Fair for whom? Why poverty reduction efforts must not ignore labour

Bernd Mueller

The international development community has invested tremendous effort and finance in the goal of ending global poverty. Especially in low-income countries across Africa, this has produced countless projects and policies to boost productivity, livelihoods, incomes, and liberties for those who have to eke a daily living out of US$1.90 or less. While these development initiatives[1] vary greatly in scope, ambition, and method, it is possible to identify a common trait: most target beneficiaries in a capacity as existing or prospective self-employed producers, such as farmers or owners of micro, small and medium enterprises.

This focus stems from the notion that most poor people’s livelihoods come from informal self-employment, as purported by national statistics in low-income countries, particularly in sub-Saharan Africa. However, a growing part of the development literature highlights the need to appreciate socio-economic differentiation in poor communities (for example, Oya 2010). This differentiation manifests itself in highly uneven distribution of productive assets (mainly capital and land). A logical consequence is greatly varying livelihood strategies of households.

Why asbestos should be banned

Jan Cremers

There has been an outburst of public anger after the ‘discovery’ of asbestos polluted social housing, despite there being several other topical asbestos related incidents. This coupled with the spectacular Turin trial against some captains of industry who were sentenced for knowingly exposing their workforce for decades to the killing fibre and the alarming reports of annual death rates among teachers who were working in asbestos containing public schools. In turn, the driving thoughts behind recent research by a group of outstanding international experts were of a more pragmatic nature. The aim was to document that asbestos is still carried around the globe and that there is no reason to retreat from the fight against the trend and its effects. Unfortunately, the European Union (EU)-wide ban is not the end of the hazardous story; it is only one of the necessary steps to protecting workers and citizens against the fatal consequences of the use of a mineral fibre that started as the eternal, global insulation champion. The fairy tale of 'safe handling' that still leads to import and use in large parts of the world has to stop. In the following sections we summaries major developments that led to a slow phasing-out in Europe and a turn to other continents by the industry.

Where is decent work in DfID policy? Marketisation and securitisation of UK international aid

Phoebe V. Moore

Nothing is spared. Even international development policy is marketised and securitised in the United Kingdom (UK). Outreach to areas of the world suffering from tsunami-related devastation has not disappeared, but recent government decisions reveal significant shifts for aid spending to prioritise future conflict prevention in areas facing high levels of unemployment and lacking welfare protection, and to manage future financial impacts of terrorist attacks. Controversially, UK aid spending is increasing in areas where crisis-driven unemployment can be linked to rising social unrest, even as cuts are made to the organisation most dedicated to advocating workers’ rights, the International Labour Organisation (ILO).

DfID securitises, marketises international aid
In March 2011 the Department for International Development (DfID) published the ‘Multilateral Aid Review: Ensuring maximum value for money for UK aid through multilateral organisations’ (DfID, 2011). The UK’s newly-elected coalition government in 2010 decided to increase development aid to 0.7% of gross national income (GNI) by 2013, which is, in cash terms, an increase from £7.8 billion in 2010–2011 to £11 billion in 2014–15. In that context, DfID, in cooperation with then Secretary of State for International Development Anthony Mitchell reviewed 43 multilateral aid organisations previously used to channel funding using a specific methodology designed to measure organisations’ aims and objectives, value for money and cost effectiveness. UN-HABITAT, UNIDO, UNISDR[1], and the ILO, did not meet these marketised development objectives, so DfID decided to withdraw core funding to established partners. Market-oriented judgements such as these are part of the wider strategy of securing the dominant status of neoliberalism as an expansive global framework for economic and social policy.

Zero Hunger: A Food Security Perspective for Brazil

Walter Belik

The debate on hunger in Brazil began in the early 1930s when Dr Josué de Castro, a famous physician and geographer, began his research on the health of workers in Recife, his hometown in the North-East of Brazil. Considering the labour conditions of these workers, Castro found out the sole reason for the particularly high absence and low productivity rates: hunger among the workers.
 

In 1946 Josué de Castro published his classic book “Geopolitics of Hunger”. The international reputation of this book helped him to be elected chairman of the Food and Agriculture Organisation (FAO) during the early 1950s. Josué de Castro participated in the Brazilian government for two decades, playing a central role in the implementation of the School Meals Program, subsidies for workers’ meals paid by employers and many other important programs to combat hunger in Brazil (L’abatte, 1988). Unfortunately, after the military coup in the mid-1960s he went into exile and eventually died in Europe.

