18 Jul, 2010

Global Trades Union First Female Leader: Economic “Fanatics” Still Pursing Failed Policies

Imtiaz Muqbil

Originally Published: 18 July 2010

One important consequence of the growing number of women rising to prominent positions in the world social and economic order is that they will often find themselves on adversarial sides of many global issues. At that point, it will be very interesting to see who really identifies with isues such as poverty, jobs, gender-gaps, etc., and who is only paying lip service to them.

Last month, in an important development that went virtually unreported by the global media, a feisty 56-year-old Australian trade unionist, Mrs Sharan Burrow, was elected the first General Secretary of the International Trade Union Congress (ITUC). She has been charged with taking forward a new agenda that seeks to shift the focus from crisis to justice and reformat the world economic order in a way that will promote people and jobs first.

Her speech to delegates at the ITUC congress in Vancouver was passionate, heartfelt and blunt.

She reminded delegates that the ITUC had been borne only four years ago in Vienna and taken an historic decision to build a new international organisation to deal with “all areas of growing inequity and insecurity.” Claiming to represent 176 million workers in 156 countries and territories, the ITUC agreed to strengthen global unionism and committed itself “to a new internationalism to tackle poverty, unemployment, violations of human and trade union rights and the power of corporate globalisation; an exploitative globalisation that was driving a crisis in food security, precarious employment, and the increase in the informal economy.”

Mrs Burrow said the ITUC had warned way back then of “the challenges of creating employment, of economic migration, of the declining wage share relative to corporate profits, of social exclusion , and of an unfair trading system. Sadly we were right and the global imbalances evident then, were only set to deepen as the world was plunged into the global financial crisis, a crisis created by extreme corporate greed and weak regulation on behalf of governments, too often captured by the power of the boardrooms.

She said that in October 2008 when the crisis started on Wall Street, “the folly of unregulated financial markets and the extreme greed of those controlling and profiting from these markets became apparent to all. The financial crisis destroyed trust and confidence. Financial markets froze. Investors withdrew. Trade flows stalled. Consumers stopped spending. Workers were sacked. For several months capitalism was indeed at risk.”

Even in the poorest countries, she said, foreign investment evaporated, remittances declined, development stalled and opportunities for migrant workers vanished. Concerns for food security, the achievement of the Millennium Development Goals and the financial commitments to addressing poverty alleviation and development, all vital to basic global justice, were set back.

In responding to the crisis, she said, “we had some hope that with the emergence of the G20 and many public policy makers beginning to act with a collective view, a dose of courage and a deep sense of economic history that we may see the emergence of a new economic paradigm. For the most part, central bankers and finance ministers recalled the lessons of the 1930s and responded with an extraordinary package of monetary and fiscal stimulus packages.”

These policies helped stop the global recession turning into another Great Depression. But now “instead of learning the lessons, the cycle is repeating itself. What we have witnessed in the last two months, is one European government after another being forced into a premature and suicidal rush to implement austerity measures to pacify reckless financial markets. The emergence of the sovereign debt panic in Europe which started in Greece but is spreading rapidly, means that the possibility of a double dip recession has now become a probability.”

Mrs Burrow said, “This will not remain just a European problem for long. If the rich countries fall back into a deep recession, it will only be a matter of months before the impact is felt in factories and workplaces across Latin America, Africa and Asia. In our globalised economy, depressed demand in Europe today spells trouble tomorrow, for agriculture workers in Cameroon, hospitality workers in the Caribbean and factory workers in Cambodia – indeed workers everywhere.

“It seems that key national policy makers have lost their nerve. Having implemented the right macroeconomic strategy, they failed to move urgently to the next important task which was financial market re-regulation, regulation that would also curb the power and the impact of insider relationships that exist between the largest banks, financial institutions, rating agencies, and the largest equity and bond investors.

“Instead we have seen this insidious group of insiders re-establish and re-assert their political and financial power in the last year. First, we saw these institutions rapidly push up customer charges so that their profits and bonuses paid to top executives in financial institutions returned to their ridiculous pre- recession levels.

Second, we saw them utilise their power with the international media to launch a scare campaign about the consequences of re-regulation for economic efficiency and economic growth. Third, we saw them implementing their divide and rule tactics whereby they threaten governments tempted to re-regulate their financial markets – they threatened countries that they would lose market share to other countries that decide to be “free riders” and not impose necessary regulations.

“Finally, we have seen them again misuse their power to punish elected governments whose policies or politics they dislike. That a country like Spain which recorded a fiscal surplus in 2007, 2006 and 2005 and fiscal deficits of less than 2 percent of GDP in the first 5 years of this decade has been the subject of speculation and intense pressure in the bonds markets over recent weeks is the clearest indication that financial markets retain the power to implement policies that are definitely against the interests of the general public.”

She said Spain, supported by the IMF, has been forced to introduce a series of dramatic austerity measures, comprising of public expenditure cuts and tax increases that “will result in a 10% reduction of GDP in the primary fiscal balance from 2009 to 2013.” Public sector wages have also been cut by 25% in Romania, and thousands of jobs lost in Germany.

“This resembles the worst of the stabilisation and structural adjustment programmes that were implemented during the 1980s and 1990s at the height of the “Washington consensus”. The new IMF is starting to look like the old IMF and workers in Africa, Latin America and Asia know the pain of that prescription.”

Mrs Burrow said that many in these financial circles now “firmly believe that all countries with deficits should now implement massive and rapid fiscal contraction and further deregulation of their labour markets. In other words, it is being proposed that the pain that has recently been administered to public sector workers, pensioners and the poor in Greece, Spain and Portugal should now be spread much further and be inflicted on our members worldwide.

“This will not work for us! It is supposed to magically produce an increase in productivity and faster economic growth to offset the fiscal cut backs but it is sheer economic fantasy!

“If workers are forced to the streets to again fight the orthodoxy of labour market deregulation, of declining wages, of cuts to pensions, unemployment support, public services and public sector jobs, then unions will be at the forefront of that mobilisation.”

She added, “It represents a return of the fanatics that championed the ‘Washington Consensus’. Fanatics, who have never been on a factory floor, down a mine shaft, in a childcare center, a school, a hospital or near an export processing zone. Fanatics who see any form of labour market regulation or institution as a rigidity impeding productivity and preventing markets from clearing without any care or concern for workers rights, for discrimination against women, for the insecurity of precarious employment or for global inequity and poverty.

“Fanatics who still stand by a model that has failed all but them – a model that has, despite the success of fiscal stimulus saving 20 million jobs, has seen us lose 34 million jobs, push more than 200 million more people into extreme poverty and left us with a huge challenge of creating 300 million jobs in the years ahead to provide for the rapid urbanisation and growing labour force in emerging economies.

“Our task is to stand in their way – to convince our political leaders – and those that have ambitions to be political leaders – that implementing the advice of these fanatics will be political, economic and social suicide for them and their governments.”

Tough talk, but all true. Mrs Burrow does not need to mince words in defending her constituents, those who have been most hurt by these faulty policies.

Any chance other women leaders like Dr Noeleen Heyzer, the first woman Executive Secretary of the UN Economic Social Commission for Asia & and the Pacific, a region with the largest number of global poor, will speak in such caustic terms?

None whatsoever.