Month: December 2015

Social Exclusion and Labour Rights in the Banlieues of Paris

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The terrorist attacks in Paris have again highlighted the problem of social divisions in France and the extent to which they lead to feelings of exclusion that in some way incite violent responses. It appears that some of the terrorists grew up in or had links to the banlieues (or suburbs) of Paris, where there are high concentrations of immigrants and minority ethnic groups, as well as high levels of unemployment and poverty and a recent history of racial tensions. Many of the youth in the banlieues are unemployed, with the unemployment rate for immigrant youth above 30% according to the OECD. More generally, migrants and their children are also over-represented in low qualified jobs, with workers of North African origins experiencing the highest ethnic penalty in terms of access to employment.

France has a republican model of integration, built on the universalist values of the 1789 Revolution of secularism and equal individual rights for all. Recognition of cultural difference or ethnic communities is considered unacceptable. In contrast to the British multiculturalist model, where ‘difference’ – whether of ethnicity or religion – is tolerated or even prized, ‘difference’ in France is seen as a form of sectarianism and a threat to the republic. The French notion of laïcité, dating back to the Revolution, actively blocks religious interference in affairs of state and public manifestations of religious identity in public spaces, including workplaces. The problem for the recent generations of Muslim immigrants to France is that the proclaimed universalism of republican values – and the focus on assimilation – has meant that many Muslims feel that, if they want to be ‘French’, they must learn to be citizens of the republic first and Muslims second. This is a difficult and, for some, impossible task.

My recent research has looked at how trade unions have responded to migrant and minority workers in France. As context, it should be said that trade unions in France have one of the lowest levels of membership density among OECD countries, with only around 8% of workers being members of a union. Moreover, the union movement is divided along ideological and political lines. It also confronts ideological employers, which means that social dialogue tends to be conflictual and fairly hollow.

However, trade unions in France still have a high level of institutional embeddedness, manifest in the level of collective bargaining attained with over 90% of workers covered by some form of collective agreement. They also benefit from relatively high levels of worker turnout in workplace representative elections which are organised every 2-4 years. Elected worker representatives participate and negotiate at all levels of the organisation and enjoy a legal framework for employee representation that is the envy of trade unions in the UK, including a right to strike enshrined in the French constitution.

My previous work on French trade unions has shown that the institutional embeddedness of trade unions gives them access to resources (time, space and financing) that allows them to represent the wider interests of workers and mount campaigns to organise workers who are excluded from regulated spaces, both inside and outside the workplace. The unionisation rate among immigrant workers is only around 2%. However, this figure is based on nationality, not ethnic origin, as ethnic monitoring is not permitted in France. Migrants and their descendants are likely to be counted as ‘nationals’ as soon as they access French citizenship. This of course poses problems in terms of how we can study issues of social exclusion and discrimination, as the data needed often doesn’t exist.

What is emerging from my research in France is that trade union behaviour is still fundamentally shaped by the assimilationist model of integration. For migrants and minorities working in France this has generally meant that they have had to leave their ethnic and religious identities at the factory gates, the office door and even the picket line. One trade union activist to whom I spoke about Muslim workers taking part in a strike said that there was a ‘time for everything’ and added that he had told Muslim workers that praying on the picket line was not appropriate. There was no issue with the workers being Muslim; only the public demonstration of religious identity.

Attitudes have been changing, however, as evidenced in the debates on the wearing of headscarves. In a recent case where a woman was fired for refusing to remove the veil when asked to do so by her employer, trade unions supported the court’s decision which allowed women to wear the headscarf when working for private employers and thus not involved in providing public services. There has also been some recognition and support by trade unions for workers discriminated against on the basis of nationality and immigrant status in the past. This was the case recently when 800 Moroccan workers, working on private contracts for the public railways since the 1970s, won a case of discrimination, as they had been excluded from the benefits and status of the public-sector workers alongside whom they worked.

Even though they still approach the issue from a mainly race-blind and social rights perspective, trade unions have made attempts to integrate undocumented migrant workers who have been excluded from accessing their labour rights. Trade unions in and around Paris have done a lot of campaigning around and organising of the sans papiers workers, a large number of whom are of African origin. Ever since the 1970s trade unions have been in favour of the regularisation of undocumented workers and from the early 2000s onwards organised mass strikes of these workers to demand regularisation and respect for their labour rights. As a result, over 5,000 workers have been regularised in recent years and the campaigns continue, with greater numbers of undocumented workers organising campaigns themselves with the support of the trade unions.

