G20 should fix the world’s economy for the working people!

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©Andrew Biraj/Reuters

As G20 leaders look distraught at a global economy that is faced with weak growth, high unemployment and rising income inequality, they should repeat to themselves that this is not inevitable. The International Monetary Fund (IMF), while putting out another downward revision of growth forecasts, admitted that recovery is too slow and fragile, while recognising the problem of income inequality. The OECD, in its reports on New Approaches and Economic Challenges (NAEC) and its 2014 OECD Employment Outlook, acknowledges that rising inequality affects economic growth and social cohesion, sapping trust in markets and institutions.

In the years since the crisis, Labour 20 (L20) has been calling for a move away from austerity. If the G20 governments want to meet the target agreed by finance ministers of achieving 2% GDP growth in the next five years, they will need to shift their strategies. Change is the only way to close the crisis-induced jobs gap by creating the 81 million jobs needed by 2018. This is a reality test. It needs clear answers.

L20 modelling shows that a mix of wage increases and investment in infrastructure in G20 countries can create up to 5.84% more growth and 33 million jobs compared to business as usual. The world economy, in aggregate, is wages-led–that is, the more you pay people the more they will spend on goods and services. In contrast, every one percentage point decline in the wage share leads to a decline in global GDP by 0.36 percentage points.

Low wages, low skills and precarious jobs will not lead to sound economic recovery.

The G20 must shift away from the thinking that says the path to growth is cutting wages and maximising short-term business profit. In short, the world needs a pay rise.

We need to invest. Invest in good jobs, invest in sustainable infrastructure projects and invest in our youth. It is not acceptable that a quarter of young people cannot find work for more than $1.25 a day.

Trade unions have been constantly calling for measures for inclusive growth, including strengthened workers’ rights, minimum wages, collective bargaining and social protection floors. We need to enable women and young people to participate in secure jobs, and provide those young people with support and training with the scaling up of quality apprenticeships.

In the same vein, pro-growth policies need to push for more productive investment through 1% of GDP invested in infrastructure in every country. Investment, including workers’ pension funds, must be on the basis of the G20/OECD High-Level Principles on Long-Term Investment.

There will be no jobs or growth on a dead planet either. G20 leaders need to commit to an ambitious and fair share in reducing emissions to ensure the success of the UN Climate Conference in Paris in November 2015. Moreover, agreement on Just Transition strategies will be crucial to protect the livelihoods and jobs of workers.

We also look to the G20 for determined action on “safer workplaces”, so we can prevent another disaster like that of Rana Plaza, Bangladesh, in 2013 when a substandard garment factory collapsed, killing over 1,000 workers. Social upgrading in Global Value Chains (GVCs) is not a given: the OECD Guidelines on Multinational Enterprises could help drive progress in helping firms and their workers to benefit from GVCs. Production in developing and middle-income countries that is sustained through precarious labour and re-compensation beyond the living wage is not acceptable. Working families are looking to the G20 to take on this responsibility.

Finally, efforts to prevent multinational corporations from shifting their profits around different jurisdictions, regardless of where their activity is located, to avoid taxation must be supported. The Base Erosion and Profit Shifting (BEPS) Action Plan launched in 2013 shows that institutional drive and political momentum can produce concrete results at the G20 level. However, the current plan has some weaknesses to be addressed, including the need to allow for public disclosure of country-by-country tax reporting by multinationals, to institutionally support the participation of developing countries in the process, and to address the taxation of shadow banking and private pools of capital through collaboration with the Financial Stability Board (FSB).

The same commitment as with the BEPS plan should apply to the current jobs, inequality, climate change and investment crises. A Brisbane Action Plan is essential and needs to include national job creation and investment targets, and be followed up in consultation with social partners.

The L20 will hold its own summit in Brisbane, two days prior to the G20 leaders’ meeting. We are calling on leaders to put an end to years of stagnation and bring about the type of structural policies for jobs-rich, sustainable investment that workers can support.

The world needs that pay rise–now!

References

L20 Modelling Results, available at: http://www.tuac.org/en/public/e-docs/00/00/0F/17/document_news.phtml

OECD (2013), “Not so fast: Interview with John Evans”, OECD Observer, No 295 Q2. See http://oe.cd/JA

Read more on Rana Plaza and OECD work on responsible business behaviour at http://oe.cd/Is or www.oecdobserver.org, sections, spotlights

See also www.tuac.org

© OECD Observer No 300, Q3 2014

Useful links:

www.oecd.org/g20

G20 Brisbane 2014

Australia: Brisbane 2014 special




Economic data

GDP growth: +0.6% Q3 2017 year-on-year
Consumer price inflation: 2.3% Sept 2017 annual
Trade: +1.4% exp, +1.7% imp, Q2 2017
Unemployment: 5.7% Sept 2017
Last update: 14 Nov 2017

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