Speech at opening of the ETUC/ETUI "Europe at a crossroads" conference - Main contents

Dear Commissioner Andor i,

Dear Commissioner-designate Moscovici i,

Dear colleagues,

Ladies and gentlemen,

First, let me thank Bernadette Ségol for organizing this timely conference.

We have already heard very interesting interventions on the prospects for growth and jobs from the IMF and the ILO, and also the Commission.

I would like to address the issue of jobs and growth from a different angle.

I would like to reflect with you on the threat posed by rising inequality to our economy and our democracy.

In the past, inequality was mostly seen as a moral dilemma - and to me it is still is a moral dilemma. Achieving "social justice" is one of the most fundamental goals of politics.

But nowadays, more and more people are also waking up to the tremendous economic problems caused by rising inequality.

Not least due do Thomas Piketty's monumental book "Capital" or the recent Bertelsmann study which shows that "(...) social injustice has once again clearly increased in recent years, most obviously in the crisis-battered southern European countries."

The study attributes this to rigid austerity that has undermined social systems and concludes that a highly explosive situation has emerged with the EU, to the point where it might endanger the whole EU.

And let's not forget the stern warning the World Economic Forum made earlier this year:

"The chronic gap between the incomes of the richest and poorest citizens is the risk that is most likely to cause serious damage globally in the coming decade."

If the World Economic Forum is saying inequality has become a threat we must indeed be in trouble.

The European Parliament has stressed over and over again that decent jobs and wages are important not only for social cohesion and fairness - but for maintaining a strong economy.

We have been pointing out that in fact, social and economic priorities are not contradictory but deeply interdependent.

On the same lines sustainable budgets and investments must be two sides of the same coin.

Of course, we need to return to sustainable budgets. We cannot live at the cost of our children.

But not living at the cost of our children also includes not making short-sighted cuts in areas where long term negative effects will result - in education, research and development, health care.

In these areas we need more not less investments.

This is about investing in social inclusion and economic prosperity.

This is about building bridges to the future.

Please allow me to high-light three issues that are especially salient - both in terms of social justice and economic prosperity.

My first point: youth unemployment.

During the crisis youth unemployment has climbed to ever-new highs: more than 20 per cent of young Europeans wanting to work cannot find a job; some countries like Spain, Greece and Italy are hit particularly hard with one in two young people unemployed.

Many more are stuck in precarious work or internships.

Yes, young people have always been at a higher risk of unemployment than adults.

The transition from school or university to the first job has always been a difficult moment.

But the crisis has made this transition worse.

Much worse. And that's really unfair.

Because today, young people are paying with their life chances for a crisis they have not caused.

Now, the social divide between generations is widening. This inequality is threatening the social fabric of our societies: the trust that our democracies are fair and just, the belief that with hard work and a good education you can make it.

Let's not forget that youth unemployment also damages the economy and costs money.

In the short-term, the state has to pay social benefits.

In the long-term, youth unemployment means lower wages, lower career chances, lower productivity - money lost to the state and to businesses.

So why not take some of the money we are currently losing due to youth unemployment - the cost has been put by Eurofound at 153 billion Euros per year, that is 1,2 % of the EU's GDP - why not take a percentage of this money to create new chances for young people and invest in their future?

I am convinced that it is better to pay for putting young people back in jobs than paying for them to stay home.

And I am proud that the European Parliament has spear-headed the movement for the creation of the eight billion Euro Youth Guarantee.

Now every young person is given a job or professional training within four months after ending their education. And we pushed for the front-loading of the funds. Because, honestly, what good does money spent in 2020 do to a young unemployed today?

A lot remains to be done, as it turns out that some Member States fail to take full advantage of scheme. Not to mention the fact that the funds allocated to the program are still far below the 21 billion recommended by the ILO.

During this legislature, we will keep up the fight.

We will fight for an effective and swift implementation of the programme, for more money, and for opening the Youth Guarantee to more people.

