Workers across Europe are “holding on with their fingernails” and face a bleak winter ahead, as high interest rates exacerbate the cost of living crisis, the European TUC leader, Esther Lynch, has warned.
With eurozone interest rates at record levels, 2023 will be remembered as “a time of great economic injustice”, Lynch told the Guardian. The European Trade Union Confederation (ETUC) represents 45 million workers from across the continent, including the UK.
Lynch, the ETUC’s general secretary, expressed frustration that low-income workers are being expected to tighten their belts in the battle against inflation – which she blamed on “profiteering” by powerful firms.
“There were a lot of very, very damaging decisions made. And then the only people being called on are the people at the bottom, who have been hit hardest and hit most,” she said. “And then we’re being told, ‘Well, you have to now rein it in.’”
The European Central Bank (ECB) increased its deposit rate, which is paid on commercial bank deposits, to 4% this month, the highest level since the euro was launched more than two decades ago. UK inflation is 6.7%, against an average of 5.2% in the eurozone, and the Bank of England base rate is also higher than the eurozone rate, at 5.25%.
Lynch, who is based in Brussels, warned that after a challenging economic period, many households across the continent were now ill-prepared for these sharp increases in borrowing costs. “If you look at the last financial crisis back in 2008, people went into that on the back of a boom: they had savings. They are going to be coming into this moment of crisis at the end of the two years of Covid, where lots of people had no jobs or limited jobs on limited income,” she said.
“You can only look on and be very concerned about the situation that will develop when we’re in winter. People are holding on with their fingernails. By the time they get to the end of the year, they won’t be able to hold on any more.”
View image in fullscreenFrom left, Maxime Cerutti of Business Social Europe; Esther Lynch; Nicolas Schmit, European jobs commissioner; Ana Mendes Godinho, Portuguese labour minister; Valeria Ronzitti of SGI Europe and Piotr Sadowski of Social Platform at a meeting in Porto this year. Photograph: Jose Coelho/EPA
Lynch cut her teeth as a young trade unionist while working at computer firm Atari in Ireland in the 1980s, campaigning for the rights of working women, many of whom were part-time – an issue still dear to her heart. Back in her Atari days, she says, “the [micro]chips were the size of a matchbox”. Having watched computing technology develop rapidly since then, she is concerned about two seismic economic shifts: the rapid development of artificial intelligence, and the move to net zero.
On AI, she says: “There needs to be a consideration about how do we make sure that the benefits are fairly shared with the workforce?” That can be achieved both through taxation, and through workers having bargaining power at their firm, she added.
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View image in fullscreenRobots in action at a Renault lorry factory near Caen in France in August. Photograph: Lou Benoist/AFP/Getty Images
The ETUC has drawn up a series of rules about how AI should be deployed in the workplace, including the “human-in-control principle”: the idea that people, not machines, should always be the ultimate decision makers. Amid dire warnings from tech experts about the risks from generative AI, Lynch said it was essential that “you can always turn the machine off and the machine is willing to be turned off”.
In relation to the green transition away from fossil fuels, Lynch echoes the view of some UK trade unions, including the GMB and Unite, that it will need to be carefully managed to avoid mass job losses. “We very much hope to leave no one behind,” she said, urging European governments to echo the approach of Joe Biden’s multi-billion dollar Inflation Reduction Act, in making public investment conditional on the creation of “good paying jobs”.
“The help that companies get has to be tied to a clear plan: no more blank cheques,” she said.
Lynch was in Liverpool at the TUC’s annual congress this month to add her voice to opposition to new UK strike-busting laws, which could see unions heavily fined and workers sacked if they fail to meet minimum service levels on strike days. In February, she was ordered to leave Tunisia by President Kais Saied, after joining street protests there against anti-union legislation. While the British government is hardly an authoritarian regime on a par with Saied’s Tunisia, Lynch said the ETUC’s message everywhere is that “trade unionism is not a crime”.
“We have to be very vigilant against all these attacks, wherever they are,” she said.
View image in fullscreenLynch in Brussels. Photograph: Christophe Smets/The Guardian
And while much of her focus is on influencing EU policymakers, Lynch insists that unions on either side of the Channel still have good reason to collaborate, despite Brexit.
“A lot of the solutions that trade unions pursue, which are about understanding how to make advances for working people through collective bargaining, through collective action, through social partnership, through social dialogue, all of those exist, whether or not the UK is in the EU, because the companies are still operating throughout Europe,” she said. “The companies didn’t leave the EU.”
