[DEBATE] : (Fwd) Cosatu on G20 - not as radical as times require

[Patrick Bond]

(A shame that while containing lots of insightful points, there are also 
corporatist influences and an overall 'cautious welcome' in this 
important statement. Most progressive civ soc forces, as well as Chavez 
and Morales, are issuing really stinging critiques and renunciations of 
the G20's right to decide anything at all. And I sense the paragraph "On 
protectionism, we regret..." is a bit convoluted. With trade slowing 
down so much anyhow, this is precisely the time Cosatu could push for a 
reorientation of the economy to meet domestic needs. The Chinese import 
quotas negotiated in 2006 are now fini, and more thousands of jobs will 
be lost to a fresh import wave. The only way that protectionism in these 
times can be justified is if it is part of a radical economic 
reconstruction, as Venezuela has tried to do, with new cottage 
industries and worker-managed plants. But such a strategy can only work 
if protected from the voracious exporters, so desperate now. A crisis is 
worth having if it can lead to a shake-up in power relations and a major 
change in the balance of forces, which in theory is a possibility in SA 
with Cosatu so influential in the ANC. The heavy hands of Manuel and 
Mboweni, and the dead weight of Mbeki and Erwin, remain crucial factors 
in the balance of power, it seems.)

COSATU response to the G20 2 April 2009 London declaration

The Congress of South African Trade Unions broadly welcomes the G20 
London Summit Declaration but rejects some of its conclusions.

COSATU regrets that the G20 meeting did not clearly acknowledge that the 
global economic crisis has been caused by the policies of the Washington 
Consensus, which propagated a ‘one size fits all’ economic model based 
on withdrawal of the state from the economy, emphasis on market 
fundamentalism, deregulation, privatisation, trade liberalisation, cuts 
in government spending and high interest rates, implemented through 
lending conditions attached to IMF and World Bank loans for poor 
countries. This policy led to gross imbalances in the global economic 
system, overproduction and over-accumulation, and non-regulation of the 
financial services sector.

This resulted in rising unemployment, income inequality and poverty, 
stagnating wages, cuts in social protection, erosion of workers’ rights, 
and increased insecure work. The International labour Organisation (ILO) 
estimates that 50 million jobs could be lost and 200 million people 
could sink into poverty as a result of the current economic crisis.

In South Africa, contrary to the local proponents of the Washington 
consensus, workers are being laid off or put on short time, and wages 
are being reduced; there is a decline in exports, a fall in commodity 
prices and decline in manufacturing and mining sectors.

COSATU therefore rejects the G20’s reaffirmation of a free market policy 
to address the international crisis, which is precisely the result of 
such free market policies.

We had expected that there would be a paradigm shift in policy away from 
the Washington Consensus. The real economy, decent work, and poverty 
reduction were treated as marginal to the crisis, with the main focus on 
finance issues. The G20 should have focused more on social issues, and 
particularly on jobs. We are very unhappy that the Summit did not adopt 
the Global Jobs Pact on the social dimensions and employment impact of 
the economic crisis, as proposed at the ILO.

The G20 should have followed the South African example and called on 
governments, business, labour and the community to work together to 
protect the poor, the working class and vulnerable groups from the 
effects of the crisis through industrial, fiscal and social measures.

However, we commend the G20’s position on following social measures:

* Its acknowledgement that the crisis unfairly affects the poor and the 
vulnerable in poor countries and a need for a collective responsibility 
to mitigate the effects of the crisis on the poor.
* An increase in resources for social protection for the poorest 
countries and investment in long-term food security, and increased 
resource allocation of more than $1trillion to assist emerging markets 
and poor countries,
* The UN to monitor the impact of the crisis on the poorest and the 
vulnerable
* A commitment to meet Millennium Development Goals and implement 
pledges for aid as per the Gleneagles commitments, and more development 
assistance.
* Support for employment by investing in education and training and 
through active labour policies focusing on the most vulnerable and the 
role of ILO to assess actions taken and those required for the future,
* An undertaking to reach an agreement on the UN climate change 
conference in Copenhagen in December 2009.

Macroeconomic policies should address world trade imbalances which have 
resulted in inequality, poverty and unemployment. They should deal with 
equity and redistribution of wealth to close the widening income 
inequality, eradicate poverty and achieve the MDG goals to halve poverty 
and unemployment by 2014.

COSATU calls for a significant revision of the world’s social 
architecture to place workers’ rights and development at the absolute 
centre of the new global agenda.

