The union message to G20 leaders: don’t cut until the jobs come back
TUC General Secretary Brendan Barber is meeting Canadian Prime Minister Stephen Harper today. He’s part of a delegation of trade union leaders from G20 countries, meeting the Canadian host of the G8 and G20 Leaders’ Meeting next weekend. His message will be that the jobs crisis isn’t over – either in developed countries like the UK or much of the developing world – and that public sector cuts should be avoided until the jobs come back. The UN estimates that 300 million new jobs are needed around the world. The global unions message is also the message of US President Obama.
Brendan will tell the Canadian PM that Canada is much-mentioned in the current UK debate about cutting public expenditure. But Stephen Martin should be worried less about taking the credit and more about being set up for taking the blame, even if it was his predecessor who made the cuts in the 1990s. Global unions’ main interest is to tackle the huge problem of unemployment around the world. The UN Secretary General has estimated that we need 300 million new jobs to tackle the unemployment produced by the latest economic crisis – and that’s just to get us back to where we were before the crash, which was hardly perfect. We are concerned about the impact on young people in particular – and the possibility in many countries of a lost generation. We are pleased that ILO has been involved in the G20’s response so far, and think the ILO’s work on the Global Jobs Pact has been very good. But that Global Jobs Pact – endorsed by the G20 in Philadelphia last September – still needs implementing
In that context, there is serious concern among trade unions about moves towards fiscal consolidation all round the G20: and this is not just public sector workers concerned about their jobs and wages/pensions, but also private sector workers who make things Governments buy, or depend on Government support, or are just worried about the impact of Government cuts on growth. People are confused at the moment, but as in Greece they will turn angry if those who caused the crisis get away with it, leaving the poor and the middle classes to bear the pain. If BP have to pay for cleaning up their disasters, why don’t the finance sector?
Unions understand the concern about excessive government borrowing – we would rather it hadn’t been necessary. But in Europe and US, the finance sector created a major crisis that needed to be addressed – and even countries without banking collapses (such as Canada) would have felt the impact if EU and US governments hadn’t intervened. The best way to reduce public sector deficits and borrowing is growth, and the world economy is still too fragile to be certain this will happen regardless of government intervention. Tax increases can’t be ruled out – but they must fall on those best able to pay, and have least possible impact on demand. Financial transactions taxes – the Robin Hood Tax – would be the best way to raise further revenue as they would fall on the richest, whereas cuts and consumption taxes would fall most heavily on those least able to pay and would have the worst effect on growth prospects.
As FT commentator Martin Wolf – certainly no leftist – has said: what is plan B if public sector cuts don’t result in more jobs, higher growth, more trade?
Unions know that Governments are worried about how the markets will react to prolonged deficits – but as Spain has discovered, credit rating agencies and markets are not too impressed by austerity measures either because they know they will reduce growth. If markets are bullying governments, take them on – otherwise a downward spiral of cuts leading to unemployment (with a lower tax take, and higher spending on benefits) would lead to worse deficits and more cuts.
So we hope the G20 will hold its nerve and show leadership: this is not yet the time to withdraw stimulus packages. We need to make sure the UN’s 300 new million jobs are in place first. That’s not just about any old jobs though – we want decent work which puts a high premium on skills – particularly important for young people, but also for people already at work. In that context, unions were pleased that the G20 labour ministers met for the first time ever in April, and that they met with employers and unions. We want the exercise repeated as we try to tackle the employment impacts of the crisis – and we are pleased that the French Presidency is contemplating a further meeting under their G20 next year.