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.

G20 must tackle hunger by fighting its roots causes

The Caritas-CIDSE G20 Network of Catholic agencies says making sure all people have access to appropriate food must be the priority for the leaders of G20 economies as they meet 18-19 June in Mexico. There are 925 million people in the world without enough to eat. About 300 children die from malnutrition every hour while one in four children is stunted, and in developing countries that figure rises to one in three. Yet we produce more than enough food globally to feed everyone. The Caritas-CIDSE G20 Network says reducing inequality and promoting sustainable development must be at the heart of the G20s plans to address food insecurity in the short, medium and long term.

Caritas Internationalis Secretary General Michel Roy said, “Hunger is not inevitable. It must be tackled by fighting its structural causes, primarily by promoting sustainable agricultural development of poor countries.” CIDSE Secretary General Bernd Nilles said, “The Mexican G20 has a real opportunity to show leadership on the issue of food security by ensuring better regulation of markets, strengthening of local food production and creating better access to markets for small-holder farmers. The G20 also have a particular responsibility to lead the fight against global poverty, since more than half of the world's poorest people live in G20 countries.”

Caritas-CIDSE G20 Network calls on the G20 to live up to the promises they made in Seoul in 2010. The Caritas-CIDSE G20 Network says increasing food production alone will fail without addressing the problems of access and distribution by building food reserves, curbing speculation in commodities´ markets and introducing social protection schemes. The G20 must act on the financial markets where under-regulated speculation is increasing food prices that are harming the poor. Tackling this problem requires greater intervention by public authorities, including at a global level, to rein in speculation, improve supervision of and increase transparency of markets. Emergency reserves and buffer stocks are needed in the poorest countries to protect the most vulnerable and stabilise market prices.

The Caritas-CIDSE G20 Network is a Network of 180 Catholic agencies working in collaboration to advocate at the G20 for the most vulnerable in our world.

Gates Report highlights role of innovation in expanding development resources

In a report about financing for development delivered today at the G20 Summit, Bill Gates, co-chair of the Bill & Melinda Gates Foundation, urged leaders to commit to increasing the pool of resources dedicated to development or risk causing irreparable damage to the livelihoods of millions of the poorest people. Underlying these recommendations is the idea that innovation can multiply the impact of the resources devoted to development. Gates’ report, Innovation with Impact: Financing 21st Century Development, was presented to heads of State and Governments in Cannes, France, at the request of G20 chairman French President Nicolas Sarkozy.

In his report, Gates stresses the need for rich countries to continue their generosity and meet their foreign aid commitments – which are generally between one and two percent of government’s budgets – while ensuring that aid is spent effectively in areas such as health and agriculture. Beyond rich countries’ responsibility, Gates says rapidly emerging economies represented in the G20 also play a growing role in driving progress in development. In his report, he proposes ideas for enabling speedier transfer of the innovations these countries are pioneering – particularly in the areas of health and agriculture, such as vaccines and seeds – to transform the lives of poor people in Africa and beyond. “I am particularly excited about the possibility of ‘triangular partnerships’ among rapidly growing countries, traditional donors, and poor countries, because they exploit the comparative advantages of many different countries,” Gates says in his report.

“Ultimately, developing countries’ domestic resources will be the largest source of funds for development,” according to Gates, who recommends measures the G20 could take to help poor countries’ maximize their own resources to reduce poverty. Ideas include directing foreign aid at helping developing countries better collect tax revenue, which could raise approximately $20bn a year at today’s GDP, and increasing transparency requirements for mining and oil companies. Gates calls on poor countries to focus resources on priorities which directly benefit poor people, like health and agriculture, and urged African leaders to meet the targets they had set in the Abuja Declaration to devote at least 15% of their budgets to improving health, and in the Maputo Declaration, which calls for devoting 10% of budgets on agriculture.

The report to G20 leaders also calls for adopting innovative ways to mobilize private sector finance and encourage private sector growth as a way to raise funds for development. Recommendations include making sovereign wealth funds available for infrastructure investments in poor countries, continuing to lower transaction costs of remittances by diaspora communities, and using pull mechanisms in agriculture to encourage innovation in agricultural technologies.

