S&Ds join forces with Economic Nobel laureate Pissarides in call for socially just reforms

European heads of states and governments prepare for a decisive summit today in Brussels that is likely to agree to fundamental changes to the financial integration of the eurozone; but the social disaster and worsening living standards that austerity policies have created in a number of European countries are not on the agenda.

Economic Nobel laureate Prof. Christopher Pissarides joined the S&D Group in the European Parliament in their call for socially balanced reforms and increased investments to foster growth and employment for an end to the crisis.

Hannes Swoboda, President of the S&D Group, welcomed the support of Prof. Pissarides:

„The S&D Group has warned against the ill-conceived austerity policies, imposed by the Troika of IMF, ECB and EC, since day one. For long-term healthy economies, we need structural reforms but all reforms must be implemented with respect to maintaining decent living conditions.

„We just recently witnessed a u-turn by the IMF, admitting to wrong estimates of their austerity programmes. It is important that academics and politics join forces in denouncing the disastrous consequences of blind austerity. I therefore welcome Prof. Pissarides‘ support and public demands for socially balanced policies.“

Prof. Pissarides addressed the S&D Group calling for a delay of austerity and improved conditions for investment spending:

„The problems in Greece today are not just economic, they are social and political. The fiscal austerity is damaging the fabric of society. It is causing poverty, unemployment, social deprivation and a government unable to provide any social support.

„In Greece and Cyprus, the Troika demanded immediate fiscal austerity and structural reforms. Fiscal austerity has an immediate effect; the impact of structural reforms needs years to have an effect. Given the problems with this differential timing, I suggest two recommendations: to delay fiscal austerity in order to give more time for the structural reforms to have an impact and to exclude investment spending from the fiscal austerity measures.

„Investment spending that should be excluded from austerity and financed through European structural funds includes spending on education, infrastructure and measures to help the unemployed. Education is the most important because of high youth unemployment and the threat of a lost generation. If you postpone education until the recovery, the current generation of young people will be lost forever.“