Local view for "http://purl.org/linkedpolitics/eu/plenary/2008-07-09-Speech-3-039"
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"en.20080709.2.3-039"2
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"Madam President, ladies and gentlemen, I am not going to go back to the comments made by the President of the Central Bank during our debate. It is better not to repeat what he said, since it was all correct, and anything I might say on the subject might be seen as an attempt to qualify his remarks, which is not necessary.
Payments to the management of European firms – also and above all in the financial sector – have absolutely nothing to do with the productivity gains achieved there. They just collect the money, and their actions are not economically sound or socially responsible.
Because we did not order a wage freeze, because I, more than others, am perhaps very much intent on keeping the social contract aspect of European action in mind, we have strongly urged that, instead of letting firms pay, in the light of rising raw materials and oil prices, we must consider what States can do in the field of social support for the less well-off sectors of the population, in view of the weakened purchasing power.
It is, after all, simply true that States that have consolidated their budgetary position now have the necessary resources at their disposal to be able to fund social support programmes for the less well-off sections of our population. There are States that have introduced cost of living allowances, heating and rent subsidies, and that were able to afford that because of consolidation in the past. There are also States that systematically adapt their tax systems so that less well-off sections of the population can obtain net gains from tax cuts, instead of tax cuts only benefiting those in the more prosperous population groups.
To that extent, I believe that the overall policy is, if not perfect, at least conclusive. We do not want to and we must not repeat the mistakes of the 1970s and 1980s, even if that was somewhat easier in the short term. We have to act against growing inflation. In the 1970s and 1980s we allowed runaway inflation. In the 1970s and 1980s we allowed State indebtness to keep on rising. In the 1970s and 1980s we accepted public deficits, whilst playing down their effects. The result was mass unemployment in Europe, which we have now brought down to 7.2% with – and thanks to – the euro.
The result was that we had excessive social security contributions in nearly all our countries, which many of us still consider too high, and that is not to do with a rejection of social solidarity, but with sensible financing of our social security systems. Labour was overtaxed and capital undertaxed. Those were the effects of the mistaken policy of the 1970s and 1980s.
We are against inflation, because we are against unemployment and for growth. Growth and combating inflation are not antonyms. We need inflation-free growth, so that things will be better for people tomorrow. Handing out gifts today, supposedly helping people and being feted for acting like a generous social benefactor, is the wrong policy. To be successful now, you have to think about future generations, not vice versa.
Madam President, I am speaking in German to show Mr Trichet that I know that language too, as he now does. Yes, a Frenchman who already has more than enough to do is to be complimented on taking the time, because he is living in Frankfurt, to learn the language of the people he is living amongst. Not all French people do that.
I shall speak German, so that he understands me better. I should like to make two or three final comments, because sometimes the debates in this House seem to be full of nostalgia for the 1970s and 1980s. The Eurogroup is urged to coordinate the economic policy of the euro Member States better. We are all trying our best to do that and we have now introduced a code of conduct in many areas of practical economic policy, which we are endeavouring to follow. However, you cannot, on the one hand, call for coordination of economic policy and, on the other hand, regret it when the economic policy that is coordinated in that way is then enforced in practice.
Let me give you some examples. We reformed the Stability and Growth Pact in 2005. Part of the substance of the reform proposals was to strengthen the preventive arm of the Stability Pact, which was underdeveloped and weak. To strengthen the preventive part of the Stability Pact, it is essential for governments to maintain budget consolidation and redouble their consolidation efforts when the economy is going well, in order to build up reserves for less favourable years, which, in the normal cyclical pattern of our economic systems, will occur regularly.
At the moment we are going through worse times. These are no longer good times. Governments that have consolidated have sufficiently wide budgetary margins for the automatic stabilisers to be brought into effect at a time when State revenue is falling. Governments that did not consolidate enough in the good times cannot, of course, react in bad times.
When we in the Eurogroup agree that Member States that have achieved their medium-term financial target can now also act on the current economic downturn and rising oil and food prices, they can only do that because they have in the past worked out the budgetary margins that are necessary, so that they are not weakened and incapable of reacting in times of crisis.
We have not called for a wage freeze; neither the Central Bank nor the Eurogroup has ever called for a wage freeze in the euro zone. What we are saying is that wages should not automatically rise with inflation but that wage trends must take account of productivity gains, which can be achieved in the economy, and wages can also be raised accordingly without inflation.
We have made it quite clear that we absolutely cannot go on asking for wage restraint from working people in Europe, while managers and other capital owners receive extreme and excessive pay and salaries. We have stated that several times."@en1
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