The G20 did the right thing at the beginning of the global financial crisis: at the 2009 London summit a newly elected President Obama and a last-gasp Prime Minister Brown united to secure co-ordinated action to prevent the crisis becoming a global depression. They also began the process of addressing multilateral finance sector regulation to prevent further crises. But the good news didn’t last long, and by the time of the 2010 Canadian G20, the world had launched into full-blown austerity, and took their foot off the gas on financial regulation.
Since then, it has become abundantly clear that austerity doesn’t work. The Canadians thought they had managed growth through austerity in the 1990s, although unions there disagree with that analysis, and the fact that they were bucking a worldwide boom. Clearly, however, everyone adopting austerity at the same time is a recipe for a downward spiral: the OECD’s latest global forecasts, out today, provide further evidence.
Today the Russians, who take over the chair of the G20 on Saturday (is the G20 the only year that runs 1 December to 30 November? And why?) are taking one more step towards a rational approach to global economic governance, announcing that they will be bringing together finance and employment ministers to discuss sustainable growth. This is a further step forward, building on the regular employment ministers’ meetings, and the decision under the French G20 in 2011 to set up an employment task force, initially examining agendas for tackling youth unemployment.
Since 2010, we’ve seen body after body begin, agonisingly slowly, to get it – the OECD, the IMF, the World Bank. Austerity doesn’t work. The confidence fairy isn’t attracted by deficit fetishism. Growth without jobs is unsustainable. If only the G20 had moved as fast in that direction as they did in the lurch to deficit-slashing. The economic debate is slowly being won (helped along by the painful lived experience of countries like Greece and Spain!)
Bringing finance and employment ministers together was a demand of the global trade union movement that has now secured a place in the G20 architecture (there’s an L20 of trade unionists alongside the B20 of employers). The International Labour Organisation (ILO) secured a seat at the G20 table due to union lobbying of Gordon Brown at the 2009 London G20, and didn’t lose that place as the G20 turned to austerity, but the new ILO Director General Guy Ryder is now beginning to use that seat at the table more effectively, making the case for decent work as a key part of the solution.
There is an awful lot more to achieve. Ministerial meetings, trade union access to the G20 leaders and fine words from economists have yet to shift the practice of austerity. But they are essential steps along the road to a better global deal.