ETUC urges G20 leaders to turn the fight against gross inequalities, unemployment and precarious work into a new engine for world economic growth
On 24 and 25 September, leaders of the G20 countries will meet in Pittsburgh to discuss ‘global imbalances’ [1] and a ‘global compact for growth and jobs’. The aim is to end the dependency of the world economy on the over-indebted US consumer. In support of the representations of the International Trade Union Confederation (ITUC), Trade Union Advisory Committee (TUAC) and Organisation for Economic Co-operation and Development (OEDE), the European Trade Union Confederation (ETUC) calls on the G20 to take strong action on effective financial market regulation and to tackle rising inequalities and deteriorating conditions of worker, especially unemployment.
The G20 has to take strong action on effective financial market regulation. To limit executive pay and bonuses would be useful and desirable but it is not enough. Binding decisions on financial market supervision and sufficient capital reserves requirements are the key to ensuring that such a crisis cannot happen again. It is also important to tackle tax heavens.
The ETUC reminds the G20 leaders that high and rising inequalities, together with a systematic downgrading of wages and working conditions are the root causes of global imbalances.
Here’s how high and rising inequality produces the phenomenon of global imbalance:
High and rising inequalities transfer income from groups with high consumption rates to high income groups with high savings rates.
This causes a deficit in aggregate demand.
In the US and the UK, the aggregate demand deficit is offset by financial innovation, driving households into debt so that they can keep up consumption demand.
Countries like Germany, Japan and China on the other hand pursue export-led growth strategies, thereby substituting export demand for a lacklustre domestic demand.
Around the world, diverging policy reactions to a common trend of rising inequalities create high current account deficits and surpluses at the same time.
For the ETUC, the G20’s ‘Global Compact on Growth’ needs to take action to stop the ongoing ‘War against Labour’ whilst at the same time upgrading the role of trade unions and collective bargaining to provide workers with a fair share of the benefits of economic growth and economic progress.
John Monks, general secretary of the ETUC, says: "Fair wages, stable jobs, stronger collective bargaining and more equality are the real key to a global compact for growth and jobs. Europe, where inequality, unemployment and precarious work practices have substantially spread over the past decade, is no exception to this. The EU needs to take a positive lead at Pittsburgh and subsequently".
[1] Global imbalances refer to the combination of high current account deficits in countries such as the US with high external surpluses in Germany, Japan and China.
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