From the TUC

What would it take for the IMF to back worker protection?

11 Jun 2012, by in Labour market

The IMF often claims it is no longer part of a neoliberal Washington consensus. Its discredited former head Dominique Strauss-Kahn certainly did change the rhetorical tone of its overall approach to global macroeconomic policy, and even his centre-right successor, Christine Lagarde has argued for growth, while still giving ‘fiscal consolidation’ programmes like George Osborne’s lukewarm endorsement. Our Irish and Greek colleagues tell us that the IMF has been the least hawkish part of the troikas sent in to run their economies in return for ‘bail outs’ (the ECB and the Commission have been far tougher).

But an International Trade Union Confederation (ITUC) report on IMF advice to a series of European Governments shows that when it comes to protecting workers’ employment rights, the IMF hasn’t remotely changed its spots. Whatever the evidence, whatever the problem, the IMF solution is always to liberalise employment rights. I suspect they would find some right to advise scrapping even if slavery were re-established!

The report looked at IMF advice to the Governments of Bulgaria, Spain, Greece, Ireland, Portugal, Romania, the last four of which – together with ten other EU nations – have been granted loans by the IMF since the global economic crisis begain in 2008. The ITUC paper contrasts what the IMF has been saying about overall economic policy and labour rights with what the IMF has actually advised countries taking out loans to do.

And whilst the IMF’s own public pronouncements, as well as the policy of the associated World Bank, and the evidence identified by the OECD all reject a link between employment rights and poor economic performance, the IMF consistently advocate liberalisation and the reduction of workers’ rights, especially to employment protection.

Spain was told that its labour market was more rigid than Portugal’s and should be reformed. While Portugal was told itslabour market was more rigid than Spain’s and advised to reform! In Greece and Ireland, IMF policies have led to increased unemployment. In Romania, the IMF advocated measures to liberalise employment protection legislation on the basis of the World Bank’s Doing Business Report rankings of employment protection, even though the World Bank had by that stage instructed its own staff not to use the rankings in that way.

As for Bulgaria, a 2001 IMF report concluded that:

“There is relatively little in the way of constraints on the ability of enterprises to hire and dismiss employees, unions have relatively minor roles, minimum wages are fairly low, and unemployment insurance is not overly generous.”

Yet throughout the last decade, the IMF has been pressing Bulgaria to liberalise further. And in 2012, the IMF urged the Bulgarian government to abandon a tripartite agreement on pension reform that it had praised when it was adopted just a year earlier!

It certainly doesn’t look like evidence-based policy making: more like an ideological fixation. And it is blighting the lives of millions of European workers.


4 Responses to What would it take for the IMF to back worker protection?

  1. FionaKabuki
    Jun 12th 2012, 11:26 am

    The purpose of the IMF has been altered by stealth: it is an institution wholly captured by neoliberals and should have been abolished and replaced so the new body was seen for what it is

  2. James Mac
    Jun 12th 2012, 11:30 am

    Interested that the IMF thought in 2001 that in Bulgaria

    unions have relatively minor roles

    I’d not call bringing the rail system to a standstill the act of a bit-part player… perhaps there’s hope on the horizon?

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