TWN Info Service on Finance and Development (Feb17/07)
22 February 2017
Third World Network
EU austerity policies undermining rights, increasing inequalities
Published in SUNS #8405 dated 20 February 2017
Geneva, 17 Feb (Kanaga Raja) -- Austerity policies have all too often gone
hand-in-hand with undermining economic, social and cultural rights, while at
the same time increasing inequalities in income and wealth within the European
Union and its member States.
This is one of the main conclusions highlighted by Juan Pablo Bohoslavsky (from
Argentina), the Independent Expert on the effects of foreign debt and other
related international financial obligations of States on the full enjoyment of
all human rights, in his report (A/HRC/34/57/Add. 1) to the UN Human Rights Council,
which meets here from 27 February to 24 March.
The Independent Expert had conducted an official visit to Brussels from 30 May
to 3 June 2016, focusing specifically on the response of the European Union to
the sovereign debt crisis that affected several member States and its impact on
the enjoyment of human rights, in particular economic, social and cultural
In his report to the upcoming thirty-fourth session of the Human Rights
Council, the rights expert said ensuring financial stability and controlling
public debt are important tasks.
However, Mr Bohoslavsky said that he is deeply concerned about the
"paradigmatic shift" that has taken root in the European Union in
recent years that is undermining a previously balanced approach to ensuring economic
stability, equality and social cohesion in favour of a disproportionate focus
on budgetary discipline and competitiveness.
"Austerity policies have unfortunately all too often gone hand-in-hand
with undermining economic, social and cultural rights. At the same time,
inequalities in income and wealth have increased within the European Union and
its member States."
Fiscal consolidation and structural reform policies implemented in Cyprus,
Greece, Ireland, Portugal and Spain have deepened economic recessions and
further increased unemployment and poverty.
Harsh cuts to public expenditure on social protection, health care and
education cast doubt on whether sufficient priority was given to sheltering
vulnerable groups from the effects of the crisis. In addition, social partners,
civil society organizations and affected groups and individuals should be
better consulted in programme design, review and evaluation.
The rights expert pointed out that economic reform programmes agreed between
European Union member States, the European Commission and the European Central
Bank were implemented without any official assessments of their impacts on
economic, social and cultural rights or on vulnerable groups.
"Programme reviews and official evaluations by the European Commission
were concerned mainly with whether economic and fiscal targets were met and
contained only limited analyses of adverse social impacts and how they could be
better prevented in the future."
"To regard human rights considerations as exogenous to such economic
reforms not only ignores international human rights law obligations, but also
deprives the relevant policy discussions of a critical perspective," Mr
In his view, economic reform programmes should undergo human rights as well as
social impact assessments, and their results can change policy choices.
Such assessments should be carried out in consultation with affected rights
holders and civil society and be more than an exercise in ticking boxes to be
In addition, evaluations of past reform programmes should not only assess
whether they managed to reduce budget deficits, restore debt sustainability or
enhance economic growth, but whether they ensured a fair and equal distribution
of the burden of adjustment within society.
The Independent Expert said: "The economy is society's servant, not its
master, and financial policy is a tool that Governments must ensure serves the
best interests of all, and not just the privileged and powerful."
It is therefore absolutely relevant to know the extent to which economic and
social rights have been successfully protected, what gaps exist and who is most
affected by lack of protection of their rights.
This exercise would not only allow lessons to be learned from past mistakes to
be better equipped for the future, but would ensure that identified
infringements of social and economic rights can be addressed and corrected.
According to the report by the Independent Expert, the financial and economic
crisis of 2009 affected the European Union as a whole, putting additional
pressure on the public finances of many European Union member States. Several
countries resorted to financial consolidation policies to address banking
crises, public deficits and debt.
Five euro-area countries - Cyprus, Greece, Ireland, Portugal and Spain -
requested financial support from the Union and its member States as they
experienced very serious difficulties in relation to their financial stability.
Support in the form of loans from European institutions, including new
financing mechanisms set up by European Union member States, and the
International Monetary Fund (IMF) was provided on the condition that they
implement fiscal consolidation and economic adjustment policies.
"Fiscal adjustment policies have the potential to impair a number of
internationally recognized human rights, including the rights to food, housing,
health, education, social security, water and sanitation, and the right to just
and favourable conditions of work," said the rights expert.
"The crisis and the response to it have resulted in increased poverty,
homelessness, reduced gender equality, dramatically increased youth
unemployment in Greece, Portugal and Spain, and cuts to social welfare benefits
and pensions. Some countries witnessed drastic reductions of social and health
services for persons with disabilities while the number of people not being
able to access affordable health-care services has increased."
According to the report, the integrity of international human rights law needs
to be ensured when international organizations, international financial
institutions and regional integration organizations recommend or prescribe
certain policies to their member States.
