Thursday, 23 September 2010

Opposition to Austerity

It has previously been noted in this blog how the economic crisis has disproportionately hit the countries of Central-Eastern Europe (CEE). This has been combined with the implementation of more extreme government austerity policies than those introduced in the majority of the West European states. The attempt by some CEE governments to deepen their austerity measures has begun to meet political and social resistence. In the last few days we have seen demonstrations against cuts in social spending and public sector wages in the Czech Republic, Romania and Poland.

The Czech Republic

Around 40,000 public sector workers (including police officers, firefighters and health care workers)demonstrated in Prague on Tuesday. The new centre-right government has committed itself to cutting budget spending and carrying out extensive reforms of the pension, welfare and health systems. These will include cutting public sector wages by 10%.

This is being driven by a desire to bring the country's budget deficit to below 3% of GDP by 2013. However, it is difficult to see why the government is so eager to drastically cut public spending and salaries, which will undoubtedly further harm the country's economy. Czech's budget deficit currently stands at 5.3% (small when compared to most other European countries) and its public debt of 37.5% of GDP is about half of the EU average. The right-wing parties' warnings of how the Czech Republic could become the 'next Greece' are thus scaremongering tactics designed to push through their ideologically driven economic reforms.

Romania

Romania has been one of Europe's economies most severely affected by the economic crisis. It was forced to turn to the IMF and the EU for loans to ease its solvency problems in 2008 and the government announced a severe round of austerity measures to meet the conditions of its international loans. These included cutting all pensions by 15%, although this was declared illegal by the constitutional court and the government replaced this plan by hiking VAT. The government also cut all public sector wages by 25% in July. This has led to a wave of protests, with the latest example being a demonstration of over 10,000 trade-unionists in Bucharest on Tuesday. As well as protesting against the cuts in their salaries the demonstrators demanded an end to the sacking of public sector workers and for the introduction of better labour and pension laws.

Poland

Despite Poland avoiding negative economic growth throughout the economic crisis, the government has announced its own set of austerity policies. As well as increasing VAT, the government has introduced a freeze of all public sector wages (apart from teachers). Furthermore it is reducing the state Labour Fund by nearly 5bn zloty. This is money assigned for such things as retraining the unemployed and instigating employment, and is being carried out in a situation where there are over 1.8m jobless people in Poland.

On Wednesday around 6,000 trade unionists marched in Warsaw. These included uniform workers (such as the police and firefighters) and civil servants. Polish trade-unionists will take part in the European wide protest to be held in Brussels on the 29th September. The two main trade union federations will also hold a joint protest in Warsaw on the same day and a day earlier railway workers will demonstrate in Poland's capital

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