Global Wage Report: Call for collective bargaining, minimum wages and social protection

The just published second ILO’s Global Wage Report 2010/2011, Wage policies in times of crisis, confirms that global wages have stagnated during the crisis. Excluding questionable figures for China and adjusting for inflation, global wage growth slowed from 2.2% in 2007 to only 0.8% in 2008 and 0.7% in 2009. While these world averages remained slightly positive, wages actually decreased in many countries. The International Trade Union Confederation (ITUC) has welcomed the Report. “Today’s report reinforces what unions around the world have been saying about the economic crisis and the policy responses that governments need to put in place,” said ITUC General Secretary Sharan Burrow. “Even workers who remained employed during the crisis experienced flat or falling pay.”

Over-reliance on exports and consumer borrowing for economic growth has proven to be unsustainable. To achieve a meaningful economic recovery, countries need to increase domestic demand based on rising wages and a more equal distribution of income. The ILO emphasizes three policy solutions in today’s report: inclusive collective bargaining, legislated minimum wages, and social protection programmes.

In addition to providing new data on wages during the crisis, the report also presents a longer-term analysis of low pay, defined as being below two-thirds of a country’s median wage. Since the late 1990s, the incidence of low pay has increased in two-thirds of the countries for which figures are available. However, the ILO found that low pay is much less prevalent in countries with higher levels of union membership. “Unions are part of the solution, in terms of ensuring that wages rise along with productivity and that these gains are shared fairly,” said Burrow.

* See also >>> Making the case for progressive universalism

Foundation for climate deal laid in Cancún

Governments at the UN climate talks in Cancún, Mexico, managed to approve a series of tangible if modest steps that sets up a "global climate fund" to help poor nations, create a mechanism to share clean technologies, protect tropical forests and help the poor adapt to impacts ranging from storms to rising sea levels, according to the International Union for the Conservation of Nature (IUCN). The UN climate talks are off the life-support machine, following a last-minute agreement that gives the Kyoto Protocol a lifeline, says international agency Oxfam.

The deal’s Climate Fund will be designed by a committee with a strong voice for developing countries, which should ensure that life-saving finance will be delivered to those who are most vulnerable to the effects of climate change. The Climate Fund will be a major channel for adaptation finance, helping to plug the gap in adaptation funding, so that vulnerable communities have the resources they urgently need. Meanwhile, the emissions cuts pledged after Copenhagen have been set as a minimum, with an expectation to raise them according to the demands of climate science.

Oxfam International’s Executive Director Jeremy Hobbs said: “Negotiators have resuscitated the UN talks and put them on a road to recovery. This deal shows the UN negotiations can deliver.” But many of the most difficult issues remain. According to Oxfam, we will not be able to offer a safe future for vulnerable women, men and children unless governments realize that we swim together or sink together. Our challenge is to elevate our vision and commit to the deep emissions cuts that are urgently needed.

“The progress in Cancún puts talks back on track and revives hopes that a wider, legally binding treaty that sets concrete and credible targets to reduce harmful greenhouse gas emissions is possible in the future,” also says Stewart Maginnis, IUCN’s Director of Environment and Development. "Under Mexico’s strong leadership and guidance, governments in Cancun have ensured that confidence in the UNFCCC process is being rebuilt, which brings us a step closer to that final deal.”

Adaptation, finance and Reducing Emissions from Deforestation and forest Degradation (REDD) were some of the key issues the 194-nation talks moved forward on. According to IUCN, today’s deal is a move in the right direction, but in the end, only an equitable, comprehensive and legally binding agreement will bring the much needed international commitment to manage the climate crisis.

The inclusion of REDD as part of the Cancún deal is a key step towards resolving the issue of climate change, says IUCN. Other NGOs have strongly opposed it. However, “reducing greenhouse gas emissions, while at the same time conserving forest natural resources on which millions of vulnerable people depend is a win-win solution for people and nature,” says Maginnis. “It has been one of the most promising developments in the negotiations so far, and now this further push by governments makes REDD an integral part of the climate deal.” IUCN welcomes the recognition of women within the deal struck on REDD. Women make up 70% of the world’s poor and provide up to 90% of the food in forest-dependent communities. They depend on forest resources for gathering fuelwood, forest fruits, vegetables and medicines.

Civil society and trade unions on EU-India Free Trade Agreement

As the EU-India Summit meets in Brussels today, civil society organisations and trade unions have reiterated their views on a draft free trade agreement. A broad civil society alliance called on the European Commission and the Indian Government to immediately halt the ongoing free trade negotiations between India and the EU. More than 240 concerned civil society groups signed an open letter, in which they warned that the talks would damage the livelihoods of millions of people in both India and Europe, exacerbating poverty and undermining economic and social development.

The proposed agreement would undermine people’s rights to food, to health and to gender just and social development. “The EU persistently puts pressure on India to open up its market to European dairy and meat products, while the EU continues to export these products at prices far below production costs with the help of subsidies”, said Armin Paasch, trade expert of the German Catholic Bishops’ Organisation for Development Misereor. “Around 90 million people are working in the dairy sector in India, most of them being small scale farmers or herders and 70 percent being women. Their livelihoods would be severely threatened if subsidized EU exports are permitted to flood the Indian market”, said Paasch.

Tightened intellectual property rights (IPR) would limit India’s ability to provide affordable medicines for the treatment of HIV-AIDS, malaria and cancer, not only for Indian patients but worldwide. “It is outrageous for Europe to undermine the Indian drug industry’s capacity to provide affordable and safe medicine to the poor. Despite massive protests the EU continues to insist on data exclusivity and other provisions, which would hinder timely production and delivery of generics”, said Rebecca Varghese Buchholz, trade policy advisor at Traidcraft, UK. “This example illustrates the corporate capture of the negotiation agenda: public health objectives are pushed aside in the interest of pharmacy industry profits.”

Representatives from Indian and European civil society groups claim that the behind-closed-door negotiations must be made more transparent – and be accountable to wider interests in society. “The EU-India summit is another example of the lack of transparency and undemocratic nature of the negotiations. Neither civil society groups nor Members of the European Parliament are allowed to attend the annual summit of political leaders from either region. At the same time, the 11th EU-India business summit will be held bringing together the European and Indian high level business and political representatives to network and shape a joint agenda,” explained Ska Keller, Member of the European Parliament. “This is unacceptable; the broad resistance against the FTA shows that people on both sides are no longer willing to leave the decision-making on their future in the hands of the business and political elite.”

The EU-India summit coincides with the official international human rights day. As civil society, “we believe that December 10 presents a timely opportunity to halt free trade talks until coherence of all provisions with human and women rights obligations can be guaranteed”, urged Barbara Specht, advocacy officer of the gender network WIDE. “Instead of profit interests the negotiations should be guided by gender and social justice and sustainable development objectives.”

“As we have said since talks started in 2007, any agreement must contain a comprehensive and effective chapter on sustainable development entailing the commitment of both parties to the attainment of decent work, including respect for fundamental workers’ rights,” insisted ITUC General Secretary Sharan Burrow. “A social chapter is essential so that an agreement could lead to growth, development and the creation of decent and productive employment,” stated ETUC General Secretary John Monks. “And trade unions must have rights and mechanisms to be able to raise issues under the procedures of the agreement.”

“The impact on the textiles sector stands to be particularly great unless effective measures to protect workers’ rights,” said ITGLWF General Secretary Patrick Itschert. “Our Indian and European affiliates are united in insisting on a strong social chapter.” Trade unions are also concerned at proposals to include provisions on the temporary cross-border movement of workers in the agreement – unions have always stated that trade agreements should not contain provisions to regulate migration. Should any such articles nonetheless be included, these must provide for full respect for national labour law and existing collective agreements in order to ensure that migrant workers receive employment conditions no less favourable than those of nationals.

Reflection group on global development launched

An alliance of civil society groups, networks and foundations, including Third World Network, Social Watch, DAWN, the Friedrich-Ebert-Foundation, Global Policy Forum, terre des hommes, and the Dag Hammarskjöld Foundation, has launched the Civil Society Reflection Group on Global Development Perspectives. The group (>>> www.reflectiongroup.org) consists of about 15 leading civil society activists, experts and academics from around the globe. The group will assess conventional and alternative models of development and well-being, reconsider development goals and indicators, including the Millennium Development Goals (MDGs), draw conclusions for future development strategies and provide specific policy recommendations for the UN Conference on Sustainable Development 2012.

