World Bank and IMF must change labour policies

World Bank and IMF must change labour policies to achieve poverty reduction

Brussels, 1 October 2004, (ICFTU Online): Unless the IFIs (World Bank and International Monetary Fund) reposition themselves to work more in concert with other international organisations - particularly the International Labour Organisation and other UN bodies - and drop their unswerving support for market liberalisation and labour market flexibility, current attempts to fulfil the Millennium Development Goals will fail, said the international trade union movement.

Speaking ahead of the International Monetary Fund (IMF) and World Bank's annual meetings (2nd - 3rd October in Washington), the International Confederation of Free Trade Unions (ICFTU) appealed to the financial institutions to properly incorporate labour and employment issues into their work, for example into Poverty Reduction Strategy Papers. All too often, the World Bank and IMF's policy advice and loan conditions actually serve to counteract the trade union movement's contribution to the Millennium Development Goals.

The international labour movement is committed to playing its part in ensuring that the Millennium Development Goals are reached by 2015. At the heart of this is the goal to eradicate extreme poverty. This aim will remain nothing more than utopian if living wages cannot be attained - and clearly trade unions are the best placed to ensure that this objective becomes a reality.

"The imposition of unrestrained free market policies is not the avenue to reducing poverty. Even rapid growth - where it can be attained - will not make the difference that the world wants to see: an end to extreme poverty. Growth alone does not ensure that every citizen survives on a living wage or even survives at all. One only has to look at the experience of Argentina over the past 15 years and the recent slowdown of poverty reduction in China as examples of this," said the ICFTU.

The ICFTU is also urging the IFIs to reconsider their onslaught on privatise public services as a conditionality of their loans, which often ends with greater cost and less access to fundamental services like water for low- income households.

The World Bank's own papers state "the recent slowing of poverty reduction and increasing inequality show that growth - even rapid growth is not enough". The report of the World Commission on the Social Dimension of Globalisation underlines the fact that if insufficient attention is paid to the level of employment, wages and social protection, the goal of halving poverty rates will not be achieved.

In contrast, the IMF and World Bank are frequently in favour of a one- sided approach of labour law reforms which have the overriding intention of promoting labour market flexibility - often through the approach of easing dismissal rules and dramatically dismantling worker protection. A more balanced approach such as that followed by the International Labour Organisation is a more viable long-term approach with the potential to enfranchise the many rather than the few. The IFIs must also ensure that all of their operations and policy advice are consistent with the core labour standards.

The international trade union movement therefore is appealing to the IFIs to withdraw from the simplistic view that labour regulation is bad for business and will therefore have a negative effect on development. "The World Bank and IMF would be wiser to listen to the calls for full debt cancellation for those low- income indebted countries which respect human rights if they wish to see true poverty reduction" said the world's largest trade union organisation.

The ICFTU will drive home its arguments for the IFIs to properly incorporate labour and employment issues into their work during a series of meetings from 6th- 8th October when a high- level trade union delegation, comprising some 80 participants and led by ICFTU General Secretary Guy Ryder, will hold discussions in Washington with World Bank President James Wolfensohn and IMF Managing Director Rodrigo de Rato.

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