Published on the eve of the International Monetary Fund (IMF) and World Bank Annual Meetings to be held in Istanbul on 6-7 October, Doing a decent job? IMF policies and decent work in times of crisis, critically examines the situation faced by those most vulnerable in the wake of government cuts imposed by the IMF’s tight fiscal policies in El Salvador, Ethiopia and Latvia.
The report by SOLIDAR¹, Eurodad², and the Global Network³ comes hot on the heels of the Pittsburgh G20 meeting where leaders decided to make some changes to the IMF governance structure, but failed to change the modus operandi of the two institutions.
Despite talk of a recovery, the International Labour Organisation (ILO) estimates that unemployment will rise by 59 million by the end of the year and over 200 million workers could be pushed into extreme poverty, mostly in developing and emerging countries where there are few or no social safety nets.
“This clearly shows that talk of recovery is misguided to say the least, and that once again instead of helping people survive the crisis by expanding and supporting social protection just when it’s needed most, the IMF is back to business as usual, with workers and the poor suffering bearing the brunt of their obsession with fiscal conservatism,” commented Conny Reuter, Secretary General of SOLIDAR.
The IMF has undergone a remarkable recovery over the past year, having agreed loans and credits for 2009 worth $4 billion, four times more than they did in 2008. It has stated that it has become “more flexible” in its traditionally tight fiscal and monetary policy advice and lending conditions, but the report clearly shows that the effects on the ground are still the same with cuts to vital services and wages.
“In all three IMF programmes examined in the report, there has been some easing of fiscal targets which allows for slightly higher budget deficits on a temporary basis, but as always, the sting is in the tail, and in the final years of their loans countries will again be subjected to severe fiscal tightening,” commented Nuria Molina, the Director of Eurodad.
“Despite making commitments at the G20 to follow the principles of the Global Jobs Pact* concluded at the 2009 ILO Conference by implementing expansionary fiscal policies and the safeguarding and re-enforcement of social protection and decent work, rich countries who control the IMF are still allowing it to impose conditions leaving developing and transition country governments unable to follow these principles of recovery. This is blindingly hypocritical given that rich countries, who don’t have to rely on the IMF, have just engaged in implementing the greatest fiscal stimuli of all time” she added.
“IMF representatives have said that they hope that in 2011 the world will resume its “health growth of the last decade”, but this crisis has just shown that world economic growth is based on rotten foundations. The recovery must be built on more solid foundations, with the IMF using its huge increase in financial resources in a way which allows countries to support decent work, reduce inequality and eradicate poverty, and depart radically from the economic orthodoxy that has informed its past policy advice and conditionality”, Conny Reuter concluded.
*The Global Jobs Pact is available at http://www.ilo.org/wcmsp5/groups/public/—ed_norm/—relconf/documents/meetingdocument/wcms_108456.pdf
¹About SOLIDAR: SOLIDAR is a European network of 53 NGOs active in over 90 countries working to advance social justice in Europe and worldwide. SOLIDAR lobbies the EU and international institutions in three primary areas: social affairs (more social Europe), international cooperation (development cooperation) and education (lifelong learning for all). For more info www.solidar.org
²About Eurodad: The European Network on Debt and Development is a specialist network analysing and advocating on official development finance policies. It has 59 member groups. Its roles are to: research complex development finance policy issues; synthesize and exchange NGO and official information and intelligence; facilitate meetings and processes which improve concerted advocacy action by NGOs across Europe and in the south. For more info www.eurodad.org
³About The Global Network: With the aim of achieving decent work for all, the Global Network works to empower women and men who are activists in NGOs, trade unions, associations of informal workers and grassroots movements to build capacity, exchange experiences and coordinate joint actions, at both regional and international level. For more info www.theglobalnetwork.net