EU finance ministers discuss social welfare costs

European Union finance ministers meet today to talk about reforming social welfare systems with Europe’s workers facing a growing burden from the pensions and health care costs of older people.

They will also prepare for the April 12-13 meeting of the International Monetary Fund in Washington where European nations will accept a lower voting quota, giving more say to emerging economies China, India and Brazil.

The meeting in Brdo, Slovenia is likely to be overshadowed by a large protest in the nearby capital Ljubljana where some 35,000 trade unionists will gather to press their demands for pay rises.

EU officials, alarmed by record-high inflation in euro nations, have urged employers – including governments – to steer clear of large wage rises that could worsen the situation by triggering higher prices across the economy.

Workers say this is unfair and they deserve to reap the rewards of a recent economic growth spurt that saw large profits for some companies and allowed corporate bosses to take home big bonuses.

The European economy is likely to grow more slowly this year as businesses are faced with higher costs for energy, tighter credit conditions and a possible recession in Europe’s main trading partner, the United States.

But officials will urge the EU’s 27 finance ministers not to slacken off reforms to public spending as tax revenues fall.

The European Commission warns that Europe’s population will shrink and age significantly in coming decades – costing governments more in social spending while receiving less from workers’ contributions.

“This will put a disproportionate burden on the working population as there will be only two people of working age per pensioner as opposed to a ratio of four to one at present,” it said.

It wants countries to tackle this by reforming their pensions systems and opening up labour markets to create more work and growth.

The EU nations will also agree on reforms to the IMF, a global financial watchdog with a mandate to monitor the health of the world economy and provide technical and financial help to its members.

Under the reforms, the voting share of developing countries would increase from 39.4% to 42.1%. Europe, the US and Japan will lose some of their voting weight.

EU ministers will also discuss how the IMF can fund itself in future as it pulls in less money from billion-dollar loans it lent nations that faced financial crisis.