The Group starts its work at a crucial point in time – fast approaching the 2015 deadline for the MDGs, while preparing for the 2012 Conference on Sustainable Development. Today’s unprecedented coincidence of global crises – economic, financial, food and climate – reveals the dead end to which the dominating models of development have led. “It is now time to break old ground, to draw lessons from these crises and to fundamentally rethink our goals and measures of development and social progress – in North and South”, says Jens Martins who is a group member. “The time between the Summits 2010 and 2012 provides a unique window of opportunity to reconsider the current development paradigm and to develop strategies towards a holistic, rights-based approach of global development and well-being.”

Four meetings of the Reflection Group are scheduled to take place throughout 2011. The expected outcome will be presented in a report to be published prior to the 2012 UN Conference on Sustainable Development.

Group Members
Barbara Adams (Global Policy Forum, US), Beryl d’Almeida (Abandoned Babies Committee, Zimbabwe), Alejandro Chanona Burguete (National Autonomous University of México), Chee Yoke Ling (Third World Network, China), Ernst Ulrich von Weizsaecker (Germany), Filomeno Santa Ana III (Action for Economic Reforms, Philippines), George Chira (terre des hommes India), Gigi Francisco (Development Alternatives with Women for the New Era, Philippines), Henning Melber (Dag Hammarskjöld Foundation, Sweden), Jorge Ishizawa (Proyecto Andino de Tecnologias Campesinas, Peru), Karma Ura (Centre for Bhutan Studies, Bhutan), Roberto Bissio (Third World Institute/Social Watch, Uruguay) Victoria Tauli-Corpuz (Tebtebba Foundation, Philippines), Yao Graham (Third World Network-Africa, Ghana), Jens Martens (Global Policy Forum Europe, Germany), Hubert Schillinger (Friedrich-Ebert-Foundation, Germany), Danuta Sacher (terre des hommes Germany)

ActionAid International: G20’s temporary ceasefire

As the G20 in Seoul discussed the ‘currency wars’, ActionAid International called on world leaders to remember the poor and vulnerable that will be most affected by their decisions. Soren Ambrose, ActionAid International’s International Finance policy expert said from Seoul: “The G20 leaders may sign a temporary ceasefire in Seoul, but the ‘currency wars’ will persist. Leaders must acknowledge that a ‘system’ of massive deficits, surpluses, and accumulation of dollar reserves, with developing countries subsidising the US economy, is simply no longer sustainable.

According to Ambrose, the casualties in this war will be the developing countries that can’t defend against hot money flows and the threat of rising prices. The G20 leaders must act now to aim for a lasting peace by examining new proposals for a neutral world reserve currency that can end the distortions before next year’s summit.

Trade unions see mixed outcome of G20 Seoul Summit

Trade unions have welcomed the recognition by the G20 that decent jobs are at the heart of the recovery and their commitment to provide social protection for the most vulnerable, while expressing deep concern about the global consequences of premature austerity measures. “Unions now want to see real action to fix the bitter and unprecedented social crisis of global unemployment between now and the G20 meetings in France in 2011, and remain opposed to slashing fiscal deficits in the short-term before employment is back on track,” stated ITUC General Secretary Sharan Burrow. “We are worried that without coordinated investment in jobs and social protection, the G20 stands to become a transmission belt for communicating recession from one G20 country to another, ultimately damaging the entire global economy.”

“The global economy is far weaker than the G20 admit and far from reassuring the financial markets, a headlong rush to austerity and cutting deficits prematurely will further depress investment, and hit sovereign debt ratings as current growth forecasts are downgraded,” explained TUAC General Secretary John Evans. “Governments are trying to talk up growth by calling for structural reform, but the Seoul Action Plan looks too much like the old agenda of reducing benefits and weakening job protection and will sap the confidence of households. We need a G20 action plan for jobs that promotes fairer income distribution and a demand-led recovery.”

In Seoul, the 50-strong global trade union delegation discussed trade union demands with the summit host President Lee Myung-bak and many other heads of government as well as the chiefs of major international institutions and the European Commission. “G20 Labour Ministers must now meet as soon as possible to discuss best-practice measures for decent work and the ILO’s Global Jobs Pact, and how to stop a recurrence of the labour market inequalities that were a major causative factor in bringing about the crisis,” Burrow added.

Trade unions welcome the G20 commitment to engage with unions in the G20 process, while at the same time warning that the G20 remains unduly tilted towards the narrow self-interest of the financial community. Unions warn that without genuine financial reform, the introduction of a financial transactions tax and an end to tax havens, the resources needed for investment in jobs, development and tackling climate change will be lacking. While the Seoul Development Consensus for Shared Growth is important, it does not compensate for the absence of concrete commitment of resources for the Millennium Development Goals or for the establishment of a global social protection floor, Trade Unions pointed out. Great hopes have been set into the French G20 Presidency for 2011.

G20: Take Action on Financial Transaction Taxes

A global alliance of 183 organisations from 42 countries has just released the following open letter to the G20 Heads of State and Government meeting to their fifth summit later this week in Seoul:

International Civil Society Statement to the G-20 Leaders Summit in Seoul

We, the undersigned 183 civil society organisations from 42 countries collectively representing over 200 million people, urge G20 leaders to make concrete progress towards the introduction of an internationally coordinated financial transactions tax (FTT) at the upcoming summit in Seoul.

Our organizations have long advocated that such taxes are a practical way to generate revenues needed to fill domestic and international financing gaps, discourage the type of short-term financial speculation that has little social value but poses high risks to the economy and serve as a desperately-needed and sustainable source of financing for health and development. In recent months, the case for an FTT has been strengthened with new inputs from sometimes unexpected sources. Several developments have contributed to building a solid foundation for going beyond discussion of options to implementation:

IMF research commissioned by the G-20 recognizes technical feasibility of FTTs
At the 2009 Summit in Pittsburgh, the G20 charged the International Monetary Fund (IMF) with preparing a report on various financial sector taxation options. While the IMF report delivered in June 2010 favoured an alternative approach (devoting only 3 of its 74 pages to FTTs), it did confirm the administrative feasibility of this option. A follow-up IMF technical paper has pointed out that most G20 countries have already implemented some form of transaction tax, and offered useful information on how to design the taxes to make them most effective. The paper also confirmed that such taxes can generate substantial revenues.

A report by the ‘Leading Group on Innovative Financing’ endorses one form of FTT
In July 2010, a group of international finance experts confirmed the feasibility of taxing financial transactions, with a view to financing international commitments for health and development made to developing countries. The experts had been commissioned to produce a feasibility study for a group of 12 governments -- Germany, UK, Japan, France, Belgium, Korea, Norway, Senegal, Brazil, Spain, Austria and Chile. These countries are part of the Leading Group on Innovative Financing for Development, comprised of 60 nations (including 75% of G20 member states). In their report, the experts point to foreign exchange transactions between banks as the easiest option for collecting a solidarity tax. They calculated that an extremely small tax of only 0.005% on such transactions would generate $33bn per year.

European Union and UN High-level Advisory Group on Climate Change Financing consider FTT
Meanwhile, the European Commission is considering the possibility of introducing an FTT at European level, following the support shown by the European Parliament earlier this year. A European Commission report notes that, depending on the rate and coverage, an FTT could potentially generate more than $1 trillion per year. The FTT is also being addressed by a workstream of the High Level Advisory Group of the UN Secretary General on Climate Change Financing (AGF). The Group, made up of heads of state, high-level officials from ministries and central banks, and other finance experts, is expected to release a report on climate finance options this week.

The need for FTTs has grown more urgent

FTTs are one of the few available options that could generate the enormous financial resources required to pay for the continuing costs of the global financial and economic crisis, including reducing the unacceptably high rate of job loss, and to achieve key development, health, education and climate change objectives in developing countries. Several hundred billion dollars worth of untapped revenue could potentially be harnessed. This new financing is required in addition to official development assistance in order to meet the Millennium Development Goals. Alternative financial sector taxes as proposed by the IMF would fall far short of the volume required. At the same time, the potential benefit of FTTs to enhance market stability is of equal interest as the world has become more aware of the dangers posed by automated high-frequency trading that increasingly predominates in financial markets. Even extremely low transactions tax rates would reduce the incentive for such speculative activities.

At the recent UN Summit on Millennium Development Goals, French President Nicolas Sarkozy made a very welcome vow to press for an international agreement on FTTs during his term as G-20 chair in 2011. There is, however, no reason to delay. We call for G-20 action on this critical issue to begin in Seoul.