This brings me back to the terrorist attacks in Paris and the subsequent discussions around social exclusion. There surely now exists a double challenge for trade unions to act as a force for integration for socially excluded members of society. Firstly, migrant and minority workers tend to work either in the margins or not at all, which means trade unions find it difficult to access and represent them. Secondly, the denial of ethnic and racial differences means that structural and institutional forms of discrimination and exclusion are ignored or not explicitly addressed, which can easily lead to a lack of engagement with the trade union movement on the part of workers who feel they have to suppress their core identities.

By contrast, the successes of the sans papiers campaign shows that trade unions can organise in sectors with high concentrations of migrants and minority workers and can demand labour rights for those working and living on the margins of society. France needs its trade unions to build on this example.

This blog is also published on Sheffield Political Economy Research Institute’s (SPERI) blog.

Dr Heather Connolly is Senior Lecturer in Leicester Business School at De Montfort University and a member of the Contemporary Research on Organisations, Work and Employment (CROWE) group and the Centre for Urban Research on Austerity (CURA).

Regional Savings Banks and the Financial Crisis in Spain

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The sovereign debt crisis that put the Spanish socialist (PSOE) government under pressure to begin an austerity programme in May 2010  started two years earlier in a crisis of the financial system.  Whilst central government initially dismissed it as a transient banking liquidity crisis derived from the global interbank lending drought, it soon proved to be a crisis of solvency.  And it was largely cooked in the country’s not-for-profit regional financial institutions, the savings banks. In a pyrrhic victory, they almost overtook commercial banks –the dominant element of national capital— in being the lynchpin of the ‘Spanish model’, a macro-economic system based on deepening existing specializations in tourism, property development and construction as ‘competitive advantages’ adapted to the global economy.

Forty-three out of forty-five savings banks, which had roughly made up half of the Spanish banking system, disappeared. The depth of their solvency problems, the policies implemented by central governments and the deterioration of the economy did away with them. After a complex programme of mergers, savings banks were transformed into commercial banks in 2012. Many were later nationalized and sold cheap to centre banks—effectively reinforcing centripetal flows of capital and resorting to strategies of accumulation by dispossession.

Many savings banks had evolved from being not-for-profit, regional and public-administration-funding into de-territorialising and financialising institutions competing for a larger share of the market. Savings banks were mutual financial institutions set up via foundational funds and managed by boards of stakeholders –founders, local authorities, savers and employees. With their duties to foster savings, develop the economy of their locality and carry out social works, they became anchor institutions in their cities/regions of origin. But since the liberalisation of the Spanish economy, and the deepening of financial market integration during the 1990s, they underwent a prolonged weakening of their regulatory boundaries –‘freeing’ their banking activities and undoing their territorial-boundedness—which encouraged many (particularly the riskier ones with less liquidity) to participate in securitization and high leverage practices (via money-markets) characteristic of financial centres.

The framework established by the Maastricht Treaty and monetary union brought about strong purchasing power that saw major Spanish commercial banks expanding internationally. And it also brought a lowering of (the very high) interest rates and a price war at home. In Catalonia this was markedly felt when the largest of its savings banks (and largest in the EU) La Caixa switched its rates to the Euribor in 2004. La Caixa had a strong pull effect on other savings banks and, in a more competitive market, they saw profit margins squeezed and found they needed to increase their investment volume (for which deposits were now not enough) just to maintain their levels of profit.

Securitization and wholesale markets provided savings banks with a massive volume of resources. The Land Act of 1998 (which made vast amounts of land available for construction) together with changes to securitization laws; lower interest rates; higher investment needs and the traditional pattern of channelling resources to sheltered sectors of the economy by Spanish banks (such as  construction) helped build an ‘urban development tsunami’. This tsunami was built with the mass influx of EU capitals invested in Spanish mortgage-backed securities and other property assets of which savings banks were keen originators.

