Monks: Europe can lead world on ‘green engineering’

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EU countries should pour money into ‘green’ jobs to make Europe the world leader in green engineering, John Monks, secretary-general of ETUC, the European Trade Union Confederation, told EURACTIV in an interview, describing the bloc’s economic recovery plan as “ambitious, but not enough”.

John Monks has been secretary-general of the European Trade Union Confederation (ETUC) since 2003. 

To read a shortened version of this interview, please click here

You recently said Europe was under threat from a ‘three Ds’ scenario of depression leading to deflation and excessive debt. Do you think the EU’s recovery plan, unveiled on 26 November, provides an adequate response to the global financial crisis? 

It is a good start and quite ambitious by the standard of the European Commission. It challenges member states and it pushes them in the right direction. [But] recognising that the European Commission is not the authority in this area [and is] just a coordinator, it cannot command, it can only really suggest. 

It does not want to put member states in an embarrassing position, but it wants to exert some pressure. In those circumstances, I think they have done quite well. Whether they have done enough is more doubtful. 

Indeed, if you look at the plans that are being discussed in America by the Obama team, they are five times what the European Commission has been talking about. The problems are different in the US, but the scale of the response needs to be significant in a lot of European countries as well. 

ETUC asked for 1% of GDP and the EC proposed 1.5%. Trade unions got a better proposal that they initially asked for. And yet, you are now looking at the US? 

The Commission did not get very good press for its recovery plan. Some people said “too little, too late”, or [that it was] not so effective. I think in the present circumstances it is good – and it is targeted in the right direction (green jobs). But it remains to be seen whether it will actually be carried through. 

You rightly pointed out that the Commission is the coordinator. But it seems that member states don’t really want to coordinate. German Chancellor Angela Merkel and French President Nicolas Sarkozy ruled out cutting VAT to boost consumer spending. The UK has announced major tax cuts worth around 1% of GDP. Do you think the recovery plan will produce a divided club, like it did in October on the energy and climate package? 

The Commission cannot wave a magic wand like Harry Potter and create political will. That has to come from the member states. I am reasonably confident in France. They might not do the VAT, but they would do something quite important: certainly in line with the 1.5% [after the interview, France unveiled a 26bn euro stimulus plan, including 700m euro tax breaks for companies hiring new staff]. 

The one I am most concerned about is Germany, which is in what I describe pre-Keynesian Protestantism: ‘We don’t spend money we don’t have,’ ‘We don’t borrow money in Germany,’ ‘We save money and only spend what we’ve got.’ Very few Germans have credit cards for example. They like to pay by cash or debit card. 

But Germany cannot rely on export-led growth all the time, because their exports’ friends, like the UK importing BMWs, will not be able to afford them anymore. We are now in a situation where Germany has to help itself and grow itself from the inside rather than think it can do it through exports. 

In the emergency circumstances, Germany has to spend some money in Germany, and German people should be encouraged to spend. 

After all, Germany is the engine of the European economy and if it’s trying to export its way out of trouble, then it is going to do so at the expense of other countries that will be undermined. 

As you said, Germany is the engine of the EU economy. Do you think other member states will put more pressure on Merkel to show some solidarity with the rest of the club? 

There will be some pressure. But at the end of the day, Germany is a sovereign nation. This is not an EU competence area. But we are hoping that the G20 commitments and the EU recovery plan will encourage Germany to do more than it is proposing at the moment. 

I think it is fair to say that Germany did not like the bank rescue plan in the first instance, but went along with it and gave it a lot of credibility. If many of the main nations had not gone with it, the major banks would have been worse off than they are today. 

Member states are invited to take measures from a toolbox. One size does not fit all countries, but which measures would ETUC like to see in every national recovery plan? 

I would like to think that all are investing in what some are already calling the New Green Deal, taking the old Roosevelt package and adding sustainability to it. 

There is an opportunity to reorient European economy towards sustainability. The areas that I would like to come out more strongly are investment in renewable energy, sustainable engines and new lifestyles. Make Europe genuinely the world leader in environmental engineering, in reducing carbon emissions and sustainability. It is an opportunity we must seize. 

But at the moment, the package of measures that is supposed to lead us towards a low-carbon economy is in jeopardy. 

Look, we will face many lobbies and people that would say that we cannot cope with new stricter emission targets; otherwise we would have to layoff people. There is a lot pressure in the textile and car industries. 

But I hope help for industry is steered towards the jobs of the future rather than doing things that would contribute to global warming. 

Surely smart ‘green’ growth means investing in tomorrow’s skills and technologies. Personally, I don’t see much evidence of this transformation. Is it happening? How do we prevent money from ending up in the black holes of the old economy and make sure that the EU serves as a model of sustainable growth for jobs and climate protection? 

