Restricted internal documents of the European Central Bank (ECB) reveal that the bank is not simply promoting austerity in countries like Greece, but ruthlessly applying austerity economics in its own offices in a bid to maximise profits from loan repayments to indebted countries.
Based in Frankfurt, Germany — the largest financial centre in continental Europe — the ECB is the central bank for the European Union’s (EU) single currency, the euro.
The bank, whose members are the central banks of 19 European nations, was the target of pan-European protests after pushing forward an unpopular bailout package for Greece tied to stringent austerity measures.
The internal documents, along with sources inside the bank, allege that the ECB is “engaging in widespread exploitation of labour” that could well be “illegal.”
Unacceptable conditions for workers, sources said, are being maintained to erode the ECB’s capacity to challenge the power of the national central banks, which are its shareholders.
ECB sources said that chronic understaffing was not simply a result of mismanagement, but an unwritten “rule” adopted by the Governing Council to hamper the bank’s ability to develop policies that might be too independent from those favoured by national central banks.
The policy also allows the ECB to maximise profits from EU-wide austerity and Quantitative Easing (QE) programmes, being pursued to address ongoing financial instability in the Eurozone.
Profit over people
In partnership with other financial institutions such as the IMF, the ECB has played a key role in developing the EU’s response to the financial crisis.
This summer, the UK-based Jubilee Debt Campaign found that the ECB and its member national central banks are on track to make between $10 and $22 billion in profits from repayments on loans to Greece. Despite the Eurozone governments voluntarily agreeing in 2012 to return the profits to Greece, however, the ECB has failed to do so to date.
When asked why the ECB has failed to return these profits to Greece, bank spokesperson Rolf Benders simply dodged the question:
“The ECB pays profits to national central banks who pass on their own profits to their finance ministries. It is the latter to whom you should address this question.”
The ECB’s latest trillion-euro round of QE — which Oxford economist Simon Wren-Lewis defines as “the temporary creation of money, thereby making it possible for central banks to buy long-term financial assets” — is already enriching wealthy financiers while contributing little to growth.
Even renowned investor George Soros warned that the QE policy would likely widen inequalities while allowing elite asset-owners to get rich.
“My main concern that it will make divergence between rich and poor bigger than it already is,” he told a World Economic Forum panel in January. “It will benefit the owners of assets and actually wages will remain under pressure through competition and unemployment.”
In 2012, the Bank of England similarly conceded that QE increases the wealth of the already wealthy, while worsening the plight of the ‘asset poor’, namely, most working people.
According to internal ECB documents seen by INSURGE intelligence, however, precisely this strategy is being deliberately applied within the ECB itself, where a disproportionate number of staff are employed on temporary contracts to keep wages low and terms flexible, in conditions that would normally be regarded as illegal under the EU’s own legislation.
Suppressing the peasant revolt
An internal survey of ECB staff throughout the bank acknowledged that employees felt proud of working for the bank, but also showed deep levels of dissatisfaction with working conditions.
A copy of a restricted ECB document detailing the survey’s key conclusions showed that as much as 37% of the 2719 staff surveyed reported that their health was being adversely affected by stress at work, 59% reported too heavy a workload, and 65% said that career advancement at the bank depended on “knowing the ‘right people’” rather than performance.
More than half of bank employees complained that being overworked was interfering with the quality of their work, while 42% said they are “reluctant” to reveal problems to managers due to a lack of openness and fairness. Layers of bureaucracy involved in decision-making, 71% of respondents said, meant that actions are often unnecessarily delayed.
The survey criticised the tendency to hire short-term staff, which “hampers ECB’s output” due to loss of continuity in knowledge, waste of resources on training, and chronic “staffing shortages” — the burden of which is largely picked up by lower paid temporary staff working overtime.
The survey also noted respondents complaining that the ECB’s recruitment process is “biased against women.”
ECB spokesperson Rolf Benders insisted that the bank was aware of internal staffing concerns and actively pursuing measures to address them:
“The findings of a survey among ECB staff identified a relatively high engagement of staff with the ECB, revealing the pride they have in working for the ECB, the inspiration it provides them with to do their best and the understanding they have of the ECB’s mission and values. In addition, they feel continuously informed by management on matters relating to the ECB. They value their training, learning opportunities, remuneration and tools to do their jobs. Co-operation and collaboration within divisions and within business areas is also viewed as positive. The following opportunities for improvement have been indicated in the feedback: professional and career development, work pressure and stress, prioritisation, performance management, openness and trust, and cooperation across business areas. Further analysis of this feedback is being undertaken and actions to address the opportunities are being developed, both ECB-wide and by the individual business areas.”
