After the IMF meeting: The trade union view

According to Sharan Burrow, General Secretary of the International Trade Union Confederation (ITUC) the recent annual meetings of the IMF and World Bank confirmed what the ITUC and trade unions around the world have been saying for more than two years: The idea that you can create ‘growth through austerity’ is an illusion that has destroyed million of people’s livelihoods. “The IMF should use the important findings it made public this week and support a jobs- and income-led growth strategy, not let a few countries or its partners in the European ‘troika’ dictate a continuation of austerity policies.”

Before the 12-14 October meetings opened in Tokyo, the IMF’s chief economist revealed that the Fund had seriously underestimated the impact of budget-cutting austerity measures on national economies, apparently due to using an incorrect “multiplier” in their economic models. However the final communiqué of the IMF’s ministerial committee (IMFC) asserted that only emerging-market economies, not industrialized countries, should “use policy flexibility [to] support growth”, even though ten European economies are expected to be in recession in 2012. “It is incomprehensible for the IMFC to tell Europe to pursue structural adjustment and fiscal austerity, even though it is in recession, while only countries that are already enjoying growth are encouraged to support pro-growth policies. It seems evident that this totally incoherent approach came from some industrialized-country governments that have obviously not learned the lessons of the IMF’s research revisions,” said Burrow.

Burrow also praised the G24 group of emerging and developing countries at the international financial institutions for drawing appropriate conclusions from the World Bank’s World Development Report (WDR) 2013 on the theme of employment. The G24 stated in a communiqué issued at the Tokyo meetings: “We note the finding of the World Bank’s recent World Development Report that a focus on jobs is the most effective means to reduce poverty, empower people, and promote social cohesion.” According to Burrow the World Bank and IMF should re-examine all of their policies through the ‘jobs lens’ as the WDR proposes. “We also agree with the G24 that it is unacceptable that governments have missed the deadline for the 2010 quota reform by not ratifying in sufficient number a modest shift of some votes at the IMF to emerging economies. The G24 also made important suggestions, which we share, about the need for the IFIs to do more to combat commodity price volatility, especially in light of the recent food price hike which will drive millions more people in developing countries into extreme poverty.”

Trade Union to IFIs and G20: Put job creation on top of agenda

Global economy is facing a surge in unemployment as record numbers of people out of work risk tipping the world into a 1930s-style downturn. G20 Governments and the International Financial Institutions (IFIs) have failed to deliver on their promises to attack joblessness and instead have turned their attention to fiscal consolidation, as money markets increasingly dictate policy. The International Trade Union Confederation (ITUC) and its Global Unions partners are calling on the IMF, World Bank and G20 Governments to assume leadership and put a halt to destructive economic policies as austerity measures contribute to a renewed economic downturn.

In the twice-annual letter sent to Ministers of Finance and Executive Directors of the IMF and World Bank, ITUC General Secretary Sharan Burrow said austerity measures threaten to create several million more job losses, making it even more unlikely that deficit targets will be reached. "We need programmes to stimulate employment through infrastructure and climate related investments and public services. The IFIs have a responsibility to protect public services vital to societies' development, such as education and health care, and support the introduction of a social protection floor in all countries," explained Burrow.

The Global Unions warned that policies of fiscal consolidation should only be considered when economic growth is self-sustaining and unemployment is falling. Instead of cutbacks, the IMF should lead a co-ordinated effort to establish a financial transactions tax to pay for job recovery programmes and meet development and climate-finance commitments. Unless the IFIs move to regulate the global financial system and create a solid foundation for millions of workers, jobs will remain unstable and we will forever be on a crisis footing, according to the trade unions.

Global Unions also called on the IFIs to
* contribute efforts to achieve climate resilience and reduce greenhouse gas emissions;
* provide supplementary assistance for developing countries affected by the increasing cost of food;
* reverse policies that increase gender inequalities.

In a targeted message to the IMF, Global Unions called on it to stop promoting labour market de-regulation. The ILO's expertise on working conditions should guide policy instead. The World Bank needs to ensure consistency within the World Bank Group in support of core labour standards and to put in place effective safeguards to ensure compliance.

* The ITUC, Global Union Federations and TUAC statement to the 2011 Annual Meetings of the IMF and World Bank from 23-25 September in Washington DC can be downloaded >>> here.

http://www.ituc-csi.org/IMG/pdf/No_30_Global_Unions_Statement-2.pdf

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.

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.

Doing Business 2010: World Bank discourages social protection

Even though the World Bank has endorsed improved social safety nets to protect the millions of workers who have lost their jobs due to the global economic crisis, the latest edition of the Bank’s highest circulation publication discourages countries from adopting social protection schemes by designating governments that do so as anti-business. Doing Business 2010 also recommends that countries should reduce severance pay for dismissed workers and reduce or eliminate requirements for prior notice about job cuts.