Other social measures to address the impact of the crisis on the poor, 
which should be at heart of the stimulus packages, should include:

* Commitment by all ILO member states to ratify ILO convention and 
comply with all labour standards. We are disappointed there was no 
express provision for adoption of the ILO decent work agenda. Decent 
work is the foundation of the fight against poverty and inequality and 
it should be at the cornerstone of the responses to the economic crisis.
* Implementation of the ILO Declaration on social justice for a fair 
globalisation.
* Adoption of the Global Jobs Pact on social dimensions and employment 
impact of the economic crisis, as proposed at the ILO.
* Measure to curb speculation in staple food prices,
* Measures to avert unemployment, wage losses, and to provide income 
support.
* Support to companies that are temporarily affected by credit 
difficulties in order to protect jobs.
* Putting more money into the pockets of the poor and working class in 
order to stimulate the economy. This would boost growth, as the poor are 
more likely to spend their cash quickly and thereby stimulate the 
economy. This can be done through increased benefits, direct job 
creation schemes such as investment in public infrastructure, and tax 
breaks.

COSATU agrees that countries should strengthen financial supervision and 
regulation among others:

* Public control, oversight and regulation of all financial products and 
transactions in particular, hedge funds
* Introduction of measures to address executive pay and bonuses that are 
behind much of the risky investments and regulation of remuneration 
schemes by law.
* Introduction of laws to regulate corporate social responsibility of firms
* Stopping the race to the bottom between tax jurisdictions which is 
eroding tax revenue for most countries and introduce sanctions against 
non cooperative jurisdictions including tax havens.
* Requiring of oversight and registration of credit rating agencies 
which are responsible for hiding some of the risks associated with the 
current crisis

The G20 Summit called on central banks to lower their interest rates, so 
that government investment in public infrastructure can be financed at a 
low interest rate cost. We demand that our SARB take heed of the G20’s 
call.

We welcome the commitments to reform the IMF, in particular for 
appointments of head of international financial institutions on merit. 
We regret that there was no commitment to reflect developmental 
objectives including the social mandate of decent work which means 
increasing employment and improving the quality thereof in the IMF mandate.

There should have been commitments to abolish lending requirements for 
the IMF and WB that leave developing countries with little or no policy 
space to develop their economies. The G20 should address the US veto 
powers and representation of the developing countries on the IMF board.

COSATU deeply regrets that the IMF has been given an enhanced role in 
coordinating the global financial reform. This organisation has been 
responsible for actively pursuing policies which have contributed to the 
current crisis, and indeed is still pursuing them during the crisis. Its 
policy mandate, governance structures and policies must be transformed. 
An unreformed IMF could aggravate rather than resolve the crisis. 
Otherwise the coordination should be done by the UN.

We regret that the Financial Stability Board, which is meant to provide 
early warning on macroeconomic and financial risks in cooperation with 
IMF, is not representative of the poor countries; only one regional 
organization, the EC is represented. Other regional organisations such 
as the African Union and Association of South East Asian Nations (ASEAN) 
countries should have a place in the G20 just like the European Commission.

On protectionism, we regret that the G20 did not reprimand the rich 
countries for breaching their November 2008 Washington declaration not 
to impose protectionist measures. Since Nov 2008, 17 of the G20 
countries have imposed trade-restricting measures, through among others, 
export subsidies in the form of fiscal measures.

Poor countries should not accept calls to avoid protectionism, which are 
in fact designed to stop poor countries from using targeted trade 
measures to protect their industries from the crisis, whilst the rich 
countries are using fiscal measures to protect their industries.

We regret that the G20 did not reaffirm the mandate of the Doha round to 
put the interests of developing countries at the heart of its programme. 
We still demand that trade policy negotiations in the WTO must be 
developmental in character and Non-agricultural-market-access (NAMA) 
provisions should not result in further trade liberalisation of markets 
in developing countries and job losses.

The next G20 meeting should be convened within 6 months to enhance 
coordination and a common approach to the crisis. COSATU demands that 
the trade unions should be directly represented at that Summit.

The G20 should ensure that there is a paradigm shift in policy making 
away from an economic model which focus on one option namely of opening 
markets and deregulation to a model which focuses on decent work, 
economic, environmental and social sustainability, an economic model 
that puts people first.

Patrick Craven (National Spokesperson)

Congress of South African Trade Unions

1-5 Leyds Cnr Biccard Streets

Braamfontein, 2017



P.O. Box 1019

Johannesburg, 2000

SOUTH AFRICA



Tel: +27 11 339-4911/24

Fax: +27 11 339-5080/6940/ 086 603 9667

Cell: 0828217456

E-Mail: patrick at cosatu.org.za