Gates also uses the report to identify new streams of funding, by directing a percentage of funds from a Financial Transaction Tax (FTT), Solidarity Tobacco Contribution, and an aviation and bunker fuel tax, to fund development and climate change. Concerning the FTT the report says: “Some modelling suggests that even a small tax of ten basis points on equities and two basis points on bonds would yields about $48bn on a G20-wide basis, or $9bn if it were confined to larger European economies. Other FTT proposals offer substantially larger estimates, in the S100bn to $250bn range, especially if derivatives are included.”

G20 leaders must put people before bankers

G20 leaders must meet the demands of working people at the G20 summit in Cannes on 3-4 November 2011 and deliver on their promises to reform the financial sector. As the economic and financial crisis enters its most dangerous phase so far, G20 leaders must deliver a co-ordinated response which puts people before bankers, warns the international trade union movement. Meeting alongside the G20, the ‘Labour 20’ Summit in Cannes will bring together elected trade union leaders from G20 countries for crisis talks on the economy and on attacks on labour rights.

International Trade Union Confederation General Secretary Sharan Burrow said unemployment is the largest single threat to recovery and has reached record levels with over 200 million people out of work and many more working in insecure jobs. Meanwhile, the financial system continues to be bailed out by governments who fail to take the necessary action to reform their destabilising and highly risky lending practices. “Public pressure for governments to act in the interests of people and not the bankers will grow and grow. People are angry. The international trade union movement will be in Cannes to demand action and reform to respond to that justified anger,” said Burrow.

Global Unions are calling on G20 leaders to adopt a four-point plan for jobs and recovery that stems the jobs crisis and re-shapes the world economy for working people:

* Establish a co-ordinated jobs target and immediate measures of job-intensive infrastructure programmes, green jobs investment and labour market programmes to raise skills;
* Reduce income inequality and strengthen workers’ rights;
* Put in place a social protection floor;
* Reform the financial sector and establish a financial transactions tax.

The proposals for recovery plans from the L20 will be delivered to G20 host President Nicolas Sarkozy and to other G20 Heads of State and Government, and must be taken into account in the final G20 conclusions. The statement of global unions to the G20 is >>> here.

Trade unions praise G20 Labour Ministers

The international trade union movement said Labour Ministers have set the standard for Finance Ministers and Leaders to follow as they prioritized employment and endorsed the social protection floor and rights for workers after their two day meeting in Paris, 26-27 September. ITUC General Secretary Sharan Burrow said that Labour Ministers have shown themselves to be champions of workers and the real economy where workers and employers are the actors, not bankers and rating agencies. Now the G20 Leaders and Finance Ministers must follow suit. The results of the meeting can be found in a Communiqué and the Conclusions endorsed by the Ministers.

“G20 Labour ministers have shown their Leaders the way to go. Now the Leaders must send the right instructions to their Finance Ministers, so that spending for jobs is increased while the G20 finally bring the financial markets under control as they promised to do when the crisis first broke three years ago. Complacency by G20 governments has meant no regulation of the financial sector and no action to meet the jobs crisis. We know that only workers will drive the world out of the crisis, not the bankers or the ratings agencies,” said Sharan Burrow.

The union movement also welcomed the creation of a task force on employment by the G20 Labour Ministers, and called for the group to put in place plans to build the green economy, tackle the severe crisis in youth employment, formalise informal economic activity and create sustainable jobs and businesses. OECD-TUAC General Secretary John Evans said Labour Minsters have set in place the basis for serious follow up to their work by establishing a task force on employment to be co-chaired by France and Mexico. “Its work needs to cover all the main challenges to employment at this time, from youth unemployment to the national employment targets that the G20 needs to establish. The union movement will devote maximum priority to working with the task force to help devise responses to the record levels of global unemployment,” said John Evans.

Trade unions further welcomed the Labour Ministers' endorsement of a social protection floor based on the ILO's four-part definition and workers’ rights. “When over 75 % of the world’s workers have inadequate social protection this is an economic as well as a social disaster and no more than now in times of great transitions. Developed countries built their social security systems when they were poor and coming out of the Great Depression of the 30s. These great social contracts became economic foundations as they work as economic stabilisers. When the finance ministers meet in Paris in October, they need to look at coordinated action for investment in jobs and social protection and to recognize the economic role of collective bargaining to reduce income inequality,” said Sharan Burrow.

