Protestors against government spending cuts to public services in the aftermath of the 2008 global financial crisis often carried placards and banners bearing the slogan “Austerity kills”.
The COVID-19 pandemic is demonstrating the brutal truth inherent in this statement. A decade of austerity imposed by the EU institutions and EU member state governments has caused significant deterioration in healthcare services across the EU.
Over the past week, doctors in northern Italy have described the horrific situation of their being forced to choose which patients are to be treated, and which are to be left to die.
The European Centre for Disease Control warned on March 12 that, “The speed with which COVID-19 can cause nationally incapacitating epidemics once transmission within the community is established, indicates that in a few weeks or even days, it is likely that similar situations to those seen in China and Italy may be seen in other EU/EEA countries or the UK…The risk of healthcare system capacity being exceeded in the EU/EEA and the UK in the coming weeks is considered high.”
The WHO has outlined the immediate actions we need to implement in each member state of the EU:
- Find, isolate, test and treat every case and trace every contact;
- Ready your hospitals; and
- Protect and train your health workers.
This was the strategy used in China, South Korea and other countries in south-east Asia that effectively contained the epidemic. But the response from many EU member states does not include even the ambition to “find, isolate, test and treat every case and trace every contact”. The EU’s healthcare and public sector sectors are simply not equipped to respond in accordance with international best practice.
Healthcare gutted by spending cuts and privatisation
A report I published last month found that the European Commission made 63 individual demands of member states to cut spending on healthcare provision and/or privatise or outsource healthcare services between 2011 and 2018, in order to meet the arbitrary debt and deficit targets enshrined in the Stability and Growth Pact.
These demands affected the “peripheral” economies hit by the sovereign debt crisis especially harshly: Greece, Spain, Italy, Ireland and Portugal.
Some of the key findings of the report, Discipline and Punish: End of the Road for the Stability and Growth Pact?, including its impact on public services in the EU, are briefly outlined below.
EU surveillance and control of member states’ budgets
The Stability and Growth Pact (SGP), first enacted in 1997, has proven to be one of the most contested and controversial features of the Economic and Monetary Union, and the broader EU. The SGP imposes two numerical ceilings on government expenditure: (1) the government debt-to-GDP ratio must be below 60 per cent; and (2) the annual deficit of member states must be limited to 3 per cent of GDP or less.
The power of the European Commission to surveil and control the national budgets of EU member states was significantly strengthened in 2011 by the adoption of the Six-Pack and in 2013 by the adoption of the Two-Pack, as well as the signing of the Fiscal Compact, an inter-governmental treaty.
The European Semester is the annual programme of coordinated economic policy across the EU, introduced by the Commission in 2011. It essentially aims to make the national budgets of member states subject to the scrutiny, alteration and approval of the Commission and the Council before the final budget plan is finally put to a vote in the national parliament.
The European Semester incorporates the requirements of the SGP and the Macroeconomic Imbalance Procedure, as well as broader structural reforms under the Europe 2020 strategy. In response to the draft budgetary plans submitted by member states, the Commission produces “country-specific recommendations’” to individual states.
Singling out healthcare for budget cuts
The report examines the SGP’s role in intensifying the transfer of wealth from labour to capital in the EU, in particular since the global financial crisis. It examines the precise ways in which the SGP achieves this transfer by examining the content of the country-specific recommendations made by the European Commission to EU member states on the basis of the SGP and the Macroeconomic Imbalance Procedure. It also examines the deeply corrosive impact of the SGP and its enabling framework, on democracy in the EU, and the implications of this.
The report analyses the content of all country-specific recommendations made under the SGP and the Macroeconomic Imbalance Procedure from 2011 to 2018. It finds that in addition to consistent demands for reductions in public spending, the Commission has specifically singled out pensions, healthcare provision, wage growth, job security and unemployment benefits.
The content of Country-Specific Recommendations from the Commission under the Stability and Growth Pact and the Macroeconomic Imbalance Procedure 2011-2018
NUMBER OF EU28 MEMBER STATES RECEIVING INSTRUCTION FROM COMMISSION
|YEAR||Increasing pension age/
cuts to pension funding
|Spending cuts on healthcare/
privatisation of healthcare
|Suppression of wage growth||Reducing job security/
workers’ bargaining rights
for unemployed, vulnerable or people with disabilities
Source: Author’s calculation based on Commission CSR data 2011-2018
From the introduction of the European Semester in 2011 to 2018, the Commission made 105 separate demands of individual member states to raise the statutory retirement age and/or reduce public spending on pensions and aged care.
It made 63 demands that governments cut spending on healthcare and/or outsource or privatise health services.
Demands aimed at suppressing wage growth were put to member states on 50 occasions.
Instructions aimed at reducing job security, employment protections against dismissal, and the collective bargaining rights of workers and trade unions were made 38 times.
In addition to routine demands to cut government expenditure on social services generally, the Commission also made 45 specific demands aimed at reducing or removing benefits for the unemployed, vulnerable people and people with disabilities, including by enacting punitive measures to force these individuals into the labour market – or, at least into becoming jobseekers.
Under the cover of limiting debt and deficits, the European Commission is enforcing austerity in policy areas it has no legal authority over.
The current political focus must of course be on responding to the immediate and enormous challenges posed by the pandemic. But as we face into a likely far sharper recession than that of the global financial crisis, we also need an honest assessment of the failed public policies that have left EU healthcare systems in such a weak position, with such devastating results.