The G20 and Jobs: Time for Plan B

John Evans

When the economic crisis broke following the collapse of Lehman Brothers in September 2008 and the global banking system seized up, workers began to be laid off, families saw their houses repossessed and banks teetered on the brink of collapse. Financial panic knew no frontiers. It was clear that a coordinated global response by governments and institutions was required to counter what the IMF termed the “Great Recession”. The major economies used the G20 as the forum to coordinate their responses, scaling it up from a low-key Finance Ministers’ Forum into a Heads of Government Summit process – effectively replacing the G8.

The international trade union movement responded rapidly[1], matching the “heat” of the street with the “light” of policy messages coming out of the G20 Summits. Trade union demands centred on stabilising employment, putting in place social protection for workers hit by the crisis, and effective and coordinated government intervention to support the global economy so as to prevent the “Great Recession” becoming a 1930s-style “Great Depression”. Three years later, with the crisis in a new and even more dangerous phase and major economies slipping into recession, the trade union agenda is as valid as it ever was.

How Capital Flight Drains Africa: Stolen Money and Lost Lives

Léonce Ndikumana

James K. Boyce

Financial scams often cheat working people. In most cases, the victims simply lose their money. In Africa, some lose their lives.

Sub-Saharan Africa experienced an exodus of more than US$700 billion in capital flight since 1970, a sum that far surpasses the region’s external outstanding debt of roughly US$175 billion. Some of the money wound up in private accounts at the same banks that were making loans to African governments.
 

Inflows of foreign borrowing and outflows of capital flight are closely intertwined. As we document in the book Africa’s Odious Debts, there is a strong correlation between the two. For every dollar of foreign borrowing, on average more than 50 cents leaves the borrower country in the same year. This tight relationship suggests that Africa’s public external debts and private external assets are connected by a financial revolving door.
 

What role do big corporations play in the economic well-being of the European Union? A non-standard view of Eastern Europe

Ognian N. Hishow

The global economic crisis caused demand in the European Union (EU) to drop to low levels. In order to mitigate the effects of the crisis, stimulus packages were hastily put up in the old member states (OMS). A considerable part of the spending was directed to the financial and banking sectors as it was concluded that these were systemically important. In addition, the core sector of Europe’s industry, car production, also received significant financial support.

Both the banking sector and the automotive industry play a crucial role in the new member states (NMS) of the EU. Hence one would expect that spending on banks and automotive firms in Western Europe, where the OMS are located, is what would have kept Eastern Europe’s economy, where most of the NMS are located, afloat during the crisis. Yet that assumption is wrong; the money that has gone to the big international European corporations has largely benefited them alone. To see why, it is important to consider how the economic integration of the NMS was conducted.

Working for a Social Protection Floor

Ellen Ehmke

Andreas Bodemer

Worldwide, 75% of the population have no or insufficient access to social security provision. Despite the long record of social security as a human right, which is enshrined in the Universal Declaration of Human Rights (Art. 22, 25) and the International Covenant on Economic Social and Cultural Rights (Art. 9), its implementation has been widely disregarded.

Many pretexts have been given to excuse this severe injustice. Prominently, the competitiveness of a globalised economy has allegedly caused a scarcity of financial resources available for social policies. On the one hand, the assumed negative effects of social security on economic growth have served as reason to cut back globally. On the other hand, during and after the economic crisis of 2009/2010 many observers confirmed the benefits of wide-ranging use of existing social security structures.
 

