Responding to Global economic crisis Decent Work, Global Jobs Pact & challenges before TUs

2 Global economic crisis Discussion points - What caused it ? - How are govts addressing the issues? - What can we learn from it? What needs to be done?

3 Causes Sub prime housing loans? OR Crisis of over production/over capacity, erosion of profitability Inequalities (within & between countries) that limit purchasing powers and markets – unequal distribution of income between capital & labour in US led households’ to consume mainly through debt (Stiglitz) ‘markets know the best’ philosophy – reduction of public control on the economy - insufficient regulation of financial markets, Banks & FIs - speculation & greed de-regulation of economy & labour markets

4 Strategies for growth & profits Since 1970s: Shift from post war welfare state to neo-liberal market economy policies Privatisation & structural adjustment (1980s) - redistribute incomes towards the rich (theory: rich invest & that promotes economic growth) 1990s: Globalization, opening up & integration of China, India, Brazil, Russia, & many other emerging market economies – BUT this increases the problem of over-capacity, which depresses prices & profits Deregulation of capital markets & Rise of Financialization - Financial sector creates profits but it doesn’t create new value (Value of credit derivatives market is estimated at more than 8 times the global GDP)

5 The world today Richest 20% pocket 86% of the world’s GDP; and the poorest 20% mere 1%. 200 richest people in the world had combined wealth of over $1 trillion, equal to the annual income of 41% of the world's people (2.5 billion) Over 1/5 th of the world’s population (1.3 billion) — live on less than $1 a day & lack access to clean water; Over 5 million children die every year under age 5 due to lack of access to health care and lack of income security 80% of the world population w/o adequate social security, 50% has none

6 Impact of Crisis 212 mn jobless worldwide in 2009 (ILO) – crisis added 34 mn additional unemployed since 2007 Over 200 million additional workers at risk of falling into poverty Abt 40% drop in FDI in 2009, with more than a 50% drop in some developing countries (UNCTAD). Capital Outflow from developing countries – stock markets crash – depreciation of currencies – credit squeeze – economic slow down – job losses – remittances, foreign aid, govt revenue – all go down

7 Impact on Workers Besides Job losses (migrants, youth, women) – Wage cuts, wage freeze, higher work loads, forced unpaid leave, default on social security contributions, rise in casual unprotected precarious work, violations of FoA – rise in decent work deficits Impact on family welfare: nutrition levels, children education (girl child), burden on woman, alcoholism, housing Pensions - globally pension funds lost over 5 trillion $ between 2007 & 2008) – in some countries where pensions were privatised (ex in Latin America), they lost more – at the same time social security expenditures increased due to increased demand for social assistance.

8 Impact on Wages (ILO data base) Decline in real wage growth from 4.7% in 2007 to 1.5% in 2008; In G-20 stagnation (0%) in 2008 – situation worsened in 2009: Real wages fell in more than half of the countries; hard hit - Germany, Korea, Japan, Taiwan, Mexico, South Africa wage disparity & gender pay gaps increased in a number of countries Given high unemployment figures, there will be greater pressure on wages in the future & increasing social conflicts on wages expected

9 Response to Crisis Measures to stabilize financial markets, Banks & preserve lending to enterprises & hence employment and incomes – included Central banks cut interest rates, expanded money supplies & eased requirements on collateral for refinancing operations by central banks Borrowing & spending by Govts (fiscal stimulus packages) Bail-out of Banks & firms thru loans, asset purchases, guarantees, and direct spending Establishment or enhancement of bank deposit guarantees

10 But many countries with large levels of foreign debt, high inflationary pressures and facing massive capital flight could not take counter cyclical measures (Hungary, Ukraine, Latvia & other CIS countries) – to avoid depreciation of currencies & increasing debt servicing costs – these countries had to take loans from IMF and implement austerity measures – to build confidence in the financial markets BUT these had negative impacts on employment, wages and investment.

11 “The current recovery plans are necessary, but insufficient. It is not enough to inject money into the economy, we need to change its principles to make sure it generates social justice, development for all, equity, stability and long-term prosperity,” – says international labour movement.

