The IMF in charge of the hen house?
Deemed irrelevant prior to the financial crisis, the IMF was given enormous powers by the G20 to resolve it. But in light of statements it made earlier this week, trade unions are wondering whether world leaders have put a fox in charge of the hen house.
At the end of April, the IMF will give an interim report to G20 Finance Ministers on their efforts to build “strong, sustainable and balanced growth” and outline options on how the Banks should help pay for the mess they got us in. In a worrying omen of what their conclusions might be John Lipsky, the second in charge at the IMF, said earlier this week, that to drive growth, “…liberalization of goods and labor markets and the removal of tax distortions… should be pursued vigorously”. As the global trade union movement’s statement of priorities for the meeting makes clear, the world is crying out for millions of green and decent jobs, not the cutting of taxes and slashing of workers’ rights.
Active interventions in labour markets are working. According to the ILO, some 12 to 14 million jobs have been saved through initiatives such as shorter working time, youth job guarantee schemes and decent income protection. As its recent World of Work report shows, countries that have done so, such as Brazil, Australia, Germany and Jordan have weathered the storm, while those with deregulated labour markets and limited social protection schemes haven’t.
The conclusion is that keeping people in work is keeping the economy afloat, but only just. That’s why the UK’s government’s commitment to extend the jobs guarantee scheme for young people – the hardest hit by the crisis – is so important.
And so is collective bargaining. It enables workers to collectively come up with sensible compromises with management in tough times to keep people in work. For a statistical feast on how good industrial relations drives productivity, morale, and economic recovery check out the TUC’s recently published pamphlet, The Road to Recovery.
Globally, the decline in the proportion of workers covered by collective bargaining arrangements over the past three decades is a key reason why economic growth has left the majority of people behind. As ordinary workers have lacked bargaining clout, their wages have stagnated and income inequality and the social hardship that comes with it have been rising. In many countries this has driven the dangerous reliance on debt to finance household spending that was responsible for the financial crisis.
The IMF would do well to understand the human cost of deregulated labour markets. In the UK’s white meat sector, weakened employment rights has only led to miserable working conditions for the mainly migrant workers employed there. As the recent EHRC’s inquiry into the sector shows the precarious status of these agency workers has made them vulnerable to bullying and harassment, forced overtime and poverty wages. And how many of the 260 workers interviewed preferred this deregulated and flexible arrangement? You only need one hand to count this one – four of them.
Instead of slashing workers rights and removing “tax distortions”, we need serious public investment to create jobs. The ILO estimates that, despite positive government action, some 34 million jobs have been lost globally since the financial crisis began. An estimated 215 million workers and their families have been pushed into extreme poverty by the financial, food and fuel crises – getting by on less than $1.25 per day. Joblessness is likely to continue well into the future, despite initial signs of recovery. In some countries, as the ILO and the OECD’s forecasts show, unemployment will not reach its peak until well into 2011 at the earliest. Globally, over 300 million new jobs will need to be created over the next five years to return to pre-crisis levels of unemployment.
Who should foot this bill? At Pittsburgh in September last year, the G20 gave the IMF the job of coming up with options on how the finance sector should “make a fair and substantial” contribution to pay for the crisis. It will report back to Finance Ministers at the end of April. Given the scale of the task ahead of us the IMF needs to seriously consider a Robin Hood Tax, or we need to seriously consider getting this fox out of the hen house.