The complete list of signatories can be accessed >>> here.

South Centre: The missing issues on the G20 agenda

The hopes of a rapid global economy recovery have recently been dashed by renewed turmoil in the world economy. The sovereign debt problems in several European countries, the gyrations in currency exchange rates, volatility in capital flows, and the war of words among major economies over “trade sanctions” and “competitive devaluations” are some of the many troubling signs of a new crisis that may be worse than the 2008-9 crisis triggered by the US sub-prime mortgage problem.

A new South Centre report, Why the IMF and the International Monetary System Need More than Cosmetic Reform, authored by the Centre's Special Economic Advisor, Yilmaz Akyüz argues that these recent problems reflect the lack of international mechanisms to prevent financial crises that have global repercussions and that threaten to spill over to the trading and economic systems. The report points out that:
* There are no effective rules and regulations to bring inherently unstable international financial market and capital flows under control.
* There is no multilateral discipline over misguided monetary, financial and exchange rate policies in systemically important countries despite their strong adverse international spillovers.
* National and international policy makers are preoccupied primarily with resolving crises by supporting those who are responsible for these crises, rather than introducing institutional arrangements to reduce the likelihood of their recurrence. Through such interventions, they are creating more problems than they are solving, and indeed sowing the seeds for future difficulties.

The South Centre report is being issued on the eve of the G20 Summit 10-12 November in Seoul. The G20 has established itself as the forum to deal with the financial crisis. According to the report, however, the G20 and the IMF agendas do not include some of the most important issues that need to be addressed to deal adequately with the financial crisis or prevent future crises. The missing issues include enforceable exchange rate and adjustment obligations, orderly sovereign debt workout mechanisms and the reform of the international reserves system.

Developing countries are especially vulnerable to the effects of the global financial problems, and they also have limited capacity to respond to shocks. They thus have a special interest in the reform of the international financial and monetary system, including the IMF. The reforms should lead to the establishment of an orderly and equitable international monetary and financial system. However, if this does not materialise, developing countries should find ways and means of protecting themselves and looking after their interests through regional mechanisms. These include arrangements regarding regional currencies and exchange rate mechanisms, intra-regional provision of international liquidity, policy surveillance and regulation of financial markets and capital flows.

Global solutions are better than such regional arrangements and developing countries should strive to realise them. But if major economic powers do not cooperate in building the new global system, it is definitely better to have the regional arrangements than to have a “non-system” in which the developing countries continue to be the victims of global financial crises.

Please find the report >>> here.

ITUC calls on World Bank to complete overhaul of Doing Business

The 2011 edition of the World Bank’s Doing Business report includes a welcome first step for revising the report’s past practice of encouraging countries to dismantle labour and social regulations, which it did by granting its best ratings to countries with the lowest levels of workers’ protection. Doing Business 2011 has removed the “Employing Workers Indicator” (EWI) from the “Ease of Doing Business Index” and country rankings, although the basic data from which the EWI is calculated remains in an annex to the report. The Bank has furthermore, according to Doing Business 2011, “instructed staff not to use the [EWI] indicators as a basis for providing policy advice or evaluating country development programs or assistance strategies”.

ITUC general secretary Sharan Burrow invited the Bank to complete the process of overhauling Doing Business. “By considering labour regulations only from the view of whether they are deemed to be good for business, the World Bank has caused enormous damage to workers by advising borrowing countries through its highest-circulation publication that labour standards should be dispensed with,” said Burrow. “The global economic crisis has made clear that well-designed and enforced labour regulations and social protection are essential for securing employment and for providing adequate income for those who lose their jobs. The Bank should carry through on the positive step it has made in Doing Business 2011 by removing the EWI from all future editions and, instead, adopting policies on labour issues that recognise and reward the importance of adequate labour regulations and comprehensive social protection.”

The ITUC noted that even though Doing Business’s annex on “Employing Workers” speaks positively of countries that provide financial support for reduced working time programmes designed to prevent lay-offs or that have increased unemployment benefits, the report penalizes countries that require any sort of contribution by employers for unemployment insurance, workmen’s compensation, old-age pensions, maternity leave or other social protection programmes. Through its “Paying Taxes Indicator”, which has not been modified in Doing Business 2011, the Bank continues to advocate that business should be exempt from all forms of taxation, whether it be corporate income tax, property tax, social security contributions, property tax, capital gains tax or financial transactions tax. Doing Business 2011’s top ten best performers for their very low total tax rate on business include Timor Leste, Vanuatu, Maldives, Macedonia, United Arab Emirates, Saudi Arabia and Georgia.

World unions ask G20 Finance Ministers: Where are the Jobs?

International trade unions have accused G20 governments of being complacent in their claim this week that – according to the G20 Finance Ministers Communiqué – “global economic recovery continues to advance”. “G20 Finance Ministers have to look beyond the comfort zone of Wall St and the City of London, to the reality that millions of people are still losing their jobs and are now being made to suffer further austerity whilst the benefits accrue to the very banks and financiers who caused the global crisis in the first place,” said ITUC General Secretary Sharan Burrow. According to ITUC, the world economy is not out of the woods yet, and the commitments made by the G20 in London and Pittsburgh to put employment at the centre of decision-making are not being met. The G20 leaders’ meeting in Seoul next month must put jobs back on the G20 agenda.

While the Communiqué of the Finance Ministers meeting in Gyeongju, South Korea, talk about the need for international cooperation and coordinated responses to the crisis, there is scant evidence of governments working together, except to reinforce their apparent determination to achieve “fiscal consolidation” to appease the financial markets rather than to get growth into the global economy and put people back to work. The proposal by the US administration to set limits for both trade surpluses and deficits were watered down in the Ministers’ conclusions and now will have to be revisited in Seoul. “Whatever the mechanism, more balanced global growth that is consistent with falling unemployment has to be achieved by surplus countries expanding domestic demand more rapidly - not just through adjustment by deficit countries” said Burrow.

The Ministers also agreed to “complete financial repair and regulatory reforms without delay” – a statement challenged by the unions on the basis that work has hardly started to fully implement the measures which are required. In addition, their reference to the “importance of partnership between governments and business to promote economic growth beyond the crisis”, gives rise to further concern about the undue influence of business on the global agenda. The G20 should be establishing a broad based task force on jobs that includes all social partners instead of developing a cosy relationship with business elites that gives them a fast track to press for more of the labour market deregulation that led to the rising inequality before the crisis, said John Evans, General Secretary of the OECD Trade Union Advisory Committee.

The commitment to increase developing country influence on decision-making at the International Monetary Fund is welcomed by the unions, however the target date of January 2014 for this to be completed means that the current industrial-country bias at the IMF will remain in place for at least three years more. The Ministers’ reference to the IMF promoting “structural reform” is of great concern, given that this has always been understood to include further weakening of labour laws, such as the sweeping deregulation currently being pushed by the IMF on Romania. – A top-level international delegation of trade union leaders will press their concerns on these and other key issues in meetings with G20 leaders at their Summit in Seoul next month.

G20 must create new Seoul development consensus

Growth is necessary but not sufficient to lift poor people out of poverty, international agency Oxfam said as it published a briefing paper calling on the G20 to agree an historic new Seoul development consensus to help the world’s poorest. The paper, The Making of a Seoul Development Consensus, shows that people living in extreme poverty largely missed out on the benefits of growth in the last two decades of the 20th century. The poorest received only 1.5% of the $1.9trillion additional global gross domestic product (GDP) even though they accounted for a third of the world’s population at the start of the period. Today, the poorest 40% get just 5% of the world’s income.

By contrast, the poorest have been hit hard by the recent global slump with the World Bank estimating that 64 million have been pushed into poverty by the crisis and the poorest countries suffering a $65bn fiscal hole, forcing them to make cuts to health, education and agriculture spending. This comes at a time when millions of poor people are already struggling as a result of increased food prices and extreme weather linked to climate change.

G20 officials are meeting in Seoul on Thursday and Friday this week to lay the foundations of the G20’s approach to development ahead of the Heads of State summit next month. Jasmine Burnley, Oxfam policy adviser and co-author of The Making of a Seoul Development Consensus, said: “These startling statistics show the scale of the failure of the discredited Washington consensus and the need for G20 leaders to break with the past and provide real global economic leadership in tackling poverty. Economic growth is vital to help poor people escape poverty, but history teaches us that it is not enough on its own. We need to see a new Seoul Consensus that not only drives economic growth but is sustainable and ensures the poorest receive a fair share of the benefits.