The G20 Labour Ministers met following a tripartite dialogue with employers and unions. “A strong social dialogue with employers and unions laid the foundation for the G20 Labour Leaders discussion, which allowed workers to be put at the centre of recovery plans. Finance Ministers and Leaders need to take heed, and hear the voices of workers not just the bankers,” said Burrow.

G20 Labour Ministers in Paris: Addressing unemployment can boost economy

The international trade union movement called on the G20 Employment and Labour Ministers meeting in Paris on 26-27 September to step up to the plate and ensure that the G20 leaders tackle the jobs crisis as the central priority. Sharan Burrow, General Secretary, ITUC said time is running out, the G20 Finance Ministers meeting in Washington failed workers, now it up to the Labour Ministers to stand up for working people. “With unemployment come worsening social problems that will cause tension and strikes.”

According to Burrow, by addressing unemployment and putting people back to work politicians can boost the economy. “If boosting the economy is the problem G20 leaders are most worried about, jobs and social protection is the solution,” she said. John Evans, General Secretary TUAC said targeted investment in social spending such as health, infrastructure and green jobs will create jobs in the real economy. “The G20 promised to put quality employment at the heart of the recovery in their response to the financial crisis in 2008 - 2009, but their premature withdrawal of support for jobs has meant three years later we see a jobs emergency,” said Evans.

Labour and Employment Ministers are meeting for the last time before the Finance Ministers in October and the Leaders meeting in November. The ITUC, TUAC and Global Unions are calling on G20 Employment and Labour Ministers to:

* Ensure that their leaders put employment as the central government priority;
* Insist that their governments develop alternative sources of finance to provide funding for employment policies including making domestic taxation more progressive, combating tax evasion and tax havens, introducing a Financial Transactions Tax (FTT) and, for the Eurozone, “Eurobonds”;
* Set up investment in infrastructure and “green” jobs, skills development and other active labour market policies;
* Launch a G20 “Youth Pact” guaranteeing young people quality employment or education and training;
* Establish a G20 Working Group on Employment and Social Protection.

>> To read Sharan Burrow's statement to the G20 Labour Ministers click here.

>> To read the Global Unions statement to the Paris Meeting click here.

>> To read a joint ILO-OECD report on unemployment in the G20 countries click here.

G20 action plan fails to address root causes hunger

According to CIDSE, the catholic development network, the G20 Agricultural Ministers’ Action Plan on Food Price Volatility and Agriculture contributes little to tackling global hunger. The alliance says the plan is more concerned with mitigating the consequences of price volatility than with addressing its root causes. It is “a band aid for a big gaping wound; it won’t cure the ailing global food system,” as Gisele Henriques, CIDSE’s food expert said. “Although the recent spike in commodity prices has worsened the situation, we should not forget that even before the 2008 food price crisis there were over 800 million hungry. We must look beyond the markets for an answer to this injustice.”

The action plan, which has been significantly diluted during the negotiations on 22-23 June in Paris, aims at improving agricultural production, increasing market information and transparency, strengthening international policy coordination, improving and developing risk management tools for governments, firms and farmers, as well as improving the functioning of agricultural commodities’ derivatives markets. G20 Agricultural Ministers propose the establishment of emergency food stocks, necessary to address food crises, ignoring regulatory stocks which could resolve food price volatility in the mid-term. CIDSE urges the G20 to support the re-establishment of regulatory stocks, at local, national and regional levels, which would help curb the excessive volatility in prices for both consumers and producers. Yet matters of financial regulation of the food markets agricultural ministers left to their fellow financial ministers and central bank governors.

