After 15 years of successive crises, European citizens have seen their purchasing power and living standards drop, while the EU, as an economy, is increasingly playing catch-up with the US. Coupled with internal issues such as the rise of the Euroskeptic far-right, could mean that the bloc risks seeing its influence as a geopolitical entity further recede.
In an exclusive interview with Phileleftheros and in-cyprus, Nicolas Schmit, EU Commissioner for Jobs and Social Rights, who is expected to run against incumbent Ursula von der Leyen for the leadership of the European Commission in the upcoming June elections, stresses that the way forward is a people-centric Europe, which works for the people.
He highlights the importance of good, targeted social policies such as creating quality jobs, a minimum wage, affordable housing and labour rights for platform workers, while noting that the recent cost-of-living crisis is driven by increased profits.
Interview with Stelios Marathovouniotis.
Many countries in the EU are experiencing a housing and cost-of-living crisis as GDP growth and prices are outpacing wage growth. What can the EU do to make sure that profits are spread more evenly in the bloc?
There is a lot of debate on what are the causes of this inflation which started during the pandemic. In Europe, we had this question of supply chains being interrupted, which pushed prices higher, and then came the energy crisis due to the war in Ukraine, something that the US did not experience.
Very often when you have these inflationary tensions, you have a lot of sectors who say that this is an opportunity for them to increase their prices, although their costs and production costs may not have been affected so much. This is something which happens. It was not the wages, pushing the prices up as it’s always said, but the profits. I think here we have a problem also of competition, not enough competition, which allowed certain sectors to increase their prices. This now has to be corrected.
Also, we have in many places in Europe now, a lot of protests by farmers, although the food prices are among those who have increased the most. However, the farmers have not benefited from these increases. It’s the distribution or transformation industry who have taken the opportunity to increase their prices.
This is a question of how we approach the way we combat inflation. The monetary policy is one aspect. It’s not the best, but it’s unfortunately, always the only method we use. We have seen that there are lots of other impacts of the monetary policy, which we have now seen that can be detrimental.
As a Commission, we have to make sure that wages are keeping up with price increases. This is something new. Because previously, we would have said, well, we have to control wages and wage increases. But we understood that this inflation was not due to higher wages. That’s why we have to maintain a normal evolution of wages, which at least should compensate on the one hand price increases, but on the other hand, take into account productivity gains. That’s the question of if our economy grows faster, and wages do not follow, I think we just have to follow the productivity gains in the economy. This is the normal situation. And we should come back to that normal situation everywhere. That’s why we push very much for this minimum wage approach. But not just the minimum wage. We also have to encourage better wage settings through collective agreements.
Can collective agreements and minimum wages be set at a European level or is it up to the national governments?
We can set a certain number of things and set the right frame at the European level. But, regarding setting wages, in the end, it’s largely up to the national or even regional level.
But you should set the right frame. Because there is a need for better coordination, not just for economic policy. Macroeconomic coordination is also about social policy. And that’s why we believe the more we integrate as Europe through the internal market, but also through the monetary integration, we need better coordination of social policies and economic policies and obviously, budgetary policies.
How is AI already affecting work in the EU and what steps is the bloc taking to regulate the technology?
For the time being, nobody yet can evaluate the impact of AI directly on the labour market. So we cannot say that AI is destroying many jobs and that we will end up with massive unemployment, jobs will disappear, because people will be replaced by AI. For the time being, at a global level, I would say that we can identify jobs, which will be replaced and which are already being replaced. But globally speaking, we cannot see any direct impact of AI on the number of jobs disappearing. There might even be new jobs created thanks to AI. What we know is AI will transform the labour market. A lot of jobs, including white-collar jobs. In the past because of robotisation, we had blue-collar industry workers replaced by robots.
Now, we see that with AI, it will be more about white-collar jobs. This means that many jobs will not disappear, but there will be a combination between AI and persons. But this also means that we have to reskill people to work with AI. So, there is an absolute need for upskilling people to face this change, but nobody, for the time being, nobody knows exactly what the impact of AI on labour markets will be.
There is a pessimistic view, saying that we will lose a lot of jobs. But there is also a more optimistic view that jobs will change if we prepare people well enough.
AI might be a chance for Europe because we have a demographic situation, in which we will lose 1 million people in the labour market, every year. So that means either we will lose our economic capacity, or we have to replace people with technology.
You’ve been saying that a shorter workweek can be beneficial for the economy and help attract workers in sectors that are experiencing staff shortages. How can this work?
I always say, if, in a company, there is an agreement, to change the organisation of work, and adopt a four-day workweek, at the request of the employees, they should do it. Why not?
We have a lot of pilot projects, all over Europe, trying to reorganise work. Not only in Europe but also in the UK, with a lot of positive results. Companies which are having a lot of difficulty attracting employees, consider reorganising their work based on the four-day week, they can become more attractive. For instance, in Germany, smaller companies offering this possibility are becoming much more attractive.