“The G20 should ensure that investment in agriculture, free health care and education are stepped up, not reduced in response to the economic crisis. Malaria alone costs Africa $12bn each year in lost revenue and improvements in education are clearly linked to increases in GDP. In this way helping the poorest will boost the global economy to the benefit of all.”

Oxfam is calling on G8 countries to meet their existing promises to increase overseas aid. It also wants the G20 to take action to fix the hole in poor countries’ budgets by introducing a financial transaction tax on the banks, hedge funds and other institutions whose greed did so much to cause the economic crisis. Burnley said: “It cannot be right that while banks have received trillions in state bailouts poor countries are left without any alternative but to slash essential services to the poor as a result of a crisis they did nothing to cause. Taxing the financial sector is the fairest way to protect the poorest from the damage done by the global financial elite.”

* Please find the report >>> here.

Global Witness: British banks complicit in Nigerian corruption

British high street banks have accepted millions of pounds in deposits from corrupt Nigerian politicians, raising serious questions about their commitment to tackling financial crime, warned Global Witness in a new report, International Thief Thief. By taking money from corrupt Nigerian governors between 1999 and 2005, Barclays, NatWest, RBS, HSBC and UBS helped to fuel corruption and entrench poverty in Nigeria. What is so extraordinary about this story is that nearly all of these of these banks had previously fallen foul of the UK banking regulator, the Financial Services Authority (FSA), in 2001 by reportedly helping the former Nigerian dictator Sani Abacha funnel nearly a billion pounds through the UK. These banks were supposed to have tightened up their systems but as this report now shows, a few years later, they were accepting corrupt Nigerian money again.

There is no sign that the FSA has taken any action this time. Global Witness's new report is based on analysis of court documents from litigation in London by the Nigerian government to get funds returned from the UK that were stolen by two former state governors. British banks made it possible for Dieypreye Alamieyeseigha of Bayelsa State and Joshua Dariye of Plateau State to bring their corrupt loot into the UK. "Banks are quick to penalise ordinary customers for minor infractions but seem to be less concerned about dirty money passing through their accounts," said Robert Palmer, campaigner at Global Witness. "Large scale corruption is simply not possible without a bank willing to process payments from dodgy sources, or hold accounts for corrupt politicians," he added.

One of the banks profiled in the report is RBS, now majority owned by the taxpayer. RBS allowed former governor Alamieyeseigha to receive bribes and bring £2.7m into the UK. An English High Court judge found that at least £1.56m of these funds were bribes paid by a state contractor called Ehigie Edobor Uzamere, currently a Nigerian senator, in order to win a contract to build a fence around the governor's official lodge. Global Witness has asked RBS whether it carried out adequate checks on its customer and his funds, but has not had a reply.

Global Witness is concerned that banks and the FSA have yet to take this problem seriously enough. Anti-money laundering regulations require banks to identify their customers and the source of funds, but they are not being adequately enforced. Banks need to get much better at checking where the money is coming from and whether it was obtained through corrupt practices. The banks in this report may not have broken the law, but corrupt money still entered the UK and so our financial system is still complicit in corruption. This is an ongoing problem, as shown by the action taken against HSBC by the US regulators last week. They required HSBC's American arm to overhaul its due diligence systems following violations of US anti-money laundering laws and inadequate monitoring of transactions and customers, including ‘politically exposed persons' - ie the foreign senior officials who could be involved in corruption.

The British coalition government plans to abolish the FSA. Whatever body replaces it must take corruption seriously. The government and the new regulator must send a clear signal to the financial sector that corrupt money is not welcome. And the banks themselves must demonstrate much more clearly the steps they are taking to stop dirty money entering the financial system.

* Please find the report >>> here.

Climate funds bypass hardest hit: Oxfam calls for a new global climate fund

The poorest people who need the most help to adapt to a changing climate are largely being bypassed by the small amount of climate funds now being disbursed, says a new Oxfam report published today at the UN climate change talks in Tianjin, China. The report, Righting Two Wrongs: Making a New Global Climate Fund Work for Poor People, shows that negotiators must create a Global Climate Fund that vulnerable populations in poor countries can access so that they are not left behind in proposed climate solutions. The study brings together evidence, which shows that in recent years:

* Less than a tenth of climate funds disbursed to date are estimated to have been for adaptation to help poor people in developing countries who are bearing the brunt of climate impacts.
* The world’s 49 poorest countries have received about one-eighth – $450m out of $3.5bn – of funding from the Global Environment Facility.
* Only $220m has been donated to fund adaptation plans (known as NAPAs) in the Least Developed Countries – just one tenth of the $2bn estimated total plan costs.

Oxfam is calling for a new Global Climate Fund to be set up at the UN climate summit in Cancún in December to govern public funds pledged by developed nations under the Copenhagen Accord. This fund must help address the failure to get adequate climate investments to poor people who bear the brunt of climate change’s impacts. “Righting Two Wrongs” calls for a new fund and broader finance system that is seen as legitimate by both developed and developing countries and that is representative, equitable, accountable, accessible, transparent and efficient. Poor governments must be able to directly access the fund and at least half of the money should be spent helping poor and vulnerable people adapt to a changing climate. In addition, a number of accountability measures are recommended, including ensuring that poor countries and women have an equal say in how the fund is managed and spent and that the fund is transparent as to where the money is going.

* Please find the report >>> here.

IMF and World Bank annual meetings: Global unions’ call

Concerned by the faltering pace of global economic recovery, which has yet to produce a real recovery for millions of workers and unemployed men and women, the ITUC and its Global Unions partners have called upon the 2010 Annual Meetings of the World Bank and the IMF (8-9 October in Washington) to reject austerity programmes and to support job-focused stimulus measures and investments in quality public services to assist in the global economic recovery. “The World Bank and the IMF must pay greater attention to the underlying problems that explain stagnant and declining real wages, including widespread violation of workers’ rights,” said ITUC General Secretary Sharan Burrow. “Redressing the declining income of working people and closing the gender pay gap should be major objectives of both institutions. The IFIs must work to build a more balanced and robust global economic recovery, which means that they should encourage and support countries that adopt labour and social protection policies aimed at reducing inequality.”

In a statement released on 5 October, the international trade union movement points out that austerity conditions applied in recent IMF loans have already been felt by working people, including the rapidly declining quality of public services that will cause long-term harm to countries’ development. Noting that the IMF’s lending capacity was tripled in 2009 in order to combat the global economic crisis, Burrow stated: “The Fund should use its vastly expanded financial resources to encourage countries affected by the global crisis to deploy counter-cyclical fiscal policies over longer periods of time until they have fully emerged from recession situations. Furthermore, the situation of Greece and other countries underscores the need for an effective sovereign debt restructuring mechanism that can be used by countries with unsustainable debt levels.”

A renewed recession potentially looming on the horizon threatens to further slow progress in attaining the UN Millennium Development Goals, already severely compromised due to negative economic growth in 2008-2009 and failures to meet aid commitments. Moreover, many countries have not moved forward with necessary regulations of risky financial activities – the kind that led to financial collapse in 2008. Global Unions call on the IMF to assist in the design and implementation of a financial transactions tax (FTT) as an effective and just means to generate revenue to repair damage caused by the financial crisis (including unacceptably high rates of joblessness) and to fulfil major international development and climate change finance commitments.

* Please find the Global Unions’ statement >>> here.

Call for a “Greenpeace of Finance”

Last week, French Green MEP Pascal Canfin launched a call for the establishment of a “Greenpeace of finance” to counter the powerful lobby groups which can dominate EU decision-making over reform of the financial sector. Strong civil society involvement is essential for ensuring that there is a democratic debate over EU policy in this area, he argued. “No NGO in Europe is capable of producing specific expertise like Greenpeace can on nuclear or Amnesty International can on human rights. We need a Greenpeace of finance,” Canfin said.

According to Canfin, “Historically the banking sector isn't a traditional action area for NGOs. The newness of the topic means that they do not spend very much money developing expertise in the area”. He called also for former bankers and traders to become involved.

A consultation was held between MEPs and civil society organisations (CSOs) on this issue under the title “Make Finance Work”, with the aim of exchanging experiences and building joint capacities to influence financial regulation, and of planning joint campaign activities for sustainable finance. Parliament offered to provide funding for the establishment of a “Finance-Watch” umbrella network for an initial period of six months, after which the CSOs would be expected to continue its running on their own. It was stressed by participants that funds would be needed to finance detailed academic studies which could serve as relevant input for drafting legislation, as this is a proven way to affect policy change.