Supporting Dissent versus Being Dissent



Steven Toff

Jamie McCallum

When the Occupy Wall Street movement (OWS) began on September 17th 2011, few could have predicted the wave of occupations that would soon sweep the rest of the country and indeed much of the world in what has been referred to as the American Fall. While it remains to be seen how this inchoate movement will mature, it has so far exceeded everyone’s calculations - it is the first time since the 1999 anti-WTO demonstrations in Seattle that tens of thousands in the US are taking to the street for economic reasons. Average Americans, many of whom have long understood the moral and economic turpitude at the root of Wall Street, are now expanding that stance to make a wholesale critique of neoliberalism and questioning some of the most foundational principles of capitalism. Despite its occasional penchant for protest and militant action, and its position as nearly the sole organization comprised of the US working class, the labor movement has been unable to mobilize itself or recruit others in the cause against rising income inequality and the erosion of democratic protections for workers. Now that the OWS movement has raised the issue, built a movement base, and reached out to labor, there remains a looming question: how will unions respond to the call?
 

Decent Work 2.0

Frank Hoffer

Last month, Juan Somavia, the long serving Director-General of the International Labour Organisation (ILO) announced his departure in 2012.
 

As head of the ILO, he introduced the Decent Work Agenda in 1999 to re-focus the ILO and make it relevant for the 21st century.
Twelve years later, the concept of ‘Decent Work’ is firmly established in the global debate and as an objective of national policy. It appears in many documents of the multilateral system, the G20 and national policy fora. It generates millions of Google hits. It is the subject of much academic research and debate. It is enshrined in several ILO Conventions and Declarations, and the international trade union movement introduced the annual Decent Work Day to campaign for workers’ rights. ‘Decent Work’ is so ubiquitous in ILO documents that some cynics say: "Decent Work is the answer, whatever the question!"
 

Will Decent Work survive the departure of the Director-General who coined the term and so successfully marketed it? Should it survive? The answer to the former question is one of the unknowns of “Realpolitik”. The answer to the latter depends on the assessment of what Decent Work means and how it should evolve.

New Economy vs. Old Ways

Goran Lukić

New buzz-words are entering into the traditional economic landscape of industrial relations. Managers and politicians who want to be in touch with new economic trends are using terms such as 'green economy', 'renewable energy' and 'corporate social responsibility (CSR)'. Another concept that is being touted as a 'big idea; is 'fair-trade' or 'Creating Shared Value (CSV)'. It seems that these terms are being translated into real action. According to an HSBC Global report, 19% of anti-crisis measures in France were put into the renewable energy sector in 2009, while 13% of Germany's 2009 anti-crisis measures were put into green investment and green tax reform. Q-Cells, a manufacturer of photovoltaic cells, which has its headquarters in the German city Bitterfeld-Wolfen, began its operations in 1999 with 19 employees, and soon had more than 1 000 people on its payroll.[1]

According to Fairtrade International (FLO), the fair-trade industry is booming. The sales of Fairtrade-certified products grew by 15% between 2008 and 2009. In 2009, Fairtrade-certified sales amounted to approximately €3.4 billion worldwide. There are now 827 Fairtrade-certified producer organisations in 58 countries, representing over 1.2 million farmers and workers. In addition to other benefits, approximately €52 million was distributed to communities in 2009 for use in community development.

Contesting a ‘just transition to a low carbon economy’

Jacklyn Cock

Introduction

Recently, the South African labour federation, the Congress of South African Trade Unions (Cosatu), has expressed its commitment to a ‘just transition to a low carbon economy.’ However, at this moment the content of that commitment is unclear. Members of Cosatu affiliates could have very different understandings of the scale and nature of the changes involved. A ‘just transition’ could involve demands for shallow change focused on protecting vulnerable workers, or it could involve deep change rooted in a vision of dramatically different forms of production and consumption. In this sense, the ecological crisis represents an opportunity to not only address the unemployment crisis in our society, but to demand the redistribution of power and resources, to challenge the conventional understanding of economic growth and to mobilise for an alternative development path.

