International Centre for Trade Union Rights

Demanding a seat at the tableAuthor(s): JOHN EVANSSource: International Union Rights, Vol. 16, No. 1, Labour Rights and the Global Economy:IUR examines the labour rights impacts of the global financial crisis (2009), pp. 11-12Published by: International Centre for Trade Union RightsStable URL: http://www.jstor.org/stable/41936596 .

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FOCUS □ LABOUR RIGHTS AND THE GLOBAL ECONOMY

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economies that make up the OECD. Yet even these forecasts are based on relatively optimistic assumptions that the financial markets begin to stabilise in the months ahead and that there are not other major 'shoes to drop' in terms of nega- tive financial shocks. History has shown that crises on this scale lead to social and political instability with unpredictable and often tragic results.

The working families that TUAC's affiliates rep- resent have an enormous stake in the response of governments and the international institutions to this crisis. How protracted and deep the global recession proves to be depends on how timely and well-focused government action is. Already, for more than two decades, social cohesion has been under stress as a result of growing inequal- ity in most countries. Today, those who are los- ing homes, jobs and pensions as a result of the financial crisis, for which they bear no responsi- bility, as taxpayers are being called on to bail-out those who are responsible. This produces a strong political cocktail that governments would do well to heed. Whilst short term action to save the banking system, stop major companies going under, and stimulate demand to help the recov- ery of the real economy are all necessary, there can be no return to 'business as usual' once the recovery is underway.

This most serious economic crisis since the Great Depression of the 1930s must mark an end to an ideology of unfettered financial markets, where self-regulation has been exposed as a fraud and greed has overridden rational judge- ment to the detriment of the real economy. A national and global regulatory architecture needs to be built so that financial markets return to their primary function: to ensure stable and cost-effec- tive financing of productive investment in the real economy. Moreover governments must acknowl- edge the urgent need to begin work on a more inclusive, just and democratic system for the gov- ernance of global markets.

Trade Union leaders from the G20 countries took these messages to the leadership of the International Financial Institutions and Heads of Government in meetings in Washington on 15 November on the eve of the G20 Crisis Summit. They presented a joint declaration prepared the TUAC and the International Trade Union Confederation.

This 'Washington Declaration' called on gov- ernments to: ■ Initiate a major recovery plan to stabilise glob-

al capital markets, move economies rapidly out of recession, stave off the risks of a global

depression and get back on the track of creat- ing decent work. There should be further coordinated interest rate cuts as necessary. Governments should bring forward infrastruc- ture investment programmes that can stimu- late demand growth in the short term and raise productivity growth in the medium term. Now is the time to move forward with a 'Green New Deal' to create jobs through alter- native energy development and energy saving and conservation. Tax and expenditure mea- sures should be introduced to support the purchasing power of middle and low income earners. Development assistance budgets need to be maintained to the Least Developed Countries (LDCs) to help meet the Millennium Development Goals (MDGs) with the adop- tion of binding commitments and a timetable to meet the UN target of 0.7 percent of GDP.

■ Ensure that a financial crisis on such a scale never happens again. For two decades most governments, together with the International Financial Institutions (IFIs) have promoted the lightly regulated 'new financial architecture' that has characterised the global financial mar- kets responsible for this crisis. Governments have now been forced to intervene to save the banking system; the quid pro quo must be properly regulated financial institutions. The agenda must cover: the public accountability of central banks; counter-cyclical asset requirements and public supervision for banks; the regulation of hedge funds and pri- vate equity; the reform and control of execu- tive compensation and corporate profit distrib- utions; the reform of the credit rating industry; the ending of offshore tax havens; the taxa- tion of international financial transactions; proper consumer protection against predatory lending and aggressive banking sales policy; and active housing and community-based financial service public policies. The new sys- tem needs to reflect the requirements of all regulators, bank regulators, tax and competi- tion authorities, and governance and con- sumer bodies in each country. There must be no more piecemeal approaches to reform.

