The World needs a Pay Rise, Safe Jobs and Sound Investments: L20 Statement to the G20 Labour Ministers Meeting

On 10-11 September, G20 Labour and Employment Ministers will gather in Melbourne to discuss what can be done to deliver the G20 target of 2% additional growth in GDP over the next five years and how this can translate into creating the 81 million jobs required by 2018 to close the crisis induced jobs gap.

The L20 will hold its own meetings and join the ministers for consultations, where it will be represented by a global delegation composed of union leaders from Australia, Indonesia, the United States, the ITUC, the ETUC, and TUAC. The consultations will treat the central issues including G20 Employment Plans, labour market strategies, addressing informality, as well as boosting participation among women and creating safe workplaces.

The L20 statement to be presented to the ministers argues that boosting growth and avoiding prolonged stagnation or even deflation requires a strategy for raising wages and public investments. Creating quality jobs must be front and centre in G20 policies with job creation targets set in consultation with the Social Partners.

This needs to be part of a policy mix expanding public investment to kick-start growth and to ensure that it is job-rich and inclusive by:

-  Raising low and middle-incomes both to reduce inequality and to inject purchasing power into the global economy. Research undertaken for the L20 shows that reversing the decline in the wage share in national income by between one and five percentage points of GDP in G20 countries could raise growth by close to 2% over the next five years.

-  Increasing public investment in social and physical infrastructure both to expand growth in the short term and bring about the structural transformation of economies needed to counter climate change. Our estimates suggest that expansion of public infrastructure investment by 1% of GDP across the G20 could create up to 3.8% more growth over five years compared to current policies – thereby surpassing the G20 growth target.

As for now, growth in many economies is constrained due to fiscal austerity and “structural reforms” – that some G20 members and financial institutions still advocate despite evidence that this is pushing the global economy into deflation. “Structural reforms” are usually code for reducing wages and worker protection. These policies would grow the incomes and wealth of the 1% but damage workers’ living standards and reduce economic efficiency.

In Melbourne and at the G20 Leaders’ Summit in Brisbane in November, global unions will continue to call for measures to combat in-work poverty through the establishment of robust, well-set minimum wages and ensuring a living wage, and strengthening the coverage of collective bargaining.

The Labour Ministers’ Meeting can provide the much-needed impetus for concrete measures in Brisbane to reverse the currently damaging economic and social prospects, as well as to deliver on past G20 commitments.

Income inequality is now at least recognized as a major global issue that is contributing to the shortfall of demand – albeit only after 30 years of constantly declining labour shares in total national income.

And, indeed, there are solutions that would be beneficial to societies and growth that the L20 is arguing for including:

• Youth guarantees, youth employment and quality vocational training and apprenticeships;
• Expanding women’s employment opportunities by investment in childcare and elder-care, and promoting inclusive labour markets by boosting activity rates of vulnerable groups;
• Shifting people from informal to formal employment by strengthening workers’ rights and social protection systems;
• Global social protection floors, including universal health care and quality public services; and
• Guaranteeing ’safe workplaces’ to reduce work-related injury and illness across the G20 and in the supply chains of G20 companies.

The L20 will call on the G20 in November to signal a change of course - with the Melbourne Labour and Employment Ministers’ meeting laying the foundations. The Brisbane Action Plan to be adopted by G20 Leaders must put in place comprehensive measures to “support aggregate demand and reduce inequality” as committed to in 2013, and ensure policy coherence through coordination processes at national and G20 levels.

For more information, see the TUAC Website