ILO trade Union training on Economic and Social Policy with a special focus on Poverty Reduction Strategy Papers

Barbados Workers College, 13-17 October 2003

Claude Kwaku AkpokavieILO (ACTRAV)

Overview Mission of trade unions What is poverty? State of global poverty Inequality matters The return of the poor Why the return of the poor What are PRSPs Principles of PRSPs Elements of PRSPs Implementation of PRSPs Why unions should participate in PRSPs/PRSs Trade union critique of PRSPs What to look out for Trade union action against poverty

Mission of trade unions

Defence of workers’ rights/interests Promotion of social

justice/development Defence of the weakest is linked to

the defence of the strongest, most protected

What is poverty?Poverty is … : Multidimensional Poverty is a lack of:

o access to basic needso powero Voiceo Security

Poverty is about:o Income (employment)o Rights (standards)o Social protectiono Participation of the poor in shaping their destiny

(social dialogue)

State of global poverty

Complexity of measuring poverty (income/HDI/relative income)

1.2 billion people live on less than 1US$ a day (i.e.. 24% of developing world’s population)

2.8 billion people live on less than 2US$ a das (i.e.. nearly half the world’s population)

State of global poverty

Distribution of world population living on less than 1US$ a day, 1987 & 1998,in %

    

Region 1987 1998

East Asia and Pacific 35.3 23.2Europe and Central Asia 0.1 2Latin America and the Caribbean 5.4 6.5Middle East and North Africa 0.8 0.5South Asia 40.1 43.5Sub-Saharan Africa 18.4 24.3

State of global povertyIncome poverty by region, 1987-98: share of population living on less than $1 a day, in %Relative income poverty by region, 1987-98: share of population on less than⅓ of average national consumption for 1993

Income poverty Relative income povertyRegion 1987 1998 1987 1998

East Asia and Pacific 26.6 15.3 33 19.6Europe and Central Asia 0.2 5.1 7.5 25.6Latin America and the Carribean 15.3 15.6 50.2 51.4Middle East and North Africa 4.3 1.9 18.9 10.8South Asia 44.9 40 45.2 40.2Sub-Saharan Africa 46.6 46.3 51.1 50.5TOTAL 28.3 24 36.3 32.1

State of global poverty: gender Some 70% of people in extreme poverty

are women Unequal access to education, credit, jobs,

property ownership, … Women have increased participation in

labor markets but higher levels of:o Unemploymento Insecure jobso Lower wageso Undervalued jobs

State of global poverty: rural sector Of the 1.2 billion people living in extreme poverty, 900 million

of them live and work in rural areas They are rainfed farmers; Smallholder farmers; Artisanal

Fishermen; Pastoralists; Wage labourers; landless peasants; Female-headed households; Indigenous people

Problems:o Cultivate dry and marginal lands o Live in remote areaso Illiteracyo Bigger families and higher mortalityo Suffer from hunger and diseaseso Have few opportunities off the lando have less access to land, water, credit and social serviceso No access to land

State of global poverty: labour market 160 million workers unemployed (notably first

time job seekers) 70 million youth unemployed Youth unemployment is twice as high as

average unemployment Estimated 500 million workers, mostly from

developing world, earn less than 1US$ a day 460 million new job seekers will enter the

labour market over the next decade (two-thirds from Asia)

Inequality matters!

Increasing inequalities between countries / within countries

1960 per capita GDP of richest 20 countries = 18 times that of poorest 20 countries. In 1995 the gap increased to 37 times.

Inequality is important because it determines poverty outcomes

The “return of the poor”Policy evolution of IFIs: 1960 – national modernisation mid 1970s – basic needs 1980s - Structural adjustmentCritique: Human face of adjustment World Social Summit 4th World Conference on Women, Beijing UN: Year/Decade for Poverty Eradication G8 initiatives: debt relief (HIPC) 1999: World Bank & IMF adopt POVERTY REDUCTION

STRATEGY PAPERS as framework for aid and debt relief 2000 Millennium Development Goals (half extreme poverty

by 2015)

Why the return of the poor Structural adjustment policies where having

little impact on poverty and inequalities Increased pressure on IFIs to heighten poverty

impact of aid, lending Crisis of legitimacy of the World Bank & IMF Criticism that development decisions were

behind closed doors with little consultation Research showed the need for a

comprehensive approach to poverty reduction End of the Cold War Emergence of an international public opinion

What are PRSPs? PRSPs are Poverty Reduction Strategy Papers 1999: World Bank & IMF decide that PRSPs will be the basis of all

concessional lending and debt relief under the Highly Indebted Poor Countries (HIPC) Initiative for all low income countries

