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.