However, despite official recognition by the EU of the importance of an “open, transparent and regular dialogue” with civil society, CSOs often claim that the EU institutions marginalise them and refuse to engage with their demands for greater openness. One notable example is the EU’s bio-fuels policy: last week five environmental groups wrote an open letter to the European Commission demanding that it live up to the Lisbon Treaty’s requirements for transparency over this issue. “We are worried that a pattern of scientific obfuscation and intransparent working is emerging within the Commission regarding the impact of the European Union’s bio-fuel policies,” reads the letter.

Massive protest in Brussels rejects European austerity plans

More than 100,000 trade unionists from throughout Europe took to the streets of Brussels on 29 September to oppose austerity measures which, if governments do not change direction, will have disastrous social and economic results. Parallel national protests taking place across Europe include a general strike in Spain, and demonstrations in Italy, France, Portugal, Lithuania, Latvia, Germany, Cyprus, Serbia, Poland, Finland and Ireland. Protests already held in Bucharest and Prague brought together more than 20,000 and 40,000 people respectively.

John Monks, General Secretary of the European Trade Union Confederation (ETUC) which organised the Brussels march, said “Trade unionism is on an unstoppable march for progress, equality and justice, determined to build from the debris of the current crisis, a new, better society where those who are too big to fail cannot be allowed to continue to ignore those who they have regarded as too small to matter.” Along with the actions in Europe, trade unions from across the world are planning events to call for jobs, public services and regulation of banking and finance in the lead up to the World Day for Decent Work, on 7 October.

Tens of thousands of US trade unionists will take part in a rally in Washington DC on 2 October, organised by “One Nation Working Together”, a grassroots coalition advocating the creation, protection and advancement of good jobs. “During this economic downturn, creating good jobs and helping those who have lost their jobs are defining issues not only for Americans – but for all workers throughout the world. We need a global economic recovery that works for all working people,” said Rich Trumka, President of the AFL-CIO, which is organising the Washington march along with dozens of civil and human rights organisations.

More than 100 events have already been registered on the World Day for Decent Work website, which tracks activities organised by trade union organisations in the lead up to and during 7 October itself. A major international conference the following week in Geneva will focus on countering the threat to quality public services posed by the growing obsession of governments to implement austerity measures without proper regard to the consequences on social cohesion and employment.

“Working people and those seeking jobs are justified in their anger at having the costs of the crisis forced upon them while bankers, financiers and speculators once again reap the spoils at the expense of the real economy. Tens of millions of jobs have been lost, and 100 million people pushed into absolute poverty in the developing world. Governments, especially the G20, pledged to regulate the finance sector, to create jobs and put the world economy on a sustainable and productive pathway. Yet they are not showing the common will needed to meet these goals. We will continue and step up the pressure until they do,” said ITUC General Secretary Sharan Burrow.

The cost of hunger and a summit failure

A new ActionAid report has revealed that hunger could be costing poor nations $450bn a year - more than ten times the amount needed to halve hunger by 2015 and meet Millennium Development Goal One. The report, Who’s really fighting hunger? shows the real dates countries will meet MDG1 and scores nations on their efforts to fight hunger. Is was released to coincide with world leaders meeting at the UN in New York to discuss progress on the Millennium Development Goals.

As the UN Millennium Development Goals summit closes in New York, ActionAid’s Chief Executive Joanna Kerr says: “With the world still reeling from a global food crisis and the threat of another looming, world leaders should have initiated an emergency response here at the summit. Instead for yet another year nearly a billion people will go to bed hungry and the world will be $450 billion poorer.”

According to ActionAid, UN summits will continue failing to deliver so long as leaders keep making empty promises on too many issues. With only five years to go, concerted action on the goals most off track is the only way forward. “Spreading yourself too thin never gets the job done.”

Unions call for IMF and ILO: Work for jobs and recovery

At a major conference organised by the International Monetary Fund (IMF) and the International Labour Organisation (ILO) in Oslo on 13 September, a high-level international union delegation led by ITUC President Michael Sommer and ITUC General Secretary Sharan Burrow will be arguing that priority must be given to maintaining economic stimulus policies, and achieving a real and sustained economic recovery with jobs at the centre.

"Achieving durable recovery means that the labour market imbalances and inequalities that were a major cause of the crisis must be tackled and prevented. Therefore, recovery must not be built on deregulation but can succeed only if based on policies that can improve well-being for people – on better and more available social protection, on collective bargaining, on higher minimum wages, on more progressive taxation, on green jobs – policies encapsulated in the Global Jobs Pact of the ILO," said ITUC General Secretary Sharan Burrow, adding “Furthermore, a financial transactions tax is needed to help provide the resources to carry out those policies.”

The Conference comes shortly after the release of the OECD’s Interim Economic Assessment that signals a likely slowdown in growth to 1.5% in the G7 economies in the second half of the year.

* A link to an ILO/IMF background document on the conference can be found >>> here.

Ecofin meeting: Not the end of Robin Hood Tax debate

The recent meeting of the EU ministers for economy and finance (Ecofin) could not find an agreement on the implementation of the Financial Transaction Tax (FTT) also known as Robin Hood Tax. But according to Peter Wahl of weed Germany, “this is not yet the end of the discussion”. The official communiqué says: “Ministers will further discuss the issue at an informal meeting in Brussels on 30 September and 1 October." This is confirmed by a statement of the German finance minister Schäuble who said (according to the German edition of the Financial Times) that the implementation of the tax was not for sure but there would be a chance for which one must fight. The British finance minister Osborn said instead: "This has been discussed since decades and will continue to be discussed for decades."

Unofficial sources said that Greece would have joined the camp of the proponents which by now consists of Austria, Belgium, France, and Germany.

The president of the EU Commission (the executive of the Union) Barroso said in a speech at the European Parliament yesterday: "I am also defending taxes on financial activities and we will come with proposals this autumn." It is unclear what he means by "financial activities". It could be the "Financial Activities Tax" as proposed by the IMF, but it could also be something else. Probably the opacity is by intention in order not to occur partisan between the big shots Germany and France on the one hand and the UK at the other.

France announced to raise the issue of the FTT again in the G20, although the Toronto summit had refused the FFT.

As the Germans had announced that in case that an implementation at EU level would not be possible - and the statement of Osborn points very much in that direction - an implementation in the Euro Zone should be considered. The finance minister of Luxembourg, Luc Frieden, opposed this and said the FTT "in the Euro zone only is not acceptable."

Despite the political differences on the subject Peter Wahl still sees a window of opportunity for the FTT:

“The differences between the elites are obvious. They are not capable to come to an agreement in either direction. Pressure from civil society should therefore continue. This is also important in those countries, where the government is in favour of the FTT, in order to prevent a retreat. There are some major countries such as Italy and Spain where the government is silent. There, pressure should try to reach a positive attitude.
The option of the implementation in the Euro zone should be looked at more in detail. The Europeans should prepare for the October Ecofin and the proposal announced by the Commission. At global level, the UN conference on the MDGs and the General Assembly and the G20 summit in Seoul could be further landmarks for campaigning.”

Stand-Up Against Poverty

Fiscal holes and black holes threaten MDGs

A just published report for Oxfam by Development Finance International, The Impact of the Global Financial Crisis on the Budgets of Low-Income Countries, examines the impact of the global financial crisis on the budgets of low-income countries, especially their spending to reach the Millennium Development Goals (MDG). The crisis created a huge budget revenue hole of $65bn, of which aid has filled only one-third. As a result, after some fiscal stimulus to combat the crisis in 2009, most Low income Countries (LIC) (including those with IMF programs) are cutting MDG spending, especially on education and social protection. They have also had to borrow expensive domestic loans, and increase anti-poor sales taxes. Almost all LICs could absorb much more aid without negative economic consequences (whereas they have much less space to borrow or to raise taxes).

The report therefore urges the international community to make strong new aid commitments at the Millennium Summit in September 2010, funded by financial transaction taxes or other innovative financing:

* the IMF to encourage LICs to spend more on MDG goals and on combating climate change and to report regularly on such spending;
* and LIC governments to increase spending on social protection and education; taxation of income; property and foreign investors; and efforts to fight tax avoidance.

