Former TUC and ETUC General Secretary Lord John Monks sets out his views about the challenges facing the European Union and why trade unionists are right to protest tomorrow about the new treaty due to be discussed by Europe’s leaders at the summit at the end of this week.

Tomorrow, hundreds of thousands of trade unionists across the European Union, and especially in the Eurozone, will be demonstrating against the EU’s austerity and for growth, solidarity and employment. Not only are these policies of austerity being forced on Greece, Ireland and Portugal, they are being enshrined in a new treaty coercing 25 EU countries (except the UK and the Czech Republic).

Never was an EU treaty less needed.  There are already strict rules for countries in the Eurozone but they were broken and then made irrelevant by the large scale of the economic crisis.  We don’t need more rules.  That will not power Europe out of this crisis.

But this approach, driven by Germany, is massively counterproductive and is based on punishing sinners against the existing EU rules.

Solidarity has been largely absent in the EU’s response to the sovereign debt crisis, and where it has occurred, the terms of the support have been so draconian that EU ‘help’ has felt more like a punch in the stomach: in Greece in particular, but also in the other distressed countries.

Just when the EU needed to rise to the challenge of handling its worst economic crisis since 1945, it has adopted the approach of President Hoover in the early 1930s and intensified austerity at a time of economic collapse.  It is as though John Maynard Keynes, the great economist, had never analysed what went wrong nor that President Roosevelt had not correctly tackled the 1930s crisis by the New Deal policies of growth and employment.

If the lessons of the 1930s are being forgotten, so are the lessons of the post war period.  Then General Marshall correctly saw that Europe was broke and needed dollars to re-equip itself and start to grow.  The USA stepped forward, first to help Greece, and then the other countries of Western Europe.

This was in contrast to the period after the First World War when heavy reparations were charged by France and Belgium in particular, on the defeated countries, especially Germany, so making their economic and political recovery very difficult, and ultimately paving the way for the rise of the Third Reich.

Today, Greece feels a bit like Germany did after Versailles.

So what can be done?  The USA is providing one answer.  Its economy is recovering partly because it did not apply austerity policies.  In Europe, including the UK, it is vital that similar policies of growth take precedence over the drive to repay debt.  The debt must be repaid but the distressed countries need help with the stronger nations carrying some of the burden.  This can be done in various ways especially using Eurobonds; by the European Central Bank acting as a lender of last resort, just as the US Federal Reserve and the UK Bank of England have done; and by special measures to tackle the difficult position of the young unemployed.

Not everyone agrees with me when I say that the EU has been a brilliant success up to this particular crisis.  But since then, the EU has barely put a foot right.  It needs now to listen to the trade union voices of the ETUC.  These will resonate across many a square and down many a boulevard on Wednesday.

I leave with a sad sense that neither the EU, nor the UK for that matter, is in good shape, indeed worse than when I arrived 8 years ago – not quite the epitaph for my stewardship that I intended.

The immediate cause of this is the financial crisis which crashed, like a tidal wave, into Europe in 2008.  The crisis may have originated in the USA but the collapse of the subprime mortgage market there exposed Europe’s own property bubbles.  Credit disappeared, industrial production dived, economies halted.

At first, the EU did well.  Banks were propped up by Governments assuming responsibility for bad debts.  Short-time working schemes, car scrappage schemes, and other stimuli packages kept the economy moving.  We did not repeat the disastrous decisions of the 1930s to cut in a recession and so make things worse.  Keynes’ lessons seemed well learned.

That is, until Greece in 2010!  Then the crisis switched from the banks to the debts of member states with individual countries coming under threat. Whereas rescuing banks was easy to arrange – the major political decisions were taken quickly – rescuing countries is proving much more tortured and difficult.  ‘Moral hazard’ was ignored when the banks were in trouble, but creditor member states are regarding debtor states as good-for-nothing, feckless spendthrifts, requiring as much punishment as help.

The Euro Plus Pact will operate generally in the eurozone and six other countries from 2013, generalising the austerity approach unless countries’ economies are fully competitive with Germany in particular.  Otherwise, it is clear that member states will have to lower wages, reduce pension entitlements, cut welfare and other public spending.