In April 2009, the Bank announced that the Doing Business labour market flexibility indicator, which encourages the reduction of workers’ protection, “does not constitute World Bank policy and should not be used as a basis for policy advice or in any country program documents”, and that the indicator would be removed from the Bank’s conditionality framework (known as CPIA: Country Policy and Institutional Assessment). The Bank also stated, “Doing Business 2010 will include a commentary explaining these steps”, but the new edition of the publication issued today ignores this commitment posted on the Bank’s web site in April.

“If the president of the World Bank truly believes that countries should improve social protection in order to mitigate the impact of the global recession, as he has said on numerous occasions, then it is high time for the Bank’s highest circulation publication to stop promoting the elimination of social and workers’ protection,” said Guy Ryder, general secretary of the International Trade Union Confederation. The ITUC called attention to the fact that Doing Business 2010 puts Cambodia in the category of countries that are “making it more difficult to do business” because it introduced a social security contribution. Conversely, Georgia is praised and given a better ranking by Doing Business because it abolished its social tax. Doing Business 2010 criticizes the democratic government of Honduras, whose president was expelled after a coup d’état in June, because it increased severance pay and advance notice requirements in response to the economic crisis (Honduras has no unemployment insurance). Similarly, Doing Business downgrades Portugal for increasing the dismissal notice period by two weeks.

On the other hand, the authoritarian regime of Belarus, which lost its preferential trade status with the European Union for violating fundamental conventions of the International Labour Organization (ILO), obtains high marks from Doing Business 2010 for making it easier to eliminate jobs. Rwanda wins this year’s Doing Business “top reformer” prize because “employers are no longer required to consult beforehand [about job cuts] with the employees’ representatives or notify the labor inspector”. The Bank’s publication also praises Macedonia for getting rid of measures to retrain redundant workers, and Mauritius for eliminating mandatory severance pay.

Trade unions call on IFIs to act quickly on G20 goals

The international trade union movement has called on the World Bank and IMF to use the opportunity of their spring meetings in Washington to accelerate efforts to stem the global collapse in employment and economic prospects. In a statement released by the ITUC and its Global Unions partners, trade unions warn that global unemployment could increase by 50 million people in 2009 unless the IFIs and governments take immediate action to implement the commitments made at the G20 London Summit.

The statement notes that among the groups most affected by the financial meltdown are workers close to retirement in countries that adopted mandatory privatized pension funds as advocated by the World Bank. Global Unions suggests that the Bank participate in providing compensation for the loss of retirement incomes suffered by these workers. The trade union statement emphasizes that job creation and public investment must be an essential part of all economic recovery strategies, and further proposes the reform of global governance systems to ensure that the world economy remains sustainable after the crisis. Noting that longstanding demands for governance reform of the IFIs remain unfulfilled, the statement urges both the World Bank and IMF to quickly and substantially increase the representation of developing countries in their decision-making structures. It also suggests that the IMF should monitor recovery programmes and advocate for stronger fiscal stimulus measures if current expansion plans prove insufficient.

In addition to outlining the international trade union movement's proposals for new financial sector regulation, including the nationalization of insolvent banks, the statement encourages the IFIs to promote active labour market policies, extend social safety nets, and invest in "green" projects to shift the world economy onto a low-carbon growth path. It calls on the IFIs to work with the International Labour Organization to find employment-driven solutions to the crisis, to support the proposed Global Jobs Pact at the upcoming International Labour Conference, and to cooperate in establishing a global Charter for international governance that would include all the major international labour, financial, trade and development instruments.

Study: World Bank loans exacerbate climate change

The World Bank has a difficult task at hand; it must continually work to provide the impoverished with access to energy while at the same time, mindfully investing in technologies that do not further compound the effects of climate change. Heike Mainhardt-Gibbs, a consultant with the Bank Information Center (BIC), examines the World Bank’s approach to energy sector investments in her February 2009 study, World Bank Energy Sector Lending: Encouraging the World’s Addiction to Fossil Fuels. The assessment finds that even with important gains in renewable energy and energy efficiency in recent years, the World Bank Group’s overall lending approach to the energy sector does not support developing countries’ transition towards a low-carbon development path.