81 “PRSP-eligible countries” o 39 in Sub-Saharan Africao 12 in East Asia and the Pacifico 11 in Europe and Central Asiao 9 in Latin America and the Caribbeano 2 in Middle East and North Africao 8 in South Asia

Caribbean PRSP eligible countries: Guyana; Dominica; Grenada; St Lucia; St Vincent; Haiti

Other countries are encouraged to undertake Poverty Reduction Strategies (PRSs)

To date 50 Interim-PRSPs and 20 Full PRSPs

Principles of PRSPs COUNTRY DRIVEN (country ownership)

based on broad PARTICIPATION of all stakeholders

RESULTS ORIENTATED and focused on outcomes that would benefit the poor

COMPREHENSIVE in scope and recognising the multidimensional nature of poverty

PARTNERSHIP-ORIENTED

LONG-TERM in perspective

Elements of PRSPs Poverty diagnosis (features, causes)

Poverty actions (priority, short/long term)

Indicators (set targets, indicators of progress

Monitoring (coordination, monitoring results)

Implementation of PRSPs participatory process approval of cabinet approval of parliament endorsement by Boards of WB and IMF for

concessional lending and debt relief implantation into domestic policy

(macroeconomic policy, budgetary allocations, social spending, sectors)

donor assistance

Implementation of PRSPs Interim-PRSP (roadmap- 1 year) Full PRSP (3 years) Annual reviews World Bank: Poverty reduction support

credit (PRSC) IMF: Poverty reduction and growth facility

(PRGF) Regional Banks Bilateral donors UN agencies

Why unions should participate in PRSPs/PRSsPRSPs offer trade unions an OPPORTUNITY to: link Redistribution with Growth place an emphasis on access to basic needs and

public services like water, health, education influence national socio-economic policy build broader alliances with like=minded Civil society

organisations bring labour concerns into wider public arena argue against structural adjustment policies institutionalise social dialogue on socio-economic

policy

Why unions should participate in PRSPs/PRSs

Participation in PRSPs poses RISKS for unions:

Danger of legitimising unfavourable outcomes

Diversion of limited resources

PRSPs may offer a minimalist position policy framework (reduction of poverty) instead of an ambitious framework (eradication of poverty / development)

Union critique of PRSPs

Participation / ownership gap:o TUs participating – quality of

participation?o PRSPs: disguised structural adjustment?o Lack of capacity of some trade unionso Networking – new allianceso Social dialogue institutions and PRSPso WB/IMF role: country ownership?

Union critique of PRSPs

Content issues:o Correlation: trade union participation &

labour content of PRSPso Membership interests / broader interestso Sectoral component of PRSPs -

Agricultureo Global causes of poverty & PRSPs

Union critique of PRSPs Some policy issues:

o Employmento Privatisationo Public goods (water, electricity,…)o Macroeconomic framework of PRSPso Rights (labour law reform/social policy)o Minimum wage policy & poverty reductiono Social protection (pensions..)o …etc…

What to look out for: LABOUR MARKET POLICIES: IFI-sponsored reforms often

include reducing or freezing wages, eliminating job security provisions, eliminating limits on working hours, restricting collective bargaining right

PRIVATISATIONS of state-owned enterprises are often included as specific IFI loan conditions (job losses, working conditions, impact on poor, working conditions)

TRADE LIBERALISATION often includes reduction or elimination of import tariffs and other restrictions on imports and capital flows (impact on domestic agriculture, industry, jobs, rapid outflow of capital)

INVESTMENT POLICY: to encourage exports, many countries have created EPZs, offering tax advantages, looser regulations, restricted labour rights

What to look out for: MARKET LIBERALISATION: IFI reforms often include

eliminating price controls, price subsidies, and reducing private sector regulation-may lead to price increases of essential goods, imposition of user fees on public services

PENSION REFORM often include partial or total privatization of old-age pension systems- often results in reduced pensions and wide variation in benefits dependent on choice and chance

FISCAL AND MONETARY POLICY: pressure to increase taxes or reduce public expenditures in order to reduce the government deficit; IMF may push monetary authorities to raise interest rates or otherwise act to sustain the value of the currency, with the stated objective of controlling inflation

What to look out for: MACRECONOMIC POLICY: PRSPs are still largely

within the framework of past conditionalies of IFIs (stabilisation and structural reforms)

privatizations must be subject to consultations, social impact analysis

Government and IFIs must accept to examine alternatives to privatization, including IFI assistance for improved public services

Lessons learnt

Need for Capacity Building (institution; policy; advocacy)

Proactive – be ahead of the curve Budget monitoring Dealing with Global dimensions of PR Risks and opportunities of PRSPs Sustainability of PRSP approach:

investing in the long term

Action

Organise the unorganised Services to poor (informal) workers Initiate socio-economic activities

(cooperatives, mutual health systems …passion…policies…action