What is already evident is that the austerity measures are not working.  Growth in Greece and Ireland, (and in the UK where the Coalition Government is prescribing similar medicine) is stagnant.  The EU must alter its direction of travel.  It must give growth much more help than just rely on the warm words of EU 2020.  Economic governance cannot just be austerity governance.

It must give equality more prominence. It must do more to help the young who are the major casualties of the recession so far. It must restore the drive for a more sustainable environment and sustainable economies.

It must combat the rise of the eurosceptic and nationalist right who will wreck the EU if they ever come to power.  And in democracies, that means the EU must have popular, attractive themes, not just grim news and harsh discipline.

There are some of the challenges I leave behind.  I wish my successors well with them.

These are important issues. The existing (temporary) scheme is currently deployed to deal with the Greek and Irish problems and instill confidence that there will not be other casualties. It is not working very well at present. Austerity is killing growth which in turn is killing confidence. The bond markets are not particularly impressed with the sacrifices being made because they fear there will be little or no growth.

The proposed mechanism is predominantly penal with its emphasis on financial orthodoxy, paying off debt, cutting public expenditure, reducing pay and benefits, and making labour more “flexible” (i.e. workers more vulnerable and cheaper!). The aim is to reduce the level of pay and benefits in member states in trouble – a kind of internal devaluation and deflation but with actually more pain inflicted than would be the case with an external one of the kind that the UK has experienced so far in the past two years. And the proposed competitiveness pact would put the European Union on a collision course with social Europe.

European leaders have made the wrong choice. Instead of following the example of the Marshall Plan – a genuine European Recovery Plan – which stimulated the continent’s rise from the ashes and wreckage of the Second World War, they are following the mean spirited example of the Treaty of Versailles 1919. That Treaty was about punishment of the defeated, about painful austerity, and about national humiliation.

The result of Versailles was disastrous. Germany could not meet its reparation payments and out of its consequential hyper inflation and default came the Nazis and war.

This time, the war outcome is only a remote possibility thanks to the EU and its ability to pull the nation states of Europe into some kind of common endeavour. But the EU needs policies of hope as well as discipline. Most of all it needs policies to spur economic and employment growth and new economic governance rules that assist those processes.

So the scope of EU issuing its own bonds should be on the tables in Brussels. So should plans for a Financial Transaction Tax (at European level- if the rest of the world won’t follow our lead).  So should a European New Deal encouraging investment in young people (especially hard hit by the crisis) in a more sustainable economy and environment and on the new jobs of the future.

It took the threat of the Red Army in central and eastern Europe and the menace of powerful Communist movements in France and Italy to secure the Marshall Plan. What will it take today for a similar act of generosity? Or will our guide to the future be Georges Clemenceau, the President of France in 1919, and his disastrous reliance on reparations? Europe’s leaders have a heavy responsibility to make the right choice.

The tragic deaths of three people after a firebomb was thrown into a bank were the work of an idiotic individual but other petrol bombs were tossed around and the risks of a serious incident were high. The incident overshadowed the large, peaceful demonstrations which also took place and in which I took part. The Greek unions are to demonstrate again to express their abhorrence at the deaths.

The Greek Parliament is under great pressure from an angry, humiliated population, faced with a 16% cut in Greek GDP over the next few years, with pension cuts, lower labour standards, and disruption of collective bargaining. In truth, Greece has no choice. If it does not accept the EU/IMF deal, it will have to default on its debts, which because of the single currency would take the country and the rest of the eurozone into unknown territory. But at the moment, it is hot anger rather than cool calculation which is running strongly.

In my speech to the demonstration, I wanted to put the blame for the crisis where it rightly lies – with the previous Greek Governments who cooked the national accounts to gain entry into the euro, aided and abetted by Goldman Sachs and other banks; and on the richest tax dodgers. I wanted to urge the Greeks to copy the Finns who in the early 90s were faced with a sharp drop of 15% of GDP in their economy following the collapse of the Soviet Union but who produced an agreed national economic plan which put the economy back on the path to growth. It all sounds a bit Nordic to the Greeks but they will have to work hard to preserve democracy and to summon the will to accept short-term pain for the prospect – a distant one admittedly – of longer term gain.