After Brazil’s re-democratisation process, the subject of hunger re-emerged. In the mid-1980s the country was devastated by an inflation rate of more than 3000% per annum and poverty and lack of food was affecting everyone. Consequently, a huge campaign led by a sociologist Herbert “Betinho” de Souza was launched in Brazil, mobilising the population to collect and donate food to needy people.

Lack of Rain in the Rainforest

Nora Räthzel

From work or nature to work and nature: another kind of unionism

On a one-week tour organised by João Paulo Cândia Veiga from the University of São Paulo and Manoel Edivaldo Santos Matos from the Union of Rural workers (Sindicato dos Trabalhadores y Trabalhadoras Rurais de Santarém, STTR) in Pará, a region of the Brazilian Amazonas, we visited eight communities along the Rivers Arapiuns, Maró and Amazonas. These are small communities of between 90 and 300 people. They are of mixed indigenous and Portuguese origin, some groups defining themselves as indigenous. Traditionally, they lived from fishing, hunting, gathering fruit and planting manioc. But with the arrival of timber companies their lives have become unstable. In the eighties, but on a much larger scale in the nineties, timber companies entered more remote areas of the rainforests. Game, fruits and fibres on which people had lived began to decrease radically. In the middle of the nineties, supported and organised by the STTR, the communities living in the areas began a struggle for the ownership of the land they worked and lived on. They won this struggle but their battles have not ended. The timber companies remain, employing carrot and stick strategies to get at the wood: threatening activists on the one hand and promising to provide electricity and jobs on the other. The companies do not keep their promises, jobs are heavy and wages are low. But when survival is difficult, some people see no other choice than to work for them. Others are too concerned with the future of the forests to accept such an option, which creates tensions within communities.

The Microfinance Delusion

Milford Bateman

The optimistic beginning

Thirty years ago, it was widely thought that the perfect solution to unemployment and poverty in developing countries had been found in the shape of microfinance, the provision of tiny microloans used by the poor to establish an income-generating activity. Microfinance is most closely associated with the US trained Bangladeshi economist and 2006 Nobel Peace Prize recipient, Dr Muhammad Yunus. By celebrating self-help and individual entrepreneurship, and by implicitly discrediting all forms of collective effort, such as trade unions, social movements, cooperatives, public spending, a pro-poor ‘developmental state’ and – most of all – collective moves to ensure a more equitable redistribution of wealth and power, neoliberal policy-makers in the international development community fell in love with microfinance. The World Bank, USAID and other agencies began to aggressively push forward the concept and, in order to reduce the need for subsidies, also insisted microfinance be turned into a for-profit business. Microfinance soon became the international development community’s highest profile, most generously funded and supposedly most effective economic and social development policy.

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.
 

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.

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 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.
 

Brazil, India and South Africa: Low Spill-Over, High Resilience of Financial Sector

Martina Metzger

The course of the global financial crisis displayed widespread flaws in regulation and supervisory failure. The financial sectors of advanced countries piled up systemic risk comprising almost all financial institutions. In addition, high cross-border exposure between the financial institutions resulted in a core meltdown when the bubble burst in 2008. The financial sectors of many advanced countries risked collapse, meaning unprecedented monetary and fiscal intervention by policy authorities was necessary to stabilise the situation.

In contrast, many emerging market economies weathered the financial tsunami not only better than expected in terms of financial and macroeconomic stability given their previous performances during crises, but also better than G7 countries. Against this backdrop, we begin to question which factors account for the low impact of the global financial crisis and which features might explain the strong resilience of emerging markets’ financial sectors. The countries under consideration here are Brazil, India and South Africa. Apart from being heavy weights in their respective regions and continents, the financial sectors of these three countries showed a remarkable resilience to the global financial turmoil.

Trade, employment and development: Back on track?

Richard Kozul-Wright

In today’s world of increased economic and political interdependence achieving a broad-based, rapid and sustained growth in incomes and employment involves even more complex policy challenges than in the past. This was the case before the recent crisis, but it is even more so as policy makers in both developed and developing countries look for ways to mitigate the damage from that crisis and build a more sustainable recovery.