The authors of the report, Katerina Kyrili and Matthew Martin from Development Finance International warn: “If these changes are not made, the fiscal hole caused by the crisis risks becoming a ‘black hole’ into which the MDGs, and the lives and education of many of the world’s poorest citizens, will disappear.“

UN Summit should endorse financial transactions tax

The International Trade Union Federation (ITUC) is calling on governments to commit to introducing a financial transactions tax (FTT) at September’s United Nations Development Summit to help tackle global poverty and accelerate action on jobs and climate change. The UN Summit, to review progress on the Millennium Development Goals (MDGs), will take place against a background of growing global unemployment and inequality and major set-backs on economic development in countries across the globe. An FTT could raise between US$200bn and US$900bn depending on the way it is structured and the level at which it is set, according to the ITUC submission which is being sent by its national affiliates to governments in preparation for the Summit. Even a small percentage of the funds raised by an FTT would help put in place a social protection floor, which would give a major boost to tackling poverty. The submission sets out the case for putting an FTT at the centre of an overall package of measures which would also tackle corporate tax evasion and ensure effective regulation of banks and finance.

According to the trade union body, instead of simply focusing on spending cuts, governments need to increase revenues to ensure employment, public services and development aid. Parts of the finance sector are awash with money, just two years after taxpayers had to bail out poorly regulated banks. An FTT would not solve all the world’s problems, but it would certainly be a good starting point by moving capital from speculative profiteering to kick-starting the real economy and helping avoid a double-dip recession which would have horrendous consequences for the poorest countries in particular, trade unionists say.

HIV and AIDS: Trade unions press for rights-based approach to combat pandemic

International trade union movement is calling for governments to push ahead with a rights-based approach to tackling the HIV and AIDS pandemic, following the 18th International AIDS Conference in Vienna at the end of July. “While there are some positive signs concerning HIV and AIDS prevalence in some countries, millions of HIV-positive people have no access to treatment, millions more are at high risk of infection and there are disturbing signs of increasing incidence in several countries. We have to overcome the stigma and discrimination which are still common around the globe, and allocate sufficient resources to stop the spread of the virus and ensure that treatment is available to all those affected. We are especially concerned that the global economic crisis, and cuts to public expenditure on health in particular could undermine the progress which has been made,” said ITUC General Secretary Sharan Burrow.

Stressing the importance of action at the workplace in fighting the pandemic, the trade union delegation at the Vienna Conference highlighted the adoption of a Recommendation on HIV-AIDS and the World of Work by the ILO at its June Conference this year. The ILO Recommendation, the first ever international human rights instrument to focus explicitly on HIV and AIDS and the world of work, was adopted by an overwhelming majority of ILO delegates. It clearly establishes the importance of action at the workplace, including voluntary testing and counselling protection against discrimination, and focuses on the need for engagement with those most vulnerable and at risk.

Trade union participants from the ITUC, Global Union Federations and national representatives from across the world, including Argentina, Cameroon, Canada, Cote d’Ivoire, Ghana, Guyana, Kenya, Nigeria, the Philippines, Tanzania, Uganda, the UK, Ukraine and Zimbabwe joined the ITUC’s Austrian affiliate the OeGB which hosted the trade union delegation to the Vienna Conference, which was attended by more than 20,000 participants in total.

For further information:
* Global Unions AIDS Programme (GUAP), Statement to the Vienna AIDS Conference

Oxfam: G8’s summit of shame fails poor people

As the G8 Summit comes to a close, international agency Oxfam criticized the leaders for their failure to deliver on their promises and for trying to divert attention by cobbling together a small initiative for maternal and child health. “No maple leaf is big enough to hide the shame of Canada’s summit of broken promises,” said Mark Fried, spokesperson for Oxfam. “The G8’s failure will leave a sad legacy of kids out of school, denied medicines for the sick, and no food for the hungry.”

With total G8 aid frozen, their five billion dollar commitment to maternal health will likely be taken from vital areas such as education and food, cautioned Oxfam. “This year the headline is maternal health, last year it was food. With overall aid frozen, the G8 are just shuffling the same money around to different pots,” said Fried. “The only promise that counts is the Gleneagles one to increase aid by $50 billion by 2010 and that is the one they have abandoned today.”

At the last G8 Summit, donors pledges $22 billion over three years to support agriculture in developing countries, but Oxfam calculates that at most $6 billion of this is new money and they are double counting it to pay for other initiatives, such as helping poor countries cope with climate change. “There are a billion hungry people in the world but it seems the G8 are out to lunch. Instead of new money for old promises, we got old money, re-pledged, recycled and renamed,” said Fried. “Oxfam asks France, as next year’s G8 host, to offer real accountability and resuscitate the G8’s flagging commitment to the world’s poor.”

As focus now shifts to the G20, Oxfam is encouraged by the place development issues have garnered on the agenda, and called on leaders to give poor countries a seat at the table. “The G20 mustn’t repeat the G8’s mistake of only inviting Africa for the photo ops,” said Fried. Oxfam also urged the G20 to adopt a financial transaction tax to raise the funds necessary to fight poverty and climate change. "After the scandal of the G8's broken promises, the G20 now has the chance to stand up and deliver for the world's poor,” said actor and Oxfam Global Ambassador Bill Nighy in Toronto. "A Robin Hood Tax on banks is a simple but brilliant idea to raise hundreds of billions of dollars to help millions of poor people who have been hit hardest by global economic downturn, hunger and climate change."

EU aid own goals pushing MDGs out of reach

EU Member States are missing their official development aid targets and jeopardising global efforts to reach the Millennium Development Goals, reveals a new report published today by CONCORD, the European confederation of development NGOs. The report, Penalty against Poverty: More and Better EU aid can score Millennium Development Goals, is being released as EU leaders are set to meet in Brussels next week to agree their common position for the United Nations’ MDG Summit in New York this September.

‘Penalty against Poverty’ finds that EU development aid in 2009 amounted to €49bn or 0.42% of national income – €1bn less than 2008 levels. Official estimates for 2010 put total EU aid at 0.46% of national income, far short of the 0.56% target for 2010 agreed by member states back in 2005. In real terms, this represents a shortfall of €11bn in funding with some of the EU’s biggest economies – Italy (€4.5bn), Germany (€2.6bn) and France (€800m) – amongst the worst offenders.

“EU aid efforts are being crippled by a crisis of commitment. In 2005 EU leaders committed to allocating 0.7% of their national income to fight global poverty but 5 years later they are well off-track on aid and abandoning their international commitments on aid effectiveness”, said Hussaini Abdu, Country Director of ActionAid Nigeria. “We are not asking them to get more ambitious about fighting poverty, just keep their existing promises on aid quality and quantity”, he said

The annual AidWatch report notes that although inflated aid figures continued to decline compared to 2008 levels, a staggering €3.8bn of inflated aid – or 8% of the total EU amount – was reported in 2009. This includes €1.4bn for debt cancellation, €1.5bn in student costs and €0.9bn spent on refugees in donor countries – making real EU development aid only 0.38% of European GNI.

“EU aid is €19bn short of what was promised to developing countries by 2010 to help them meet the MDGs – more than half the estimated extra €32bn required per year globally to meet the hunger goal alone”, said Justin Kilcullen, President of CONCORD. “This is very disappointing from a bloc that calls itself a leader on global development”, added Eduardo Sánchez, President of the Spanish NGO platform. “Europe’s credibility as a global leader on development is at stake. If EU leaders are serious about regaining the trust of poor countries, they must come up with an ambitious MDG action plan next week”, said Elise Ford, head of Oxfam International’s EU office.

Representing over 1,600 European NGOs, CONCORD calls on EU governments to keep their promises to deliver more and better EU development aid. EU leaders must commit to legally-binding yearly timetables stating how aid targets will be met and find new ways to raise money for development such as a financial transaction tax which would bring estimated yearly revenue of €215bn - €1tr at no extra cost to the tax payer. Europe must put an end to the inflation of aid figures and place developing countries and their citizens at the centre of efforts to meet the MDGs.

Trade unions warn G20 finance ministers against inaction

As G20 finance ministers and central bankers meet in Busan, Korea, on 4-5 June 2010, with proposals to introduce new taxes on banks and other financial institutions high on their agenda, trade unions are calling for a firm and comprehensive G20 agreement to re-regulate global finance, including the introduction of a financial transaction tax. “Current proposals to introduce new bank taxation and new limits on bank loans in a strengthened Basel II agreement fall far short of the bold and ambitious action that is needed to deliver the necessary changes and quell the rising tide of public anger caused by speculative pressure on countries like Greece and Portugal,” said ITUC General Secretary Guy Ryder. “We need a real hands-on approach to banking supervision and to excessive bankers’ pay, and to shielding commercial and retail banking from irresponsible shadow banking and speculation.”