"International organizations have to act in accordance with human rights
obligations binding on them on the basis of their own foundational treaties,
customary law and general principles of international law, or human rights
treaties ratified by them. In addition, they have to ensure that measures proposed
or enforced by them respect the human rights obligations binding on their
While international human rights bodies have recognized the constraints that
States may face during a financial crisis, there are limits on the extent to
which States may deviate from their obligation to realize economic, social and
cultural rights to comply with conditions imposed by their creditors, said Mr
Member States also have to comply with their human rights obligations when they
exercise decision-making control in international organizations, for example,
through their membership on the boards of international financial institutions
such as the European Stability Mechanism or IMF.
"Certain procedural obligations should be respected when designing,
negotiating and implementing adjustment policies. These include the obligations
to undertake a meaningful human rights impact assessment and to ensure
transparency, participation and accountability," said the Independent
IMPACT OF DEBT CRISIS ON HUMAN RIGHTS
In his report, the Independent Expert focused on impacts in euro-area countries
that were subjected to strict conditionalities for receiving lending, and
highlighted his concerns in relation to the rights to work, to health and to social
He said in the years following the financial crisis, public debt levels
increased significantly in most European Union countries and have remained
above the official debt ceiling set for euro-area member States at 60 per cent
In Greece, Ireland, Portugal and Spain, public funds used to stabilize the
financial sector and to safeguard the banking sector from collapse contributed
significantly to the increase of public debt. Private debt was turned into
public debt. In Greece, the present level of public debt is financially and
"Current debt levels may easily become a risk for the enjoyment of human
rights. While debt service costs in some countries may still be manageable in
the short run, they could significantly increase should the period of
historically low interest rates come to an end, making the refinancing of
public debt more expensive," the rights expert cautioned.
Even today, the cost of servicing debt consumes important resources that could
be better used for productive and social investment to fulfil economic, social
and cultural rights.
This is the case in Greece in particular which, in the view of the Independent
Expert, requires debt relief to boost economic and social inclusive growth.
"Regrettably, fiscal consolidation and economic reform policies have so
far largely failed to reduce public debt levels."
During the period 2008-2014, overall government expenditure hardly changed in
real terms for the European Union as a whole. However, in Greece, public
expenditure was in free fall, with extreme cuts in the field of health care.
While the number of unemployed persons in Greece increased from 380,000 in 2008
to 1,270,000 in 2014, spending on unemployment benefits went down, indicating
that the majority of the unemployed had either never received unemployment
benefits or had lost their entitlement to receive them owing to long-term
On the other hand, Cyprus, Ireland and Portugal significantly increased
spending on unemployment benefits.
Government expenditure in Ireland was reduced in real terms, with particularly
harsh cuts in education, benefits and services for persons with disabilities,
the sick, families and children.
Portugal made large spending cuts in health and education. Overall government
expenditure contracted in Spain, where significant cuts were made in family and
child benefits, education and public health care; only expenditure on old age
Cyprus, Greece, Ireland and Portugal reduced funds for combating social
exclusion and poverty.
"This raises the question of whether mitigating negative social impacts on
vulnerable groups was actually as much of a priority as claimed in some
official policy documents," the rights expert said.
Expenditure on benefits for sick persons and persons with disabilities was also
slashed significantly in Cyprus, Greece, Ireland and Spain.
The Independent Expert said he is concerned that the economic reform policies
implemented across the European Union have caused severe cutbacks in health
services and social welfare entitlements for persons with disabilities.
"These cuts have undermined their right to an independent living, reduced
support services for families with disabled children, inhibited the
de-institutionalisation of persons with disabilities and restricted the right
of children with disabilities to live in family settings. The right to an
adequate standard of living and social protection was also disproportionately
The report also noted that fiscal consolidation policies often included
reducing the number of public employees. Restrictions on hiring in the public
sector were introduced in Cyprus, Greece, Ireland, Portugal and Spain.
In Greece, measures also included a labour reserve scheme aimed at transferring
or dismissing workers employed in the public sector. Conditions for collective
dismissals were relaxed in Greece and Spain.
Public sector wages were cut in Cyprus, Greece, Ireland and Portugal and
minimum wages frozen in Portugal and cut in Greece, including to levels below
the statutory minimum wage for young workers entering the labour market.
The number of unemployed persons in the European Union increased to about 22.9
million in 2015, 6.1 million more than in 2008, before the financial crisis.
Within the European Union, the highest unemployment rates can still be observed
in Greece (23.4 per cent as at June 2016), followed by Spain (19.5 per cent in
Unemployment in Cyprus (12.1 per cent) and Portugal (11.0) has also remained
above the European Union average (8.6 per cent).
More worrying, 10.9 million persons, or nearly one in two job seekers, have
been without a job for more than 12 months.
Long-term unemployment has remained high, particularly in countries that
underwent adjustment programmes. In Greece, 73.1 per cent of all unemployed
have been without a job for more than 12 months; in Ireland, Portugal and Spain
the figures are 56.2 per cent, 57.4 per cent and 51.6 per cent respectively.
In the European Union as a whole, 4.2 million people between the ages of 16 and
25 are without a job, with youth unemployment rates reaching 47.7 per cent in
Greece and 43.2 per cent in Spain.
