25 Jan, 2012

Labour Leaders Demand Jobs, Growth And Equity In Davos

Imtiaz Muqbil

25 January 2012 (ITUC, WEF media releases): The international union movement has put its case for the reform of capitalism at the World Economic Forum in Davos this week with five principles for dealing with current economic challenges. Addressing political and business chiefs, trade union leaders from Indonesia, USA and the UK and the international trade union movement called for jobs and growth to be at the centre of plans to reboot the world economy.

Ms Sharan Burrow, General Secretary International Trade Union Confederation, said the pervasive economic challenges had spread to all areas of working life, from young people unable to find their first job, parents struggling with rising inequality and seniors struggling to survive on dwindling pensions.

“Over the past three decades income inequality has risen in 17 of the 24 OECD countries for which data is available. With growing unemployment and stagnating wages, we’re sitting on a social time bomb,” said John Evans, General Secretary Trade Union Advisory Council to the OECD.

“In Davos this week, we’ll be pushing to put people back into our economic system. Because it’s workers in work that will drive us the global economy out of the crisis,” said Sharan Burrow.

Labour’s five principles for growth include:

1. Jobs –Five years of two per cent GDP invested in the green economy across six sectors in 12 countries can drive more than 55 million sustainable, decent jobs.

2. Social protection, sustainable demand and decent work – These should include a social protection floor in every country, with a global fund to kick-start development in the poorest countries; minimum wages on which people can live with dignity; and an expansion of collective bargaining to ensure fair work conditions.

3. Financial regulation – Governments must band together to stand up for the ’real economy’ by putting a ban on algorithmic High Frequency Trading, regulating the credit rating agencies, and requiring transparency for the shadow banking system – the hedge funds and investment vehicles that transact trillions of dollars but fall outside national regulatory systems.

4. Fair and progressive taxation – It is time to repair the balance sheets of governments through a fair contribution from those that can afford to pay: through making corporations pay their fair share, urgently implementing a broad-based, low-rate Financial Transaction Tax to reduce speculation and provide a new source of government funding to invest in public services, social protection and development.

5. Climate action – Governments must find the political will required to save our children’s future, by reducing emissions of industrialised countries by 25-40% by 2020, implementing a green climate fund and ensuring a just transition for workers and communities.

“There will be no growth unless governments invest, using labour’s five principles as a road map” said Philip Jennings, General Secretary UNI. “It’s time to bring the real economy out of the shadows of financial greed – with unions and employers at the table agreeing a set of principles for growth.”

“The World’s Next Top (Economic) Model”, read Sharan Burrow in the Huffington Post

Read Labour’s Five Demands for Jobs, Growth and Equity for Davos 2012

Meanwhile, the WEF itself issued a release about the opening day of the Davos debate, headlined, “To Serve Society Better, Capitalism Needs a Redesign.” It quoted business, banking, labour and academic leaders as agreeing that “capitalism needs to serve society better.”

Speaking in a session on the future of capitalism, Ms Burrow, argued that widening income inequality and high unemployment, especially among young people, are an indication that the capitalist system has failed society. The business community “has lost its moral compass,” she reckoned. “We must redesign the model. We must reset it. Stop the greed. Unless employers and workers sit down with governments, the system will continue to fail.”

However, according to the WEF release, other panellists in the session disagreed with Burrow’s view on how well businesses are meeting their social responsibilities. “The business community has not lost its moral compass,” asserted David M. Rubenstein, Co-Founder and Managing Director of the Carlyle Group, a private-equity firm and global asset manager. “Capitalism may be the worst economic system except for any of the others.” Businesses do not think about ways to reduce wealth and jobs, he added. To ensure that capitalism is fair, focus on improving laws and regulations, investing in education and promoting innovation and creativity, Rubenstein advised.

Responding to the criticism levelled at large financial institutions since the global economic crisis unfolded that they are irresponsible risk takers that focus entirely on profits, Brian T. Moynihan, Chief Executive Officer of Bank of America, said that banks do not enjoy unfair advantages because they are too big to fail. “Our power, size and capabilities come from our clients. Our revenue is representative of the economic activity taking place. We are big because our clients are [global] and we support them.”

Growing income inequality is fuelled not by bad corporate governance but by “far deeper forces,” including the development of technology, the emergence of a global market and the need for innovation, Raghuram G. Rajan, the Eric J. Gleacher Distinguished Service Professor of Finance at the Booth School of Business in the University of Chicago, explained. These forces are increasing the demand for skills and pushing pay higher.

“These are not going to be affected by corporate governance,” Rajan told participants. “The right debate is about how we get the innovation and creativity we need.” Concluded Ben J. Verwaayen, Chief Executive Officer of Alcatel-Lucent: “We need to talk about innovation, real sustainability and reforms – not about corporations and greed. It’s about decision-making. We have to go for transformation. We have to talk about job creation, not job security.”