Unions are urging ministers to "immediately change course" in the way they treat member states with serious deficit problems – such as Greece, Ireland and Portugal.
John Monks, general secretary of the European Trade Union Confederation (ETUC), has written to members of the Ecofin Council insisting that they "change the logic of the financial bailouts, allowing the countries involved to grow out of debt".
According to Monks, "brutal austerity, both in terms of public finance as in terms of wages, is not working but is instead undermining the economies of countries such as Greece, Ireland and Romania".
Union leaders are very critical of the package that was adopted by EU leaders 12 months ago, with the aim of saving the economy of the whole euro zone while putting Greece on a path towards reducing its budget deficit and repaying its national debt.
ETUC insists that "the severe austerity measures plunged the Greek economy deeper into the recession," while "massive social and pay cuts put social peace at risk".
An emergency resolution adopted by the ETUC Congress in Athens yesterday (16 May) points out that the Greek economy has shrunk by 4.3 % in the last 12 months, while the national debt has grown to 142% of GDP. Unemployment and bankruptcies have increased, tax revenue has fallen, and "the justified resistance of the population" has grown.
"To get out of the crisis, Europe must help countries in crisis such as Greece with an ambitious investment and development programme to generate growth and employment and with that income and tax revenue," says ETUC.
In particular, the unions are insisting that "Greece needs loans with lower interests and longer terms without further restrictions".
Greek people feeling 'anger and resignation'
George Dassis, a veteran of the Greek trade union movement, describes the current mood of the Greek people as one of "anger and resignation".
Speaking to EurActiv in an interview, he said public anger is directed towards "the politicians who led the country into the situation that it's in today," while there is also a sense of resignation "because people cannot see a solution".
Dassis is a member of the ETUC executive committee and president of the employees' group in the European Economic and Social Committee (EESC), an EU advisory body.
Asked to comment on the strikes that have been organised by Greek trade unions, most recently on 11 May, Dassis admitted that "one doesn't solve the problem with general strikes."
"But on the other hand, doing nothing and not protesting is not good either," he said. "It's necessary to send a signal towards the governments."
According to Dassis, "it's obvious that with the austerity measures adopted one year ago we will not get out of the current crisis".
He believes that Greece's problems will not be solved unless all of the democratic political parties are willing to work together on tackling the fight against corruption, fraud and tax evasion.
Greece and other countries 'need low-interest loans'
At the same time, Dassis insists that the European Union and the European Central Bank (ECB) should be more generous in the way they deal with Greece and other countries facing similar difficulties, such as Ireland and Portugal.
The EESC member considers it unreasonable that the EU has lent money to Greece with an interest rate of 5%, since reduced to 4%. He notes that Portugal was recently offered a loan of €78 billion, with an interest rate of 6%.
Dassis points out that such interest rates are significantly higher than the rate charged to Greece by the International Monetary Fund (IMF) (3%), or the rate at which Germany is able to borrow from the ECB (closer to 2%).
"I don't call that solidarity. I call that a business transaction," he said.
The ETUC member believes that loans to Greece and other deficit-ridden countries should be low interest, with rates close to those that are available to banks, and that their terms must be extended. He said that this could be done by the European Central Bank, for example by means of so-called 'euro-bonds'.
Meanwhile, Dassis firmly rejected the idea that Greece, Portugal and/or Ireland should be forced to leave the euro zone, insisting that this would be a "catastrophic scenario for European integration".
"I am deeply convinced that if we want to continue living in peace in Europe then we have to keep going with the process of European integration," he said.
"But to keep going with this process we must also guarantee a certain level of economic and social cohesion," he added.
Structural funds seen as vital source of support
Alongside low-interest loans, Dassis believes that the EU should also be making greater use of its cohesion funds, including the European Regional Development Fund (ERDF), to help Greece and other member states that are facing financial difficulties.
He said that as a provisional measure, to help these member states get through the crisis, the structural funds should invest money in projects without obliging governments to provide matching funds from their national budgets - "because they have no money".
Dassis regrets that the approach currently being taken by the EU institutions is weighing most heavily on those groups who can least afford the consequences in terms of lower salaries and reduced pensions, as well as cuts to social welfare benefits.
"Across the 27 member states of the EU, it is only austerity measures that are announced, and which affect not the richest but the middle classes and those on low incomes, starting with workers and pensioners," said the veteran trade unionist.
According to him, trade unions must send the message that "European workers are fiercely opposed to all these austerity measures that are almost exclusively targeted on workers and pensioners".
To read the interview with George Dassis in full (in French), please click here.
Ben Carlin