The Costs of the Financial Crisis 2008/09: Governments are Paying the Tab

Sebastian Dullien

One could almost get the impression that the storyline of the global economic and financial crisis of 2008/9 is forgotten. Questions of bank regulation and financial sector oversight are hardly discussed in public anymore and legislative efforts to rein in speculative and highly risky activities seem to have petered out. Instead, the public debt crisis has taken center-stage. Around the world, discussion focuses on cut-ting public deficits, with a strong focus on cutting public expenditure and a secondary focus on raising general direct and indirect taxes. The debate has turned from one about obvious market failures, especially in financial markets, to one about alleged government failure. That is, governments spending much more than they take in as revenue and hence piling up increasingly unsustainable public debts.

However, if one looks into the details of the development of the public debt in many of today’s crisis countries, it becomes clear that it is precisely the economic and financial crisis of 2008/9 which has put the debt levels onto an unsustainable path. Prior to the crisis, countries such as Spain or Ireland and probably even the United States were on a path of (or at least close to) fiscal sustainability. After the crisis, markets now question public finance sustainability even in countries such as France.
 

Summer days on Utøya

Dan Gallin

I shall never forget the summer days I spent in 1955 on Utøya, the small island near Oslo that the Norwegian trade unions had given to the Labour Youth League as a study and leisure centre.
 

I had arrived in Europe in March 1953, back from the United States where, as a student, I had discovered socialism in the shape of a Trotskyist dissidence. The brilliant explanation of the world, the heroic and tragic story of the “Old Man” and his movement, had taken hold of my imagination and my emotions. So much so that I drew the attention of the authorities who gave me one month to leave the country.
 

So there we were, my companion and I, in Europe and needing to find our bearings. She was a member of the same group. By the summer of 1955, we were ready to discover Scandinavia, the bastion of a social democracy that we viewed with suspicion.

The dilemma of job creation and decent work

Edward Webster

In August 2010 South African government officials began closing down clothing and textile factories in Newcastle, in the province of KwaZulu–Natal. This came in the face of angry protests from the workers because the owners were paying less than the statutory minimum wage of R324 ($49) a week. The factory owners said they could not pay more and survive in the face of cheap Chinese textile imports.
 

Globally, the clothing and textile industry is to a large extent controlled by an oligopolistic group of large retailers and branded manufacturers, who stipulate their supply specifications in terms of low price, high quality and short lead times. But due to the strengthening of the local currency (the rand) since 2003, the end of the Multifibre Agreement (MFA) in 2004 and relatively high labour costs, South Africa no longer has a comparative advantage in an integrated global economy.[i]

Argentina’s ‘Year of Decent Work’, a critical assessment

Bruno Dobrusin

The centre-left government of Cristina Kirchner declared 2011 as the ‘Year of Decent Work’ in Argentina, following consultations with the ILO and other international institutions regarding government programmes during the current global economic crisis. The Kirchner administration has indeed promoted several counter-cyclical measures to fight against the global recession and maintain levels of employment in the country. The relative success of these policies, together with the continuous economic growth that Argentina has witnessed since 2003, led the government to tour the international forums such as the G20 meetings and claim that Argentina is an example of a successful response to the crisis. Despite the improvements in the overall economy and the high levels of employment that the country is witnessing, the so-called ‘model’ is far from ideal, and has to be questioned on its main claims. This article discusses the recent improvements as presented by the government and the counter-facts suggested by a recent study carried on by the Workers’ Confederation of Argentina (CTA)[i].

The euro crisis and the European trade union movement

Vasco Pedrina

After successfully bailing out banks and adopting a first wave of economic recovery measures, the authorities of the European Union (EU) and its member states began to impose draconian, anti-social austerity plans from the beginning of spring 2010. These plans stem from an increasingly coordinated policy at the EU level, which is entering a new phase with the “Euro-Plus Pact” and the “enlarged bailout plan”. Dressed up as part of a fight against “macroeconomic imbalances”, new mechanisms are to be put in place. These will provide EU authorities with the means to step up the pressure for general social dismantling. Concretely, this amounts to a “wages straitjacket” that calls into question the autonomy of social partners (one of the pillars of the “European social model”), raises the retirement age across European countries and introduces legislation to curb national debt. This policy is not only having dramatic social repercussions. It is also heading up an economic blind alley that is putting the euro at risk.
 

