Greece in the deadlock of the Troika’s Austerity Trap

Giorgos Argitis

On 27 November 2012, the Eurogroup reached a new “Greek deal” which once more discloses that there is no political will to address Greece’s debt crisis, as well as the country’s economic and social catastrophe. This fact increasingly makes Greeks think that the sovereign debt crisis incorporates significant geo-economic and geo-political interests at the expense of national sovereignty. Nonetheless, in the pure economic domain, there are two main aspects of the new agreement: first, the Troika’s condition that Greece has to adopt and apply a fiscal correction mechanism to “safeguard the achievement” of irrational and unrealistic fiscal growth and privatisation targets. This mechanism will institutionalise economic austerity and the impoverishment of Greek workers in the private and public sectors, and squeeze to zero the degrees of freedom for national economic policy-making.

The second aspect is the restructuring of creditors’ debt claims as a means for Greece to reduce its financing gap and borrowing needs. This decision, in conjunction with Greece’s public debt tender purchases, is hypothesised to bring Greece’s public debt back on a sustainable path by 2020-2022, which will facilitate the gradual return to market financing. The new agreement between Greece and the Troika is characterised by much fantasy, but little realism. The economic, social, and political environment in Greece remains fluid since uncertainty and lack of credibility continue to surround the course of economic policy-making in Greece and the Eurozone.

The National Pact to Eradicate Slave Labour in Brazil: A useful tool for unions?

Siobhán McGrath

Lisa Carstensen

In 2012 two major clothing retailers, the Spanish group Zara and the Brazilian retailer Marisa, were suspended from membership of the “National Pact to Eradicate Slave Labour.” In both cases, the suspension occurred less than a year after the firms became members in the first place. As members of the Pact, they had pledged to eliminate slave labour from their supply chains. These cases generated a major debate – about forced labour in São Paulo’s clothing industry but also about the Pact itself and, linked to this, about the “Dirty List” of those found to be using slave labour[i].

So how does the Pact work? Is it a model for other countries committed to the fight against forced labour? Is it useful for the trade union movement? What are its limitations? We argue below that the Pact is a powerful tool which has been used to make progress in the ongoing fight against forced labour. Before explaining how we come to this conclusion, however, it is necessary to provide a short overview of the institutional and legal context of the Brazilian struggle against slave labour.

Minimum Wage Legislation and Informal Employment Expansion: The Case of Iran

Karimi Moughari

The International Labour Organization and many labour economists believe ‘labour force’ should not be mentioned as a production input and the income of the workforce must not be set by the outcome of supply and demand in the labour market, because the welfare of human beings is the ultimate goal of economic growth and development. So, labour should not be regarded as a ‘commodity’.

Economic systems must guarantee living wages for decent work. Minimum wage legislation is one of a number of important mechanisms used to support workers against the risk of absolute poverty caused by market wages. While the goals associated with minimum wages are right and proper, minimum wages cannot be effective for most unemployed people who cannot survive without jobs and prefer to work with wages lower than the formal minimum rather than remain unemployed for a long time. Therefore, the existence of informal employment is inevitable, especially when unemployment is rising.

Iran has a long history of minimum wage legislation since 1946. However, despite the emphasis of the Labour Law, jobs with wages lower than the formal minimum have increased rapidly in small, medium and even large enterprises, especially over the past two decades. As Iran’s economy does not perform soundly and labour market institutions are not efficient, the Iranian government does not ensure the enforcement of the formal minimum wage. Therefore, low-paid jobs and informal employment is expanding.