Union Power – Global Justice

ITUC 2nd World Congress, Vancouver, 2010
Sharan Burrow – ITUC President

Delegates, friends, union men and women – welcome to the 2nd World Congress of the ITUC.

Let me begin by acknowledging the first nations peoples of Canada and pay my respects to their elders, past and present.

Let me acknowledge the great Canadian Labour Congress and thank Ken Georgetti for the hospitality in this wonderful city of Vancouver and for the commitment to global unionism that has driven he, and his team, to do the enormous amount of work necessary to facilitate our deliberations this week.

Four years ago we met and took an historic decision to build a new international organisation a new internationalism. Delegates came to Vienna give birth to the ITUC; to strengthened global unionism.

Our commitment was 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.

We also recognised the need for union influence in other areas such as action on climate change – in short we committed to the ITUC with renewed determination to deal with all areas of growing inequity and insecurity.

We warned 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.

From crisis to global justice: this journey we are committed to requires an economic and social transformation that means putting people first.  Hence our theme: “Now the people”.

Since the founding of the ITUC, the unity of purpose and solidarity has been strongly forged and is recognised by us and those we advocate with. In his introduction to the main report before the Congress, Guy Ryder will expand on these efforts and achievements, but I want to say here, that we are proud of what we have done.

Guy rightfully points out that the world is at a tipping-point. Guy states clearly that we are balanced on a knife-edge between one future that can offer decent work, balanced development and better living standards and another which would plunge millions more people into unemployment, poverty and suffering.

Over the past few weeks that knife-edge has become razor sharp.

Over the last 18 months, world leaders recognised the urgent need to rebalance the global economy and promised policies that put employment at the heart of economic recovery, that the financial markets would be regulated, investments would be made in the green economy and a new model of growth and development implemented.

Events and policy decisions in Europe in recent weeks however, have tipped prospects for the global economy and consequently dignity and security for workers, backwards not forward.  

These events will dominate our discussions this week, because we must respond with strength and solidarity, with intelligent alternatives that raise the political stakes for those policy makers who are willing to punish workers, yet again, because they let the financial markets dominate global policy in order to advance their own interests.

How did we get here? How did we get to a place where the world looks even bleaker for working people and their families than it did four years ago?  

Think back to October 2008 when the world’s economy entered a recession. 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.

All this because of a crisis that started on Wall Street but soon spread to every corner of the world. The impact was felt even in the poorest of countries, as 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, have been set back.

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 were sufficient to stop the global recession turning into another Great Depression.

Despite some standout results in a small number of countries including Brazil, Argentina, China and Australia the recovery in jobs was not universal. Global unemployment and underemployment continued to rise throughout 2009 and during the first half of this year.

Even for those lucky enough to keep their jobs, in too many countries wages have fallen, abuses of workers rights have increased and living standards have deteriorated. The gap between the rich and the poor has continued to widen, within and across, countries.

The imperative that governments maintain their fiscal and monetary stimulus measures long enough to ensure the recovery in private investment and consumption was strong enough to sustain the recovery became accepted policy.  

Yet 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.

Colleagues, this will not remain just a European problem for long. The reason for emphasising this is that, 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.  

Why have we now returned to the brink of economic disaster just when we were starting to see light at the end of the tunnel?

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 bond 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.

The economic crisis in Spain is a private sector induced and fuelled crisis. It has very little to do with government policies. Despite this, in the last few months  the Socialist Government of Spain faced increasing difficulties in selling bonds and raising revenue in capital markets to cover the necessary roll-over of public debt.

The IMF intervened but in return for a promise of support if required, the Government of Spain has introduced a series of dramatic austerity measures. The magnitude of the fiscal consolidation and time frame of the contraction is extreme. The public expenditure cuts and tax increases will result in a 10% reduction of GDP in the primary fiscal balance from 2009 to 2013.

