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23 June, 1999The main theme of the Central Committee meeting of the International Metalworkers' Federation was "The Euro -- Impact on the Global Economy, Industry and Metalworkers."
HELSINKI: Before the panel discussion on this subject, which took place on June 24 in Helsinki, Per-Erik Lundh, President of the Finnish Metalworkers' Union, referred to the challenges the Euro presented as well as the opportunities. In Finland, both the trade union movement and its social partners see the Euro as a stabilising factor, which can also help balance the national economy. Its real effects, however, will not be known for some time.
Management based its business strategies too much on short-term market prices, adversely affecting long-term company development, productivity and workforce competence. Social partners in Finland had negotiated so-called economic buffer funds with the government to help prepare for eventual economic fluctuations.
John Schmid, of the International Herald Tribune, moderated the debate. He spoke of the enormous ramifications the Euro would have and quoted a journalist who said: "If the U.S. of Europe ever comes to pass, it will be because of the Euro." There was little consensus on what the Euro really meant, so one could never write and talk enough about it.
Lugwig Schubert, Deputy Director General for Economy and Finance, European Commission, stated that the Euro would not be a panacea solving all problems. The main questions were: would it be a stable currency, and what would this stability cost in terms of growth and employment.
He felt that the Euro would be stable due to the careful preparation of the clauses in the Maastricht Treaty. Its effects would be the elimination of currency exchange fluctuations, it would provide stability for the political construction of the European Union, but there could be conflict over wage policies.
Jeff Faux, President of the Economic Policy Institute in Washington, D.C., remarked that "the introduction of the Euro is the most important event for global financial markets since the United States abandoned the gold backing for the dollar in 1971."
A key question was whether the Euro would encourage faster European growth or would it reinforce the austere macroeconomic policies that have resulted in high levels of unemployment. Would the European Central Bank absorb the lesson of the recent American experience - that non-inflationary full employment can be achieved through sustained low interest rates?
It was monetary policy and macroeconomic policy rather than labour market flexibility which created jobs. He stated a strong Euro would undercut the U.S. Treasury's influence in global finance, but the typical U.S. worker would gain from an expanded role for the Euro.
In the long run, manufacturing workers everywhere would benefit due to a sharing of responsibility for the world's reserve currency. Stakes for workers in manufacturing industries were high if global growth was slow, so the Euro could be an instrument for faster growth, higher wages and rising living standards.
Carlos Eduardo Carvalho, Professor of Economics, Sao Paulo, Brazil, was the most pessimistic speaker. He said that it is symbolic that the Euro has been introduced in the same year that a war occurred in Europe. It causes fear and he was afraid it would create problems for the Latin American countries.
An indirect consequence of the Euro is that the example of monetary unification of countries with the economic and political density of Europe affects the type and range of policies considered in other regions of the world. The emergence of a proposal for a common currency in Mercosur is an example of that effect.
However, Carvalho finished by hoping the Euro would be a bridge between Europe and Latin America leading to increased trade and investment in the region.
Management based its business strategies too much on short-term market prices, adversely affecting long-term company development, productivity and workforce competence. Social partners in Finland had negotiated so-called economic buffer funds with the government to help prepare for eventual economic fluctuations.
John Schmid, of the International Herald Tribune, moderated the debate. He spoke of the enormous ramifications the Euro would have and quoted a journalist who said: "If the U.S. of Europe ever comes to pass, it will be because of the Euro." There was little consensus on what the Euro really meant, so one could never write and talk enough about it.
Lugwig Schubert, Deputy Director General for Economy and Finance, European Commission, stated that the Euro would not be a panacea solving all problems. The main questions were: would it be a stable currency, and what would this stability cost in terms of growth and employment.
He felt that the Euro would be stable due to the careful preparation of the clauses in the Maastricht Treaty. Its effects would be the elimination of currency exchange fluctuations, it would provide stability for the political construction of the European Union, but there could be conflict over wage policies.
Jeff Faux, President of the Economic Policy Institute in Washington, D.C., remarked that "the introduction of the Euro is the most important event for global financial markets since the United States abandoned the gold backing for the dollar in 1971."
A key question was whether the Euro would encourage faster European growth or would it reinforce the austere macroeconomic policies that have resulted in high levels of unemployment. Would the European Central Bank absorb the lesson of the recent American experience - that non-inflationary full employment can be achieved through sustained low interest rates?
It was monetary policy and macroeconomic policy rather than labour market flexibility which created jobs. He stated a strong Euro would undercut the U.S. Treasury's influence in global finance, but the typical U.S. worker would gain from an expanded role for the Euro.
In the long run, manufacturing workers everywhere would benefit due to a sharing of responsibility for the world's reserve currency. Stakes for workers in manufacturing industries were high if global growth was slow, so the Euro could be an instrument for faster growth, higher wages and rising living standards.
Carlos Eduardo Carvalho, Professor of Economics, Sao Paulo, Brazil, was the most pessimistic speaker. He said that it is symbolic that the Euro has been introduced in the same year that a war occurred in Europe. It causes fear and he was afraid it would create problems for the Latin American countries.
An indirect consequence of the Euro is that the example of monetary unification of countries with the economic and political density of Europe affects the type and range of policies considered in other regions of the world. The emergence of a proposal for a common currency in Mercosur is an example of that effect.
However, Carvalho finished by hoping the Euro would be a bridge between Europe and Latin America leading to increased trade and investment in the region.