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World Bank and IMF should support a new social contract

World Bank and IMF should support a new social contract and full employment

Brussels, 11 October 2018 (ITUC OnLine): The ITUC and its Global Unions partners, in a statement ahead of the IFI Annual Meetings taking place 12-14 October in Bali, Indonesia, are urging the international financial institutions to support a sustainable and fair future.

The International Monetary Fund identified a plateau in recent global economic growth and lowered predictions for emerging economies. The stagnation of workers’ wages and the capture of economic gains by the already well-off were recognised by the Fund as pressing issues for policymakers.

“Multilateralism is in crisis due to the erosion of trust and a broken social contract. The IFIs need to support a new social contract that fosters full employment through labour market policy, social protection and appropriate regulation,” said ITUC General Secretary Sharan Burrow at the meetings in Bali.

High levels of global debt and instability in emerging markets could mean more IMF loan programmes in the near future. The ITUC called for the IMF to end the promotion of harsh austerity measures that create a vicious cycle of recession, hardship for working people and the erosion of revenue. The shortcomings of this approach are already being demonstrated in Argentina. Trade unions urged a focus on addressing dependence on foreign debt, under-regulation of the financial sector and other measures to avoid crisis.

Trade unions praised progress at the IMF to operationalise inequality reduction, including through the consideration of alternative policy recommendations. The statement urged the IMF to support social protection for all in the creation of a new social spending strategy, slated for completion in 2019.

The ITUC applauded the implementation of a new set of binding environmental and social safeguards by the World Bank on 1 October. A labour safeguard now requires safe and decent working conditions for all workers on projects funded by the Bank. The statement called on the World Bank to provide policy advice that supports public investment, quality jobs and just transitions for workforces affected by climate and technology change. Amid uncertainty over the future of work and economic crisis, these measures would promote stability and inclusive growth.

Burrow observed: “The future of work and the global economy will be determined by the policy choices we make today. Now is the time for action by the IFIs to avert crisis and put the global economy on the road of sustainable development.”

The ITUC represents 207 million members of 331 affiliates in 163 countries and territories.

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