Yet according to an ECB employee speaking on condition of anonymity due to fear of retaliation, there has been no meaningful response at all to concerns about conditions facing workers:
“The pressure in the ECB on temp workers is very high and we are suffering from unacceptable conditions. Most employees at the ECB have temporary work contracts of six months to one year, even though the tasks they are working on are of a permanent nature. These workers perform the same tasks as normal employees.”
In March, the Wall Street Journal reported on a letter from the International and European Public Services Organisation (IPSO), the official trade union representing EBC staff, which noted that a third of ECB employees were “at risk of burnout.”
The letter said that while national central banks employ around 60,000 staff, the ECB has only 1300 permanent staff — an indication of how severe the understaffing situation is inside the ECB.
“Due to the high stress and pressure, many ECB employees suffer from mental illnesses, such as depression and burn-out syndrome,” said the ECB staffer. “It has been found that the suicide risk here is much higher than at other institutions or businesses.”
The understaffing, combined with mismanagement of internal resources, has gone on for so long despite repeated protestations from the ECB union, that it appears to be the result of a deliberate policy by Europe’s national central banks to hamper the ECB from fulfilling its mandate.
“IPSO is convinced that the ECB’s ability to effectively carry out its tasks and responsibilities is impaired through severe and systematic understaffing,” continued the union letter. “Unfortunately, when it comes to decisions regarding the staffing levels at the ECB, national or apparently even NCB-centric interests seem to have prevailed in many instances.”
Cogs must keep to their place in the Machine
The criticisms focusing on staff issues raise fundamental questions about the integrity of the ECB’s wider economic and monetary policies, and their role in furthering the interests of the ECB Governing Council, whose members consist of the heads of national central banks across the EU.
On the latest QE package, for instance, the ECB buckled under German pressure to avoid Germany having to share risk in proportion to the size of its economy for the purchase of government bonds.
The QE programme has contributed little to growth, but has instead “gone into the banking system to shore up their balance sheets and restore their profits,” according to City of London economist Michael Roberts:
“And it has engendered a massive bubble in financial assets; and the prices of government and corporate bonds and most of all, stock prices, have rallied to record highs. The only beneficiaries have been the top 1% of wealth holders everywhere as they own the bulk of financial assets.”
Yet QE is unlikely to restore growth alone. Hence, around the same time the new QE round was launched in Europe, the Paris-based Organisation for Economic Cooperation and Development (OECD) called for “structural reforms” to further deregulate markets and facilitate investment.
In Roberts’ words, the OECD “wants ‘free markets’ in labour to keep wage costs down and free movement of capital internationally to raise profitability. Apparently, the problem is that capitalism is not being allowed to work, not that it does not work.”
The ECB, then, appears to be practicing what it preaches at home: weakening labour to maximise profits. And the workers are expected to stay quiet and suck it up.
An internal memo by the ECB’s communications chief Christine Graeff sent to ECB staff on 24th April, obtained by INSURGE, complained about unsolicited media coverage of “workloads and burnout” problems at the bank in the German press, and warned staff against speaking in public about these issues:
“There is a huge mismatch between the public perception of ECB staff and the entirely valid internal discussion. The simple truth is that by private sector standards the overwhelming majority of staff have secure and well-paid jobs here, even though all involved agree there is room to improve. It’s worth reflecting also a bit on the sacrifices made by the 18m [million] people in the euro area who have no job at all before talking about hardship in public.”
Graeff’s approach is not entirely surprising given that before her appointment to the ECB, she was for over a decade Partner and Managing Director in the Brunswick Group, a London-based global PR and lobbying firm for the financial services industry.
Brunswick’s clients have included major banks and insurance firms such as Barclays, Halifax Bank of Scotland, Standard Life, Alliance and Leicester, as well as energy giants like nuclear energy group EDF, fracking company Cuadrilla, mining firm AngloAmerican, the world’s largest metals company BHB Billiton, among others.
Sources inside the ECB reveal that the shortage of employees at the bank is not a result of mere incompetence, but based on an unofficial “rule” adopted by the Governing Council.
“These people are trying to make sure that the ECB cannot fulfill its tasks, because they fear that as the ECB becomes more powerful, the national central banks get less resources and influence. So they imposed a rule that the ECB cannot hire additional staff,” said one source, echoing concerns raised by IPSO.
The extraordinary situation facing the European Central Bank’s employees is a direct consequence of the bizarre legal limbo the bank inhabits, due its jurisdictional powers.
“Neither national nor European worker protection laws apply to the ECB, because it is not part of any nation. Nor is it a European state,” said an ECB staffer. “So basically, the Governing Council of the ECB has complete freedom to define any rules or laws for its employees that it wishes, with no democratic oversight and no worker representation.”
In other words, the bank’s internal policies are not very different from its approach to working people across Europe.