G. Katrougalos The Greek Austerity Measures: Violations of Socio-Economic Rights

The Greek Austerity Measures: Violations of Socio-Economic Rights

Published to the Blog of the International Journal of Constitutional Law and ConstitutionMaking.org, 29-2-2013

Recently, the European Committee of Social Rights (the supervisory body of the European Social Charter) delivered two decisions on collective complaints, condemning Greece for violation of articles 10 and 12 of the Charter because of its austerity legislation enacted in 2010. (The Committee has also declared admissible many other complaints attacking other parts of the austerity program of the country: Complaints Nos.76/2012, 77/2012), 78/2012, 79/2012 and 80/2012.)

Moreover, in this year’s November session, the ILO Committee on Freedom of Association  (the supervisory body of the International Labor Organization) examined similar complaints submitted by trade unions and called on Greece to bring its labor relations system back to fundamental rights, as protected by the ILO Conventions (see paragraphs 950-1002 of the 365th Report of the Committee on Freedom of Association).

In the cases of Greece, Portugal, Ireland and, most recently Cyprus, the austerity programs took the form of an informal agreement (not an international treaty) between them and the IMF and the EU, in the form of a “Memoranda of Economic and Financial Policies.” The latter provide for conditionality policy guidelines that these countries must follow in order to receive additional loans from the IMF and the EU.  Their implementation is supervised by an informal body of representatives of the European Commission, the IMF and the European Central Bank (the so-called ‘Troika’). Each time the Troika reports that the assisted Member has achieved a “milestone” of the Memoranda and met the preset objectives, it gets the pre-decided tranche of the loan.

In Greece, the receipt of the Memoranda didn’t address either the national or the more general causes of the crisis. Besides some self-evident technical reforms against tax evasion, they have just repeated the same general dictates of the neoliberal orthodoxy. In essence, the recipe called for horizontal reduction of all public expenses, primarily of social expenditures. It also called for a thorough deregulation of labour law legislation, and a massive transfer of wealth from the public to the private sector through privatizations of public enterprises. These privatizations are to take place regardless of the strategic nature of public enterprises or their financial utility for the budget.

Within this framework, the ‘Memoranda’ could be seen as just one more episode of the prevailing ‘Sado-Monetarism’[i] of the EU economic orthodoxy,[ii] or as a part of the more general neoliberal Washington consensus imposed by the IMF so far in many countries of the Third World. However, the agenda cannot be legally implemented within the existing constitutional boundaries of a developed democracy. The Memoranda imply that the ‘troika’ has decision power for defining and implementing economic, financial and social policies, which are innately contrary to the fundamental principle of a social state. Hence, this transfer of sovereignty does not merely put the Greek government and parliament under a direct political control of their debtors, but gravely violates the constitutional order.

The “Memoranda” are programmatic guidelines of a political rather than legal character. In order to be implemented, they require at the international level a treaty between Greece and its lenders (IMF and the States of the Eurozone) and at the domestic level executive legislation. Two such international loan treaties have been signed, one in 2010 and one in 2012. Both are problematic on procedural and substantive grounds. None has been ratified by the parliament, contrary to the explicit provision of article 36, paragraph 2 of the Greek Constitution. Both treaties contained such exorbitant clauses regarding national sovereignty that it would be impossible for an important number of MPs to vote for them.

The treaties also include an explicit and irrevocable waiver of immunity of the Greek State, which, according to the Legal Opinion attached therein, expands also to issues of “national sovereignty.” This goes much further than the generally accepted waivers of immunity from execution known in international law.

More importantly, the austerity measures violate several structural constitutional principles (such as the principles of equality of public burdens and of a social state of law – article 4, paragraph 5 and article 25, paragraph 1 of the Greek Constitution) and fundamental social rights (articles 21, 22 and 23 of the Constitution). They also violate essential guarantees of the EU Charter of Fundamental Rights and International Labour Law. For instance, a number of bills have imposed important reductions of salaries not only of civil servants or of staff employed in public sector under private law but also of private employees, encroaching on the collective agreements in force. This is a clear violation of collective autonomy, which is guaranteed by Article 22, paragraph 2 of the Greek Constitution[iii] and a number of international treaties, for example Article 8 of International Labor Convention no 151 of 1978 and Article 6 of the European Social Charter.[iv]

As Nobel laureate Amartya Sen recently remarked in the New York Times: “Such indiscriminate cutting slashes demand — a counterproductive strategy, given huge unemployment and idle productive enterprises that have been decimated by the lack of market demand.”

However, Greece does not have a constitutional court, and the ordinary courts have to date generally upheld the respective laws as constitutional, accepting that the measures are justified by the state of necessity faced by the Greek economy. However, recently the Supreme Court of Audit (Cour des Comptes) has unanimously declared unconstitutional the last wave of pension reductions and the Court of Cassation did the same with respect to cuts in judges salaries.

