In their joint opinion, published in Euractiv, industriAll Europe General Secretary Judith Kirton-Darling and Jan Willem Goudriaan, General Secretary of EPSU, stress the crucial role of quality public services in achieving Europe's green industrial ambitions. They argue against new austerity measures and call for fair investment to uphold social rights, the Green Deal and good jobs in industry and public services. A return to austerity will corrode public services, our industrial base and lead to more Euroscepticism. IndustriAll Europe and the European Federation of Public Service Unions, EPSU, are the largest European trade union federations within the ETUC.

On 10 February, the European Parliament and Council of Ministers reached agreement on the review of the EU’s fiscal rules which govern the budget policies of Member States. This compromise will lead to a new wave of austerity. It scuppers the ambitions of the EU to realise the Pillar of Social Rights, the Green Deal and an ambitious Industrial Policy. It must be rejected.

And that is in line with the demands of the thousands of workers who filled the streets of Brussels last December. Coming from the different corners of the EU and from across manufacturing and other industries, commerce, transport, education, health and a broad range of other public services, they had two clear messages: We do not want a return to austerity policies. And: We need a fair deal for Europe’s workers.

To underline the concerns of those trade unionists, many of them members of industriAll European Trade Union and the European Public Service Union, the ETUC calculated that the proposed rules would mean €100 billion in cuts to public spending every year over a four-year period. For Belgium, this would imply cutting spending by €27 billion over a four-to-seven-year period, significantly impacting social security and public health and other public services. European employers and unions for social services have expressed their concerns and demanded clarity how the new rules will affect care for the elderly, disabled and children.

As the negotiations on the reform of the EU economic governance rules reach the finish line, our political leaders seem to have learnt nothing in the last decade. Ignoring the evidence of the damage done to our health systems and public services, so evident during the COVID19 pandemic, they are steering us into a new era of austerity and yet another self-inflicted economic crisis.

We see the disappearance of public services from rural areas and clear evidence of a lack of qualified staff right across our judiciaries, education and in the agencies crucial to implement the green deal and Europe’s industrial strategy. There is not enough investment in strengthening labour inspectorates, tax administrations, environmental protection agencies or public administrations. These bodies are crucial to accompany the digital and green revolutions that are needed to make them fair for all and to ensure public funds are spent well.

And austerity goes hand in hand with the de-industrialisation of Europe. Austerity and deindustrialisation are the antithesis of what Europe needs.

Self-sabotage of EU climate and industrial objectives

At a time when other major economies, most notably the US, are investing in clean tech and good jobs through a more flexible fiscal approach, the EU is about to tie its own hands with new economic governance rules that will prevent almost all Member States from investing in the twin transition and in good quality jobs.

As the language of industrial policy has re-emerged on the European political scene, the new fiscal rules would make such policies the privilege of those whose national pockets are deepest – fragmenting the internal market and accelerating deindustrialisation in large swathes of Europe. We will all be losers – our industries are intertwined. Deindustrialisation in one part of Europe will undermine industrial investments in wealthier regions in the medium term.

According to research from the New Economics Foundation (NEF), only four Member States were able to make the necessary investments to reach the goals of the Paris Agreement and only half were able to achieve the European Green Deal when the European Commission first published its proposal on the reform in April 2023. Incredibly, this didn’t cause an about-turn by the co-legislators.

So-called ‘frugal’ and conservative players in the talks are pushing for a common numerical benchmark for debt ratio or deficit ratio reduction. Let’s be clear - such a common numerical benchmark is a return to the old ‘one-size fits all’ approach of the Stability and Growth Pact that lead to the double-dip recession and the slow recovery of the European economy after the 2008-09 financial crisis. How quickly we have forgotten the brutal impact that this decision had a decade ago.

Investment gaps are the problem

A decade on, the ambitious goals that the EU has committed itself to in the European Green Deal, the Digital Decade and the European Pillar of Social Rights are impossible to reach without economic governance rules that would protect (and encourage) green, digital and social investments.

Our investment gaps are well documented. The Commission has estimated another €520bn public and private investment is needed in the EU per year to deliver the European Green Deal. Leading think-tanks Agora, Bruegel and Bacciati estimate that governments should be investing around 1%–1.9% of their GDP, or €159bn to €323bn a year to achieve the EU’s agreed climate targets, as set out by NEF. This public investment must be accompanied by social conditionalities. No public money should go to companies that do not conclude collective agreements with the unions. We should not give money and public contracts to companies that avoid paying their fair share of taxes, or to companies that do not respect their environmental obligations.

It is impossible to deliver on the European Green Deal’s promise of a Just Transition for workers and their communities without taking a holistic view on the massive investment needs in decarbonising production, in re- and up-skilling workers, dealing with staffing of our health and care services to address the 2 million missing health professionals or addressing the social housing crisis. Currently, there are no safeguards foreseen in the fiscal rules to protect these investments.

We see an interdependence and a virtuous circle between a European industrial policy and quality public services. A vibrant and sustainable manufacturing fabric producing the goods and services needed will contribute to the tax base for quality public services and social protection. That tax basis and the cohesion in our societies will benefit from wealth taxes that address the inequalities. This will provide the public goods and infrastructure underpinning social cohesive, healthy and educated societies for all, not for only a few. And that in turn creates attractive places to invest and produce, and a vibrant industrial fabric, including in rural areas.

Our alternative will save Europe in the future

If we allow a return to austerity, the corrosive political cost on public services and our industrial base will lead to more Euroscepticism. We see the potential benefits in the long term for Europe of achieving quality public services and good industrial jobs through public investment and public funding based on fair taxation including wealth taxes. We have political choices on the table in the forthcoming elections. We will vote for a fairer society for all, not for the few. We hope you join us.

Opinion published in Euractiv