David Begg's letter on the meetings of the IMF and World Bank
5 May 2009
To the Minister for Finance
Mr. Brian Lenihan
Re: Statement by Global Unions to the 2009 Spring Meetings of the IMF and World Bank (Washington, 25-26 April 2009)
Dear Minister,
Global Unions have welcomed the series of decisions reached at the G20 London Summit as important progress towards effective multilateral cooperation for resuming growth and creating jobs. Urgent action to implement those commitments is now required in order to stem the massive collapse in employment and economic prospects across the world. Global unemployment could increase by 50 million in 2009, and hundreds of millions of workers will not earn enough from their labour to reach the poverty line. Recognizing the need for immediate and drastic measures to stop economic decline, the attached statement from the international trade union movement calls on the World Bank and International Monetary Fund not only to confirm the G20 conclusions, but to add their own weight to the G20 proposals concerning global governance and social and employment cohesion. The IFIs must address the problems that contributed to the crisis, including some of their own policies, and prioritize the creation of decent work as the key to economic recovery.
The International Trade Union Confederation to which the Irish Congress of Trade Unions is affiliated, has produced this statement jointly with the Global Union Federations and the Trade Union Advisory Committee to the OECD. All of the above organizations form Global Unions.
The statement considers the role of the international financial institutions as part of a reformed system of global governance that must tackle the current crisis and build a more sustainable world economy for future generations. Necessary actions include:
- Implementing a coordinated international recovery and sustainable growth plan focusing on public investment for maximum impact on job creation
- Nationalizing insolvent banks to restore confidence and lending in the financial system and establishing new rules and mechanisms to control global finance
- Combating wage deflation and reversing the growth of income inequality by extending the coverage of collective bargaining and strengthening wage-setting institutions
- Establishing a legal benchmark of norms and instruments of the international economic and social institutions - the ILO, IMF, World Bank, WTO and OECD - for effective and accountable global economic governance
With regard to the specific role of the IFIs in confronting the crisis, the statement criticizes the IMF for supporting anti-recession programmes only in industrialized and some emerging economies while demanding pro-cyclical restrictive fiscal and monetary policies in less developed countries. The statement warns that by applying this double standard, the IMF may significantly limit any increase in overall aggregate demand that could result from the expansionary policies it is advocating on a global level. The statement further calls on both IFIs to encourage job creation as a priority objective of recovery strategies, because putting people to work is the most tangible and sustainable means of restoring domestic consumption levels. Noting that longstanding demands for governance reform of the IFIs remain unfulfilled, the statement urges both institutions to quickly and substantially increase the representation of developing countries in their decision-making structures.
The Irish Congress of Trade Unions is working with our trade union colleagues around the world to advance the proposals outlined in the attached statement. I urge the government to actively consider our recommendations for the upcoming Spring Meetings of the IMF and World Bank and look forward to receiving your reactions to the statement.
Yours sincerely,
David Begg
General Secretary