An Post, Irish Ferries, and the EU

An Post has decimated its SDS service

BRENDAN YOUNG, a member of Democracy And Public Services in Europe (Email [email protected]) explains the threat posed to public services by the EU-wide 'liberalisation' of markets

Anybody with doubts or illusions as to the drive from the EU to massively 'liberalise' public services would do well to examine both the European Commission's Directive on Services in the Internal Market and the EU Constitution in light of the disputes at An Post and Irish Ferries. The threat to public services in Ireland comes as much from Brussels as from Fianna Fáil and the Progressive Democrats.

The SDS operation is being closed as part of An Post's preparation for full liberalisation of the Irish postal market in 2009. Liberalisation will allow foreign companies to compete with An Post for postal contracts, fragmenting the service and raising a serious threat to already vulnerable rural deliveries. There will also be serious implications for the pay and conditions of workers.

Workers in Irish Ferries are fighting the 'outsourcing' of labour: the company wants to use agency workers, probably East European, who will work for much lower wages. This kind of struggle is likely to be repeated in other industries — especially construction — with workers being forced to compete against one another as employers try to drive down wages.

What does all this have to do with the European Union? The European Commission's Directive on Services in the Internal Market, currently under consideration by EU governments prior to ratification, poses one of the most serious threats to public services in Ireland, and across EU member states, in living memory.

Central to the Directive is the 'country of origin' principle. This would allow a privately-owned provider registered in a country where regulations allow low standards to operate according to those regulations in every member state, regardless of the laws instituted by the national governments.

Two old people's homes operating side by side in Ireland, for example, might operate under completely different health and safety regulations because the company managing one of them is registered in a country with even lower regulatory standards than the 26 Counties. A Dublin-based company could undercut care homes in Belfast, since Southern regulations are much more lax than those in force in the Six Counties.

SIPTU General President Jack O'Connor, announcing SIPTU's support for the campaign against the Directive, said it "will allow employers with headquarters in member states with the weakest standards of labour and other regulatory protection to operate in other member states without having to comply with the more advanced standards of such member states. This opens up a major threat of social dumping."

In order to avoid a flight of capital, member states with more advanced protections will be obliged to take part in a race to the bottom: they'll have to loosen their own regulations in order to remain attractive to businesses that might otherwise set up in other countries to take advantage of their lax regulations.

The European Federation of Building and Woodworkers says the Services Directive will nullify the Posted Workers Directive, which requires a foreign employer who sends workers to another country to observe the pay and conditions of the country of employment.

The 'outsourcing' at Irish Ferries shows just how weak this protection is; and the Services Directive would wipe it out. It will lead to an overall lowering of standards across the EU, as public services are required to compete with increasingly deregulated private providers.

This is what the Commission — including Charlie McCreevy, under whose remit the Services Directive comes — understands as 'liberalisation'.

Liberalisation is also enshrined in the EU Constitution, where the promotion of "uniform measures of liberalisation in services" is central to its Common Commercial Policy. The same aim is in the Nice Treaty, but new in the Constitution is the end of the unrestricted power of veto member states have on trade agreements in health, education, and cultural and audio-visual services.

These trade agreements — the stuff of 'liberalisation' — are made on our behalf behind closed doors by the European Commission in the General Agreement on Trade in Services — the GATS. The GATS agreements entail progressive elimination of regulations, so that a foreign company can compete to provide a service with no preferences allowed for existing domestic providers.

Under the new Common Commercial Policy, unanimous agreement in the Council of Ministers would only be necessary when a trade agreement on health or education could be shown to 'risk seriously disturbing the national organisation of such services and prejudicing the responsibility of Member States to deliver them'.

What this means is not defined, so it would be the European Commission or European Court of Justice that decides what it means — after the Constitution is in place. So for anything short of the breakup of nationwide services, qualified majority voting would be the way decisions are made on international trade agreements — for all public services. Opponents of liberalisation could be outvoted, since their veto is gone.

Governments elected in Ireland on a platform of protecting and expanding public services would find themselves overruled and their room to manoeuvre greatly restricted if the proposed Constitution is passed.

The Constitution would make it much easier for the Commission to make GATS deals in all public services — something they already want to do. It provides the framework to further liberalise trade in public services across the EU. The Services Directive shows the direction in which the Commission wants to go, and the current disputes show the implications for workers and for services.

'Socialists' of various hues — in government, in opposition or in the trade union movement — might wish to reflect upon this.