CIDSE emphasises that current production models must be reconsidered. A recent report by the UN Special Representative on the Right to Food demonstrates that agro-ecological innovations can double production in a period of 3 to 10 years and it is precisely this kind of production model that must be supported. This also means creating food policies which strengthen local production by small holder farmers, because they account for 75% of the world’s hungry. The G20 also failed to take serious its own inter-agency report on price volatility. This report, coordinated by the FAO and the OECD, underlines the negative role of biofuels on price volatility and recommends a rethink of policies which incentivise biofuels, adopted by many G20 States members. “The poor progress made at the Paris meeting confirms once more that the G20 is not the most legitimate forum to pre-determine decisions on global food security. It should reinforce more democratic multilateral bodies such as the FAO’s Committee on World Food Security instead,” said Henriques.

G20 agricultural meeting: Biofuels, food reserves and stock transparency need urgent attention

The G20 must scrap their most damaging biofuel policies and demand more open information about food stocks as part of urgent measures needed to tackle global food price volatility. International agency Oxfam is also calling on G20 Agricultural Ministers meeting in Paris 22-24 June) to reconsider the case for food reserves so that countries can better handle the kind of price spikes that left an extra 150 million people hungry during the last food price crisis. Many poor people are continuing to be hurt by rising food prices.

An early draft of the G20 communiqué, leaked last week, was disappointing. Oxfam said it did not go far enough in trying to tackle the problems. Oxfam says that a recent expert report on price volatility into the G20 made it crystal clear that biofuels were part of the problem. The G20 must urgently remove the types of biofuels subsidies and mandates that are increasing price volatility and failing to tackle climate change. The G20 must have immediate contingency plans to adjust their biofuels targets when food supplies are endangered.

Oxfam also said the G20 must require major private sector traders and investors to provide governments with adequate and timely information on their food stocks in order to improve market transparency. In a new briefing paper, Oxfam says policy-makers should re-examine evidence from countries like Madagascar and Indonesia that show that properly designed food reserves combined with other measures could help developing countries to tackle food price volatility. Oxfam’s call comes with a warning that global grain stocks are again dropping alarmingly. When global cereal stocks fall below 15-20% of world consumption, price hikes and market break-down have followed. By the end of this year, Oxfam says, this ratio could be as low as 17%.

A global grain reserve of just 105 million tons would have been enough to help avoid the food price crisis in 2007-8, the paper said. The cost of maintaining this would have been $1.5bn “or just $10 for each of the extra 150 million people who joined the ranks of the hungry as a direct result of the last food price surge. The paper says that India managed to stabilize food prices in 2008 because the government made a massive purchase and release of rice and wheat. International institutions have warned G20 leaders that renewed food price volatility is now a high risk. However, the same institutions have summarily dismissed food reserves as one of the ways to stabilize prices,” report co-author Thierry Kesteloot from Oxfam said.

Oxfam acknowledged that in some cases food reserves may have been poorly managed in the past but that did not mean the policy itself was wrong – rather, it meant that the reserves themselves needed to be better implemented and governed. “The prevailing view that food reserves in themselves don’t work is unsophisticated and short-sighted. There are smart new ways that countries can maintain sufficient food reserves as part of a bundle of policies that could work to limit price surges. We’ve already seen the huge human cost of countries not having food reserves,” Kesteloot said. Oxfam says that G20 governments should agree to scale up national and regional reserves in developing countries and support public intervention of developing countries in buffer stocks managed in a durable, transparent manner. The G20 should commit technical and financial resources to establish these reserves and encourage other governments to do so.

G20 must go beyond market tango to tackle global hunger

CIDSE – Measures to reduce price volatility in agricultural markets is one of the issues G20 Agricultural Ministers will discuss when they meet on 22-23 June next week in Paris. As food price volatility persists, with prices now fluctuating around a level twice as high as the average level in the period of 1990-2006, the issue can no longer be ignored according, to The international alliance of Catholic development agencies CIDSE. This increasingly frequent volatility is a result of a complex web of factors with dire consequences for the world’s poorest consumers who spend 50 – 70% of their income on food. CIDSE welcomes the fact that curbing of price volatility is high on the G20 agenda, while warning that poverty in general, and access to food in particular, are structural issues that must be addressed in order to reduce the number of hungry people in the world.

