Time for the World Bank and IMF to embrace full, decent employment

photo: AFP

Governments have gathered at the annual meetings of the IMF and World Bank this week as the economic forecast shows employment falling behind growth. There is a global deficit of vaccines and a shortage of decent work that must be addressed to avoid a lost decade for workers.

Ahead of the meetings, the IMF extended cancellation of some loan repayments and took the crucial step of allocating $650 billion in Special Drawing Rights (SDR), an international reserve asset. The allocation has already provided much-needed liquidity and freed up resources for crisis response in developing countries.

The benefits can be maximised by the reallocation of SDRs from high-income countries toward squeezed developing countries. At the annual meetings, governments and the IMF agreed to create a Resilience and Sustainability Trust Fund for this purpose. The Bank increased funding for vaccines by $8 billion and is updating its strategy on social protection and jobs.

Bold action

ITUC General Secretary Sharan Burrow said: “In the coming months, vaccinations and debt relief for developing countries are an urgent task to enable a recovery led by employment. This will also be enabled by bold action to achieve universal social protection and create jobs in the transition to a net-zero carbon global economy.

“The IMF should swiftly launch the Resilience and Sustainability Trust Fund and use it to support just transition with climate-friendly job creation. To deliver its aims of shared prosperity and an end to extreme poverty, the Bank’s approach to social protection and jobs should align with international standards and the Sustainable Development Goals. Both institutions must clearly see full, decent employment as a guide for all policy.”

The global labour movement has proposed comprehensive measures for the international financial institutions to support a just recovery and transition, including speeding-up production and distribution of vaccines, and putting social dialogue and labour rights at the centre of climate action. The statement calls for suspension or elimination of surcharges on IMF loans, which put an unfair burden on countries in crisis. Discussions moved forward but no decision was reached.

Respect labour standards

The labour standards of the World Bank and its private sector arm, the IFC, are an important way that the institution has promised to protect workers’ rights on loans. However, it has not acted for over a year after trade union leaders at the IFC-funded Sheraton Grand Conakry were fired in retaliation for forming a union.

In the pandemic response, the Bank has increased the use of Development Policy Loans. These loans provide money to governments if they carry out policy reforms and are not subject to the labour safeguards.

“We call on the international financial institutions to promote and respect international labour standards and be guided by SDG 8 in all operations. The institutions should take immediate steps in this direction, including the World Bank Group strengthening safeguard implementation and checking that all Development Policy Loans align with ILO conventions.

“The Fund can adopt procedures for loans and policy advice that ensure respect for fundamental labour rights, including collective bargaining, and systematically address inequality. Both institutions should update their strategies on inclusive growth, jobs, and social protection to meet the moment,” added Sharan Burrow.