In commenting on these measures the International Monetary Fund said:

“We fully support this package. It significantly strengthens and front loads the envisaged adjustment and enhances credibility by taking concrete and bold measures, such as cutting public sector wages.”  

Further they focused their attention on pension “reform” and the labour market, the system of collective bargaining, labour legislation and employment protection legislation. The IMF urged the Spanish Government to rapidly implement radical reforms across all these fields.

But it doesn’t stop in Spain. Public sector wages were cut by 25% in Romania, thousands of jobs were lost in Germany and so on and so on.

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.

Colleagues, tomorrow we will hear from the Managing Director of the IMF. He deserves a fair hearing from us, because early in this crisis he was on our side arguing consistently and coherently for fiscal stimulus, for jobs.

There was a commitment to work with the ILO, to drive income-led growth, social protection, minimum wages and collective bargaining, to avoid wage deflation. The Global Jobs Pact was an accepted framework for securing economic growth and building domestic demand.

But we want to know why more recently he has wavered and the IMF now seems to favour fiscal retrenchment in far too many countries.

Nobody argues that fiscal consolidation is not important over time, but surely it is the timing that is critical and it requires a growth strategy that can soak up debt, without further attacks on the livelihoods and living standards of working people and indeed the threat of further economic turmoil.

As we gather here in Vancouver, we know that next weekend the G20 Leaders will be meeting on the other side of Canada. The omens for that meeting in Toronto are not good.

The G20 Finance Ministers recently met. While it appears that they were not unanimous in their views, there would appear to be a majority of Finance Ministers who now want to see a rapid return to business as usual. A return to the failed “Washington consensus” policies and the worst aspects of the stabilisation and structural adjustment programmes of the 1980s and 1990s.

There are many in these financial circles who 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.

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.

We have the alternate policy options, beginning with the ‘ILO Global Jobs Pact’  –  the economic power of income-driven growth but also the dignity of social protection, a minimum wage, the distributive justice of collective bargaining, the power of public sector investment to drive jobs in the private sector through aggregate demand, the environmental necessity of investment in the green economy also driving jobs, the opportunity and the productivity that is facilitated by investment in education and training and research and development – decent work;  union workplaces where freedom of association and the right to organise and collectively bargain is respected.

We also have economic power. Our host, Ken Georgetti, heads up the ITUC Committee on Workers Capital for us. There is now some $US16 trillion under trustee management and much more if governments were to declare and vest cumulative pension entitlements now incorporated into consolidated revenue.

We can and must incorporate workers capital strategies into our organising and our political campaigns.

This week, you will debate and decide policy and action programs on many issues, including peace and disarmament, sustainable and just development, labour rights and strengthening campaigns for freedom of association and collective bargaining, precarious employment and multinational enterprises, organising in the informal economy, the rights of migrant and domestic workers, pay equity and equality of opportunity for women, youth unemployment, climate change and much, much more.

These debates, and your decisions, will all sit at the heart of our quest for global justice but we must now organise to win.

The power of the unions to fight for peace; to build and sustain democracies; to vote out anti-worker, anti-union governments; to stand up against corporate bullies; to fight exploitation; to bargain for a fair share of the wealth workers create and to ensure our taxes are invested in public and community services; in development and in sustainability…this has been demonstrated by many of you in your own nations, but it requires us to redouble our efforts to organise workers nationally and globally.

The Global Council of Unions must play a central role in prioritising our targets and our capacity to organise. The GCU brings together the ITUC and the Global Union Federation leadership. Together we can consolidate the decisions you take this week by organising to win.

It will require all of us to win global justice – women, young people, workers with disabilities, migrants – all of us, unionised, in touch with our communities and with other global communities to prevail.

The ITUC, unified, with shared union values, with common purpose in the quest for global justice – that is why we are here and that is why we will organise to build the ITUC to an even stronger global force for change.

Now the people – yes!  

Global Justice – yes!

Viva the ITUC, Viva!