In an open letter to G20 Ministers CIDSE says that in order to achieve global food security the G20 is right to aim at preventing excessive speculation and regulating commodity markets as well as addressing the issue of food reserves. However, the alliance argues that regulating markets is but one piece of the puzzle and that the G20 should also support measures to strengthen local small holder production whilst supporting the harmonisation of the various global food security initiatives towards a multilateral food governance within the UN. “Food security cannot be addressed through markets alone; it is not because of a lack of production that nearly 1bn people go hungry. Sufficient food is produced globally, but tremendous quantities go to waste after production, during processing, transport or on supermarket shelves,” said CIDSE’s food expert Gisele Henriques, who will be attending the G20 meeting in Paris.

As agriculture is the mainstay of 75% of the developing world’s poor, CIDSE believes food policies should strengthen local production by small holder farmers, who account for 75% of the hungry in the world. It is extremely worrying that aid to the agricultural sector has decreased from 18% of Official Development Assistance (ODA) in 1979 to less than 4% currently. This trend must be reversed in favour of agricultural policies which support modes of production that develop and promote food and livelihood systems with greater environmental, economic and social resilience in face of climate change and future economic and food price crises.

Appeal to G20: Stop Gambling on Food & Hunger

More than 100 civil society organizations from all over the world have sent an appeal to the G20 Finance Ministers meeting this weekend under the French presidency in Paris. The appeal urges the G20n for immediate action on financial speculation on food commodities. The document says:

Over the past few years, price hikes in basic foods have created dramatic shortages in many of the world’s poorest countries. In 2008, the world saw a major crisis with skyrocketing prices over a short time span for crops like rice, wheat and corn. Food riots erupted in 25 countries and more than 100 million people were added to the world’s undernourished and starving.

Now, with food prices rising again, a similar crisis could be just around the corner. We urge political leaders and heads of government in the European Union, United States and elsewhere to act immediately to avoid the repetition of such a scenario. While developing solutions to hunger and malnourishment in the world is a huge challenge, reining in financial speculation on agricultural commodities is of paramount importance. With global financial markets still in turmoil, agricultural commodity ‘futures’ have become increasingly attractive to financial investors and speculators. Enormous amounts of capital are flooding these markets, causing sudden food price spikes that can be lethal for low-income families in developing countries. Increased volatility caused by the influx of ‘hot money’ into and out of commodity markets is also causing havoc for farmers, who cannot predict what price their crops will command from one month to the next.

At the moment, action to crack down on excessive speculation in commodity markets is being considered in the US and EU, and in both places there are opportunities to implement reforms that would stabilise food prices. The G20 governments have also identified it as a top priority. This political context represents an historic opportunity to secure a sustainable relationship between financial markets and agricultural markets.

The financial services industry has already spent billions of Euros trying to persuade governments not to limit speculation. These lobbyists represent a small but powerful group of vested interests who are profiting from an activity that is fundamentally harmful to the vast majority of people.

We call on governments and parliamentarians to listen instead to the millions of consumers, workers, farmers, businesses, religious groups, academics, international development activists and others who believe effective controls over financial speculation on agricultural commodities is necessary to defend the world’s poorest people and the world’s food producers from exposure to sudden food price hikes and extreme price volatility.

Rules are needed in several key areas. These include ensuring full transparency and supervision of financial markets in food commodities, imposing strict limits on the level of participation by purely financial actors in commodity futures markets, and banning financial institutions from buying up physical stocks in food and farmland.

This is an urgent matter. Not only because of the live discussions in the US, EU and G20, but mostly because prices in agricultural and food markets are becoming more volatile with each passing month. Unless steps are taken to stop excessive speculation, it is only a matter of time until a disastrous new chapter in the global food crisis begins.

* Please find the signatories >>> here.

Finance Ministers in Paris: Early acid test for G20

The world’s leading economies must act now to stop the price of basic foods from surging further out of the reach of poor people. They must also commit to a Financial Transaction Tax (FTT) to help millions of people hit by the economic crisis and climate change. International agency Oxfam has welcomed the promise of action on these issues from France, the current G20 chair. Oxfam says that this week’s Finance Ministers’ meeting in Paris, on Feb 18-19, is an early acid test as to whether the G20 can turn words into action.