■ Establish a new structure of economic gover- nance for the global economy. This must go beyond financial markets or currency systems to tackle all the imbalances of growth and capital flows that contributed to the crisis. Just as the post-World War II economic settlements included the strengthening of the International Labour Organisation (ILO), in parallel with the creation of the United Nations, the new post- crisis settlement must address international economic governance. Governments must start work on the necessary structures. But

Forecasts suggest that for the first time since the 1930s GDP will fall in the OECD industrialised economies

JOHN EVANS is General Secretary of the Trade Union Advisory Committee to the Organisation for Economic Cooperation and Development (TUAC-OECD) in Paris, France

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FOCUS □ LABOUR RIGHTS AND THE GLOBAL ECONOMY

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this debate should not be held between bankers and finance ministry officials, behind closed doors. Trade unions must have a seat at the table.

■ Combat the explosion of inequality in income distribution that lies behind this crisis. The new system of economic governance must tackle the crisis of distributive justice that has blighted the global economy. It must ensure more balanced growth in the global economy between regions, as well as within countries, between capital and labour, between high and low income earners, between rich and poor and between men and women.

The declaration adopted by governments at the end of their meeting was clear on the need for coordinated stimuli, but short on details. The sub- sequent wrangling and time delays in putting in place measures are worrying. Fiscal deficits are being cited as constraints, but the choice is stark, governments must step in as investors of last resort as the private sector has seized up. Better to incur deficits to support the recovery of the real economy than to face a collapse of public finances due to the accelerating contraction of the real economy. The G20 conclusions was more detailed on the areas where financial mar- ket supervision and regulation must be reformed: counter-cyclical capital requirements for banks; reformed executive pay; supervisions of credit rating agencies; codes for hedge funds and pri- vate equity; reformed accounting standards; tighter regulation and transparency of offshore financial centres.

But on more open and legitimate governance and on social justice the G20 was silent. Unions will be returning to the debate with leaders in the weeks and months ahead: in the UK on the eve of the 2 April G20 summit; and at the Eight Labour Ministers meeting in Italy in May; and at the OECD Ministerial meeting in July; and at the subsequent G8 summit.

Working people require a seat at the table in these meetings and institutions. They have little confidence that bankers and governments meet- ing behind closed doors will get it right this time. There must be full transparency, disclosure and consultation. The Global Union organisations are ready to play their role in this process.

continued from page 10...

■ Will future IMF loans be subject to the usual terms and conditions?

The IMF recently announced a new pro- gramme of loans to assist certain countries in difficulty, which would be exempt from the usual conditions. It remains to be seen how the IMF intends to implement it. In the mean- time, standard conditions will apply to coun- tries who have recently received emergency loans (Hungary, Iceland, Ukraine, etc..). One of our demands is the lifting of their condi- tionality: partly to make the loans more rapid- ly accessible but also because history has shown that the conditions imposed by the IMF have often had negative impacts. For instance, during the Asian crisis, the IMF granted loans to countries like Thailand and Indonesia on the condition that they cut public spending, including social spending, which led to an increase in poverty. The policy imposed on Indonesia included letting banks go bankrupt. All this led to prolonging the crises in these countries. Exactly the opposite is now hap- pening in developed nations: governments that are, in principle, in favour of liberalisation and privatisation are intervening and national- ising part of the banks' assets. We therefore need an in-depth revision of the conditions laid down by the developed countries that control the international financial institutions but contradict the policies they preach when faced with the same problems at home.

■ Could the development of green jobs be jeop- ardised by this crisis?

Going back to economies so dependent upon fossils fuels is no longer an option. Eventually, the economy will have to be restructured. And the best time to do it is when this overhaul can be combined with a job creation policy. Some of the world's industrialised nations did this with a degree of success in the thirties. In the United States, for example, the famous 'New Deal' policy built the infrastructures that laid the foundations for the modern post-war econ- omy. The Americans implemented it because there was manpower and basic products avail- able that were not being used because of the crisis in the financial sector. It's the same now. Let's join together to adopt policies that con- tribute to accelerating the investments needed to build the modern economy of the 21st Century, to develop the green economy we need so much. They would help us, at the same time, to counter the immediate fallout of the crisis through the direct creation of jobs.

INTERNATIONAL union rights Page 12 Volume 16 Issue 1 2009

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