Dr. Peter Rigney:

I welcome the opportunity to speak about the social and economic dimension of Economic and Monetary Union EMU. In the autumn of 2013 Europe is not in a particularly good space. Unemployment across the eurozone averages 12%, while GDP in the second quarter was 3% below its pre-crisis trend. Meanwhile, the ECB is limited in what it can do because its mandate emphasises fighting inflation, even though the spectre looming over Europe is deflation.

The recent statements by Mr. Barroso and Mr. Van Rompuy on opening up a social space in the process for EMU are a late conversion almost on a par with St. Paul's conversion on the road to Damascus. The only difference is that at least we knew St. Paul was sincere. There is a view that the attachment of a few social indicators to the European semester process is a mere fig leaf and that current policy is to do the minimum in order that society does not break down altogether within the eurozone, while leaving the Internal Market to develop as a free trade area.

The European system has changed since Ireland entered the bailout programme. The world we are entering is one of budget surveillance, the European semester and country-specific recommendations. Having failed to join the train when it left the platform because we were in the bailout programme, we will be hoisted into it as if by magic. Bailout programme countries are exempt from this process, but as soon as we exited the bailout programme we entered into this process. It is an intrusive process that would have been unimaginable in 2006, but it is infinitely preferable to the troika process. In this context, we welcome any move to broaden the debate beyond the purely economic to the social because they are intrinsically linked.

The debate on the social aspect of EMU will be undertaken partly in Dublin and partly in Brussels. We operate through the European Trade Union Confederation, ETUC. At its conference in Dublin last June the ETUC proposed a social compact for Europe that would set out a vision for the future in which fundamental social rights took priority over economic freedoms and that the European Union honour its treaty obligations to work for the improvement of living and working conditions of all its citizens. It is vital that economic governance no longer be regulated purely by economic criteria such as deficits and public debt. Prioritising these issues over all others has sparked the increase in poverty and inequality and furthered the erosion of public services, social protection and social relations. In reality, economic and social factors are inseparably linked. Social indicators are essential points of reference if we wish Economic and Monetary Union to proceed in a coherent and socially positive way. The major problem, however, is that while these social indicators are a useful tool, they remain mere indicators. They have no teeth and lack the power to change the direction of economic policies. It is imperative that these social indicators carry weight in the development of economic policy.

We are particularly concerned about social dumping and how some employers exploit cross-border workers. I recently attended a meeting in the European Parliament on this issue and it seems that, owing to the actions of a small number of employers, Ireland is gaining an unsavoury reputation for sharp practice in the application of employment legislation. The core of our problem is that we have an evolving eurozone economy with a Central Bank observing the narrow mandate of price stability at a time when Europe's main challenge is deflation. The independence of the European Central Bank is not counterbalanced by any other European institution. By contrast, under the Humphrey Hawkins Act of 1978, the US Federal Reserve is required to take on board the US Government's economic goals, together with achieving reasonable price stability. Without easing up on the 2% inflation target, it is difficult to see how the European economy can be reflated and without reflation there are grim prospects for Europe's 25 million unemployed. We need a more intensive debate at European level on a new mandate more akin to the mandate of the US Federal Reserve.

The unpleasant truth of the matter is that EMU has removed currency devaluation from the toolkit of economic management. In the absence of this tool, the devaluation which occurs is internal, as we have witnessed to our cost in recent years. This imposes huge stresses on the fabric of society and these stresses are worsened by the policy straitjacket in which the ECB is placed. It is often said the generals are always prepared to fight the last war. In this case the ECB is mandated to fight the war of the 1970s and 1980s when the economy could have been better compared to that during the great depression of the 1920s and 1930s. The paradox is that the special priority given to price stability requires European integration to proceed at the expense of provisions and redistributive functions in member states. Welfare systems are a national competence and likely to remain so because, for example, the Scandinavians will never cede control of their welfare system to Brussels in the current circumstances.

Compounding the dilemma is that the eurozone is about to embark on its most ambitious phase of economic integration at a time when support among EU citizens for the European project is at its lowest. The citizens of creditor and debtor countries are up in arms for different reasons. The True Finns, the Danish People's Party and Alternative Für Deutschland are manifestations of "not another cent" Euroscepticism in creditor countries. Congress believes the opening of a genuine dialogue on the economic aspects of EMU is to be welcomed, provided it is dialogue to an end, not for its own sake. A genuine social dialogue might help to revive the tarnished image of Europe among its citizens.