Austerity policies in Europe: crisis response or class warfare?

As a result of austerity policies in response to the global financial market and Eurozone sovereign debt crises, policies of wage cuts and dismantling or hollowing out of collective bargaining have been implemented across the European Union (EU). And yet, as a new wage map by the European Trade Union Institute (ETUI) illustrates, the general situation of European people has not improved.

The three key findings of the wage map are summarized by the ETUI as follows:
  • ‘The majority of countries (15 out of 27) record falling real wages. The most dramatic decline of real wages since the onset of the crisis took place in those countries that were subject to financial bailout programmes.

  •  A decline in real hourly minimum wages affecting the most vulnerable part of the workforce. Once again, the highest decline can be found in those countries which were dependent on financial aid programmes.

  •  A drop in the wage share in the majority of EU countries indicating a redistribution of income from labour to capital.’
Poster by PropagandaTimes

It should not be surprising that these policies have done little to overcome economic crisis. If everybody cuts wages and hopes that products are bought by people in other countries, an overall aggregate decline in demand across the EU is the result. Not everybody can pursue a strategy of export-led growth. Some also have to import products. In short, what the excellent wage map by the ETUI reveals well is that austerity policies have not worked in terms of getting Europe out of recession.

Nevertheless, perhaps the real purpose of austerity has never been to overcome recession? Perhaps the real purpose has been to change the balance of social class forces in society? As the ETUI notes itself, austerity policies have gone hand in hand with moves towards dismantling collective bargaining. Equally, austerity has gone hand in hand with attacks on the public sector and attempts across the EU to open up public sectors to private investment. This is directly enforced by the EU as part of bailout packages for countries such as Greece, but other countries too such as the UK are currently pursuing a policy of partial privatization with the excuse that this was necessary in order to pay off public debts.

Cartoon by barbourians

Ultimately, austerity is a strategy of class warfare by capital against working people and trade unions as their representatives. Arguments about having to deal with public debt are used to justify a drastic transformation of European political economies.

Resistance then has to focus first on increasing again the wage share. But this cannot be enough in itself. In the end, the control of the means of production by capital needs to be challenged to change fundamentally the balance of power in favour of labour. 

Prof. Andreas Bieler
Professor of Political Economy
University of Nottingham/UK
Personal website:

28 August 2013