland, Portugal and Cyprus.

The draft opinion of Spanish Rapporteur Alejandro Cercas on the role and operations of the troika with regard to the euro area programme countries, notes that the EU institutions (the ECB, the Commission and the Eurogroup) were fully co-responsible for the conditions imposed under the economic adjustment programmes, and therefore for their social consequences.

The opinion deplores the fact that the European Parliament was  completely marginalised during all phases of the project and regrets the fact that those programmes were designed without any assessment of the consequences by means of impact studies or coordination with the European Parliament’s committees.

On employment the opinion notes that the adjustment policies and structural reforms in the four countries have led to dramatic unemployment rates, historically high rates of job losses and worsening working conditions; points out that the consequences for activity rates, in particular as regards the sustainability of social protection and pension systems, were even more serious because the gap between the Europe 2020 targets and reality is rapidly growing ever wider.

It also notes that the most vulnerable groups – the long-term unemployed, women, migrant workers and the disabled – have been strongly hit and are suffering from higher unemployment rates than the national average.

The opinion also is concerned that, among the conditions for financial assistance, the programmes include recommendations for specific cuts in fundamental areas of the fight against poverty, such as pensions, basic services, health care and pharmaceutical products for the basic protection of the most vulnerable; highlights the fact that the main impact of these measures is on the fight against child poverty.

It notes that Commission figures and various studies show that between 2008 and 2012 income distribution inequality grew in the four countries, and that the cuts in social and unemployment benefits resulting from austerity measures, as well as the wage reductions due to structural reforms, are raising poverty levels.

The opinion calls on the Commission to carry out a detailed study of the social and economic consequences of the adjustment programmes in the four countries in order to provide a precise understanding of both the short-term and long-term damage to the social protection systems, with particular regard to the fight against poverty, the maintaining of good social dialogue and the balance between flexibility and security in labour relations.

It calls on the EU to provide support, after the assessment, including through financial resources where appropriate, for the recovery of social protection standards and of the fight against poverty reduction and the renewal of social dialogue through a social recovery plan; calls on the Commission, the ECB and the Eurogroup to phase out the exceptional measures that have been put in place.

Finally, it calls on the EU not to apply such institutional and financial solutions in future, and to put in place mechanisms enabling the EU institutions to achieve the social goals and policies set out in the Treaties, in particular those relating to the individual and collective rights of those at greatest risk of social exclusion.

In late March Cyprus averted a collapse of its banking sector after agreeing on a €10 billion bailout with the troika that featured a haircut of banking deposits over €100,000 in its two largest lenders and the winding down of the island`s second-largest lender as well as an array of public spending cuts and salary reductions. (CNA)


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