From the TUC

ILO hits back: keep the stimulus

03 Jun 2010, by in Economics, Labour market

Just when you thought every international institution was joining the headlong rush to demand that Governments withdraw economic stimulus packages, the International Labour Organisation (ILO) hits back. Opening the summer conference with the publication of its annual report, Recovery and Growth with Decent Work, the ILO has broken with the malign consensus (or what Paul Krugman calls “conventional madness”). ILO Director General Juan Somavia says 

“in response to pressure from financial markets, many countries are being pushed into stringent fiscal policies that jeopardize recovery, making it less likely that investments, growth, employment and wages will pick up in the short run or that tax revenues will recover any time soon. The end result is that deficits will become more difficult to reduce and debts more difficult to pay off.  So why now, at this very uncertain time of weak recovery, should the sovereign debt issue, with such a sense of a gathering storm, become the major, urgent, overriding global policy priority for markets? This may not be in their own interests if it leads to greater economic contraction or even a double-dip recession. It was just such a response that helped to bring about the Great Depression of the 1930s.”

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