First, World Bank fossil fuel lending is on the rise. During its 2008 fiscal year, the World Bank and International Finance Corporation (IFC) increased funding for fossil fuels by 102% compared with only 11% for new renewable energy (solar, wind, biomass, geothermal energy, small hydropower). On average, fossil fuel financing by the Bank is still twice as much as new renewable energy and energy efficiency projects combined and five times as much as new renewable sources taken alone. During the last three years, the Bank spent 19% more on coal than on new renewable energy. Bank lending to coal projects will make a low-carbon transition difficult given that coal emits almost twice as much CO2 as natural gas per unit of energy.

Secondly, Bank fossil fuel projects have a clear impact on global CO2 emissions. “When the fossil fuels involved in the World Bank and IFC lending projects for the 2008 fiscal year are combusted, the project lifetime CO2 emissions from this one-year of financing will amount to approximately 7% of the world’s total annual CO2 emissions from the energy sector, or more than twice as much as all of Africa’s annual energy sector emissions,” emphasized Mainhardt-Gibbs. Clearly, the World Bank’s investments in fossil fuel-based energy are far-reaching and yet none of their current climate change initiatives adequately incentivize for a reduction in financing for fossil fuels.

Finally, the Bank must carefully reassess its approach to financing the development of fossil fuels. They share the blame – and thus the shame – for the global climate change crisis. “The Bank’s continued lending focus on fossil fuels commits many developing countries to fossil-fuel based energy for the next 20 to 40 years,” Mainhardt-Gibbs noted. When developing countries eventually take on GHG emissions reduction targets of their own, the World Bank’s current approach to energy will make meeting these targets more difficult and costly for these countries.

Trade Unions urge World Bank and IMF to take action against unemployment

An 80-strong high-level delegation of trade union representations from around the world is meeting with the International Monetary Fund Managing Director Dominique Strauss-Kahn and World Bank President Robert Zoellick, as well as Board members and several other officials of the two bodies, this week in Washington to push for further immediate anti-recession measures and effective global regulation to ensure future global economic stability. The delegation is led by ITUC (International Trade Union Confederation) President Sharan Burrow and General Secretary Guy Ryder. Top of the list of union concerns is the spectre of spiralling global unemployment, as more and more employers cut staffing in the face of the credit squeeze.

"Action by governments and the international financial institutions to support decent jobs is essential in the face of the expected world-wide employment crisis, and will lay the foundation for economic recovery. While the IMF has been encouraging industrialised countries to adopt vigorous fiscal stimulus polices, which we believe it is correct in doing, it has been putting forward a much more traditional 'fiscal discipline' approach in its advice to most developing countries. Developing and transition economies are now rapidly beginning to suffer from the global economic crisis and the IMF and the World Bank should jettison failed policies of the past and focus their efforts on maintaining and creating employment, both to deal with the present crisis and to lay the foundations for economic recovery," said ITUC General Secretary Guy Ryder.

The IMF has agreed to emergency loans to several countries particularly affected by the economic crisis. While the conditionality of these loans is not as complex and onerous as that imposed during the Asian financial crisis of 1997-98, ITUC affiliates are concerned by the some of the conditions or required "prior actions" that feature in many of these, such as interest rate and utility price hikes, restrictions and even reductions in wages, particularly in the public sector, and reductions of pension payments other public spending cuts. All of these will dampen the level of activity of economies already in recession and lead to a reduction in workers' living standards, and are inconsistent with the fiscal stimulus polices the IMF is encouraging rich countries to adopt. The ITUC is particularly concerned with the some conditions of a loan agreement that the IMF just concluded with the authoritarian government of Belarus. In exchange for a $2.46bn emergency loan, the government of Belarus, which has been condemned by the ILO for violating fundamental workers' rights, has promised to apply wage restraint throughout the broad public sector, increase utility prices and pursue privatization. Belarus is also required to reform its the social safety net and focus assistance on "the most vulnerable groups", which could result in reduced social protection for many workers since they cannot express and defend themselves freely due to repression of trade unions carried out by the Lukashenko regime.

The union delegation is putting forward a comprehensive and practical recovery and reform package, based on the "Washington Declaration" presented to the November G20 leaders meeting in Washington. The package stresses that governments need to be prepared to ensure further coordinated cuts in interest rates and to front-load investment in infrastructure, education and health to help stimulate demand growth and reinforce public services. This needs to be accompanied by tax and spending measures to support the purchasing power of low- and middle-income earners, and concrete steps to launch investment in green goods and services, to help address climate change.

Noting that the IMF was called upon by the G20 to assume a major role in designing a new regulatory framework for the global financial system, the international trade union delegation will insist that they must have a seat at the table in a re-regulation process that puts the real economy, not the interests of global financial speculators, as the central priority. The union delegation is also urging the World Bank to help contribute to avoiding a repetition of the catastrophic impact of the recent food price crisis on poor countries' populations by going beyond providing emergency relief loans and helping developing countries increase their food security. In so doing, both IFIs must reverse some of the policies they encouraged poor countries to adopt in the past, such as the reduction of state aid to agriculture through low-cost seeds and fertilizer, the dismantling of public grain stocks, and the shift from food to bio-fuel production.

