Government workers went out on strike in Greece and the United Kingdom last week. The two strikes are unrelated, but they share the same root causes. In both countries the government has decided to balance its budget on the backs of the most vulnerable. In both countries government workers are in the forefront of the battle to prevent this.
Greece is going through a terrible economic crisis. Economic output fell by 2% in 2009 and 4.5% in 2010, and was falling at an annualized rate of 7.5% in the first half of 2011. The unemployment rate is 16.5%. The worst statistic — and the reason for the Greek debt crisis — is a government budget deficit of 9% of the country’s total national income.
Of course, to American eyes these figures might not look so bad. We don’t manage our economy much better. Our 2011 budget deficit is running at 9.8% of total national income. Given that our economy is growing, not shrinking, Greece’s figure of 9% doesn’t look so bad. Still, Greece doesn’t have our unparalleled access to capital markets. It’s in trouble.
The Greek response to the crisis, however, is only making things worse. The crisis is temporary, not permanent. A temporary crisis calls for temporary solutions: a surcharge on the wealthy, a moratorium on debt payments, a loan from the International Monetary Fund (IMF) or the European Central Bank (ECB).
Unfortunately, the ECB and the IMF are pushing Greece into a program of long-term cuts in government staffing levels and government services for the population. Greece has little choice but to comply — or to face the uncertain consequences of abandoning the Euro currency. Greece’s government workers struck to protest these self-defeating policies, but it doesn’t look like they have much hope of success. At least they’ve taken a stand.
The situation in the United Kingdom couldn’t be more different. The UK had a mild financial crisis. Economic output fell 4.9% in 2009 but then bounced back up by 1.3% in 2010. The economy has continued to grow, albeit slowly, in 2011. The unemployment rate, at 7.7%, is well below that in the United States. The economy certainly isn’t strong, but it is not in decline.
As in Greece and the Untied States, the budget deficit in the UK is about 9% of total national income. But the UK is not Greece. The UK is one of the major centers of the world’s capital markets. More important, the UK borrows in its own currency, while Greece borrows in Euros, the European Union’s shared currency. As a result, the UK is at no risk of a default.
That makes the actions of the British government all the more inexcusable. The British government plans to cut 490,000 public sector jobs, or about 8% of the central government workforce. There is no justification for cuts of this size. They represent nothing short of an all-out war on government and the services it provides.
Like their Greek counterparts, British government workers took a stand last week against draconian cuts in government services. Of course, they were also taking a stand for their own jobs. But that wasn’t all. Private sector workers also showed their support by going out on strike as well. All across the country, people protested the war on government workers.
Government workers are also under pressure in the United States, especially at the state and local level. In the US, however, it’s much harder for government workers to strike. Federal workers and many state workers simply aren’t allowed to, and risk being fired if they don’t show up to work. Others are afraid to. And of course very few private sector workers even have unions, so it’s impossible for them to go out on strike in support.
As a result, we rely on Greek and British workers to fight our battles for us. The war on workers in the wake of the global financial crisis isn’t limited to one country. It is a worldwide effort to reduce government services and restrict worker rights. In today’s globalized world, when workers anywhere take a stand, they stand for all of us.
For years, the world learned from the United States and followed our example. The world wanted to be like us. American workers were more secure, better trained, and better paid than workers anywhere in the world. Those years are over.
Today, it is the United States that stands to learn from the rest of the world. If British workers can prevent the roll-back of government services and the resulting return of recession in the UK, they can set an example for us. Cutting government jobs and services is rarely a good idea. It’s never a good idea in a recession.
A tide of austerity has swamped Greece and looks set to roll over Italy, Portugal, and Spain. Let’s hope it breaks against the resolve of the British unions. If not, it may just sweep west across the Atlantic to drown us as well.