“Concerns about preciously guarded national sovereignty or disrupting the slow economic recovery are misplaced,” stated TUAC General Secretary John Evans. “On the contrary, regulation is key to attaining recovery. Such concerns can be addressed by well-designed and coordinated international cooperation, and G20 Finance Ministers should instruct the Financial Stability Board to undertake comprehensive modelling to pave the way for the creation of a financial transaction tax at global or regional level.”

“The reports by the Financial Stability Board and its members released in the past year reveal the extent to which governments and supervisory authorities have lost control over global finance,” UNI General Secretary Philip Jennings emphasised. “It is essential that all derivatives and alternative investments, including hedge funds and private equity, should be brought under the scrutiny of proper regulation and public authorities. Moreover, worker representation in bank and insurance risk management systems needs to be enhanced.”

See trade union statement to the Financial Stability Board >>> http://www.ituc-csi.org/trade-union-statement-to-the-4th.html

G20 must seize this moment to make the world a fairer place

A global bank tax to help poor countries survive the economic crisis must be urgently agreed, Oxfam said ahead of the G20 meeting of finance ministers in Busan, South Korea. International development agency Oxfam is pressing for a bank tax that will raise a minimum of $200 billion per year globally to help pay for the impact of the crisis on the poorest and for the costs of climate change, and which will raise the same amount for rich countries to spend on domestic priorities.

Oxfam spokesperson Mark Fried said: “This is a once-in-a generation opportunity for the G20 to reshape the global economy in favor of poor people. We can never return to a situation where the greed of the richest takes precedence over the needs of billions. However the G20 chooses to structure the tax, it should bail out not banks, but the world's poorest people. A financial sector tax is the best option to deliver the scale of resources needed to recover from the financial crisis. The G20 must now seize the moment and deliver a tax that will to raise resources to tackle poverty and climate change. Finance ministers meeting this week must agree a roadmap for taxing the financial sector, and close the deal at their upcoming Canada summit.”

The International Monetary Fund (IMF) gave its preliminary report on a financial sector tax to G20 finance ministers in April. The IMF proposal is two taxes to repay the costs of the global economic crisis and to pay crises to come: a levy payable by all financial institutions, and a tax on their profits and pay. The G8 has broken its promise of $50 billion in aid to poor countries by 2010, and 50,000 more children in Sub-Saharan African countries died last year because of the financial crisis.

Climate cash must not increase developing countries' debt

Oxfam has warned that the $100bn a year pledged by rich nations to help fight climate change could fail the poorest people, if recent moves to deliver climate cash as loans continue. A new report, Climate Finance Post-Copenhagen: The $100 billion questions, comes up as UN climate negotiations re-open for the first time since last year’s summit in Copenhagen. Whilst recognizing the need for some limited cut-rate loans to help poor countries develop in a low carbon way, the international agency strongly opposes the use of loans to help communities adapt to climate impacts.

Oxfam’s concerns come at a time when it is becoming clear that a significant proportion of the first installments of climate cash, to be delivered between 2010 and 2012 will be loans not grants. “At a time of economic emergency, when several poor countries are slashing critical health and education budgets to avoid a debt crisis, rich countries are considering saddling them with climate debt for a situation they did not cause and are worst affected by,” said Oxfam’s Senior Policy Advisor Antonio Hill. “It’s like crashing your neighbor's car and then offering a loan to cover the damages,” he added.

The report lays out a clear road map for how rich countries can not only meet their $100bn a year promise, but also double it by 2020 in line with actual needs. It suggests new and innovative sources from which to raise the cash, to ensure that governments do not raid it from existing and future aid budgets. These include:
* $100bn a year from a global Financial Transactions or ‘Robin Hood’ tax on banks – a small tax of 0.05% that could raise $400bn a year for health, education and climate change.
* $20-$30bn a year through the creation of emissions trading programs for international aviation and shipping; this would cap the amount of carbon emissions that could be produced by these industries, then charge them for each unit of carbon used.
* $75bn a year in fixed contributions from rich countries according to their historic responsibility for carbon emissions and ability to pay; this could be raised through the money from domestic emissions trading (or cap-and-trade) programs or taken from budgets currently used for subsidizing fossil fuels and carbon-heavy industry.
* $16bn a year by 2012 from the IMF in the form of low-interest loans for low-carbon development - using $120bn of rich country Special Drawing rights (SDRs) as capital, ‘green bonds’ could be issued, raising $40bn per year that can be made available as low-cost loans for clean energy investments in developing countries. Of the $40bn loaned every year, the net transfer (or savings) benefiting developing countries is $16bn.

The report also highlights the need for public sources of climate cash, to ensure the world’s poorest are not excluded from investments in their future. Whilst huge sums are needed from big business to create a global green economy, it is unlikely that companies will invest in small-scale projects with little or no financial return, designed to help poor people adapt to climate change, such as planting mangroves and developing irrigation systems. As 80% of food produced in poor countries is grown by women farmers, relying on market forces to deal with climate impacts could pose grave threats to world hunger.
Oxfam is calling on negotiators in Bonn to deliver and report openly on climate cash in 2010. A clear framework for raising and doubling the $100bn pledge in public money must be agreed by the Mexico summit in December this year.

Download the report >>> here.

Commissioner Barnier’s bank levy proposal

The EU commissioner for Internal Market, Michel Barnier, also responsible for the EU package on financial reforms, issued an official communication last week on a European project of a bank levy with some relevance for the debate on the FTT. Peter Wahl has analyzed the proposal:

Very interesting is that Barnier makes clear, that he considers the bank levy not as a tactical manoeuvre to kick the FTT off the agenda. Speaking of "levies or taxes whose purpose is to recoup the public funds committed during the current crisis to stabilise the banking system or to tackle excessive risk- taking or speculation," he declares: "The examination of such measures should continue in parallel as a useful complement to the preventive funds that are considered in this Communication."

This corresponds to the position of France (Barnier is French) to consider both a bank levy and the FTT. Barnier had spoken out before a commission of the European Parliament in favour of the FTT.

There is some more quite progressive language in the Communication. For instance: "Political support is growing for applying the so-called "polluter pays" principle, known from environmental policy, also in the financial sector so that those responsible for causing it will pay for the costs of any possible future financial crisis."

The communication also takes on board the critique, that the bank levy would increase moral hazard: "The Commission recognises that this is a major concern which needs to be addressed by making it clear and unambiguous that shareholders (up to the value of their investment) and creditors (excluding depositors which are guaranteed by deposit guarantee schemes) must be the first to face the consequences of a bank failure and that resolution funds must not be used as an insurance against failure or to bail out failing banks, but rather to facilitate an orderly failure."

Barnier also is aware of the risk that a bank levy would be passed on to the clients: "It should also be avoided that increased costs are passed on to bank customers in the form of higher charges." Furthermore, the bank levy should be part of a broader framework of regulation which is able to "mitigate the implicit guarantees associated with institutions deemed ‘too big to fail’.

The communication makes already some proposals on the size of the revenues (2%-4% of GDP) and other details.

A detailed draft will be presented in October and the legislation process should start in 2011. The communication is also meant as an input to the G20 finance ministers meeting in Seoul in June.

Of course, it is by now only an official declaration of political will, and during the further process attempts will come up to water it down. Nevertheless, its general tone reflects the deep shock of the Euro crisis and an increasing awareness of European political elites, that they have to do more than they did by now.

Trade Unions’ Message to OECD Ministers: Beat the Jobs Crisis First!

In a statement to the OECD Ministerial Meeting 27-28 May 2010, trade unions urge governments to put jobs, social cohesion, progressive taxation and green growth at the heart of recovery strategies. Global unemployment has risen by 34 million since the crisis began and many millions more workers who cannot find regular employment are not recorded as unemployed. We cannot afford a lost decade of stagnant labour markets and with it a lost generation of youth shut out from productive activity.

Union leaders including Richard Trumka, President of the AFL-CIO United States, Sharan Burrow, President of the International Trade Union Confederation and the Australian Council of Trade Unions and John Evans, General Secretary of TUAC will be taking part in the OECD Ministerial Council as members of the Trade Union Advisory Committee to the OECD. This is the first time that unions and employers have been invited to the full Ministers’ meeting. Union leaders will be taking part in the OECD Forum running on 26-27 May.