7 Reasons why a Universal Income makes Sense in Middle-Income Countries

Hein Marais

Is job creation really the best way to seek wellbeing for all in countries with chronic, high unemployment? No – especially not in a wealthy middle-income country like South Africa, where very high unemployment combines with high poverty rates. Here are 7 reasons why a universal income grant makes more sense.

 

1. EARNING A DECENT SECURE WAGE IS NOT A PROSPECT FOR MILLIONS OF SOUTH AFRICANS

While the rewards of South Africa’s modest economic growth are cornered in small sections of society, close to half the population lives in poverty, and income inequality is wider than ever before.
 

Job creation improved modestly as economic growth accelerated in the early 2000s. About 3 million ‘employment opportunities’ were created in 2002-08. The semantics are important. Very many of those ‘opportunities’ did not merit being called ‘jobs’. They divided roughly equally between the formal and informal sectors, and occurred mainly via public works programmes, business services, and the wholesale and retail trade sectors. A lot of them were crummy, insecure and poorly paid.

A Plan B for the World Economy

Christian Kellermann

‘Capitalism’ is back on Main Street. Crashing, dismantling, reforming, repairing, restoring – all kinds of approaches to capitalism are discussed in the wake of the recent crisis. The debate has gained far more momentum today than it had during the past decade, though we had already witnessed a number of such crises. However, in practice, the gap between regulatory rhetoric and actual reform of our economies and the world economy as a whole is still considerable. Our systems remain at risk of on-going instability. Crises will continue to be the norm rather than the exception if we keep on working with the dysfunctions of current capitalism. Many of us will be unable to live a decent life under conditions of increased insecurity, inequalities and pressure in terms of wages, jobs, raising children and providing for old age. An excessive degree of unequal income distribution and personal insecurity is not only detrimental to a good life; it is also economically dangerous and inefficient. The reasons for economic crises and increasing inequality, which are symptom and root of personal and systemic insecurity and inefficiency alike, are manifold.
 

The True Cost of Doing Business

Conor Cradden[1]

There is a belief widely shared among policymakers that if arguments for a proposal or decision are supported by numbers on a page then somehow this makes that choice less political. It permits the claim that what is being proposed is not really a choice at all but something that the ‘evidence’ demands. This emphasis on quantitative indicators has meant that much policy argument has been displaced into the design of the indicators themselves. Rather than being grounded on purely technical criteria, the design of statistical indicators is a highly politicized process in which different stakeholders struggle to ensure the numbers that emerge will be more compatible with arguments in favour of their policy predilections than those of the opposition.
 

The World Bank’s ‘Doing Business’ (DB) indicators are a shining example of statistics that come with this kind of built-in value judgment. The DB indicators claim to be a guide to the relative ease of establishing and running a business in different countries. This is ‘measured’ on a number of dimensions, including starting up, paying taxes, getting construction permits and enforcing contracts. The indicators allow the construction of rankings, including an overall global ranking that places Singapore at the top – making it the world’s easiest place to do business – and Chad at the bottom.
 

Is the Eurozone doomed to fail?

Jacques Sapir

The eurozone is currently undergoing a crisis of historic importance, which results in the accumulation of sovereign debt in eurozone countries and reveals the internal defects of the eurozone.
 

Since the beginning of 2010, the crisis in several EU countries has resulted in a faster growth of interest rates compared to those of Germany. This is known as interest rate “spreads” and has challenged the single real accomplishment of the eurozone: the relative convergence between countries on the debt market that began in 2000. This has been fuelled by the huge growth of sovereign debts in the wake of the 2007 crisis. But even this development could be linked to the euro as prior to the crisis it allowed a downturn of interest rates, which then facilitated the build-up of the large debt, both private and public, in most eurozone countries.