International Trade International Trade Organisation
Radical measures to correct public deficits that are being forced on governments by financial markets risk are just making the global economy more viable to another new recession which will make it even harder to pay off debts. Broadly speaking, pressure from financial markets is pushing countries into stringent fiscal policies that jeopardize recovery, making it less likely that growth, employment and wages -- and hence tax revenues -- will recover soon. This is exactly what the International Labour Organization Director-General Juan Somavia said in a report submitted to the ILO's annual three-week conference starting on Wednesday.
"Why now, at this very uncertain time of weak recovery, should the sovereign debt issue, with such a sense of a gathering storm, become the major, urgent, overriding global policy priority for markets?" Somavia asked.
"This may not be in their own interests if it leads to greater economic contraction or even a double-dip recession. It was just such a response that helped to bring about the Great Depression of the 1930s," he said.
Somavia was not wrong when he said working families were already bearing a large share of the costs of the crisis and that would increase if sovereign debt resolution rather than growth and jobs became the priority. According to him, the experiences of Latin America in the 1980s and Asia in the 1990s are sufficient examples to show how the entire process can hamper social stability.
Thus he suggested that public debt needed to be reduced in an orderly manner. Moreover, he called for quick collective action by governments to re-regulate the global financial system. He also identified that difficulties in agreeing on regulation, three years since the sub-prime crisis, were "another dimension of the test of wills being played out between governments and financial markets.
The ILO, which is the United Nations agency aimed at gathering unions, employers and governments to discuss employment issues forecasted in January that the number of jobless this year would remain around 2009's record levels, rising to over 213 million or 6.5 percent of the workforce.
The ILO conference is all set to review the extent to which Myanmar is taking steps to observe international conventions on freedom of association and forced labour It will also review and assess the labour policies of some 25 other countries.
A new international convention on HIV/AIDS in the workplace is also expected to be on its way to approval by the ILO.