Burrow: the Emperor has no clothes

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Politics & economyEmploymentAusterity


Workers can see that the Emperor of austerity has no clothes.

For the last two years he has strutted the world stage slashing wages and conditions in the name of growth.

Will economists and world leaders open their eyes in Tokyo and see that austerity has failed ?

Without an income-led growth strategy – jobs and social protection, austerity was always designed to fail.

Now it is official with even the IMF admitting that they got it wrong.

This is not a technical glitch in the calculation of the multiplier effect.

The truth is that the orthodox economics again underestimated the negative impact of austerity measures and the world economy is once again at risk of recession, with Europe already there.

The economic outlook is bleak with global growth for 2012 looking to be barely over 3 per cent and little better projections at around 3.3 per cent for 2013.

Europe with negative growth this year and stagnant prospects for 2013 shows no prospects of emerging from recession.

The tragedy is that the legacy of massive unemployment from the greed of the financial crisis and the impact of austerity measure has human consequences.

For too many impoverishment will result in damage to national wealth that will last for decades.

Georgia, a woman from Greece says it all: “My salary was cut by 45 per cent. For the first time in my 38 years I can’t pay my bills. My mother’s pension is €320 a month – she can’t live on that and I can’t help her.”

Georgia’s is one of the voices we captured in the Frontlines report the ITUC released this week.

For the ITUC, economic analysis can only be seriously understood when the reality of the impact on people’s lives is understood.

During this weeks’ meetings of the IMF and World Bank in Tokyo we have simultaneously called for a halt on the attacks on workers’ rights and laid out the policy work that will drive employment and sustainable growth.

It is also imperative that the G20 fulfill their Los Cabos commitment to review policy directions if there is a serious slowdown in growth.

The test will be whether there is any move in this direction when the G20 finance ministers meet tomorrow.

The world is on the brink of recession, unemployment is increasing, austerity measures have failed and people are increasingly desperate, which is reflected in growing civil unrest but will this be acknowledge or ignored?

The chief economist of the IMF indicated that wages, a significant driver of demand, should be raised in surplus economies.

Inequality or the shockingly uneven distribution of wealth is also acknowledged as a barrier to growth and inclusion.

Despite this, the orthodoxy of failed labour market policy still has a strong voice.

For too many economists and government policy makers the gap in economic justice is still a theoretical discussion.

For working people this is the reality of difficult lives.

The answers remain in income-led growth – jobs, sustainable jobs, decent work and social protection.