Austerity is not working so change policy



The global economy is facing a jobs emergency. Global unemployment is growing to over 200 million.

The OECD and ILO estimate that 21 million jobs need to be created each year to return to pre-crisis employment rates by 2015 in the G20 alone.

Yet, with several European economies now in recession, other industrialised countries experiencing low rates of growth, and growth slowing in emerging economies, unemployment will rise further.

Precarious and informal work arrangements, already at unacceptable levels, are increasing. Financial markets continue to wreak havoc on our democracies, economies and societies. People are angry and social tensions are running high.

Governments have failed to deliver on their commitments to prioritise employment and to curb the power of the financial markets. In 2009, the G20 countries proclaimed that the G20 was to be the “premier forum for one international economic cooperation”.

At the onset of the crisis, the G20 did demonstrate effectiveness, taking coordinated action to stabilise global demand and agreeing on proposals for financial regulation. But momentum was lost with panicking governments shifting to austerity instead of fighting recession and building sustainable and inclusive growth.

The communiqué of the latest G20 Meeting of Finance Ministers and Central Bank Governors in Mexico on 4-5 November 2012 is an admission that austerity policies have failed. They note “global growth remains modest and downside risks are still elevated”.

In the light of this they almost call for shifting from austerity saying “countries ... with sufficient space stand ready to support demand as model in the short run should economic conditions deteriorate”. Yet, the policy on the ground remains the same.

. Global austerity and global growth are not compatible. The governments of the major economies have to change policy by putting in place an employment-centred, inclusive growth plan to increase demand and measures to raise appropriate tax revenue, thereby reducing debt in the medium-term.

They should also take further measures to limit the size and complexity of “too-big-to-fail” global banks and to curb financial speculation, so as to enable government growth plans to succeed. It is democratic governments, not financial markets, which should set the policy agenda. This is the message that unions took to the streets in the European Day of Action and Solidarity on 14 November.

In their political statements and messages, a growing number of inter-governmental organisations have identified the need to tackle the jobs crisis by addressing the quality as well as the quantity of jobs. However, the reality is that labour rights are under attack at domestic, regional and international level, through efforts to break up collective bargaining structures, lower minimum wages and remove employment protection.

There are also significant cutbacks in public sector employment. These are misguided policies. They will not restore growth; they will only serve to destroy workers’ confidence, eliminate public support, and widen income inequality – now recognised as one of the contributory factors to the crisis.

The escalating jobs crisis is hitting young women and men particularly hard, with an estimated 75 million young people around the world unemployed.

Together with rising long-term unemployment, the increasing rate of youth unemployment threatens to weaken the long-term growth potential and increase the risk of social break-down and political instability.

The Global Unions call is that governments must make the implementation of their past commitments a cross-cutting objective. They need to shift away from austerity towards employment-rich, inclusive growth policies.

They must act to increase economic cooperation and boost demand and employment, particularly quality employment, increase financial regulation and implement a Financial Transactions Tax, put in place a Social Protection Floor and support development; tackle climate change and promote sustainable growth; and achieve more democratic and equitable global governance.

In short, we are calling for a holistic growth plan to:

- Kick-start the global recovery with a Jobs Plan that includes commitments to increase public investment in job creation, education and training, infrastructure, greening the economy and quality public services

- Transform the structural policy agenda to strengthen labour market institutions, social partnership, collective bargaining, negotiated and legislated minimum wages, and income support for low-income groups so as to reduce income inequality. This must include a jobs pact for youth;

- Take effective, including binding, measures to re-regulate the financial system, tackle “too-big-to-fail” global banks, introduce a Financial Transactions Tax and eradicate tax havens;

- Expand International Financial Institutions’ (IFIs) crisis assistance facilities to foster social inclusion and promote decent jobs and reform the IFIs’ governance to make it more democratic and accountable and reflective of global membership;

- Develop an action plan and fund involving both Labour Ministers and Development Ministers to support implementation of Social Protection Floors;

- Expand assistance, refocus subsides and review trade and investment in order to ensure food security, promote decent work for agricultural workers throughout the agricultural production chain and reduce commodity price volatility;