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posted on 15 October 2016

Is Austerity In The Eurozone Against The Spirit Of European Union Law?

from Dirk Ehnts, Econoblog101

The consolidated version of the treaty on the functioning of the European Union reads:

TITLE IX

EMPLOYMENT

Article 145 (ex Article 125 TEC)

Member States and the Union shall, in accordance with this Title, work towards developing a coordinated strategy for employment and particularly for promoting a skilled, trained and adaptable workforce and labour markets responsive to economic change with a view to achieving the objectives defined in Article 3 of the Treaty on European Union.

Article 146 (ex Article 126 TEC)

1. Member States, through their employment policies, shall contribute to the achievement of the objectives referred to in Article 145 in a way consistent with the broad guidelines of the economic policies of the Member States and of the Union adopted pursuant to Article 121(2).

2. Member States, having regard to national practices related to the responsibilities of management and labour, shall regard promoting employment as a matter of common concern and shall coordinate their action in this respect within the Council, in accordance with the provisions of Article 148.

Article 147 (ex Article 127 TEC)

1. The Union shall contribute to a high level of employment by encouraging cooperation between Member States and by supporting and, if necessary, complementing their action. In doing so, the competences of the Member States shall be respected.

2. The objective of a high level of employment shall be taken into consideration in the formulation and implementation of Union policies and activities.

I am not a specialist in European law, but it seems to me that Article 147 (1) says that:

“[T]he Union shall contribute to a high level of employment by encouraging cooperation between Member States and by supporting and, if necessary, complementing their action. In doing so, the competences of the Member States shall be respected."

How you could impose austerity policies in a policy framework like this is unclear to me. The failure of Europe is a political failure and maybe also a failure of legal institutions. It is an economic failure only in so much as the advise of many, many economists was ignored and a euro was set up that was almost designed to fail (the so-called Krönungstheorie says that this was deliberate) and when it did the economists were proved right but politicians were scared and panicked.

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