ICFTU ONLINE...

Brussels, September 25 1998 (ICFTU OnLine): "Globalisation is on trial", said the ICFTU in its statement to the Annual Meetings of the IMF and the World Bank released today. Citing the threat that the spreading recession in large parts of the developing world, Japan, Russia and the CIS countries could turn into a full scale slump, the world trade union body is calling for urgent co-ordinated action to cut interest rates, launch large scale social programmes and reform the international monetary system.

Bill Jordan, the ICFTU General Secretary, described the challenge facing the IMF and World Bank as, " a brief window of opportunity to modernise the institutions and regulations governing world financial markets and catch up with globalisation." Highlighting the growing social crisis of rapidly rising poverty and unemployment in Asia, the ICFTU stresses that "the financial and social crises are interlinked and so must be the package of measures to restart the global economy."

The 16-page report sent to the Managing Director of the IMF Michel Camdessus and President of the World Bank James Wolfensohn, and published on the ICFTU’s web-site, argues that policy failures by governments and speculative behaviour by international investors are jointly to blame for the crash of a series of Asian economies. It calls for rapid progress on developing a new architecture of international regulations to prevent banks from creating the pyramid of levered credits that crashed in a cascade of non-performing loans and currency devaluations. Also setting out the case for a big increase in aid for emergency jobs programmes and social safety nets, the report calls for "structural adjustment programmes to promote good governance and respect for human rights and core labour standards, increased employment and poverty reduction, and not austerity and blind deregulation."

Two specific proposals for immediate action on the non-payment of wages in Russia and the restructuring of troubled Asian businesses are likely to catch the eye of the IMF and World Bank.

The ICFTU proposes a new internationally supported overdraft facility in Russia and the Ukraine for companies that guarantee the due payment of wages. "Such a facility would not be inflationary given the high volume of spare capacity, would put cash in the hands of those who need it most, not to the wealthy who will transfer it abroad, and help to restart the dangerously stalled process of institutional reform and economic recovery", says the ICFTU.

For Asia, the report highlights the impasse facing many large Asian companies which are unable to raise new finance to restructure and are too big for governments to allow to go bankrupt. "An international fund, financed by industrial country governments and working as part of the World Bank’s International Finance Corporation, should be set up to inject new share capital into Asian companies and reduce over-borrowing". It would oversee the elaboration of five to ten year financial and social restructuring plans for the major companies, and then sell on the shares to capitalise new national social security funds.

The ICFTU also calls on governments and institutions to "take immediate steps" to prevent the crisis from spreading to Latin America and Africa. "If one Latin America country collapses, there could be a 'domino effect' as others follow, setting back efforts to reduce unemployment and social inequality", the ICFTU warns. In Africa, the "main threat" is a reduction of commodity export revenues, the trade union international says, which will undermine the fragile recovery in a number of countries. The ICFTU's prescriptions for Africa include a relaunched debt reduction and write-off scheme to replace the "much heralded but disappointing" Highly Indebted Poorest Countries Initiative. The HIPC's $ 7 billion over 4 years contrasted with the $ 100 billion mobilised for Asia over the last year.

Looking beyond the crisis, the ICFTU strongly believes that comparative advantage will lie with those countries that have a stronger social cohesion built on investment in education and in training, health care and sound industrial relations system, founded on core labour standards.

In a call for urgent action by governments that echoes recent statements by President Clinton, Prime Minister Tony Blair, the French government and many other leading politicians, the ICFTU says "Preventing a global slump and building the foundations for recovery and sustainable development is not just a matter for economists and bankers, it is a challenge to the leadership of the world’s major democracies in the industrialised and developed world." Bill Jordan commenting on the recent discussions at and around the UN General Assembly said that "After a year of temporising, our message seems to be getting across. Stopping globalisation is both unrealistic and undesirable. The real question before the international community is can we create the international policies and institutions to manage the process of globalisation in the service of the needs and aspirations of people."

International Confederation of Free Trade Unions (ICFTU)
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