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LABOUR: ILO Urges Action on Financial Speculation

Feizal Samath

GENEVA, Jun 15 2009 (IPS) - World leaders, employers and trade unionists, meeting here at a crisis summit on employment, welcomed a new ‘Global Jobs Pact’, but warned that any delay in its implementation would worsen the problems created by financial speculation.

"For those who think this is a temporary crisis, it’s a suicidal approach. We can’t wait… we have waited too long. We must act now," warned French President Nicholas Sarkozy, speaking at the 3-day International Labour Organisation (ILO) Jobs Crisis Summit here.

Millions of people have lost jobs across the world as a result of the global financial crisis. The Global Jobs Pact (GJP), proposed by the ILO, is expected to be widely discussed at this summit and endorsed at ILO’s 16-day annual international labour conference which closes on Jun. 19.

The GJP calls for high levels of employment and decent work for all. It also calls for an open economy that delivers opportunities and fairness alongside a sustainable environment and low carbon growth. It stresses the importance of social protections with strong and affordable social security systems and workers rights.

At least nine heads of state and government joined vice-presidents, labour ministers and leaders from employers’ and workers’ organisations at the meeting – which includes four high-level panels on global and regional coordination, development cooperation, fundamental principles and rights at work, and industry enterprise-level strategies.

Sarkozy said the world cannot be governed by the markets or laws of supply and demand. "If there is no global regulation, globalisation will not survive the law of the jungle. There cannot be freedom and liberty without rules."

He said globalisation should not be about trade or merchandise but about health, education, labour and culture – which are not goods or commodities.

The French President urged the International Monetary Fund (IMF), World Bank and other multilateral agencies to respect the environment and social conditions in countries, and pushed for a new global system that finances entrepreneurs not speculators.

"The crisis has given us a license to imagine. There is no time to retreat, more time to lose. Look… oil prices are rising again, the speculators are back," he said, hoping that action would be taken on the decisions made at the recent G20 summit where – among other measures – the IMF said it would move away from imposing conditions on standby credit facilities.

But Raymond Torres, director of the ILO International Institute for Labour Studies, speaking to reporters, said many countries are waiting for the IMF decision at the April G20 meeting of leaders to take root. "We hope it works because some countries are asking: Where is the promised support?" he said.

In his speech, outspoken Brazilian President Luiz Inacio "Lula" Da Silva broke away from his prepared text to slam U.S.-based multilateral agencies saying the ‘Washington consensus’ is over. "We need to build a new world based on equitable distribution of wealth," he said. The Washington consensus refers to the World Bank and the IMF and their policies.

Lula, welcoming the GJP, said the international community cannot allow more jobs to be lost in poor countries. "G20 leaders promised not to bail out banks and financial institutions, but protect jobs and create jobs. We need to build a new [economic] model that’s equitable," he said.

He condemned U.S.-based credit rating agencies, saying that while they go around warning other countries, "they could not stop the risk in their own countries."

"We cannot live in a financial system that speculates on paper, this is unproductive and doesn’t create jobs." Lula was referring to U.S. financial institutions and the sub-prime lending which triggered the crisis.

ILO Director General Juan Somavia called for an increasing social dialogue vis-à-vis the GJP to make things work. "Cooperation and dialogue is urgent, central and indispensable," he said, adding that one of the biggest challenges is making social dialogue work at home.

"We know it’s not easy. We justify its presence. We find excuses for its underperformance, we blame. But the end result is that we all lose. If social dialogue doesn’t take root at home in times of crisis, we would be weakening the potential of a Global Jobs Pact," Somavia said.

Sir Roy Trotman, vice chairperson of an ILO committee that prepared recommendations for the main conference, said trade unions should be brought in as full partners in the GJP under a tripartite agreement.

ILO officials told journalists that countries like China, India, and Arab states were not affected as badly as other countries. "India and China were not exposed to the world because of their huge domestic market while Arab states had huge financial reserves to withstand the crisis," Torres said.

The fact that Arab states were not as badly affected has helped to minimise the impact on migrant workers, many of whom come from Asia.

Ibrahim Awad, Director of the ILO’s International Migration Programme, says there has not yet been any major loss of jobs or reduction in remittances – which countries like the Bangladesh, Indonesia, Philippines and Sri Lanka depend on.

"While some part of the construction industry has been affected in Dubai, by and large not many workers are returning home," Awad told IPS.

However, he said while the impact in the Middle East has been marginal, the situation is far more serious in Central Asia – where thousands of people migrate to work in Russia, a country severely affected by the crisis.

In Kazakhstan, for example, Awad estimated that remittances account for 45 percent of GDP. "That’s half the economy that is dependent on remittances," he explained.

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