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Pensions: The European Parliament Advocates Giving Up the Pay-As-You-Go System

Translated Wednesday 27 October 2010, by Isabelle Métral and reviewed by Derek Hanson

The report on the financial crisis voted by the European Assembly [1]
proposes measures that show total disregard for the present social mobilization against austerity. The text, reported by socialist MEP Pervenche Berès, got 501 votes last Wednesday; 67 MEPs voted against it, and 50 abstained. On the left, the Confederal Group of the United European Left/Nordic Green Left (GUE/NGL) was the single party to vote against it. [2]

In her recommendations Pervenche Berès did mention the fact that “the decline in the share of VA that has gone to labour since the 1980s” is one of the causes of the crisis, yet the solutions proposed by the European Parliament do not advocate anything that might reverse the tendency… The report calls for the setting up of “labour exchanges … that give employers more leeway,” following the old refrain that flexibility creates jobs.

The proposed recipes are a replica of the policies stimulated by the Commission. And so, the report makes it a point of honour to call for the completion of the “internal market”, that is to say for the liberalization of markets not yet liberalized. The principle of a tax on financial transactions is no doubt "favoured" [3] in the report, but an amendment to another text that dealt with the production of revenue for the EU budget by means of such a tax was rejected by the right.

As concerns austerity, the report expresses the wish that the consolidation of public expenses will not “weaken the systems of social protection”, yet demands “mechanisms of incitement and penalty” for governments that do not observe the stability pact (the pact that limits recourse to public debt). This demand is formulated several times in the document.

Worse still, on the subject of pensions, the text considers that “the financing of pensions cannot be left entirely to the public sector, but must be based on three pillars: namely public, occupational , and private pension schemes.” Against which communist MEP Jacky Hénin violently protested “that by voting this report, Socialist and Green MEPs are simply spelling the end of the “pay as you go system”, and supporting Sarkozy’s policy!”

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