This deferential stance of the Greek courts so far starkly contrasts with the decisions by constitutional courts in other countries issued after judicial scrutiny of austerity measures imposed by the International Monetary Fund (IMF). In the previous decade, when the IMF was active in South America, there were several decisions invalidating legislation restricting social security rights. For instance, in Colombia the Constitutional Court annulled a statutory provision that increased the age of retirement from 60 to 62.[v] In Argentina, the Constitutional Court has invalidated a pension cutback of 13 percent.[vi] More recently, the Constitutional Courts of Latvia[vii] and Romania[viii] issued similar, well-founded decision invalidating pension cuts. The Constitutional Court of Latvia has explicitly reaffirmed, as in some of its previous judgments[ix], that “the State itself is responsible for the system of social and economic protection (types and amounts of allowances) and its maintenance. This system is dependent on the economic situation in the State and the available resources.” However, “even if the State reduces the pension disbursement amounts for a period of time in a situation of rapid economic recession, there is still a definite body of fundamental rights that the State is not entitled to derogate from.”[x] Romania’s Constitutional Court ruled along similar lines, based on its interpretation of article 47 par. 2 of the Constitution, protecting the right to social security. The Court found that “the state has a positive obligation to take all measures necessary to achieve that objective and to refrain from any conduct likely to encroach the right to social security”.

It is noteworthy that the European Commission tacitly recognized in its last Review of the Program the unconstitutionality of the last austerity measures, stating that“important budgetary measures are likely to be challenged in courts, which could lead to the need to fill a fiscal gap emerging as a consequence.”[xi] Oddly, the Commission is not preoccupied by the illegality of the measures, but instead mentions it just as a compelling factor for introducing a new wave of them.

Up until this point, the most disruptive impact of the Memoranda has been at the level of labour law. After all, the deregulation of the latter is one of the structural reforms that the IMF intends to impose on all countries it ‘assists’. The reform (a genuine counter-revolution) comprised a complete annulation or premature termination of all collective labour agreements. Even the national collective agreement has been unilaterally modified, so as to reduce the minimum legal salary. Moreover, the abrogation of the law permitting trade unions to ask for an arbitration award if the employers refused to negotiate wages, in association with the statutory imposed termination of the collective agreements, means practically the end of all collective agreements in the immediate future.

Even with regard to the reform of the public sector, the Memoranda failed to be the ‘handmaiden of change’, as hoped by its proponents. It has imposed a sharp reduction of personnel, which has simply deteriorated the structural problems within the Greek administration. The public agencies that have been terminated by the new legislation were those most needed, such as the Organization of Social Housing and the Public Institute of Geology and Mineral Exploration (IGME), but of which are vital for future investments and the exploitation of physical resources. The gaps in a skewed public administration were accentuated rather than diminished.

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[i] M. Perelman,  ‘Sado-Monetarism: The Role of the Federal Reserve System in Keeping Wages Low’. Monthly Review,  63, 2012, at 11.

[ii] “Eurodaemmerung” for P. Krugman. (End this depression now,  Norton, New York, 2012, p. 166 fwd.)

[iii] Article 8 of International Labour Convention no 151 of 1978 states that “[t]he settlement of disputes arising in connection with the determination of terms and conditions of employment shall be sought […] through negotiation between the parties or through independent and impartial machinery”. According to article 5 of the International Labour Convention no 154 of 1981, “[m]easures adapted to national conditions shall be taken to promote collective bargaining”. For its part, the Council of Europe’s European Social Charter of 1961 (revised in 1996) refers to the right to bargain collectively (article 6) and to the right to social security (article 12). The drastic reduction of salaries and pensions (in some cases by more than 35%) are also contrary to the protection of property by article 1 of Protocol of the ECHR. In fact, the concept of property may, in accordance with the relevant ECHR jurisprudence, encompass salaries and social security benefits. Cf. Hellenic Council of State (ΣτΕ), Decision 632/1978.

[iv] See ECHR, Stec and Others v. United Kingdom (decision as to the admissibility)[GC], nos. 65731/01 and 65900/01, παρ.51, ECHR 2005-X. In general, the Court in Strasbourg has found that an agreement with the IMF can not deny protection under the ECHR. See Capital Bank AD v.Bulgaria, no.49429/99, παρ.110-111, ECHR 2005-XII, 24.11.2005.

[v] Decision C-754/04. See S. Clavijo Social Security Reforms in Colombia: Striking Demographic and Fiscal Balances, International Monetary Fund Paper,WP/09/58 2009.

[vi] Decision of 22 August 2003, see IMF, Lessons from the Crisis in Argentina, Prepared by the Policy Development and Review Department In consultation with the other Departments, approved by Timothy Geithner October 8, 2003.

[vii] Decision of 21 December 2009 in the case No. 2009-43-01.

[viii] Decisions no. 872-873 of June 25, 2010, Official Gazette no.433 of June 25, 2010.

[ix] See Paragraph 1 of the Concluding Part of the Constitutional Court Judgment in the Case No. 2001-11-0106 passed on 25 February 2002 and Paragraph 9 of the Judgment in the Case No. 2005-19-01 passed on 22 December 2005

[x] The Court is making reference to the ECtHR Judgment in Case Kjartan Ásmundsson v. Iceland, Application no. 60669/00, passed on 30 March 2005, para. 39.

[xi] EUROPEAN COMMISSION DIRECTORATE GENERAL ECONOMIC AND FINANCIAL AFFAIRS ,  The Second Economic Adjustment Programme for Greece – First Review  November 2012