This liquidity surge was used in lending investments that fed the bubble. Credit to finance construction reached 60% of total credit. Lending practices worsened as savings banks bought construction companies and began selling flats and mortgages via real estate agents working on commission for them. They expanded outside their own city-regions losing their clients’ trust and information advantage characteristic of their proximity banking. Moreover, lending policies rooted in savings banks’ traditional function of providing financial inclusion became predatory when, in their competition for new clients, savings banks targeted the influx of low-income urban migrant communities, as happened in Barcelona. So-called ‘dinghy’ loans –the Catalan version of US ninja loans—became Spain’s own toxic assets.

Regional financial spaces in Spain were connected to EU and global financial markets. Without this link it is difficult to understand how the housing bubble and the crisis began and unfolded.  The financial crisis soon became a general economic crisis triggering mass unemployment and shortage of credit. But, whilst the banking system was restructured and propped up by centre government and an EU/IMF bailout in 2012 (which came with strict austerity conditionality) the weight of the crisis burden was shifted onto the population.

The distribution of the initial impact of the financial debacle was uneven. Cities were badly affected but in some regions there was a marked urban-rural continuum.  Thus, the metropolitan area of Barcelona was ground zero for evictions with 59.030 cases (trailed only by Madrid with 52.276 cases). In the north-western region of Galicia the mis-selling of preference shares to unwitting savers was widespread. Regions and local authorities account for about 50% of public spending and they are responsible for delivery of most services. But real estate taxation is the architrave of their fiscal system (together with cash transfers). Without recourse to one of their traditional sources of financing, their fiscal woes  worsened following the bust and budget cuts and many had to resort eventually to the strict conditionality of the regional liquidity mechanism set up by central government to face their debt. Many also had to pick up the tab for the spending formerly financed via social works.

An archipelago of citizen interventions scattered throughout Spain demonstrated the depth of popular discontent and made up for the neglect of public authorities in dealing with the social wreckage. Citizen-led groups emerged to advocate for the interests of the masses of people in precarious housing situations as well as for those affected by the collapse of preference shares in financial institutions such as BANKIA. These groups pushed local authorities to achieve solutions. These ‘civic platforms’ also fed into broader social movements such as the indignados, and the formation of the new political party Podemos.

So far, they have already had a political impact in the victory of citizen political platforms in the 2014 municipal elections in Madrid and Barcelona, among other urban spaces. Newcomer parties Ciudadanos (centre-right) and Podemos (left) are widely expected to end Spain’s bipartisan political system in the coming general elections on the 20th of December. But it remains to be seen what they will do to transform the financial system. So far, whilst Podemos proposes an ambitious programme of democratization of the economy (including public banking, non-recourse mortgages and managed personal bankruptcy, financial transparency and taxation), Ciudadanos barely mentions finance in its economic measures.

Dr Paula Portas-Perez is visiting research fellow at the department of politics and international relations at Cardiff University. This post is based on Paula’s article ‘Plain vanilla banking? The financialization of Spanish regional savings banks’, which is forthcoming in ‘Regional Science, Regional Studies’.

Making the most of the devolution revolution

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In his budget statement last week, the Chancellor spoke again of a ‘devolution revolution’. Other areas beyond Greater Manchester will receive new powers and responsibilities previously held in Whitehall. Agreements with Sheffield, Cornwall and Yorkshire are underway, with more to follow. It can be hard to keep abreast of these developments, as each agreement contains a unique pattern of policies to be devolved, resulting in varying degrees of local control. We are supposed to see the agreements as great successes, but with little sense of what it all amounts to.

What is devolution for? New Economics Foundation (NEF) has been working with the Crick Centre at the University of Sheffield to map the arguments made for devolution, in order to address this crucial question.

We recently released the findings of this research which can be found here. A summary is shown in Figure 1 (click on the image to enlarge)

FIG1

Advocates of devolution point to economic growth as the main motivation, above all other concerns. On average, just under half of all arguments for devolution refer to its role in creating economic growth. Improving the effectiveness of public services came second with 23.7% of arguments, and strengthening democracy third at 12.9%.

From the perspective of central government departments, local governments and think-tanks alike the focus is economic growth. Creating growth in parts of the country which have struggled economically is a laudable ambition, and one that merits discussion, but it also matters how growth is discussed and what it is taken to mean.

We found that economic growth arguments are weak on explaining how growth would be achieved and focus primarily on benefits to the national purse. How income-to-cost-of-living ratios, which affect everyone’s day to day economic reality, would be affected by devolution is seldom mentioned. Reducing poverty through economic growth is mentioned only four times in a total of 1,129 arguments. Numbers of jobs created are discussed far more than the quality of jobs.