Remember – when the UK was briefly in the hands of the IMF, Greece was under the heel of the Colonels. Violence and chaos plays into the hands of the far right. Avoiding another Greek tragedy will be a major task for the Greek trade unions as they struggle to make the best of a very difficult situation.

121 years on from the first May Day celebrations, we find we’re standing at a crossroads for the world of work in Europe, one where there is a real risk of taking the path back toward 1889.

The financial crisis has hit employment levels and job security right across Europe. Vulnerable work, unsecure, under regulated, under rewarded and exploitative (and these days often the only type of work available to young people) is spreading to sectors of the economy that until now were not afflicted by this phenomenon.

Inequalities in European societies are increasing as huge fortunes continue to be amassed by many, leaving the victims of the crisis further and further behind.

The ETUC is determined that vulnerable work must not come to represent the future of the European Union. Vulnerable work undermines people, society and democracy. Over the longer term, we are headed towards a widespread impoverishment that downgrades Europe both economically and politically.

Only by investing for the long term, can Europe safeguard many of the very valuable aspects of its economic and social model. To remedy the worsening employment situation, the EU must increase investment, through an EU recovery plan equivalent to 1% of Europe’s GDP, and designed to deliver new, innovative and job-creating industrial policies. The quality of employment must be the objective. Quality jobs, backed by a focus on access to skills for all, can help ensure a decent life and sustainable economic and social development.

We don’t just need the old methods of piecemeal intergovernmental cooperation, but instead an EU-wide vision for industrial coordination that transcends our intra-European divisions and the perverse effects of the demand for short-term profitability in industrial investments.

Active solidarity policies are also necessary to provide support for individuals and countries in difficulty, but also to stimulate activity and social cohesion. Focusing on slashing public spending and social protection schemes at a time when the economy still needs to be shored up is a mistake that is sure to have serious consequences. Without investments, without solidarity measures, society as a whole will be shaken.

The challenge is tremendous, particularly in a context of aggressive globalisation and large government deficits in Europe. But the challenge has to be met, which is why Europe has to be given sufficient resources, particularly budget resources.

Throughout Europe today, trade unions will be on the march to express their rejection of the path that leads to a lowest-bidder approach to employment and social protection. I’d like to wish you the best for May Day, and invite you to join our call for solidarity and cohesion for the future of all European workers.

At the ETUC, we’re increasingly concerned that Greece seems to be alone to face a renewed wave of financial market speculation, as heavily leveraged speculators take advantage of Greece’s debt crisis, exacerbating the country’s situation for a heavy profit. The European Council, the European Central Bank and the European Commission are giving an entirely wrong message: The speculators are to be left alone, whilst workers and governments are being pressed to cut wages, social benefits and public services.

Europe needs to come together right now and take collective action against the speculators. If the EU can’t organise the solidarity between its member states and its workers, then the crisis won’t stop in Greece. Financial markets will use their power to single out individual countries, moving on as certain states fall. Member state after member state will be forced to cut wages, benefits and jobs. Portugal, Spain, Italy, Ireland – this could spread both quickly and widely, with everyone in Europe feeling the repercussions. Without real action, and action aimed at fundamentally changing the system, the whole idea of a Social Europe is in grave danger.

This is why we’re demanding a New Social Deal for Europe. The EU needs to see a financial transaction tax, a common Euro bond, a European rating agency and a European Central Bank, which also supports public policy and public finances (not just the banking sector). In the European workplace, collective bargaining needs to be strengthened. Competitive wage cuts and wage freezes must not come to replace the competitive devaluations of the period before the single currency.

The way forward has to be through recovery plans agreed with Europe’s social partners, in which the rich and comfortable accept that they need to take a fair share of responsibility for the situation, and it is not just the wider populace who should be left to carry the burdens of the recession, in the form of unemployment, pay and pension cuts.