ITUC and TUAC Reaction to the G8 Outcomes in Lough Erne

G8 Leaders in Lough Erne changed the tone of economic policy statements by bringing “demand” back to the global policy agenda, as evidenced in the conclusions of the global economy working session, published by the British Prime Minister’s office:

“Promoting growth and jobs is our top priority. We agreed to nurture the global recovery by supporting demand, securing our public finances and exploiting all sources of growth. The fight against unemployment, particularly long-term and youth unemployment, remains critical in our domestic and collective agendas.”

Commenting on the conclusions, ITUC General Secretary Sharan Burrow said words need to be reflected by policy:

"The G8 focus has shifted from austerity to ‘flexible’ fiscal policy and the need to support demand. This has to be backed by a change in policy on the ground. When the G20 Finance and Labour Ministers meet next month in Moscow, they must put forward a jobs plan that includes major increases in infrastructure investment and income-led recovery."

The G8 governments, by acknowledging the economic and social vulnerabilities and downside risks, as well as the recovery measures put in place by Japan, need to draw the right conclusions and strengthen policies that lead to a fair distribution of income, a reduction of unemployment, specifically of the youth, and a better resilience of the global economy. The G8 specifically emphasized structural reforms as a key strategy. According to John Evans, TUAC Secretary General, there needs to be a shift in the structural reform agenda:

"The G8 communiqué calls for structural reforms to produce "healthy labour markets" – that must mean building fair labour markets through policies that reduce inequality by strengthening, not attacking, collective bargaining and minimum wages."

On tax, the G8 Leaders’ commitments are a welcome modest step forward and contrast with past inaction. The leaders agreed an automatic exchange of information between tax authorities, the creation of a new “common template” for multinationals to report what they pay in taxes “across the world” to tax authorities (though not yet the public), making the extractive industry payments “more transparent” and aiming at disclosing “who really owns” companies and trusts. However, while the statement calls for the OECD to pursue work on tax transparency, and on base erosion and profit shifting tax avoidance by multinationals, the G8 outcome falls short of a roadmap and clear deliverables in order to transform these commitments into effective action.

"Some progress seems to be made on automatic exchange of information, on beneficial ownership and transparency, but the agreement falls short of what is needed to effectively take action for a fair system of international corporate taxation,” said Burrow.