The near-failure of the Greek economy in the spring touched off a round of suspicion about the debt of a number of Europe’s countries and the validity of the opinions which major credit rating agencies issue to guide investor decisions. As a result, ratings of the countries were slashed. Governments needed to prove to the capital markets that they would not be swamped by their debt. The prospect of sovereign defaults began to be raised. Many experts still believe that the situation in Greece is so bad that the country will need to renegotiate its debt which would almost certainly cause it to be expelled from the eurozone.
Unions have a long history of using disruption to force both businesses and governments to make decisions that favor their members. This has been particularly true in the US. The coal worker’s strike of 1902 involved more than 130,000 people and was such a severe threat to the national economy that President Theodore Roosevelt needed to intervene to prevent a national crisis. The strike lasted 163 days. The 1952 United Steel Workers strike almost shut America’s industrial operations. These are only two of a series of labor stoppages that affected the US economy over the period of the last century and a half.
There are no longer unions in the US strong enough to hamper national economic activity through strikes because they have lost too much of their power. The most visible symbol of this is the way in which the UAW was forced to stand by as the American car industry was dismantled.
Europe is a different matter. The two largest unions in France shuttered much of the energy transportation operations across the country. The French government estimated that the action cost $200 million a day in lost business activity and damaged GDP recovery each day. Labor has struck both government operations and industry in most of the nations which have begun to institute austerity measures and the same unions are threatening to stage huge strikes again.
The challenges facing national governments which have begun austerity measures are extremely complex. Cutting spending only helps the economy if government receipts do not collapse. Labor stoppages can also quickly erode tax revenue. Businesses that cannot operate lose sales and those lost sales eventually translate into lost taxes. Unions can negate austerity cuts if they damage GDP improvement or even cause GDP shrinkage by bringing parts of an economy to its knees.
Below is the 24/7 Wall St analysis of eight major European nations and their most powerful unions and labor organization. The analysis lays out the financial problems that cause these governments to take a road to austerity. Furthermore, it describes how they have decided to cut costs and raise taxes. 24/7 Wall St. has also looked at the power of the unions, many of which have already staged massive labor stoppages.
What the analysis shows is that the financial fate of many European nations is not entirely in the hands of their governments. Unions are a part of a power struggle which will decide whether austerity will survive. Labor will not only strike, it will head to the ballot box. In many nations unions can both slow GDP improvement and possibly to vote out regimes with policies they oppose.
France:
Union Reaction:
Confédération Générale du Travail, Or General Confederation of Labor (CGT) – The largest trade union in France, the Communist-rooted CGT, includes public and private sector employees – notably refinery, port, and utility workers. The confederation has been at the forefront of the recent protests, engaging in measures more radical than standard public demonstrations. Under orders from the union, workers have shut down the majority of the nation’s refineries, and France is experiencing a serious fuel shortage. One in three gas stations in the country are currently without fuel. This has affected every sector of the economy.
Force Ouvrière, or Worker’s Force (FO) – The left-leaning FO represents another of the country’s large labor federations that includes workers in many sectors. While the FO has not engaged in the targeted strikes that the CGT has, transportation workers (which are among the Union’s members) have severely hampered national rail yards and airports. Half of the flights in Paris’ Orly airport were cancelled last Tuesday.
Spain
Union Reaction:
Spain’s largest unions have expressed outrage at the measures. At the end of September, the public sector workers of the country’s largest unions went on strike, shutting down television stations, newspapers, some transportation and all of Spain’s auto plants. Spain’s problems are made worse by the fact that any unions members who lose jobs may not find new employment for years. The unemployment rate in Spain is 20%.
Comisiones Obreras, or Workers’ Commissions (CCOO): The largest trade union in Spain, the CCOO was founded in the 1960’s under the Communist banner, and leans heavily to the left. CCOO formed a coalition with the country’s other major union, UGT, during the general strike on September 29th, and have continued to call Zapatero’s austerity measures unsustainable.
Unión General de Trabajadores (UGT): The nation’s second major union, UGT is rooted more in democratic socialism than Communism. It nevertheless continues to work closely with the CCOO since the general strike in September. UGT and CCOO have continued to decry Zapatero’s budget cuts, and a second, larger strike may arise if labor continues to be affected by the country’s austerity movement.
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Greece
Union Reaction:
Sporadic protests and labor strikes have occurred since the country’s credit crisis, including a major dock strike in June, as well as widespread participation in the September 29th Europe-wide strike, which shut down the country’s public transportation for a day.
