By John Harris (THE GUARDIAN, 02/07/08):
So this is how you resell the EU to its sceptical inhabitants: a Parisian sky lit up in blue and gold, the Eiffel Tower decorated with stars, and goody bags designed by Philippe Starck. Unfortunately, although yesterday’s ceremonial launch of France’s EU presidency came with a patina of upmarket optimism, the tussle over the Lisbon treaty brought to mind a grim archetype: the proverbial punch-up outside the party, with potentially grave consequences for the people inside.
There again, the French government has pledged to use the next six months to focus on a few areas besides Europe’s constitutional arrangements. The top line includes climate change, fuel and food prices, defence and immigration, but there has also been word of a drive to curb executive bonuses paid despite corporate failure – a matter, it seems, of extending Nicolas Sarkozy’s quest to “moralise capitalism”. At home he has already legislated to align severance payments with performance, and scale down the “golden parachutes” that enrage the public; and on the western side of the EU, opinion is aligning in a sympathetic direction.
Horst Köhler, the Christian Democrat president of Germany, has decried the “bizarrely high” pay of some executives, while the German Social Democrats have proposed a move to stop “excessive” pay being deducted from taxable profits; Jean-Claude Juncker, Luxembourg’s prime minister and the president of the eurozone’s group of finance ministers, has been heard to describe excessive executive rewards as a “social scourge”; and the Dutch parliament is considering upping the tax on golden parachutes and executive pensions.
There is a wider context for all this: the way the credit crunch has rewritten the terms of European debate. Only a few years ago, Tony Blair was urging the EU to embrace a more Darwinian version of capitalism and decrying “the malaise of France and the angst of Germany”. Sarkozy and Angela Merkel, the German chancellor, were cracked up as pioneers of Blairite-cum-Thatcherite economic medicine. Now Blair’s belligerence is but a memory (and his mooted gig as the first EU president surely a non-starter); Sarko’s attachment to Anglo-Saxon economics seems much more equivocal; while Merkel warns German firms not to dismiss the noise about executive pay as a simple “jealousy debate”, and celebrates Germany’s “social market” model. She has every right to: Germany tops the world rankings for export earnings, and is approaching full employment.
Stage right, unfortunately, lurks the usual villain of the piece, parroting its old warnings about capping aspiration. Last month the Treasury minister Kitty Ussher assured the British Bankers’ Association conference that “executive pay is a matter for boards and shareholders, not for governments and regulators”. The message was clear: even if Paris, Berlin and Brussels tighten up, it won’t happen here.
How depressing is that? By way of pointing up the disconnect between high-up pay and performance, City bonuses are down only 1% year on year (£13.2bn for the first five months of this year against £13.3bn for 2007). Against that backdrop, space opens up for a conversation about one of the most highly charged issues of our time – and the government wants no part of it. When it looks to Europe, the mask slips, and everything becomes clear: New Labour remains not just scornful of continental social democracy, but is at pains to distance itself even from some of Europe’s right-of-centre leaders.
There is a long and varied story here. Its longest-running strand is the British opt-out from the European working time directive. Of late, it has taken in the government’s refusal to be bound by the Lisbon treaty’s charter of fundamental rights (on this score, New Labour stood in a lonely corner with Poland’s ultra-conservative Kaczynski twins). There is also the issue of temporary and agency workers, and the saga of new rules aimed at the cynical undercutting that divides not just workplaces, but the towns and cities where they are located. The government’s recent limited moves – to give agency employees some of the same rights as so-called “core” workers after 12 weeks, as against EU proposals to make things level after six – came after the repeated blocking of action at a European level by British officials and politicians. Here was a woefully familiar script: smoke and mirrors in Westminster, and reheated Thatcherism in Brussels.
Of course, despite much of Europe’s apparent swing back towards its collectivist inheritance, the EU’s progressive aspects sit uneasily with all kinds of schemes taken from the neoliberal handbook. When it comes to the executive pay debate, however, the argument is clear enough. What is taking shape in Europe isn’t some crazed drive to eat the rich, but a modest move on the more iniquitous privileges enjoyed by some of the people responsible for our current economic problems. As Britain once again pulls away, a refrain thrown at the Brown government with increasing regularity springs to mind: if not now, then when?