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Reducing poverty tops agenda in talks between IMF and labor unions

Author(s):
International Monetary Fund. External Relations Dept.
Published Date:
January 2004
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About 80 leaders of labor unions and international confederations of unions, with nearly 200 million workers worldwide, joined IMF and World Bank management, staff, and Executive Directors in Washington on October 6-8 to discuss how to reduce poverty, create more jobs, enhance social inclusion, and reduce inequalities. While the unions’ leaders acknowledged efforts by the Bretton Woods institutions to consult more widely with unions and civil society, they said the IMF continues to pay too little attention to employment, wages, and social protection in its economic advice to countries. The meeting, the second in a biennial series instituted in 2002, built upon a tradition of dialogue with the global labor movement begun more than a decade ago.

In opening remarks, IMF Managing Director Rodrigo de Rato welcomed the continued dialogue with labor unions, noting that in many countries organized labor is an important, and sometimes indispensable, instrument for social change. In a world characterized by ongoing and fast-moving transformation, countries must adapt, he said, and this often requires dealing with such challenges as aging populations, the need to modernize labor markets, and the liberalization of trading systems. Participation of civil society—including labor unions and employers’ organizations—in these economic and social debates can strengthen the consensus on what often constitutes difficult policy choices. And strong global expansions such as the current one, de Rato observed, provide a timely opportunity to undertake reforms, since changes in behavior are easier to bring about during economic recovery.

The trade union delegation—led by Guy Ryder, General Secretary of the International Confederation of Free Trade Unions (ICFTU), and Willy Thys, General Secretary of the World Confederation of Labor, with representatives from the Global Union Federations and the OECD’s Trade Union Advisory Committee—pointed out that, despite the IMF’s upbeat assessment of the global economy, most developing countries will miss the United Nations Millennium Development Goals by a wide margin. If progress toward these goals is to be accelerated, the international community must take more ambitious action on debt relief and consider the various initiatives being proposed—including some form of global taxation—to raise extra funding. They took note, however, of de Rato’s observation that the problem with obtaining new resources is political, not technical.

The labor union leaders also stressed that poverty reduction depends on implementing the right policies. In their view, the Bretton Woods institutions’ emphasis on pro-growth, market-oriented economic liberalization is inadequate “because growth is not enough.” They argued that too little attention is paid to employment, wages, and social protection; growth must be accompanied by “decent” job creation and an increase in social security and justice.

The union representatives welcomed the more systematic consultations with local unions during the IMF’s annual country (Article IV) consultations and other missions. But they called for greater involvement of local unions in the elaboration of poverty reduction strategies in low-income countries. IMF representatives pointed out that the decision on whom to consult is made chiefly by the governments themselves.

The IMF’s recommendations to countries on labor market reform remained a point of contention for many of the union representatives. They expressed concern that the IMF calls for greater labor market flexibility regardless of a country’s circumstances, and this, they said, tended to result in simple deregulation and increased social insecurity. They urged greater consultation with unions on policies to promote a less disruptive restructuring of the labor market.

A summary of the proceedings, jointly agreed by the participants, will be published at a later date on the IMF’s website (www.imf.org).

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