Europe’s vicious circle of misery

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You feel World War III is fast approaching when you are in a room in Brussels, during a technical working group meeting, discussing money. Who gets to pay – net contributors and who gets allocated EU funds – net beneficiaries, voicing their concerns? The richest countries wanting to limit or decrease the EU budget and the poorest trying to milk as much as they can. Fortunately, there is the Presidency, which tries to find a compromise between all parties, and wars are avoided.

The European Union has successfully secured peace in Europe between countries who get to fight together in a meeting room rather than through sacrificing innocent lives. However, why is there so much unhappiness with the EU with the mushrooming in Europe of Euro sceptics and even a country actually deciding to leave the EU – Brexit?

The answer is simple, the EU is too slow to respond to the poorest citizens’ concerns. One major concern everyone speaks about is immigration. From an economic point of view immigrants provide increased labour force and so increased production, therefore increased well-being for all. However, what if the countries are experiencing anemic growth and people struggle to keep their job? Seeing foreigners adding competition to an already stagnant job market is not easy. Especially, if the competition is not a fair competition. Illegal immigrants do provide such unfair competition as their illegal status makes them work in the black market. Thus, unscrupulous entrepreneurs see illegal immigrants as a source of human resources at a bargain price. Of course, honest entrepreneurs have to compete with the unscrupulous ones. Making the life of the honest businessperson impossible.

During last European Parliament election, in 2014, I had to opportunity to hear Martin Schultz speak about his vision for immigration in Europe. He emphasised the need for a legal channel of immigration in Europe and not one which is confining individuals to the black economy and a life of slavery. Maltese are familiar with the complicated procedures which were required by their family members to go and work in Australia and Canada. A health check, vaccinations, job and lodging available upon arrival in Australia were prerequisites to being able to enter the country. Literally the opposite of arriving with kids in a sinking dinghy with only the clothes you are wearing. Why does the European bureaucrat seem to have forgotten about these systems? Or have the higher echelons decided to push aside a legal system in favour of one which allows unscrupulous businesses to take advantage of the desperate?

The discussion about immigrants flooding our labour market is at the moment on the back burner in Malta since labour demand is high. However, in Europe this is still a very hot topic which is swaying elections in favour of extreme right wing eurosceptics. Providing a legal route for migrants is essential in order to preserve a united Europe and a fair well functioning competitive environment for workers and entrepreneurs.

Immigrants are just a facet of the discomfort faced by Europeans. Another discomfort is the job losses and lack of opportunities for Europeans in the labour intensive sectors of the economy. The truth is that since trade was opened to China, jobs were lost and it was very difficult for persons in these sectors to find another job. However, is competition from labour intensive companies outside the EU always fair? Well my answer is no.

I followed WTO negotiations with great interest around the year 2000. As an economist fresh out of university, I somehow expected that if trade barriers had been lifted, someone like the International Labour Organisation, would step in to guarantee that workers in cheap labour countries would be treated with respect. This would allow for fair competition. Nearly 20 years have passed and I am still waiting. Only to realise that the whole trade barriers opening was just a way for big businesses to be able to use the cheapest possible labour for their products without any concern for human rights. If you think about the prices of, for example, clothing during the past 20 years, there have been negligible decreases in prices, if any. However, production has shifted from Europe to Asia with the obvious decrease in costs associated to it, especially in terms of institutional costs imposed on employers in the more developed World. The result was increased profits for the big companies rather than a more equitable allocation of world’s wealth.

I was speaking to a Chinese woman, who told me that worker’s rights, as being paid, have become a right protected by government only during the last 5 years. Today, if a worker is not paid in China, the government helps financially by providing free legal aid to get a case heard in courts. So one can only imagine what has gone on in terms of worker rights protection before the last 5 years. One can also understand why labels on clothes  nowadays are telling us that products are produced in places like Bangladesh instead of China.

The EU seems unconcerned how products in third countries are produced. This has an effect on the third countries, where living conditions are unbearable making emigration the only option for a decent life. A documentary by SKY news, about children in Congo working in cobalt mines, is heart breaking. Cobalt is used to produce our smartphones. Why are we made accomplices in child slavery?

The EU’s lack of concern on how products in third countries are produced also has an effect on EU countries whose manufacturing can never compete with products being produced without any respect to individuals and the environment. How can an adult miner ever compete with a slave child in terms of costs?

So, lack of ethical purchasing feeds a vicious circle of misery. Third country nationals trying to escape slavery being caught up in paperwork and having to survive on an illegal status. European conditions for low skilled workers which are miserable, as jobs using low skilled workers are always decreasing. Plus the added competition for low skilled jobs with easy supply of immigrants ready to work in inhumane conditions as their illegal status does not allow them to choose anything else. The circle goes on. More low-skilled labour intensive industries leaving Europe, more Europeans unemployed, more illegal immigrants escaping slavery in their home countries and again more miserable conditions for the lowest people in our society. A revolt against institutions is the natural consequence.

Of course, retraining workers is the only answer out of this vicious circle so workers can move to another job. Illegal migrants are obviously invisible to the educational system so for them there is not even a hope out of the misery vicious circle.

When I was in my 20s, I was an advocate of skill retraining. However, now that I am in my 40s, I do understand much better how difficult it is to actually retrain later in life. I do not think it’s impossible, but I do understand people who do not manage to do so and vent their frustration with their life through criticising their Government and the EU. They are ready to believe every conman who tells them that they are ok and it is just the world around them which is rotten and needs to change. For example, by leaving the EU. The conman does not tell them that the job that once gave them dignity will never come back even after leaving the EU.

It is high time that the European bureaucrats and politicians are detached from unscrupulous business persons. We have to give a chance to honest entrepreneurs who believe in respecting and remunerating adequately their workers. We need a Europe which protects the rights of workers worldwide by not allowing imports from companies which disrespect workers. Just as products are certified in terms of hazardous contents, quality and performance, products should be certified in terms of respecting human rights.

If Europe is to remain strong and peaceful we need to take care of lowest class not only in Europe but throughout the World. As Mother Teresa said, “Poverty is not made by God, it is created by you and me when we do not share what we have”.

Fleur Vella shares her views about the need of Europe to put the well-being of people in the centre of its policies for Diplomatique.Expert .

About the author

Fleur VellaFleur Vella read a Bachelor of Commerce Honours in Economics and a Master in Business Administration at the University of Malta. She started her career with the Government of Malta carrying out research related to Malta’s pre-accession negotiation position. During this time Ms Vella also started lecturing at the University of Malta as a visiting lecturer. Following Malta’s entry into the European Union, Ms Vella was part of a team working on Malta’s EU budget 2007-2013 negotiations. This process determined the amount of funds Malta received during the period in question. In 2006 Ms Vella joined the private sector and since is running a small business enterprise. Throughout the past years she has grown aware of the challenges that micro and small business enterprises encounter in a very competitive set-up. Ms Vella is a spokeswomen in support of micro and small business units. She provides input towards macroeconomic policies required to improve the operations of this economic sector.

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