New ILO Leadership Could Push For Better Economic Policies

May 23, 2012

Mark Weisbrot
The Guardian Unlimited, May 22, 2012

See article on original website

The Troika (the European Central Bank – ECB, the European Commission, and the IMF) is dragging Europe into its second recession in three years.  The ECB by itself has the ability to end this crisis – by guaranteeing low interest rates on the sovereign bonds of countries such as Spain and Italy – and member governments would then be able to restore normal economic growth and employment. However, the ECB refuses to do this, partly because the Troika is using the crisis as an opportunity to force changes, especially in the weaker eurozone economies, that the people residing there would never vote for.  These changes include shrinking government, privatizations, “labor flexibility,” and reduced public pensions.

Since Europe has by far the largest banking system in the world, the eurozone crisis is also a significant drag on growth and employment throughout most of the world, and could easily do more damage if it is not resolved.

It is in this context that a struggle is taking place both within and between governments and international institutions over the economically and socially destructive policies in the eurozone.  At the latest G-8 summit in Camp David on Saturday, there were noticeable differences between Presidents Obama of the U.S. and François Hollande of France, on the one hand, and Chancellor Angela Merkel of Germany, over the wisdom of continuing to push Europe deeper into recession through fiscal tightening — as the Troika is currently doing.

While there are signs that many IMF economists and even the leadership of the IMF are not happy with the Troika’s policies, the Fund is not going to break with the Europeans on its board of directors. 

However, there is one international institution that, because its governance structure includes labor unions, is sometimes able to take a more progressive stance on these vital issues.  That is the International Labor Organization (ILO) (affiliated with the United Nations).  This differentiates it from such organizations as the IMF, the World Bank, or the OECD (Organization for Economic Co-operation and Development) – all of which have an enormous influence which tends to re-enforce the status quo, or worse.

The ILO estimates that the world has lost 50 million jobs since the world economic crisis and Great Recession began, and the Troika is adding to the toll.  In 2009, the ILO proposed a Global Jobs Pact, which picked up support from the UN and the G20, but with little results.  Last year it proposed a Social Protection Floor, which also won international support, but again not much effect.

On May 28, the ILO will choose a new Director-General.  The front-runner is Guy Ryder, a former general secretary of the International Trade Union Confederation (ITUC). Last November, he secured the support of the Workers’ group, comprising a quarter of the ILO electoral college, before his rivals were even known. There are also other candidates with regional support, such as Colombian Vice-President Angelino Garzón.

But there is one candidate who is most likely to try to harness the ILO’s potential to challenge the devastating economic policies that have caused so much unnecessary unemployment and suffering in the past four years. That is Jomo Kwame Sundaram of Malaysia, the only Asian candidate. He is the Harvard-trained Chief Economist at the United Nations, also responsible for its technical cooperation programs. Reputedly behind the 2009 Stiglitz Commission report [PDF] on the crisis, Jomo has shown clear understanding not only of the causes of the current economic crisis but also of the failure of the relevant government and international institutions to bring us out of it. He would also expose the fallacies of the labor market liberalization policies currently being touted as the solution. His track record indicates that he would provide the necessary leadership at the ILO.

Although the ILO’s efforts to establish international conventions to promote a “rights-based” agenda for labor can be helpful, they are ineffectual in the face of high unemployment. They are also far from sufficient to advance the cause of the billions of workers who are unemployed or facing increasing insecurity due to precarious employment, stagnating wages, and declining benefits. The prospects for increasing employment, and even wages, in the near future will depend, in large part, on the macroeconomic policies pursued by governments – especially those of the largest economies. These have been going in the wrong direction, and the ILO needs to confront these policy failures head-on.

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