Devolving economic powers over skills, housing, business rates and enterprise could in theory improve how the local economy works for its residents and local stakeholders. Yet the current focus pays little attention to how devolution would improve the lives of local people.

A s Figure 2 shows (click on the image to enlarge) Creating a more democratic country seems an obvious aim for devolution but in fact is neglected by advocates of devolution, particularly advocates in local government.

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On average local governments refer to strengthening democracy in only 9% of the arguments they make for devolving power. They neglect the expanded role citizens could play in decision-making if decisions are made closer to home and rarely discuss the ways in which devolution could increase the accountability of elected leaders to the public. Simply creating elected mayors is not enough to revive an ailing democracy. This is why local governments should also be considering the mechanisms for citizen participation which could make devolution worthwhile.

One change could make all the difference as the devolution revolution progresses. This is to bring the debate into the open for public discussion, locally and nationally, so that everyday economic concerns feature strongly in discussion of economic growth and establish a model for more accountable, deliberative democracy. The debate has so far been conducted in the backrooms of Westminster rather than in public forums.

Several parties in government have proposed a Constitutional Convention, but are yet to act on the proposal. The convention model is a citizen forum bringing together a representative sample of people to discuss changes underway in the governance of the country. In the meantime, a group of academics and civil society groups have piloted this model in Sheffield and Southampton, showing how it would work. Drawing on examples from countries including Iceland, Canada, the Netherlands and Scotland, they show that the direct participation of local people in decision-making improves not only the democratic quality of decisions, but their effectiveness. It’s a match made in heaven for the devolution revolution.

‘The briefing Democracy: the missing link in the devolution debate’ is available for download from New Economics Foundation website here.

This post was originally published on the University of Sheffield’s Crick Centre Webpage

Sarah Lyall is a researcher and policy analyst at the New Economics Foundation. She tweets @sarahglyall and @nefSocialPolicy.

Managing Capitalism in Latin America: the Decline of the ‘Pink Tide’

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Following over a decade of relatively high growth rates wedded to redistribution, increased social spending, and the incorporation of labour and social movements into the wheels of decision making, consistent electoral success of the political Left in countries as diverse as Chile, Brazil, Ecuador, Bolivia, Argentina, and Venezuela had given the progressive ‘Pink Tide’ a growing sense of permanency. Latin America  has been heralded by many on the Left – most prominently in Manuel Riesco’s concept of the Developmental Welfare State – as a new model for development that breaks substantively with the neoliberal consensus.

But beginning with the economic and political convulsions in Brazil centred on a deepening corruption investigations linked to the ruling Workers’ Party (PT) and a widespread middle-class dissatisfaction with the government of Dilma Rousseff this is being increasingly shaken. The language and practices of austerity have begun to re-emerge in these states, with Brazil, the largest economy in the region, taking the lead in reducing social spending, unemployment protections, and taxation in a strategic re-orientation in favour of powerful business interests that began as early as Rousseff’s first government after 2012.

The unexpected electoral victory of conservative former businessman Mauricio Macri in Argentina has reinforced the growing clamour that proclaims the end of the informal progressive regional coalition. The first non-Peronist leader to gain office through democratic election since 1983, Macri has come to power with a mandate to address the “mistakes” of Kirchnerism through a new commitment to free-market economic policy. Despite assurances he will sustain some of the popular social policies previously implemented, he now represents the leading edge of the re-emergence of austerity practices.

The phrase “re-emergence” is used deliberately in these contexts as such restrictions on social spending, the rolling back of protections for labour, and the use of varied mechanisms of economic policy to promote regressive redistribution upwards to powerful firms and financial capital are all too familiar. Chile under the dictatorship of Augusto Pinochet 1973 and Argentina under the post-1976 military dictatorship and the disastrous economic stewardship of Carlos Menem in the 1990s, saw first-hand the deleterious impact of such a constellation of policy measures. IMF Structural Adjustment Programmes, most notably with Mexico in 1995, also consolidated this global counterrevolution in the region and the dramatic reversal of the “populist” redistribution and government spending strategies of the twentieth century.

