81 million jobs need to be created by 2018 to close the massive jobs gap caused in the wake of the global financial crisis as noted in the Labour Ministers’ communiqué.
The Australian government claimed that the “reforms” that G20 government have committed to will almost achieve the target by raising growth by 1.8 percent by 2018. This remains highly uncertain, as growth forecasts from the OECD and IMF since February have been revised downwards twice.
The outcome communiqué of the meeting points to uneven growth that is far below the pace required to adequately generate jobs and reverse the “persistent weaknesses in demand”. So, how to achieve job-rich and sustainable growth if current policies and so-called “structural” reforms fail to deliver and push more and more people into poverty or precarious working conditions?
The L20, present for a consultation session at the meeting, had a message: business as usual will not generate the growth that societies need. ACTU President Ged Kearney, representing the L20, told Ministers that “fiscal austerity and rising inequality will not deliver the strong inclusive growth needed to create jobs and prevent a generation being scarred by chronic unemployment. A fresh approach is needed. Simply put, the world’s workers need a pay rise now.”
A very different set of policies are needed to create quality jobs, especially for vulnerable groups and young people. Job creation can go hand in hand with decent wages and policies that drive consumption by establishing living minimum wages, strengthening collective bargaining and renew commitments to building social protection systems and social dialogue.
This in turn will generate private investment, especially if backed up by a rise in public infrastructure investment.
The Ministers’ Communiqué remains silent on how to reduce inequality and achieve inclusive growth in a period when the labour share in national income is falling in most G20 economies, while profits and financial incomes have soared.
A report, prepared by the OECD, the World Bank and the ILO prior to the meeting confirms this http://www.ilo.org/global/about-the-ilo/media-centre/press-releases/WCMS_305429/lang—en/index.htm concludes that further real wage reductions will be “counterproductive”. Instead, as the L20 argues, coordination efforts with Labour Ministers and social partners could deliver coherent policy packages that begin to put purchasing power and confidence back into the global economy.
The L20 gave cautious welcome to the apparent progress made with regard to the G20/ OECD Base Erosion and Profit Shifting (BEPS) Action Plan that was presented to the meeting.
The progress made by the OECD on BEPS now needs to be followed up by implementation. However gaps in the Action Plan need to be addressed by:
Ensuring public disclosure of the country-by-country tax reporting by MNEs so as to rebuild citizens’ trust in global businesses’ contribution to development.
Facilitating the participation of developing countries in the BEPS process through concrete institutional support.
Addressing the tax treatment of the shadow banking system and private pools of capital: It is time for the G20 to step up and engage a comprehensive approach to tax and finance.
Finance Ministers also launched a Global Infrastructure Initiative including a “knowledge sharing platform” to identify quality infrastructure projects. However the proposal appears focussed on protecting the interest of foreign investors, with little consideration for other stakeholders or for ensuring transparent and fair risk-sharing when public money is used to leverage private finance in infrastructure financing.
As Ged Kearney said: “We work together to produce goods and services - it is capital and labour combined that produces growth. It is essential that the rule of law exists for investors to abide by - going beyond anti-corruption to respect for labour standards, for Occupational Health and Safety, for property rights of citizens, and to governance arrangements that are transparent, fit for purpose, and include host community engagement.”
No major announcement was made on financial regulation. Regulation of the shadow banking system and the strengthening prudential and supervisory rules applying to “too-big-to-fail (TBTF)” financial institutions, as with previous ministerial meetings, remain “work in progress”. And the risk of further delays by the Financial Stability Board in their implementation is real. In an apparent concession to the banking industry, the G20 Finance Ministers agreed that the expected FSB proposal on TBTF “will be subject to public consultation and a quantitative impact assessment and “further refinement” before any final measure is agreed.
The attention now shifts to the International Financial Institutions Annual meetings in October in Washington, to which global unions have submitted a statement and beyond that to the G20 Leaders’ Summit in Brisbane in November, which will be immediately preceded by an L20 Summit, where G20 trade union leaders will be pressing their case for a policy mix of wage led growth and increases in public infrastructure investment.
“G20 Leaders must ensure that wages and jobs are at the heart of their discussion in Brisbane. The world needs a pay rise. Governments can’t continue to believe that cutting wages and worker protection will create jobs and the fiction that business can survive without customers who have money to spend,” said Sharan Burrow, General Secretary of the ITUC.
“Faced with stagnant growth, falling real wages in many countries and a global jobs gap that will rise to 81 million on current polices Leaders must give some hope to working families that policies will kick start a real job rich recovery”, said John Evans, General Secretary of TUAC.