The union leaders will argue that rising public deficits across OECD countries must be addressed by growth-expanding demand that leads to an increase in output and jobs. Financing fiscal consolidation through cuts in public services, in social security and pensions would only prolong the jobs crisis and risk a social crisis. OECD governments must change the policies of the past two decades that led to the crisis – financial deregulation, rising income inequality and global imbalances. They must muster the same level of political will that was used to save the global banking system to beat the global jobs crisis.

“Working people need the right skills for tomorrow’s global economy, they need a socially ‘just transition’ to the green economy, and robust labour market institutions, including collective bargaining, to produce fairer income distribution”, says John Evans of the TUAC. “They need progressive tax reforms and stepping up work on tax evasion to protect public finances”. The TUAC Statement also calls for a global financial transactions tax to help pay for the cost of the crisis and to finance the Millennium Development Goals and climate change policies.

EU report on climate change fast-track financing

The European Union is failing to give full details about its €7.2bn pledge for immediate climate finance needs in developing countries. This is the EU’s contribution to the $30bn committed by rich countries in Copenhagen to help poor countries curb their emissions and adapt to a changing climate over the next three years. EU finance ministers meeting on 18 May in Brussels were expected to endorse a progress report on whether and how this money is being delivered.

Oxfam warned the EU is not being transparent enough. The report does not provide clarity on how much each EU member state will pay, on how much it will cover mitigation or adaptation projects, and critically, if this money will come on top of existing commitments to provide 0.7% of national income for overseas aid. Neither is the EU revealing the degree to which funds will be disbursed bilaterally instead of through multilateral channels such as the United Nations, nor how the world’s poorest and most vulnerable people will benefit.

Leaders in Copenhagen agreed ‘fast-start’ finance would be “new and additional”. Oxfam says this means money for climate action in poor countries must come on top of rich countries’ commitment to provide 0.7% of their national income as overseas aid. However, the EU is still divided on how to interpret “additionality”, and it is not alone. The US claims that President Obama’s budget request for climate change finance in 2011 is $1.9bn, but from all appearances that includes double-counting of cash from commitments on food security made at last year's G8 summit in L'Aquila, Italy.

Tim Gore, Oxfam International’s EU Climate Change Policy Advisor, said: “By not being fully transparent about its financing pledges, the EU is undermining trust with developing countries at a very delicate stage of the game. We need an open dialogue about how to guarantee that climate cash comes on top of money already committed for schools and hospitals. There’s no point trying to cover that up. The most important thing is to be honest about the challenges. If there are difficulties, it is better to be open. We expect the EU to address the current shortcomings in a full report later this year, which details how the money will be spent. In a global climate deal, annual reporting is a must”.

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Spain contributes €45m to the Adaptation Fund

Spain has become the first country to make a significant contribution of €45m (ca US$60m) to the United Nations Adaptation Fund. This contribution will help the ground-breaking facility set up under the Kyoto Protocol to finance climate change adaptation projects and programs in developing countries. “I am truly delighted by the Spanish contribution. The adaptation needs of developing countries are immense and require substantial financial resources. Every contribution will help strengthen the efforts and work of the Adaptation Fund, which is now fully operational and ready to finance concrete adaptation projects in developing countries. Spain has sent a strong message to the developing countries that it is serious about its commitment to help them adapt to climate change”, says Farrukh Iqbal Khan, Chairman of the Adaptation Fund Board. “I hope other developed countries would now follow suit by making contributions and thereby helping Adaptation Fund to fulfil its mandate.

Apart from its size, the contribution is noteworthy in that, in accordance with the rules of the Adaptation Fund, the money will be disbursed at the sole discretion of the Adaptation Fund Board to meet the most pressing funding needs of developing countries, without any conditions superimposed by the donor.

The Adaptation Fund is a self-standing fund established under the Kyoto Protocol of the UN Climate Change Convention, which gets its funding from a two percent share of proceeds of all Certified Emission Reductions issued under the Protocol’s Clean Development Mechanism projects and other sources of funding. The Fund is designed to finance concrete climate change adaptation projects and programs based on the needs and priorities of developing countries.

“Rich countries must follow the example of the Spanish government and channel cash for immediate adaptation needs through the UN Adaptation Fund. That’s the best way to ensure developing country ownership over adaptation planning, and will help regain much needed trust in the UN climate talks,” said Oxfam International. "We expect all governments to guarantee that longer-term climate financing will be additional to their overseas aid commitments. With such an announcement, as current holder of the rotating EU Presidency, Spain could demonstrate that the EU is serious about increasing financial support which rises to the challenge of growing climate impacts in poor countries.”

EEAS proposal is contrary to Lisbon Treaty

A recently obtained legal opinion of a UK-based law firm states that High Representative Catherine Ashton’s proposal for the set-up of the European External Action Service (EEAS) is inconsistent with the EU treaties’ provisions concerning development co-operation. A coalition of European development organisations, including Eurostep, CDSE, CONCORD and others, is urging EU member states, the European Commission and the European Parliament to reject the proposal and ask for a legal review.

The EU Treaties clearly state that “Union development cooperation policy shall have as its primary objective the reduction and, in the long term, the eradication of poverty” (Article 208, TFEU). NGOs are concerned that allowing the EEAS, under the command of the High Representative for Foreign and Security Policy, to take over some of the Commission’s responsibility for development puts this primary objective in jeopardy.

“Lawyers confirm that the proposed set-up of the EEAS, which mixes intergovernmental policy areas like foreign and security policy and common policy areas of the European Community such as development policy contradicts the EU treaties,” said Bernd Nilles, Secretary General of NGO network CIDSE. “The EEAS supports intergovernmental policy and we are deeply concerned that the common EU development budget might be used to pursue national, economic and security interests. The HR’s proposal fails to recognise this imperative as there is no indication that safeguards will be put in place to ensure that development objectives will be protected. In so doing, the proposal goes against the spirit of the Treaties.” Simon Stocker, Director of Eurostep, commented: “The EU is the largest donor in the world. The politicisation of EU aid would undermine the achievement of the Millennium Development Goals.”

The revised proposal has been discussed and approved by EU foreign ministers in Luxemburg on Monday 26 April. However, the European Parliament, which has expressed concerns over the proposal, must give its approval before it can come into effect.

IMF must help keep poor countries keep up spending

Poor countries are being forced to cut back on their economic crisis-response spending too soon, international agency Oxfam said on the eve of the Spring Meetings of IFIs, calling on the International Monetary Fund (IMF) to take steps to reverse this trend. These countries need to massively increase social spending, as the economic crisis pushes millions of people further into poverty and the Millennium Development Goals deadline approaches. Instead, budget data from 56 poor countries surveyed by Oxfam - including detailed breakdowns of social spending in just over half of these countries - shows that poor countries have had to slash education, health, agriculture and social protection spending:

* Budgets in 2010 are being cut on average by 0.2% of GDP.
* Two thirds of the countries for which social spending details are available (18 out of 24) are cutting budget allocations on one or more of the priority social sectors of education, health, agriculture and social protection.
* Education and social protection are particularly badly affected, with average spending levels in 2010 lower even than those in 2008.

Rich countries are failing to provide the support needed to prevent these cuts. Oxfam has found that the economic crisis has left 56 poor countries with a combined ‘fiscal hole’ (that is, a shortfall in budgetary revenue) of $65bn in 2009 and 2010. Despite promises by the G20 and donor countries to help poor nations survive the crisis, just 13% of this revenue gap has been filled by grants. Given this failure by the international community, poor countries were forced to resort to expensive domestic borrowing to finance spending in 2009; now they are cutting spending prematurely to avoid a new debt crisis. This comes on the heels of the OECD’s report that development aid fell $3.5bn in 2009, and World Bank calculations that 50,000 more children in Sub-Saharan African countries may have died last year because of the financial crisis.

Oxfam also called for a change in IMF rules so that it can give grants, funded by gold sales, to finance a massive increase in poor countries’ health and education spending. At present, the IMF’s Articles of Agreement only permit it to give loans. “The IMF and G20 also need to endorse Financial Transaction Tax which, at rates of around 0.05% per currency transaction, would raise hundreds of billions of dollars annually. Otherwise, this poor country fiscal gap risks becoming a black hole into which the education, health and future prospects of the world’s poorest will disappear,” said Oxfam in Washington DC.