Women are still more frequently affected by unemployment than men within the
European Union. In Greece, this difference is particularly marked: the female
unemployment rate stands at 27.8 per cent, compared with 19.8 per cent for men.
A similar pattern can be observed in Spain (21.5 per cent versus 17.7 per
The fiscal consolidation policies have limited the affordability and
accessibility of public health-care services in programme countries. In Greece,
a large number of individuals dropped out of the public health insurance
Reform measures included reduction of health-care staff, reduction in the
number of public hospital beds and an increase in co-payments for outpatient
treatment or medication, effectively shifting the cost burden from public
budgets to citizens. Waiting times for medical examinations and surgery
increased in Cyprus, Greece, Ireland and Spain.
Measures implemented in countries affected by adjustment included reform of
pension and social welfare systems, including unemployment benefits or benefits
for families, children and persons with disabilities.
"The reform measures have so far not been able to reduce poverty and
material deprivation, in particular among children, migrants, the unemployed,
single-parent households and female pensioners," the Independent Expert
In several countries, the official retirement age was increased and measures
taken to reduce early retirement. In addition, existing and future pensions
In Greece, Portugal and Spain, bonuses were cut or completely abolished. In
Portugal, all pensions except the minimum social security pension were frozen,
and some were reduced.
However, the number of persons inadequately covered by social security,
unemployment or social welfare benefits has increased. About 121 million people
in the European Union were at risk of poverty or social exclusion in 2014, 4.7
million more than in 2008; this increase was concentrated mainly in euro-area
countries implementing austerity measures and structural reforms.
In Cyprus, Greece, Ireland, Portugal and Spain there were 3.8 million more
persons at risk of poverty and social exclusion in 2014 than in 2008.
Furthermore, it is unlikely that the European Union will reach its own target
of reducing the number of people at risk of poverty or social exclusion by 20
million by 2020.
The Independent Expert said that the European Union should be commended for
several initiatives to mitigate the consequences of the economic and financial
In this context, he cited the Youth Employment Initiative to address youth
unemployment, an investment plan for Europe to boost growth and employment, and
the European Commission's Social Investment Package.
While welcoming these initiatives, he, however, said that they do not yet
appear to have been able to address in a satisfactory manner the poverty and
unprecedented levels of youth unemployment in European Union member States.
The Independent Expert also welcomed the considerable effort made by the
European Union to incorporate a human rights-based approach in its development
cooperation and its external policies.
For example, in its Action Plan on Human Rights and Democracy, the European
Union recognizes the human rights dimension in the areas of social policy,
health, education and access to food and water, and promotes and supports the
development and increased coverage of national social protection floors for the
promotion of economic, social and cultural rights.
In the area of trade and investment policy, the Action Plan specifies that the
European Union will continue to develop by 2017 a robust and methodologically
sound approach to the analysis of human rights impacts on trade and investment
agreements in ex ante impact assessments, sustainability impact assessments and
ex post evaluations.
In his view, there is, however, a need to enhance policy coherence in the field
of external and internal human rights policies of the European Union.
"No credible argument can be made that what can be done externally for the
benefit of rights holders outside the European Union cannot be done internally,
for the benefit of its own citizens and residents. A human rights- based
approach should therefore also guide country-specific recommendations and
inform the lending of European institutions to its own member States," he
He further said it is deplorable how little lending conditionalities were
formally assessed for their potential harm to human rights holders before they
Guidance published by the European Commission suggests that in the field of
economic governance, including "recommendations, opinions and adjustment
programmes", impact assessments are not a priori necessary, on the basis
that such "specific processes are supported by country specific
It may therefore not be surprising that the European Commission did not publish
any social or human rights impact assessments in relation to the financial
assistance programmes implemented in Cyprus, Ireland, Portugal or Spain, said
Moving forward, the Independent Expert called for a change of approach. In this
context, he welcomed the first social impact assessment by the European
Commission, undertaken in August 2015 for the third economic reform programme
currently being implemented in Greece.
"It is a first step in the right direction, although the social impact
assessment, which was produced on short notice, was not able to assess the
economic reform measures against international human rights standards," he
"There is also significant room for improving the monitoring of social and
human rights impacts of financial assistance programmes in the context of
official programme reviews or evaluation reports."
The Independent Expert, amongst others, recommended to the European Commission,
the Council of the European Union and European Union member States that they
ensure that human rights impact assessments of macroeconomic reform and
financial assistance programmes supported by the European Union are prepared
before, during and after their implementation.
He also called on these institutions to develop particular guidelines for
conducting human rights impact assessments for macroeconomic reform programmes,
building on the normative components of internationally recognized economic,
social and cultural rights and on existing impact assessment guidelines and
They were also called upon to incorporate human rights obligations into debt
sustainability analysis to ensure that debt service does not undermine the
fiscal space of States for ensuring social protection and accessible and
affordable public services in the field of education and health care. +