General Confederation of Greek Workers (GSEE): GSEE is Greece’s largest trade union, encompassing 800,000 members and 83 separate worker organizations, all in the private sector. GSEE played a major role in the dock workers strike in June, as well as the Europe-wide strike in late September. Citing the government’s continued austerity policies, GSEE is planning another major strike, set to begin on December 15th.
Civil Servants’ Confederation (ADEDY): Unlike France and Spain, Greece’s two major labor confederations are neatly divided between the private sector (GSEE) and the public sector (ADEDY). ADEDY was responsible for a major rail strike in the country two weeks ago, and was also responsible for the recent debacle in which civil servants scheduled to be fired as part of the cuts demonstrated inside of the Acropolis, shutting down the tourist site for two days before riot police eventually forced them out with tear gas.
The UK
Union Reaction:
Trades Union Congress (TUC): The TUC is the single major umbrella union which encompasses most of the trade unions and roughly six million British workers. The TUC has suggested that it would strike if the government continues to cut jobs, wages, and benefits.
Unison: Unison is the second-largest union in Britain, and the largest to incorporate exclusively public employees. In June, when Prime Minister Brown’s austere reforms were much more minor, this is what Unison had to say on the subject: “We begin that fight, here, today. We will organise. We will organise public meetings and street demonstrations, in towns and cities, up and down the country. We will build lasting community alliances, to defend our public services… We will promote an alternative economic political and social agenda.” This is the largest union strictly in the public sector.
Ireland
Union Reaction:
Services, Industrial, Professional and Technical Union (SIPTU) – Despite the fact that its members were hurt badly by national wage and employee reductions, Ireland’s massive public employee trade union endorsed the administration’s austerity measures, calling them necessary to avoid suffering the same fate Greece did. At the urging of SIPTU’s leader, Jack O’Connor, SIPTU and most of Ireland’s largest union federations agreed to a strike ban, which will last until 2014. In exchange, the Irish government and employing parties have agreed to not impose any further reductions.
Portugal
Union Reaction:
União Geral de Trabalhadores or General Federation of Workers (UGT), and Confederação Geral dos Trabalhadores Portugueses General Federation of Portugese Workers (CGTP) – Earlier this month, the Secretary General of UGT was quoted as saying: “the country is living a difficult situation… but it’s not possible that sacrifices are demanded always from the same people.” (the middle class, and public servants) For the first time in decades , Portugal’s two major trade unions, socialist UGT and communist CGTP are planning a coordinated strike on November 24th, which is expected to extend well beyond the public sector, and could potentially be devastating to a portugese GDP which is already suffering.
Italy
Union Reaction:
Several small strikes have taken place in the past six months, notably one in June which involved several hundred thousand protesters, but labor unions have been dormant as of late.
Confederazione Generale Italiana del Lavoro or General Confederation of Labor (CGIL) – The only major Italian union which poses a serious threat to the country’s economy is the CGIL. The socialist-leaning organization, which constitutes a majority of public employees, has threatened to initiate a repeat of the June strike, but so far has been unable to arrange a major event like the kind we’re witnessed in France, Greece, and Spain. “We have a government that only cares about public finances,” the head of the organization said recently, “They are taking advantage of the crisis in order to weaken labour rights. “
Federazione Impiegati Operai Metallurgici (FIOM) – While the union federations like CGIL have been unable to organize large-scale protests, groups of laborers have arranged their own walkouts. Upon the recommendation of CGIL, FIOM, the largest trade union of metalworkers in the country, struck for 24 hours earlier this week. The strike was mostly for the purposes of demonstration and relaying the workers’ message to the public, and Italian infrastructure remained largely unaffected.
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Germany
Union Reaction:
At the beginning of June, Michael Sommer, leader of the German Trade Union Association (DGB), and Dieter Hundt, president of the German Employers Association (BDA), agreed to a no-strike deal with major employers. These are Germany’s two largest trade unions, and the move is a serious blow to the anti-austerity movement in the country.
IG Metall – The largest German metalworkers trade union has been active in decrying the country’s austerity movement. In August, citing a recovering national economy, steelworkers within the union demanded a pay increase of 6%. Their demands were refused, and the union began limited strikes at the end of last month. This may set a precedent for other groups, as sentiment that Merkel’s conservative budget is unnecessary now the crisis in the country has passed.
Michael B. Sauter, Douglas A. McIntyre
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