12 Union view Regulate Global Finance - such as hedge funds & private equity funds; Create a financial transaction tax – to dampen speculation & raise funds for development – Ex: 0.005% tax on just currency exchanges & derivatives trading would raise $150 billion a year globally Regulate executive & shareholder bonus & remuneration – to discourage short term view of financial investments; Close down tax havens; What should be the objectives of International financial markets ? expand the casino in more orderly fashion OR to channel resources into real economy? Regulate financial markets so that these serve the objectives of real economy

13 Union view End deregulation of employment market & ensure respect for fundamental rights of workers (FoA & CB rights) Ensure basic social security for all (effective social protection measures would have minimized ‘impact of economic crisis’ and assisted in improving effectiveness of stimulus/recovery packages) Role of State – in providing social security to all – State is the ultimate financial guarantor - social security should be seen as human right and not as a savings account of individual contributors What else???

14 ILO Approach Tripartite dialogue with social partners - should play a key role in addressing the economic crisis & developing policy responses at national level. Pre-condition for effective social dialogue: ??? Global Jobs Pact – a decent work response to crisis.

15 What is Decent Work?

16 Decent Work Work that is productive, gives fair income, security in the workplace & social protection for the family, equal opportunities & treatment, better prospects for - personal devt & social integration, freedom to organize & participate in decision making concept of decent work encompasses both concept of decent work encompasses both individual and collective dimensions individual and collective dimensions

17 DW - a nationally defined goal, based on national context, needs Social Floor of basic rights at work No Ceiling perpetual progress Relative multiple paths

18 DW to be achieved thru – 4 pillars Creation of productive employment & sustainable enterprises;Creation of productive employment & sustainable enterprises; Implementing Standards (especially FP& RW - basic rights at work to all workers);Implementing Standards (especially FP& RW - basic rights at work to all workers); Development & expansion of inclusive social protection systems, including for those working in the informal economy; andDevelopment & expansion of inclusive social protection systems, including for those working in the informal economy; and Social dialogue – as an instrument for participation & good governance, building consensus, conflict resolution & decision making.Social dialogue – as an instrument for participation & good governance, building consensus, conflict resolution & decision making. (Mainstreaming gender concerns in each of the above)

19 Global Jobs Pact – a decent work Response to crisis ILO Summit on the Global Jobs Crisis in June 2009 adopted Global Jobs Pact - a framework for policies aimed at: Global economic recovery with job creation and the provision of social protection to working people and their families at its core; Tripartite dialogue with social partners a key for addressing the crisis & developing national policy response. It is not “one-size-fits-all” solution, but rather an integrated policy portfolio of options for national decision-making & for policy coherence among international organizations

20 Global Jobs Pact – a decent work Response to crisis Areas for action at national level include: –Employment incentive public investment; –Special employment programmes, training, skills programmes to enhance employability and improve employment prospects. –Support for enterprises (SMEs) –Broadening social protection and minimum wages –Safeguard viable jobs through support for shorter hours, work sharing combined with skills development –Invest in tomorrow’s green economy –Invest in food security and rural development –Protect and promote workers’ rights & labour standards

21 ILO’s Global Jobs Pact “maintain employment” and to “avoid the damaging consequences of deflationary wage spirals and worsening working conditions”. One of the reasons for crisis: Stagnating wages relative to productivity - together with growing wage inequality - have limited the ability of most households to increase consumption other than through debt. Therefore – Govts must take measures to promote real wage increases thru - social dialogue, collective bargaining & statutory or negotiated minimum wages. Minimum wages “should be regularly reviewed and adapted”.

22 Social Security essential S ocial protection systems can prevent increased poverty while also help to stabilize the economy - GJP recommends to build a basic social protection floor for all, including: Universal access to essential health services Income/subsistence security for all children (child benefits) Income support combined with employment guarantees through public works programmes for the working poor Income security through basic tax-financed pensions for older people, persons with disabilities & those without main breadwinner in a family.

23 Tasks for Arab Nations Over dependence on Oil, Exports, Western markets – need for diversification For economic & social stability at home – Arab countries need to depend on domestic markets – this implies Decent Work & respect for fundamental labour standards. 60% of the population in Arab countries below 25 years – youth unemployment almost double that of the rest of the world – Unemployment among Arab women highest in the world – need at least 51 million new jobs by Youth employability very low – need for investment in education & skills

24 Challenges How to realise Decent Work?How to realise Decent Work? Growth first? And decent work later?Growth first? And decent work later? What is the place of fundamental rights of workers in growth strategy?What is the place of fundamental rights of workers in growth strategy? Are workers rights a matter of only ‘being good’ to workers? A human right issue only? Or do these rights have a development role to play? Do unions have the capacity to play a participative role in economic development and promotion of decent work? Actions under National Jobs Pact?Do unions have the capacity to play a participative role in economic development and promotion of decent work? Actions under National Jobs Pact?