G20 Labour and Finance Ministers: Change of tone or will policy action follow?

International unions welcomed the statements of G20 Labour and Finance Ministers following their first joint meeting in Moscow but warned the crisis of unemployment and inequality has reached critical levels and requires an urgent action plan to drive investment and create jobs. According to Sharan Burrow, General Secretary of International Trade Union Confederation, the shared concern about the worsening jobs outlook voiced by both Labour and Finance Ministers should be a warning to G20 Leaders meeting in St. Petersburg in September to deliver a plan for investment and job creation. Over 200 million unemployed, growth forecasts down, families struggling to put food on the table with low wages, yet there is no sense of urgency amongst our leaders. “G20 leaders must acknowledge the urgent need to take action to address rising unemployment and inequality,” said Sharan Burrow.

“Year after year the social and economic situation for working people has deteriorated; however, government policies of  the G20 countries are failing.  Having Labour and Finance Ministers meet is a first step to getting them to work together towards policy coherence and should be continued under the Australian Presidency of the G20,” said John Evans, General Secretary, TUAC. “Rising unemployment and inequality are unacceptable. The downgrade of growth forecasts for G20 economies and the decrease in income-led demand is withering our economies. We therefore need a clearer commitment to a Jobs and Investment Plan into green, inclusive, fair and sustainable growth, with macroeconomic changes away from austerity towards demand-enhancing policies,” said John Evans.

“While the failed policies of austerity have attacked fundamental labour market policies, G20 Labour and Finance Ministers have recognised for the first time that implementing labour market and social investment policies that support aggregate demand and reduce inequality with social protection, a minimum wage and national collective bargaining systems will support economic growth and employment.  Yet in reality too many structural policies by national governments contradict this,” said Mr Evans.

While Labour Ministers showed support for aggregate demand to drive economies, Finance Ministers do not recognise people-centred recovery, which shows that much more is needed to achieve real coordination of policy. The Labour Ministers’ communiqué makes progress on monitoring commitments – which is absent from the joint communiqué, as well. “The world needs an effective G20 with a commitment to people not just financial markets. The hope of working people and their families lies in rebuilding trust – this requires jobs. Success lies with economies where strong employment, fair wages and social protection drive growth,” said Sharan Burrow.

EU banking structure reform is overhyped

The Hamburg based World Future Council (WFC) responded to the public consultation on a reform of the structure of the EU banking sector.

Key messages of the WFC response in brief:

● The separation of banking activities cannot efficiently cope with severe problems like high leverage and excessive risk taking. It can only flank and should not neglect effective measures such as debt brakes for the financial sector, a preventive testing of financial innovations (finance TÜV) and a scalable financial transaction tax to slow down systemically risky volatility.

● There is neither evidence nor plausibility that the reduction of intra-group subsidies through separating deposits from trading activities will lead to shrinkage of the financial sector. Banks refinance themselves primarily, if not solely, through lending activities within the financial sector. Pro-cyclical and opaque credit intermediation chains and overly complex financial innovations make appropriate risk premiums impossible.

● Possible shifts to non-bank finance must not serve as an excuse for weak bank regulation but rather be integrated within an overall approach. This is exactly the purpose of debt brakes for the financial sector, a finance TÜV and a scalable financial transaction tax.

● In view of the limited impact of ring-fencing or separating banking activities as such, full ownership separation such as in the Glass Steagall Act of 1933 is the clearest approach.

Please find the complete response >>>here.