The International Labour Organisation (ILO) worries that the kind of integrated policy framework and the accompanying degree of policy coherence required to respond effectively to the crisis within and across countries is still not in place. In particular, the kind of mutually supporting links between macroeconomic policies, social protection systems and active labour market measures are still not established to ensure both an inclusive (job-rich) recovery and to realize the Millennium Development Goals (MDGs) within an acceptable time frame.

What does wage-led growth mean in developing countries with large informal employment?

Jayati Ghosh

The past decade has been one in which export-led economic strategies have come to be seen as the most successful, driven by the apparent success of two countries in particular - China and Germany. In fact, the export-driven model of growth has much wider prevalence as it was adopted by almost all developing countries.

This was associated with suppressing wage costs and domestic consumption in order to remain internationally competitive and to achieve growing shares of world markets as far as possible. Managing exchange rates to remain competitive, despite either current account surpluses or capital inflows, became one of the major elements of this strategy. This was associated with the peculiar situation of rising savings rates and falling investment rates in many developing countries, and to the holding of international reserves that were then sought to be placed in safe assets abroad.

Trade, labour and the crisis: Time to rethink trade!

Esther Busser

Trade has been one of the main transmission channels of the financial and economic crisis to developing countries where many jobs were lost in export sectors. This was largely due to a reduced demand for goods in industrialised economies as well as to a lack of access to credit for the financing of exports.

At the international level, calls against protectionism (that is, increasing barriers to trade) have been manifold. These calls have been made in the International Labour Organisation (ILO) Global Jobs Pact, G-20 Declarations and government declarations in organisations such as the World Trade Organisation (WTO) and the Organisation for Economic Co-operation and Development (OECD). Despite these calls and the common understanding that closing off markets would have negative effects and risk a further deepening of the crisis, several countries have resorted to protectionist measures.

Beyond neoliberalism?

Nicolas Pons-Vignon

For the generation that came of age in the 1990s, the belief in the labour movement’s ability to inspire progressive change collapsed soon after the Berlin Wall. Not unlike the Wall, this belief had been seriously shaken during the 1970s and 1980s, which saw the rise of neoliberalism from Chile to the United Kingdom and, thanks to the Washington-based international financial institutions, to much of the developing world. Jan Breman (1995), in a biting analysis of the triumphant World Bank’s World Development Report on “Workers in an integrating world”, notes that the Bank saw “drastic restructuring in the balance of power in favour of capital” as a necessary condition for both economic growth and poverty reduction. Written at the height of the Washington Consensus, the report represented an arrogant dismissal of workers as political actors. Only if they would keep quiet, letting the invisible hand of the market decide how many shillings (3, maybe) to put in their pockets, would their lives improve.

New challenges for labour as growth prospects fade away

Cédric Durand

With the current crisis, economies and societies are entering a period of institutional shake up which occurs in initial conditions that are much more disadvantageous to labour than during the crisis of the 1970s. At the same time, a paradigm shift is emerging as growth prospects are fading away in advanced economies. The onset of this dispensation poses serious challenges to the labour movement and progressive political economists; this article attempts to address them and to stimulate debate.

The great contemporary crisis takes place in an environment which is radically different from the great profitability crisis of the 1970s. On the one hand, the post-world war period had allowed labour to build a strong bargaining power position. On the contrary, since the 1980s, neoliberal policies have successfully weakened its position. The combined disciplinary effects of a growing reserve army of labour, new managerial principles of controlled autonomy reinforced by IT, increasingly heterogeneous employment norms, spatial splintering of production and an increased exposure to multidimensional competitive pressures have sapped labour combativeness. Rising inequalities in favour of a thin layer of super rich and the dramatic decrease in the number of strikes are symptomatic of the retreat of labour in rich countries.

The international economic crisis and development strategy: A view from South Africa

Neva Makgetla

South Africa has been harshly affected by the international economic crisis, which led to a fall in the GDP and an even sharper contraction in employment. While job losses levelled out in the last quarter of 2009, the crisis will continue to shape long-run development. In particular, it points to the need for a development strategy that builds more on domestic and regional demand and that focuses explicitly on employment creation as central to a cohesive and equitable society.

South Africa’s GDP declined by approximately 3% between the last quarter of 2008 and the second quarter of 2009, and then increased in the third quarter of 2009. In comparison, the fall in employment proved steeper and more prolonged. The economy lost around a million jobs, or 6%, between the fourth quarter of 2008 and the third quarter of 2009, and gained only 90 000 back in the last quarter of 2009.