I agree with you. One of the major problems was this capitalism system that we now see collapsing. Serious firms found it quite difficult to raise money. 

There has been all this money around for property and for speculation in dodgy financial instruments. Because investors could get a higher return there, they did not go sufficiently into supporting the next wave of development which the world needs: environmental engineering. 

I don’t see the private sector supplying any of that money in the near future. It is too risky – it is not easy to devise new engines. So I hope that from the 1.5%, a significant amount of money will go towards encouraging industries to invest in more sustainable production models. 

ETUC advocated the establishment of European Sovereign Investment Fund similar to those in Russia and China, which are increasingly used to acquiring strategic economic assets abroad. But the statute of the EIB does not allow the acquisition of participation in companies, and not all EU countries support such a role. Do you think it would really boost the economy? 

This is a battle to be fought. But at the end of this huge expenditure of public money, we need to have something to show for it. We want some benefit for humanity. The best use for it is things that transform our needs as far as sustainability is concerned. 

Until this crisis a few months ago, the mood was against public investment. It was going to be done by the private sector. The ideology has changed and there are no ideological objections to the state investing. That’s where states have to put their major emphasis. 

So we needed a crisis to change our frame of mind. 

Often crises do change things. All the big changes happened after the war so thank God this is not a war! 

Due to the rules of the single market and the need to avoid national protectionism, ETUC called for an EU-wide approach to industrial policy so that specific sectors like the auto industry can be helped to switch to more sustainable models. It seems we are worlds apart from the US, which is capable of approving stimulus packages for its auto industry. Aren’t we? 

True, we have the single market as an industrial policy at the moment. We haven’t gotten a public subsidy policy and yet the car plants are lining up for help. Look what is happening in Sweden, were the government is ready to bail out Saab and Volvo, which are respectively owned by US carmakers General Motors and Ford. It is quite odd for American carmakers to seek help from a country that once had a smaller GDP than General Motors’ turnover. 

The single market rules will need to reflect the fact that some help can be given. But let’s be clear if Volvo and Saab get help, or Opel in Germany gets help, than every car manufacturer in Europe will want the same treatment. I don’t think for example FIAT will be slow in going down to Rome and banging on Berlusconi’s door. The French too. Otherwise they are going to go somewhere else. 

One principle that would make it easier is if it is given for sustainable production – cleaner engines, better recycled materials in cars, managed waste, etc. 

You called for an exceptional Tripartite Social Summit to take place before the European Summit in December. Why is it needed? Do you fear EU leaders will fail to see the forest and stick to the trees? 

We want to show our general support for an EU level response and exert pressure on member states. In the discussion to take place, I want the involvement of the social partners. We were not consulted on the recovery package. 

But we want to be able to talk about it. There are going to be a lot of workers losing their jobs and their living standards will get worse. We have a major stake in what is going on. 

It is not our fault either. It is not a wages issue. That was made by the private sector, by the banking sector and others – hedge funds and private equity – all played their parts. 

We are representing the victims of this crisis and we are entitled to sit at the table [the request for a Tripartite Social Summit was not granted]. 

On 17 December, the European Parliament will vote in plenary on the revision of the Working Time Directive which, if the EU Council of Ministers gets its way, will weaken the directive by allowing a proliferation of opt-outs and on-call work. It seems we are heading towards more flexibility than flexicurity. Isn’t this a blow to Social Europe? 

We regard it as a regression. It is indeed more in the flexibility than flexicurity direction. 

Secondly, we know what the reason we have got to where we have got to is: that the British government has decided to keep its opt-out. If they can’t keep it up, some other countries will want the same powers. 

Basically, the Council of Ministers did a deal whereby they gave to security the Temporary Agency Workers Directive and they gave to flexibility the weaker Working Time Directive. And that is a deal they made which we are fighting against at the Parliament. 

In a way, I would not read too much philosophy [into it]. It was a deal of convenience. It has accommodated the UK government on the one hand, and the UK accommodated nearly everybody else on the temporary agency. I am afraid it was my own country’s politics, more than a great ‘flexibility vs. flexicurity’ philosophy. 

Is it a blow to Social Europe? 

I think so, because it has coincided with the recession. A lot of workers are under a lot pressure. If this goes through, they will have to work longer hours. Look at Spanish carmakers. Much of their lobbying has focused on much more flexibility as far as workers are concerned. That is only one example. 

In the eight years since its launch, the strategy has seen some action but with too many loopholes and opt-outs. If more political had been behind the strategy, would have we been able to ride through the present financial crisis? 