WB/IMF annual meetings failed to guarantee assistance to the poorest

International NGO ActionAid charged that world leaders attending the World Bank/International Monetary Fund annual meetings failed to guarantee assistance for the world’s poorest countries, despite admitting that the most vulnerable could face “serious, and in some cases, permanent damage” from the global financial crisis. Shefali Sharma, ActionAid International’s Food Crisis Task Force Coordinator pointed out that the Bank’s funding response is more applicable to middle-income countries – with its plan to double non-concessional lending through the International Bank for Reconstruction and Development (IBRD) – and will do little to help low income countries.

Sharma said:

“An extra $14bn in the World Bank’s lending to middle-income countries is a drop in the ocean for emerging markets, which have access to other sources of finance and often substantial foreign exchange reserves built up since the Asian financial crisis of 1997/8. It’s no help at all for the poorest countries, which have few resources of their own to cope with the burgeoning food, fuel and financial crises, particularly as the IMF is still imposing suffocatingly tight inflation and deficit targets. Ironically, the pressure of maintaining such restrictive economic policies may be what finally tips some developing countries over the edge in months to come.”

ActionAid said that the final Development Committee communiqué merely reiterates past pledges to deal with the food and fuel crisis, but without any new aid commitments. Instead, the communiqué repeats previous policy recommendations that have little validity in the current state of affairs.

World Bank and IMF must tackle food and climate crises for world’s poorest

The World Bank and the IMF must cushion developing countries from the financial crisis that is threatening to hit them hard, while also tackling the challenges of food and fuel price increases, said Oxfam on the eve of the IFIs’ annual meetings. Nearly one billion people are now malnourished and 50 countries will remain at risk in 2009 due to price increases of fuel and basic food staples. This will make the effects of the financial crisis even more painful for poor countries. Oxfam also points to the Bank’s work on climate change and internal reform of its voting power as key issues for the four-day meeting that takes place in Washington DC from 9-13 October.

Oxfam calls on the World Bank to update its five-year old agricultural strategy to reflect the new reality of the food price crisis. In the past, the Bank has pushed for a decreased role of the state in agriculture. This has clearly failed and the Bank needs to set out a new vision. “The fight against global warming cannot be sidelined by the financial crisis either. The Bank has not thought enough about how to protect the most vulnerable communities from the impact of global warming,” Oxfam International’s spokesperson Marita Hutjes said.

The World Bank is also set to propose a new reform on the division of power - called the Voice Reform Package - within the institution. Although welcome and necessary, the reform falls far short of what is needed to make the Bank a truly balanced body. “Anything that comes up short of giving developing countries parity of the voting share will be insufficient. We need more than token change. Clearly, 21st century institutions cannot function on post-war rules,” Hutjes said.

World Bank’s Doing Business: Endorsing unacceptable labour standards

The just published 2009 edition of World Bank’s highest-circulation publication, Doing Business, rewards countries that have not ratified ILO conventions for being the world top performers for “employing workers”. Doing Business 2009 also repeats the practice of making unsubstantiated claims of causality between its “employing workers” indicator, which gives the best ratings to countries having the lowest level of mandated workers’ and social protection, and positive economic outcomes, even though the Bank’s own internal watchdog unit found no evidence of any relation between the two. Last June, the Bank’s Independent Evaluation Group declared that, “no significant association emerged between … [the Doing Business indicator on] employing workers and employment” and blamed the publication for making “overstated claims of the indicators’ explanatory power”.

Doing Business 2009 falsely asserts that, “An economy can have the most flexible labor regulations as measured by Doing Business while ratifying and complying with … the ILO core labor standards”. In reality, none the countries designated by Doing Business 2009 as the top four for employing workers ratified all of the International Labour Organization’s core labour standards (CLS) conventions. Two of the top four countries ratified not a single one of the eight CLS conventions and a third ratified only two of out of eight. “The Bank should draw the appropriate lessons from its own evaluation unit, which found the methodology of Doing Business to be flawed in identifying labour standards and contributions to social programmes as nothing more than obstacles to investment. The mandate to determine the Bank’s policy recommendations for developing countries’ labour regulations and social protection should be taken away from Doing Business,” said Guy Ryder, general secretary of the International Trade Union Confederation (ITUC).

