If the special Global Jobs Summit in Geneva in June 2009 organised by the International Labour Organisation (ILO) saw the World Bank and the International Monetary Fund (IMF) being lambasted over the global financial crisis, this week’s meeting in Oslo to discuss the deepening jobs crisis saw one of the chief protagonists standing tall and bending backwards to play its role in finding solutions.
In fact all credit to the ILO for bringing the IMF on board for the day-long summit titled “Challenges of Growth, Employment and Social Cohesion” which was a joint ILO-IMF Conference in cooperation with the Norwegian government.
One day is certainly not enough to discuss how to reduce jobs losses which have risen by 34 million in the past two years or finding jobs for some 400 million in unemployment. However the fact that two contrasting organizations – one concerned about protecting workers, their jobs and ensuring decent work for all (ILO) and the other focusing on macro-economic stability and reducing government spends even if it means using up resources to create jobs (IMF) – came together was admirable indeed.
It was like the impossible happening. In a joint paper, the two organizations said they have different mandates and different constituencies, albeit in more or less the same member countries. “Not surprisingly, our approaches and analyses are also different,” it said adding that while the IMF looked at the human cost of recessions, assessing it and reducing it, the ILO examined building an employment-oriented framework for strong, sustainable and balanced growth.
Conferences are all about strong, powerfully presented statements and a lot of hand-clapping, pat-on-the-backs and many ‘you did a great job’ remarks after that. In this case however what follows next will be the the decisive factor and the reality for millions of workers; those out of work; those joining the workforce and those under-employed (doing jobs far below less than their skills and qualifications).
Messages from conferences of this nature, however historic or crucial, means nothing unless a Dubey or a Liberman or a Greg or a Singh (all names fictitious) who are out of work, suddenly find their life turned upside down with a decent, paying job and food on the table all due to the efforts of a miles-away conference and serious follow up after that.
Generally that’s a pipe dream but give the devil its due and judging from the body language and the fervour of the speeches plus grudging admiration from opponents of the Fund, something positive appears to be happening. Spanish Prime Minister Jose Rodriguez Zapatero while taking a few pot shots at the IMF for its rigid policies congratulated the organization for being part of this initiative and moving away from its traditional role.
The decision by the staid IMF to sit down with unionists, workers, NGOs and world leaders and engage in a social dialogue on how to ease the jobs crisis and maybe even subsidize some programmes to create jobs, is a great starting point.
In fact the ILO and the IMF are seriously looking at a social protection floor or social protection scheme where the most vulnerable would be protected - something the fund would have earlier looked up in horror if such programmes led to runaway spending by governments and resulted in yawning budget gaps.
Would this be a thing of the past and shift the IMF from its traditional role of fostering spending cuts and lower budget deficits at the expense of jobs and social welfare in a sustainable way?
The next few weeks and months would be crucial particularly to the ILO and its affable Director General Juan Somavia who is leading the change that the world is hoping will happen – a more humane IMF vis-à-vis the crisis.
ILO insiders say the next key steps would be in teams from the ILO and the IMF working on a social protection floor and mechanisms to promote economic growth with job creation. Whether this would be the new IMF mantra when it lends to developing and low ncome countries remains to be seen. But to be fair, the Fund and its Director General made it clear that they are as determined as the ILO to see an end to the crisis – even if it means changing their operating style, policies and body language!
In the Sri Lankan context however, one must ask the question: What does all this mean to Sri Lanka where the IMF is seen playing a rather passive role while budget deficits have not kept to targets and in fact led to the Fund providing more time to the government to get its act together; something that never happened in the past.
In fact the previous time Sri Lanka had a programme, it was suspended by the Fund because the government failed to keep to targets.
So why the easy-going approach which has drawn criticism from economists and opposition policy analysts that the Fund, rather than being a disciplinarian and stickler for disciplined spending is moving along with the government and allowing economic indiscipline. Asked to explain by the Sunday Times reporter, which exclusively covered the Oslo summit and was in fact the only Sri Lankan present, as to why it was lenient, IMF Managing Director Dominique Strauss-Kahn explained that because Sri Lanka has suffered due to the war the Fund needed to be flexible and less rigid. (Visit releted story)
That appears to be in line with the new focus of the IMF. However if spending increases to a more precarious position, eating into scarce revenue and forcing more taxes on the people, then the Fund has a lot of answering to do. Until then one hopes the government would take to heart that spending limits are important for its own discipline apart from the fact that it’s unaffordable. Or that the ILO and IMF coming together with a social protection scheme on the table will allow more unlimited spending. That must be avoided at all costs. |
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