The Pink Tide had ostensibly offered a peaceful interlude in these devastations, first of neoliberalism and now of emergent austerity in Latin America, as well as a return to the policies of redistribution and state support for workers. Backed by neostructuralist ideas and programmatised as strategies of neodevelopmentalism that sought to combine state-led development with an openness to international markets, progressive Latin American governments (from Lula Inácio da Silva and Dilma Rousseff in Brazil and Néstor and Cristina Fernández Kirchner in Argentina to Rafael Correa in Ecuador and Evo Morales in Bolivia) offered the possibility of growth with increasing equality, social spending to support the poor, and the genuine inclusion of the voices of workers and social movements in the politics.

Yet this distinction from the policies and practices that preceded and followed it have increasingly been shown to be deeply problematic. Alfredo Saad-Filho writing on Brazil has argued that despite the rhetoric of reform there has been little substantive change either to the political configuration of power (represented in the Constitution inherited from military rule) or in the hegemony of neoliberalism and concomitant international economic integration. On Ecuador, Jeffrey Webber goes further to argue that Rafael Correa, despite positioning himself on the radical edge of the Pink Tide alongside Bolivia and Venezuela, has deliberately demobilised the social movements that brought him to power, restoring economic power and privilege across sectors and actors that are the antithesis of his proclaimed project.

So, if not a progressive interlude contrasting the varying strategies of neoliberal and austerity capitalism, what does the Pink Tide and its neodevelopmentalist model represent? It would be too simplistic to dismiss it as a mere fraud. Evidence economic growth and redistribution in leading economies of the region does not bear this out. Declines in poverty through the famous ‘Bolsa Familia’ cash transfers to the poorest families in Brazil under Lula and the universal child support measures introduced by Cristina Kirchner (which Macri has at the moment vowed to retain) provoked a genuine redistribution of wealth towards the lower end of society. Attempts to reverse neoliberal reforms of education in Chile, the prominence of indigenous social movements in Bolivia, and environmental proposals in Ecuador also pointed to the opening up of potential new space for the redistribution of political power.

Instead, these measures must be viewed along a continuum of strategies aimed at managing capitalism. I have developed this line of argument in other areas of my research to date inasmuch as the varied progressive and regressive strategies that comprised the period of import-substitution industrialisation (ISI) during the twentieth century in Latin America represented distinct efforts to intensify exploitation and – most significantly – suppress and discipline labour to this end. The limitations and contradictions of the Pink Tide, identified elsewhere by a growing number of scholars, combined with the apparent ease at which the return to the practices and processes associated with austerity and the neoliberalism of the 1980s and 1990s, imply this progressive turn must be viewed through the same lens.

Significantly, it is by returning to the workplace, the space that at CURA’s launch event last month Phil Taylor described as the “front line” of austerity where managerial strategies seek to squeeze out maximum effort at minimum cost as the epitome of exploitation, that these contradictions can become most apparent. Alongside experience of the harsh disciplining of restrictive economic and social policies, the region has seen some of the clearest examples whereby relatively progressive developmental strategies have served to incorporate workers into intensified social organisations of production with increasing work rhythms.

The archetypical populist regimes of Getulio Vargas in Brazil and Juan Perón in Argentina serve as an important point of reference, offering an ostensible voice to organised labour whilst supporting a transformation of labour processes that deepened exploitative relations of contemporary capitalism – most obviously with the Peronist “Productivity Conferences” of 1954. More closely linked were the developmentalist strategies adopted by Arturo Frondizi in Argentina after 1958 and Juscelino Kubitschek after 1956, which sought to attract foreign capital through a liberalisation of trade and investment regulation that facilitated what I have referred to elsewhere as a “disciplinary modernisation” of industrial production.

In the same vein, the proclaimed progressive strategies of the Pink Tide have gone hand in hand with appeals to foreign investment across modern sectors, to the continued opening up of once-protected sectors to the rigours of international competitive pressures that reposition domestic firms in the global economy and impose regressive technological and organisational changes. It has even led to a return to ‘extractivism’ (most notably in Ecuador) associated with a bygone era of the nineteenth century widely critiqued by regional and international scholars. It is by analysing the changing relations in production of neodevelopmentalism and the Pink Tide, as well as the changes that have occurred before and after, that will make possible a comprehensive understanding of the management of capitalism and the interconnectedness of these periods of harsh restriction and ostensibly progressive social peace.

Dr Adam Fishwick is a CURA team member as well as Lecturer in International Relations at the Department of Politics and Public Policy, De Montfort University