The World Bank and IMF have used the Doing Business indicators in numerous country-level policy reports to advise governments to dismantle workers’ protection or reduce funding for social safety nets. In some cases, countries have been forced to comply with the recommendations through loan conditions, even if such measures work at cross-purposes with the Bank’s stated goal of eliminating poverty. For example, Doing Business supports the reduction of the minimum wage in Brazil because increases applied by the current government have meant that it exceeds the low threshold that Doing Business deems acceptable for business owners. However, the World Bank’s 2008 Country Partnership Strategy for Brazil highlights “increases in the minimum wage” as one of the causes of a significant decline in poverty and of the fact that Brazil’s income inequality, which used to be among the highest in the world, “is finally eroding”. At the same time that the Bank recognizes that Brazil has succeeded in making strides towards reduction of poverty, which the Bank formerly described as its “overarching goal”, the institution’s highest-circulation publication promotes measures that would increase poverty in the country.

On the other hand, Doing Business has lauded Belarus for its top-ranking “employing workers” indicator, even though the ILO has condemned the authoritarian regime’s curtailing of workers’ rights as a violation of the CLS. The violation led to the European Union withdrawing trade preferences under the Generalized System of Preferences. “By endorsing unacceptable labour standards that have resulted in reduced access for Belarus exports to the world’s largest market, one wonders how much of a service Doing Business and the World Bank are actually rendering to those who wish to ‘do business’ in the country,” said the ITUC’s Guy Ryder.

Doing Business 2009 continues the practice of the first five editions in making unsubstantiated assertions linking the Doing Business labour indicators to positive economic outcomes, using as references unpublished studies and internal “working papers” prepared by Doing Business staff, none of which can be verified by credible researchers or the ILO. Stated Ryder: “It is surprising that, even after the Bank’s own evaluation unit found no links of causality between the indicators and employment and criticized Doing Business for making such claims, the Bank’s highest circulation publication continues repeating the same assertions. This will do nothing to enhance the World Bank’s aspiration to be a global ‘depository of knowledge’ on development issues.”

World Bank governance reform risks falling behind

Later this month a coalition of Oxfam International, Eurodad, Bank Information Center, Bretton Woods Project and the New Rules for Global Finance Coalition will appeal to World Bank President Robert Zoellick to use the actual opportunity for an ambitious reform of the institution. In an open letter the NGOs express concern that the governance reform process moving ahead at the World Bank risks falling very short of the imperatives of a new systemic reality. The letter says:

“We urge that any reform be substantial, resulting in fundamental changes that would allow the Bank to fight poverty in a far more effective, equitable and transparent manner. For this to happen there must be a true partnership between developing and developed countries.

Key to this is a commitment to parity of voice between developed, and developing and transition countries within an agreed timeframe. This would also need to be accompanied by other measures such as a transparent, merit-based election process for the president, and a consolidation of European power at the Bank’s board.

The quota reforms voted in at the IMF earlier this year were far from adequate. We believe it is important that any notion of parallelism between the IMF quota and World Bank votes be dropped in favour of the clear recognition that the World Bank has a very different purpose from the IMF. As the World Bank/IMF 2008 Spring Meeting Development Committee Communiqué stated, the Bank’s development mandate means it is distinct in nature.

Failure to achieve this deeper, systemic reform would leave the Bank vulnerable to irrelevance in the evolving structures of global financing and policy. For this reason, we urge you to use the Bank governance reform as an opportunity to promote a vision for the Bank which conforms more closely to the dramatically changed global context than the one currently being envisaged.”

Endorsements of the letter should be sent to Jeff Powell at Bretton Woods Project (jpowell@brettonwoodsproject.org)

World Bank’s own evaluation group slams Doing Business report

Following the publication last Thursday of a report by the World Bank's Independent Evaluation Group (IEG) that is heavily critical of the World Bank's own publication "Doing Business," the ITUC has urged the Bank to definitively remove the topic of labour standards from the mandate of "Doing Business," the Bank's headline annual publication. "In view of the damage being done by this report to workers' protections worldwide, the World Bank should formally prohibit its staff from using "Doing Business" to formulate policy recommendations for labour market reforms in client countries or to determine access to Bank funds," said ITUC General Secretary Guy Ryder.

The IEG report on "Doing Business" (DB) found no relation between the level of employment in different countries and the DB's notorious "employing workers" indicator, which gives the best ratings to countries that have the lowest level of labour regulations. On the other hand, the IEG observes that "a surprising number of small island states" having almost no labour rules - some of which are not even members of the International Labour Organisation (ILO) - were considered by DB to be best performers for their labour legislation. The IEG also notes that the DB "paying taxes" indicator, which penalizes countries having any kind of mandatory employers' contributions for pensions, accident insurance, maternity benefits, and so on, tended to give best scores to notorious tax-haven countries.

