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Sep 25, 2020

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  • International Journal of Labour Research 2011 Vol. 3 Issue 1

    Crisis: Causes, prospects and alternatives

    INTERNATIONAL LABOUR OFFICE, GENEVA

  • Photocomposed in Switzerland WEI Printed in Switzerland SRO

    Copyright © International Labour Organization 2011 First published 2011

    Publications of the International Labour Office enjoy copyright under Protocol 2 of the Uni- versal Copyright Convention. Nevertheless, short excerpts from them may be reproduced without authorization, on condition that the source is indicated. For rights of reproduction or translation, application should be made to ILO Publications (Rights and Permissions), International Labour Office, CH-1211 Geneva 22, Switzerland, or by email: [email protected] The International Labour Office welcomes such applications.

    Libraries, institutions and other users registered with reproduction rights organizations may make copies in accordance with the licences issued to them for this purpose. Visit www.ifrro.org to find the reproduction rights organization in your country.

    International Journal of Labour Research Geneva, International Labour Office, 2011

    ISSN 2076-9806

    income distribution / incomes policy / economic policy / economic recession / EU countries / financial market / financial system / banking / capital flow / globalization / full employment / decent work / poverty alleviation / fiscal policy / macroeconomics / developed countries / developing countries / trade union role / worker rights / precarious employment / economic and social development / employment / economic conditions / Brazil / Mexico / balance of payments / monetary policy / indebtedness / balance of trade / unemployment / EMU / household income /

    13.06.3

    The designations employed in ILO publications, which are in conformity with United Nations practice, and the presentation of material therein do not imply the expression of any opinion whatsoever on the part of the International Labour Office concerning the legal status of any country, area or territory or of its authorities, or concerning the delimitation of its frontiers.

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    International Journal of Labour Research

    2011 Vol. 3 Issue 1

    Contents

    5 Preface Dan Cunniah

    7 Editorial Pierre Laliberté

    15 A labour agenda for change Michael Sommer

    21 The Great Slump: What next? Robert H. Wade

    51 Redistribution, global imbalances and the financial and economic crisis: The case for a Keynesian New Deal Eckhard Hein

    75 Macroeconomic policy for “ full and productive employment and decent work for all”: An overview Iyanatul Islam

    97 The crisis in the euro area Trevor Evans

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    115 Diverging paths in development: Brazil and Mexico Carlos Salas and Anselmo dos Santos

    133 Making an unstable financial system work: Reform options Hansjörg Herr

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    International Journal of Labour Research

    2011 Vol. 3 Issue 1

    The crisis of 2008 revealed the fault lines in the world economy for all to see. Three decades of a social experiment with radical market-oriented policies have not only failed to deliver decent standards of living to most workers around the world, but have brought us to the brink of a major world depression.

    While the worst was avoided thanks to unorthodox fiscal and monetary policies, workers across the world are still paying the price of the policy failures through increased unemployment and precarious work, pay and benefits reduc- tions, and cutbacks in public services, to name a few. And to add insult to injury, the very economic policies that failed us then are now making a comeback.

    Though we are slowly coming out of the “great recession”, there is no question that the underlying structural problems that got us there are still with us: a fragile and still largely under-regulated financial system, depressed wages and widening income inequalities, and imbalances between debtor and surplus countries in matters of trade.

    As it is, the economic recovery scenario that is playing out in front of our eyes is that of “competitive austerity”, where governments will restrain their spending and workers their earnings to restore “competitiveness”. But, as the ILO’s World of Work Report 2010 observed, a premature fiscal consoli- dation runs a high risk of jeopardizing the recovery. And more importantly, collective salvation through exports (and wage restraint) will clearly not work if everyone applies these mechanisms.

    If the crisis has taught us anything, it is that a new framework for eco- nomic policy is needed. While there is surely no one-size-fits-all set of pol- icies, we need a new economic pragmatism that makes employment the foundation of policy-making. Already in 1964, the social partners at the ILO had understood this when the International Labour Conference adopted the Employment Policy Convention, 1964 (No. 122), which called for the use of all economic levers to promote full employment.

    Preface Dan Cunniah Director, Bureau for Workers’ Activities International Labour Office

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    At the 99th International Labour Conference in June 2010, the ILO committed itself to intensifying its efforts to define new paths for macroeco- nomic policy. We can but applaud this renewed determination and promise that the Bureau for Workers’ Activities will do its utmost to contribute to the discussion and to multiply the opportunities for exchange.

    The contributions to this issue of the International Journal of Labour Research are a small step in this direction. They are drawn for the most part from a Global Labour University Conference on “Labour and the Global Crisis: Sharing the Burden (!) Shaping the Future (?)”, held in Berlin in September 2010. The conference brought together young trade union ac- tivists from around the world as well as a new generation of academic re- searchers. Together they endeavoured to distil the lessons of the crisis for the labour movement and to define alternative ways forward.

    I am sure readers of the Journal will agree with me in saying that this is more than an auspicious beginning. Trade union leaders should find this issue of tremendous help in their daily work of seeking to secure decent work for all workers and their families.

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    International Journal of Labour Research

    2011 Vol. 3 Issue 1

    Editorial Pierre Laliberté Editor

    This issue of the International Journal of Labour Research addresses one of labour’s central challenges for our times: that of defining and fighting for a worker- and environment-friendly economic perspective for the future.1

    In the aftermath of the greatest systemic crisis since the 1930s, it has become clear that the economic orthodoxy that brought us to the brink has by and large failed to draw any lessons from the crisis: on the contrary, it has reasserted itself. Worse, after governments and central banks used every lever at their disposal to shore up the financial system and prevent another depression, the cost of Wall Street’s excesses is now for the rest of us to pay. Without strong resistance and credible policy alternatives, it becomes evident that workers – in general and the public sector more specifically – are in for “shock therapy” treatment.

    This was crystal clear from the pronouncements of political leaders at the G8/G20 meetings in 2010, where the concern over high unemployment totally vanished to make way for fiscal consolidation. Even beacons of eco- nomic orthodoxy such as the International Monetary Fund (IMF) and the Organisation for Economic Co-operation and Development (OECD) were somewhat more guarded than government leaders in pointing out that overly rapid fiscal “consolidation” in OECD countries might actually endanger the economic recovery itself. But the moderate tone of these institutions is itself in strong contrast to what they have recently prescribed to countries such as Greece, Hungary, Romania or Spain…

    That the current policy direction will prove to be self-defeating is also apparent in the renewed obsession with “competitiveness” on both sides of the Atlantic. The notion that the whole world can export itself out of trouble ought to be a non-starter, but has apparently won favour with heads of State.

    1. This issue is largely based on contributions presented to the Global Labour University

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