I worked in London for a long time. That was one of the headquarters of the global financial capitalism. All these problems start and finish there. They have nothing to do with the Lisbon Strategy. It was a huge industry and it was extremely profitable for many, many years. It has hit the rocks, like a big ship hits the rocks. The costs are enormous in other industries too. Other people are paying the price. 

I don’t think that if we had been more virtuous on Lisbon then we would have been able to avoid this situation. The fact is there was a lot of speculation. Innovation in the UK context meant some bright guy working for a hedge fund thought of another form of financial means of taking money out of gullible people. That is what they did. It is as crude as that. 

They were employing the mathematical brains of the younger generation to separate people from their money and themselves from the risk, putting it on somebody else. Lisbon missed this point and many others missed this point. It was not just the English-speaking world. French banks were also global and were playing the game as vigorously as everyone else. 

The idea coming out of the European Socialists’ manifesto is to upgrade the strategy into a European strategy for smart green growth and jobs, which will create 10 million new jobs by 2020 (with two million in the renewable energies sector alone). That seems ambitious. Aren’t we making the same mistakes as we did in 2000, putting the cart before the horse? What would we do differently? 

Every director general wants a better Lisbon Strategy. If you were in charge of education, which is an important part [of the strategy] but not an EU competence, then you wanted to add your three or four points on education. If you were in charge of transport, then you wanted your five points on transport. By the end of the process, we had 100 objectives. 

That is the danger of grand strategies. There is no Napoleon to say “I have got one objective”. We don’t have that unanimity of purpose. 

I am much more interested in getting through this recession and orientating Europe towards a greener agenda, and secondly [ensuring] that there is no reversal to business as usual in the financial market. I want to avoid [a situation whereby] all these people, in three or four years’ time, are doing exactly the same things they did a few months ago. 

Do you think the EU has the political leadership to redirect EU policies towards new social and sustainable solutions, away from the failed models of unregulated free markets? 

We have been in an era for thirty years – and in the Commission since Jacques Delors – during which economic liberalism has been the dominant philosophy. The success of the American economy, especially in the 1990s, made it the most admired economy again, as it had been in the fifties and sixties. 

Now, that era has passed very suddenly. It has collapsed, in fact. I think all things are pointing towards a more social model: more regulation, more social activity at national and European level. I think this is one of the turning point periods of modern history. 

There was one in the early eighties, with Reagan and Thatcher liberalising small states [and introducing] low taxes. It was different in France and Germany. 

Nonetheless, it was a powerful movement, and you can see the difference in the Socialists in France: those with a more ‘labour’ tradition and those that are more Social Democrats. 

But now people are looking for a big state, big expenditure and security, and the market can’t do it or won’t do it . 

That is the present day reality. It is one of those turning points in time. Nicolas Sarkozy might have said ‘We are all Socialists now,’ but he is pragmatic enough to know that the tide has turned. How long for? I don’t know. But ETUC will make sure that it turns some more. 

Turning towards 2009: Next year will be a year of change, with a new American president, international negotiations for a global climate deal, economic recovery plans and not least EU elections. If you had a Monks Crystal Ball, what would you see in there? 

The good news is the new president of the United States. I have read his two new books and I am very impressed. 

In Europe, traditionally the party in opposition does well. I think it might be different this time, because a lot of people are supportive of what their governments are doing at the moment in Europe. 

Take Belgium for example. Until the crisis came, the government had done nothing for eight months except worry about Brussels-Halle-Vilvoorde. The crisis forced them to do things. 

Look at the opinion polls in different countries: they are not going to favour opposition parties. On the other hand, the demand for a more social approach is strong, whoever wins the elections. The word that will come to everybody’s mind, which is not very good for Europe, is nationalisation. People are looking to their nation state to solve their problems. 

On the banking front, we have seen that the nations could not do it by themselves. They had to do it together. Ireland guaranteed its deposits. Germany did the same thing. Belgian banks almost collapsed and only when they got together to act did their positions partly solidify. 

People are not looking at the market. They are not looking at self-hope. When I go back to London, I hear young people working in the financial sector telling me that they don’t need the unions, that they can take care of themselves. At 25, they have a BMW, a flat in a nice London area and they travel across the world. 

When they ask me what the unions can do for them, I ask them: ‘What happens when you turn 35, you have two kids, your parents start getting ill and you have to take some time off? I ask: ‘How tolerant are companies about that?’ They immediately answer that companies are terrible about that. One said to me: ‘If you’ve got two children, you are supposed to go.’ 

A lot of others are going to learn those lessons, about some solidarity and sticking together. That is my greatest hope for 2009: that people turn back to the trade unions for help, mutual support and solidarity. 

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