World Bank staff have used these indicators since the first edition of DB was published in October 2003 to advise developing countries to do away with wide swathes of regulations, including those which protect workers, purportedly in order to make their economies more friendly to doing business. However, the IEG found no relationship between the overall DB indicator or the "employing workers" indicator and any genuine improvement in economic performance, such as higher growth, investment or employment rates. By rewarding countries having the lowest level of regulation, DB frequently gave some of its best scores to countries known as serious violators of workers' rights, including Belarus, Georgia and Saudi Arabia, all have which have severely restricted or even prohibited trade union activities.

The ITUC asked the World Bank, in addition to immediately stopping the use of the DB labour indicator in its analyses and policy documents, to launch an investigation into how the DB labour indicator was so widely used throughout the Bank, despite repeated warnings that its methodology was inherently flawed and would lead to rewarding violators of workers' rights. The ITUC repeatedly warned the World Bank on its DB report. The ILO issued similar analyses highlighting the methodological flaws starting in 2007.

The World Bank chose to ignore the warnings, and instead incorporated the DB indicators into its general labour market strategy, issued by the Bank's Human Development Network, and into its Country Policy and Institutional Assessment (CPIA). The CPIA is used by the World Bank to determine developing countries' overall level of eligibility to accessing Bank assistance.

The ITUC's most recent critique of the Doing Business report can be found >>> here.

Groups oppose World Bank Climate Funds

More than 121 groups released a statement last week opposing the World Bank's proposed 'Climate Investment Funds' to address climate change and its impacts. The statement was released during the United Nations climate change talks in Bonn, Germany and coincided with a US Congressional Hearing on the Clean Technology Fund. "With their long-term record of massive fossil fuel financing, the World Bank is spectacularly unqualified to control climate funds," said Karen Orenstein of Friends of the Earth US in Bonn. "The World Bank climate funds could undermine the UN Framework Convention on Climate Change, which is the right place to manage this kind of funds," she added.

"There is no definition of the word 'clean' in the so-called Clean Technology Fund," said Janneke Bruil of Friends of the Earth International, one of the statement's signatories. “For example, ‘clean coal’ is a false solution: it has nothing to do with renewable energy," she added.

The statement released today notes that it is "highly inappropriate to issue loans for adaptation" to climate change, because it means further indebting poor countries as they adapt to climate change caused by the industrialised countries, which are providing the loans. The statement concludes by urging industrialised country governments not to support the World Bank initiative and calls on developing country governments to raise these concerns with donor countries, the World Bank and other institutions.

Global Unions: Policy shift needed at IFIs

Responding to concerns about a possible implosion of the financial sector and a major global economic slowdown, the ITUC and its Global Unions partners called on the 2008 Spring Meetings of the World Bank and International Monetary Fund to mandate significantly increased assistance from the two institutions to countries that seek to protect their workers and citizens, particularly the most vulnerable, against the shock of an economic crisis. If there is no firm and coordinated policy response, the dramatic rise in financial and economic uncertainty since mid-2007 will lead to increased unemployment, declining living standards and higher poverty, particularly affecting women, in many countries, according to ITUC General Secretary Guy Ryder.

In a Global Unions statement released on 11 April, the international trade union movement urges the IMF and World Bank to shift their focus from promoting deregulation, including labour market deregulation using the Bank's Doing Business report, in favour of policies promoting the creation of decent work. Global Unions set out a policy agenda for the international financial institutions (IFIs) that could support, rather than dictate to, developing countries.
Specifically, Global Unions call on the IFIs to assist countries that seek to control destabilizing capital flows, require emergency financial assistance to overcome balance of payments problems, that strive to improve social protection, and that extend workplace protection and labour rights to unprotected workers.

Global Unions are encouraging the IMF, in particular, to adopt measures to help cushion states against the global slowdown, such as assistance to offset the impact of higher food and fuel prices, an emergency credit facility for countries in financial difficulty, and measures to protect against destabilizing speculative capital movements. "Just a year ago, the IMF would have been content to let market forces resolve a crisis like this," said Ryder, "but at the recent G7 meeting, even the managing director of the Fund recognized the importance of a coordinated fiscal stimulus response to the current global economic slowdown."

The statement sees a role for the IMF not only in responding to the current crisis, but in preventing new ones. In the statement, Global Unions call on the IMF to take a lead role in developing new international regulatory frameworks to control the largely unregulated activities and new financial instruments that helped set off the crisis.

