Tomorrow (29 September), ETUC is staging a European day of action in various countries to protest against the austerity measures adopted recently by many EU governments to reduce debt, restore budget discipline and boost market confidence in the euro.
Unions are concerned. "There is a bigger chance of a recession than there is of us managing a sustainable recovery," said Monks.
For years, explained the trade unionist, countries have disregarded Stability and Growth Pact rules that were supposed to keep eurozone members' debt under control. This was a fortunate move, said Monks, arguing that ignoring the monetarist corsets of the Pact had kept public investment afloat and welfare spending up.
That all changed with Greece, recalled Monks, saying that EU decision-makers under public pressure forgot their Keynesianism and started cancelling new schools, roads and hospitals, creating the risk that losses of new orders in public spending might not be compensated by increases in domestic demand from the private sector.
"The job cuts in the public sector will come through this winter and next year. We are only at the start of this," he said, noting that all schemes launched at the beginning of the crisis, like short-time work programmes, provision of unemployment insurance benefits and job subsidies should be maintained, as should fiscal and monetary stimuli.
Although Monks acknowledged that it is difficult to say when to end these schemes, a more gradual repayment plan over a longer period of time, keeping employment packages in place and increasing debt, would for him represent a better strategy to trigger a more sustainable recovery.
"I hope that EU governments will not kill the economy with austerity, but I fear that they will," he said.
Unions are worried that while countries are busy trying to pay back their debts, they run the risk of being downgraded by rating agencies and struggling to sustain a meaningful economic recovery.
"I think we should maintain welfare states and not cut them. We should be keeping up wages and not looking for pay freezes all the time, as that reduces demand. Thirdly, special measures are needed for investment in new industries such as green ones, as well as expanded opportunities for young people," Monks explained.
Economic governance must be generous, not punitive
Asked whether EU leaders were on the right track to reform economic governance, Monks said the EU should be generous and not punitive with its measures.
"I think that they have not been generous enough with Greece in particular. The fear of being the next Greece is what is motivating Ireland to be so rigorous at the present time," he explained.
EU pension reform must be more imaginative
As for pension reform, Monks is convinced that a change is needed but that increasing the retirement age is not the right approach.
"We must recognise that a lot of employers don't want to employ all workers. Older workers are expensive, they are senior and they are not working - particularly in white collar management jobs - until the statutory retirement age is out. Employers want new blood, they want space for younger people to come through," he said, calling for a much more imaginative way of tackling the problem.
According to Monks, people are entitled to their pension schemes and should be getting incentives to work. "If there are changes to reflect longevity rates then this should be introduced very gradually. The countries offering incentives seem to be the ones making the most progress with this," he said.
John Monks was speaking to EurActiv Managing Editor Daniela Vincenti-Mitchener.