Youth unemployment is the biggest challenge facing Europe today and must be our top priority.

It's not only banks who are too big to fail.

Surely, our children's futures are too big to fail.

Ladies and gentlemen,

my second point: income inequality.

Income inequality has many faces.

It's the worker who puts in 40 hours every week and still can't live off his pay-check.

The number of working poor is now at a shocking nine per cent in the EU.

It must be that one cornerstone of a social market economy is that everyone in work must be able to earn a living wage!

Income inequality is also the woman who earns less than her male colleague doing the same job.

The gender pay gap is a glowing injustice in the 21st century. The next Commission must address it fervently.

Income inequality is the Romanian butcher slaving away for three Euro per hour wages in a German slaughterhouse.

This kind of wage-dumping is undermining the social fabric of our European societies.

And there is only one solution for this: A system of European minimum wages.

And, ladies and gentlemen, above all income inequality is, the fact that in recent years top incomes have grown much faster than incomes of the rest of society.

That's not fair. But, other than not being fair, it's also an economic problem.

Say a CEO earns 100 times more than the company's average worker. But will the CEO buy 100 times more meals, and have 100 times more hair-cuts and buy 100 times more cars?

Okay, he or she might go for luxury products. But still: how many lobsters can one person eat?

I know I'm over-simplifying but there is a fundamental truth here:

Stagnating incomes equals stagnating demand, and stagnating demand equals stagnating growth.

And allowing for less growth is the last thing we can afford in Europe at the moment.

So to get out of the crisis we need to add something that is missing in today's economic policy toolbox: stimulating demand by increasing wages.

Because higher wages brings higher demand, which equals more hiring, which in turn increases wages - a virtuous circle which increases prosperity for all.

Yes, decent salaries are crucial for maintaining a strong economy.

A starting point is without doubt the introduction of minimum wages. Mr Juncker has declared in front of the European Parliament that he would work towards the introduction of a minimum wage in each EU country. The Parliament looks forward to what the Commission will propose in this field.

Additionally, some core countries could increase wages as one way of increasing spending to stimulate growth.

Ladies and gentlemen,

As my last point I would like to address the scandal of tax fraud and tax avoidance.

According to estimates one trillion Euros is lost every year in the EU due to tax fraud and tax avoidance. One trillion Euros!

That is 2000 Euros per citizen every year.

With that money we could pay off our sovereign debt within a decade!

But tax fraud and tax avoidance cuts deeper than "only" a monetary loss.

How do you explain to a family company who are honestly paying their taxes that big multinational corporations like Amazon, Google and Apple are paying almost zero in taxes?

How do you explain to people who have been suffering from wage reductions and pension cuts that their rich compatriots are hiding money in Swiss bank accounts?

How do you explain to normal citizens that European countries are engaging in tax dumping to lure companies towards them instead of standing side by side and making all companies pay their fair share in taxes?

Well, you can't really explain these things to anybody because tax avoidance and tax fraud fly in the face of fairness. Tax fraud undermines solidarity between countries and solidarity within countries.

No one is enthusiastic about paying taxes, but most people recognize their responsibility towards society. But this acceptance depends on tax justice.

The decisions taken by the finance ministers in Cairne, Australia, over the weekend to fight corporate tax evasion are a step in the right direction.

For once, the G 20 are actually following up on something they promised.

We will closely monitor the implementations of those recommendations and push for further steps to follow. Because there is still plenty of work to do.

Ladies and gentlemen,

Social policy is primarily the responsibility of national governments, but I believe the European Union can and must play an important role in fighting inequality.

So far the EU has focused on moving towards a deeper integration of fiscal and economic policies while ignoring the social dimension of the EMU.

Yet, even in social policy, we are so interdependent. What happens in one country affects another country.

I believe it is high time for the EU to show that it is protecting its citizens and flesh out the social dimension. If we address inequality we stand a fair chance of automatically stimulating growth and creating jobs on the way.

Thank you for your attention.