IMF/WB Spring Meeting: Don’t forget poverty, says Oxfam

Poverty should be at the top of the agenda at the International Monetary Fund and World Bank meetings in Washington this weekend, said international agency Oxfam. With the global economy facing a crisis, Oxfam said the emphasis on the rich world must not eclipse action in developing countries, where rapidly rising food prices and increasingly erratic weather linked to climate change are wreaking havoc. Elizabeth Stuart, senior policy advisor at Oxfam said: "Global economic uncertainty, high food prices, more frequent floods, drought and other impacts of climate change all pose a serious threat to vulnerable people in developing countries. The situation requires urgent action and more money from rich countries and yet, aid levels have fallen for a second straight year."

Oxfam is calling for immediate action from donors and national governments to ensure that the poorest consumers are protected against high food prices and price volatility on food markets worldwide. "The New Deal on targeting world hunger from President Zoellick (>>> Zoellick's Newest Blueprint) is welcome. Past policies prescribed by the World Bank which fast-tracked liberalisation, including in the agriculture sector, have left many countries more vulnerable. Poor countries need the flexibility to support and protect small-scale farmers," said Stuart. While rising prices pose a serious threat to poor people, they may also be an opportunity. Efforts must be made by all actors to ensure that poor rural producers and farm workers can access the potential benefits of higher prices. The crisis should spur much-needed reform and increased investment in small-scale agriculture.

The World Bank has also a vital role to play in fighting climate change and helping poor nations adapt to its impacts, said Oxfam. But any new climate funds that Bank manages need to be linked to the UN climate process. "It's very encouraging that donors want to give more money to redress the devastating problem of climate change. But in doing so, they mustn't undermine the ongoing UN negotiating process," Stuart said.

The new Managing Director of the IMF, Dominique Strauss-Kahn, will be looking to give a facelift to the institution this week. But Oxfam says the governance reform that will be rubber-stamped is a long way from what is actually needed. "This reform would be perfect if the Fund wanted to become completely irrelevant," said Stuart. "By continuing to suppress the voices of so many countries IMF bosses are ensuring that more stakeholders will walk away. You can't talk of real reform when the seven richest members hold more than 40% of the vote."

World Bank accused to hijack climate change

According to AlterNet/Reuters developing countries and environmental groups accused the World Bank of trying to seize control of the billions of dollars of aid that will be used to tackle climate change in the next four decades. "The World Bank's foray into climate change has gone down like a lead balloon," Friends of the Earth campaigner Tom Picken said at the end of a major climate change conference in the Thai capital. "Many countries and civil society have expressed outrage at the World Bank's attempted hijacking of real efforts to fund climate change efforts," he said.

Before they agree to any sort of restrictions on emissions of the greenhouse gases fuelling global warming, poor countries want firm commitments of billions of dollars in aid from their rich counterparts. The money will be used for everything from flood barriers against rising sea levels to "clean" but costly power stations, an example of the "technology transfer" developing countries say they need to curb emissions of gases such as carbon dioxide. As well as the obvious arguments about how much money will be needed - some estimates run into the trillions of dollars by 2050 - rich and poor countries are struggling even to agree on a bank manager.

At the week-long Bangkok conference, the World Bank pushed its proposals for a $5-10bn Clean Technology Fund, a $500m "adaptation" fund and possibly a third fund dealing with forestry. However, developing countries want climate change cash to be administered through the existing United Nations Framework Convention on Climate Change (UNFCC), which they feel is much less under the control of the Group of 8 (G8) richest countries. "Generally we have been unpleasantly surprised by the funds," said Ana Maria Kleymeyer, Argentina's lead negotiator at the meeting. "This is a way for the World Bank and its donor members to get credit back home for putting money into climate change in a way that's not transparent, that doesn't involve developing countries and that ignores the UNFCC process," she said.

IDA replenishment: European governments miss major opportunity

(Eurodad) Five days after the EU-Africa Summit, where European governments promised to build fairer partnerships with poor countries they are failing to deliver on their promise. European non-governmental organisations spoke out as European governments gather in Berlin this Thursday and Friday to confirm their financial contributions to the World Bank’s biggest fund to poor countries, the International Development Association (IDA). More than 13,000 people from across Europe have called on their governments to withhold funding from the World Bank until it ends its practices of attaching harmful economic conditions to loans and debt relief, and of funding fossil fuel development.

“European governments should not be taken in by the Bank’s assurances that conditionality is a problem that has been dealt with. Using the Bank’s own figures we’ve found that more than two thirds of loans and grants (71%) from the World Bank’s International Development Agency (IDA) are still linked to sensitive policy reforms on developing countries, mostly privatisation and liberalisation. And stories from communities around the world demonstrate the negative impacts of the Bank’s inappropriate economic policies.” says Alex Wilks, coordinator of the European Network on Debt and Development (EURODAD).