“Finance ministers will define the G20’s development credentials this weekend. They could make or break Sarkozy’s pledges to tackle the food price crisis and push through an FTT,” said Oxfam spokesperson Luc Lampriere. “The G20’s money ministers must now plan how exactly they will deliver on these promises – or otherwise G20 leaders will be left looking like emperors with no clothes.” Oxfam is seeing mounting impacts on poor people as a result of the economic crisis and food price hikes. Countries are being affected differently, but in general poor people are having to spend more of their limited income on food, and are therefore eating less, less often, and in some case less nutritious food. “We see anecdotal evidence of people slipping into food insecurity and malnourishment,” Lampriere said.”We hear about affected rural communities cutting back on health spending and having to sell productive animals earlier than they normally would in order to buy food.”

On a Financial Transaction Tax, Oxfam says: “This is the zeitgeist tax, a popular and progressive policy worth as much as $400bn a year. It would be small change from those who can most afford it but make a big difference to those who most need it. A financial transaction tax would be like a breath of fresh air clearing away the stench of bankers’ bonuses and offering hope to those trapped by the economic crisis,” he said. Oxfam is calling for an average tax of 0.05% on share, currency, bond and derivative deals. Recent research for Oxfam shows that 56 of the poorest countries in the world face a combined $65bn hole in their budgets as a result of the economic crisis. Oxfam also wants the G20 to endorse a recent finding by the UN High Level Advisory Group on Climate Finance (AGF), that at least $12 billion a year can be raised from levies on international transport, particularly on shipping.

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.

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.

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.

Trade union statement to G20 Labour Ministers

As forecasts warn of a continuing rise in unemployment on top of the additional 34 million people worldwide who have become unemployed due to the economic crisis, trade union leaders from the G20 countries will urge for more action on jobs when they meet with G20 Labour and Employment Ministers on 19 April in Washington DC. The union delegation will present Ministers with a Global Unions statement, Beating the Jobs Crisis, setting out the steps which G20 governments need to take. The Statement calls for measures across six main areas, to:

* Maintain fiscal stimulus and focus on job creation: there must be no exit from fiscal stimulus until adequate growth levels have been attained, the danger of a further slump averted and there is self-sustaining recovery in jobs. The size, duration, coordination and targeting of stimulus packages must maximise creation of decent jobs including ‘green’ jobs;

* Strengthen social protection: existing social protection measures must be increased, including extending the level and period of unemployment benefits and supporting youth through determined government action. Globally, a social protection floor for all needs to be ensured;

* Provide support for the UN Millennium Development Goals (MDGs): G20 governments should agree on an Action Plan to implement the G20 Pittsburgh commitment to achieving the MDGs. Decent work needs to be placed at the heart of development assistance, and in low income countries, strategies for the creation of quality employment based on policies of sustainable industrialisation have to be put in place;

* Support a just transition towards a low carbon economy: proposals need to be developed to ensure that the job creation potential of mitigating climate change is maximised;

* Help build a sustainable labour market model: measures are required to combat labour market, income and gender inequalities, and these need to be at the centre of the post-crisis policy framework; and,

* Re-skill and upgrade the global workforce: the G20 skills strategy must build quality skills and employment, through a new surge in vocational education and training that engages the trade unions and employers, makes lifelong learning a reality for all and focuses, in particular, on prioritising skills for ‘green’ jobs.

The Labour and Employment Ministers conference is being held as follow up action to the Pittsburgh G20 leaders’ meeting in September 2009, and is due to make recommendations to the G20 leaders’ meeting in Toronto in June. “In Pittsburgh G20 leaders said that they would put quality employment at the heart of the recovery but we don’t see this happening yet – the signs are that workers will have to pay for bailing out the bankers through public expenditure cuts, job insecurity and wage reductions. Governments have to urgently refocus their action to create decent jobs. If they don’t, the risk of a social explosion is likely to become a reality,” said ITUC General Secretary Guy Ryder.

The union delegation will also be calling on the G20 to continue focusing on employment issues beyond the Washington meeting, for example through a task force which would include trade union involvement. Through the ITUC Regional Organisation for the Americas, TUCA, the trade union movement is also putting its case to G20 member-countries Brazil, China, India and Russia, whose leaders are meeting in Brasilia on 16 April.