A few months ago we had a meeting in Brussels on AI and its impact on the labour market. The British-Cypriot economist I’m sure you know, Christoforos Pissarides said that AI could open the possibility of a larger application of the four-day week. Because if productivity – and that’s always the issue – really increases through technology, there will be the question of how these productivity gains will be distributed, or they can be distributed in better salaries, but they also can be distributed partially in working less.
There is always the danger of these gains being distributed to more profits.
That’s the other issue. But that’s then the question of rapport and relationships between employees and employers. That’s why we think that it’s so important to have a good social dialogue at all levels, including also at the level of companies.
You’ve been a strong proponent of providing better conditions for platform workers. How can this be achieved?
We have made a proposal on the working conditions of platform workers, which is still under negotiation between the European Parliament now and the Council. Not an easy negotiation, because some countries are reluctant to improve through a European directive the working conditions in this area. Here it is also an aspect where algorithms play an important role because the organisation of work in platforms is done by algorithms.
The question is, what is the status of a platform worker? Is he or she a worker or are they self-employed? Many platforms say no; we are not an employer. The reality obviously is different. And that’s why we consider that precisely because it’s a new form of labour made possible through new technology, even if it’s just driving your bike. But the way how you work is made possible through technology. Well, these workers should have the same rights.
I’m not against platforms, I think they correspond to demands in our economy. People use platforms not just for transportation or for getting their pizza. But it should be clear that platforms are not the way to circumvent social rights, vacation days and pensions.
European trade unions still lag behind the US both in terms of participation and influence. How can the EU empower trade unions and why is it important to do so?
The strength of trade unions was very much linked to certain types of activities; heavy industry and industry, in general. We see in many places industry is declining, we are in a service economy, we have more and more small entities, small enterprises. I think it is up to the trade unions to adapt to a new economy and to see how they can be credible defenders of new types of workers. It’s more difficult to represent workers coming from this very small company than being in a big entity. Platform workers are a good example. Trade unions have also to cope with these changes in our economy. What is important is, if we want an economy based on social good, and good industrial relations there is a need for having strong trade unions otherwise, there will be no good social dialogue, if one side is weakened. So this is a change where trade unions have to adapt and convince that everybody needs representation in the new economy.
In the US, although in the US the situation is a bit different. Because we had for a long time. The rights of trade unions in the US were limited very drastically, by different administrations. Now, we have an administration which is trade union-friendly. When Biden says you get I.R.A. (Inflation Reduction Act) support that means you get millions, sometimes billions of support from the federal government, but this is conditioned for instance, by collective agreements. This is conditioned by letting trade unions in your company and also for instance, when we are talking about public procurement – which is an important part of the overall economy – there should be some kind of advantage for those companies who have collective agreements. This is the way you can promote collective agreements. Now in the directive on minimum wage, we see that to be included in public procurement bids, you have to respect the law on minimum wage, which is normal because it’s a law. You have to respect it anyway.
Social inequality and the cost of living crisis are driving the rise of the far-right. In Cyprus, we have a far-right party that is running food banks. Why do we need better social and economic rights to combat the far-right?
I’m not against food banks. But you have to do everything to avoid them as much as possible. Because we have food banks all over Europe, where people cannot just have a decent living on their wage, or maybe they do not have a wage for different reasons. And they have to rely on food banks. This is something which I don’t see as the right solution, with all the respect for food banks who are doing a great job.
The fact that some political parties try to attract those who are on the margins of our society, who have been affected most by the crisis, trying to provide them some support, first shows that there is a lack somewhere else because that should be done at other levels and not by some political forces. Also, I do not know where they take the money from. There’s another question. An important question.
First, there is a need for better welfare, social protection from the state or other social organisations. We cannot just leave it to the extreme right.
Second, what does the extreme right propose? They may give some food to people, but they cannot just tell people ‘We will go on supporting you and giving you the basic needs to help you survive’. That’s not the solution. The solution is to give people new opportunities to have a decent life. They do not have any proposal to change this because they are living off social malaise. That’s why have to offer real solutions: good jobs, affordable housing, social support and helping people have a decent life.
We adopted a recommendation on minimum income for those persons who cannot make ends meet because they cannot work enough or they cannot work entirely. Women who have children alone, single mothers because they do not have childcare, or they cannot afford childcare. That’s why we say childcare has to be affordable and even free.
These are the messages we have to convey but also the policies we have to develop and put into force to counter the populist and extreme right.
What would a social democratic candidacy for the leadership of the European Commission stand for in 2024?
I would certainly put social justice and strong social policies, especially combating poverty in the European Union, as one of the big priorities, as well as working on the opportunities we give to people, such as helping people get the right skills. Also, helping member states to invest more in affordable housing. So obviously, continuing the Green Deal, but making the Green Deal more social, more acceptable for everybody and helping people understand the Green Deal is good for them because the planet is in danger.
Through the Green Deal we can change the quality of life, the quality of the environment, but also the cost of energy by making countries more autonomous in terms of energy production. This is an economic and social programme for the people. I’ve said that we need a people-centric Europe. To have this we need good social policies, targeted social policies, and a good economy, which works for people, which means yes, competitiveness is important but solidarity without solidarity is not what we what we have to aim at.
(Pictures by George Christophorou)