While the World Bank declared its commitment towards combating climate change in Bali, financing for oil and gas remains firmly on its agenda. The Bank increased its support for fossil fuel projects during the past years – by 90% between 2005 and 2006 alone. Investments in renewable energy, which have a double positive result both for climate and poverty reduction, only make up 5% of the budget for all energy projects. “The World Bank refuses to release the information on the overall emissions of the projects financed by the institution”, remarks Elena Gerebizza from Campagna per la Riforma della Banca Mondiale (the Italian World Bank campaign). “Many of these projects have had negative development impacts, responding to the energy needs of western governments and benefiting western oil corporations while harming the climate and poorer people.”

European governments are about to miss the final opportunity in Berlin to send a strong signal to the World Bank that they want to see major reform of the economic model of development that is being forced on poor countries. Without the threat of cuts to its funding, the Bank will be able to continue pursing policies that are devastating the economies and environments of poor countries.

Bank of the South must learn from World Bank’s failures

The Bank of the South, a multinational funding institute is inaugurated today by seven Latin American nations to finance regional development projects. The seven participating members are Argentina, Bolivia, Brazil, Ecuador, Paraguay, Uruguay and Venezuela. Seven presidents attend the official launch: outgoing Nestor Kirchner of Argentina; Hugo Chávez from Venezuala; Luiz Inácio Lula da Silva from Brazil; Rafael Correa from Ecuador; Evo Morales from Bolivia; Tabaré Vázquez from Uruguay and Nicanor Duarte Frutos from Paraguay. If lessons from past World Bank and International Monetary Fund (IMF) failures are learned, the launch of the Bank of the South represents a strong opportunity to combat Latin American poverty, according to the international anti-poverty agency, ActionAid.

The South can lead in making the world financial system more democratic by implementing its voting system giving equal votes to member countries. “Latin American countries are breaking new ground by discarding the discredited one dollar one vote model of the World Bank and IMF in favour of equal votes for all participating countries,” says Anne Jellema, ActionAid International policy director. The Bank of the South could be also a strong tool to reduce poverty and inequalities in Latin America. “We call on the new bank to take into account the disappointing track record of big infrastructure projects funded by the World Bank and not focus heavily on financing such projects as has been announced by several member states, ActionAid points out. “Focusing on social policies would have a stronger impact for millions of poor people residing in Latin America, and would give Latin American leaders the credibility to support poverty-related policies worldwide”.

Global Coalition: World Bank needs an oil change

More than 200 organisations from 56 countries are calling on the World Bank and other international financial institutions to end subsidies to the oil industry. In a statement, the groups refer to ‘oil aid’ as one of the most glaring barriers to fighting climate change and addressing energy access in developing countries. As the heads of the World Bank gather in Washington this weekend to discuss their energy lending and climate change strategy, the latest annual report of the International Finance Corporation (IFC) indicates that little has changed in the institution’s approach. In 2007, the private-sector lending arm of the World Bank provided more than $645m to oil and gas companies. This is an increase of at least 40% from 2006.

“The World Bank’s approach to climate change and energy is inconsistent and contradictory,” said Jennifer Kalafut of NGO Oil Change International. “Despite commitments to cut global greenhouse gas emissions, it continues to increase support for oil extraction projects around the world.” In 2006, the World Bank increased its energy sector commitments from $2.8bn to $4.4bn. Oil, gas and power sector commitments account for 77% of the total energy sector programme while ‘new renewables’ account for only 5%. “Investing in renewable electricity will save 10 times the fuel costs than if we stayed on a ‘business as usual’ course with fossil fuels,” said Daniel Mittler from Greenpeace International. “We can cut global CO2 emissions by 50% by 2050, while addressing issues of energy access for the poor and maintaining global economic growth.”

The Bank’s support to the oil sector is also highly inequitable. While the majority of its oil projects are designed for export to wealthy countries, 1.6 billion people, including 500 million in sub-Saharan Africa, still lack access to electricity. “By funding these oil projects the World Bank is undermining its own goals of fighting energy poverty and reducing greenhouse gas emissions. It is also perpetuating problems of conflict and human rights violations often associated with extractive projects, as in the case of the Chad-Cameroon pipeline,” said Korinna Horta from Environmental Defense, a U.S-based NGO. The hundreds of groups and affected communities that have signed this statement are demanding that the World Bank and other public financial institutions stop financing oil projects. They assert that development assistance should be tackling the issue of energy poverty and building clean energy pathways rather than subsidising big oil.