Next G20 announced

The United States will host the next G20 economic summit, the White House announced Thursday. The summit will be held from September 24-26 in Pittsburgh, Pennsylvania.

Just before the G20 will be the opening of the UN General Assembly in New York on 23 September. It will be preceded on 22 September by a special high-level meeting on climate change, which many of the G20 leaders are expected to attend, together with other national leaders.

Source: ITUC New York office.

A startling revelation : what the IMF and Central Bankers knew – and didn’t tell us

Svein Andresen is the Secretary General of the Financial Stability Board – the FSB. This body was launched by the G20 Leaders at their London Summit 8 weeks ago – on 2 April. It was one of their principal announcements. The role of the FSB – as its name indicates – is to ensure global financial stability and especially to set up measures which would prevent another major crisis in the future. It will bring together the major international players – the IMF and the World Bank, the OECD, the Bank for International Settlements (BIS), a number of BIS Committees, and the Finance Ministers from 25 countries (the G20 plus a few).

Mr Andresen previously headed the secretive Financial Stability Forum in Basel, Switzerland. Now, after the G20, he will get more staff and an expanded mandate – to save the world from new financial disasters – no less. This week he came to the Trade Union Advisory Committee (TUAC) at the OECD. Very carefully, and in considerable detail, he explained the FSB’s new role, its structures, and how he expects to fulfill the G20 mandate.

One of the FSB’s tasks will be to set up an “Early Warning System”, he told us. Then as my trade union colleagues around the table peppered him with questions, came the startling revelation. The former FSF and the IMF already had an “Early Warning System”, he said. A couple of years ago, the IMF had prepared “a fine report” describing precisely the risks to the global financial system. They had analyzed the massive imbalances in the system, imbalances which made it unsustainable. In other words, it was not “if” a major crisis would erupt, but “when”.

Trade union economists had been making the same warnings. I recall when the Chair of TUAC’s Economic Policy Committee, Ron Blackwell of the AFL-CIO in the US, said just that to the OECD at least two years ago. But trade union representatives were labeled as being unduly pessimistic. Nobody wanted to spoil the party!

Mr Andresen now revealed that the IMF had made precisely the same analysis! Surely such a warning should not have been ignored. So what happened? we asked. “Well” he replied “the report was circulated internally to Central Banks and to key financial ministries, but nobody acted on it”. The FSF was just a forum, with no powers, except to convene meetings, he explained. He followed with an elliptical commentary on how central bankers and finance ministries had to be careful with information, so as not to disturb the markets. “But the report will probably be published some day – perhaps soon” he sought to assure us.

I pointed out that the FSB was now more visible than its predecessor, because of the prominence given to it by the G20. The global union movement had to be given a seat at the table, we said. If the Marshall Plan, which gave birth to today’s OECD, could set up consultative mechanisms with trade unions, as well as business and industry, the FSB could do it too. Closed door meetings were no longer acceptable, we said, nor were confidential reports that were ignored and kept secret, for fear of “disturbing the markets”. Oliver Roethig, Head of the finance sector at UNI Global Union said it was time for the Central Banks to listen to the employees at the base of financial institutions – not just the hierarchies. John Evans, TUAC General Secretary, pointed out that TUAC last met Mr Andresen 10 years ago “We were given the distinct impression by you and your Chairman at that time that you were not seeking further input from us” he said.

Today, previously closed doors are now slightly ajar. We have been allowed to peer in and see some of the inner workings of institutions that previously did not feel the need to talk with representatives of workers. Those slightly open doors must be pushed wide open.

When historian Barbara Tuchman wrote “The March of Folly” some years ago, she showed how major upheavals in human history had been preceded by warnings that were then ignored. So it has been with the financial crisis – another unhappy example of the collective folly and failure of institutions. That is why these institutions must be opened up, and why representative trade unions should have a seat at the table.


FLASH – UN Conference on the Crisis deferred

The UN Conference on the Financial and Economic Crisis and its Impact on Development was due to be held in New York next week (1-3 June). Because of widespread dissatisfaction over the draft outcome documents (see my posting of 11 May) the Conference has been deferred to 24-26 June. More details will be posted on a further blog.

Source: ITUC, New York Office

What is a deficit ?

Back in my home city of Adelaide, Australia, last week for family reasons. While there, I followed the political debate on the Federal government’s budget. The government of Labour Prime Minister Kevin Rudd was under attack from the opposition for proposing a deficit, after years of surplus under the previous conservative government of John Howard. Australia did well during the years of the commodity boom, with its vast reserves of iron ore and other minerals, not to mention a thriving export trade in wine, wheat – and, yes, educational services. One of the world’s major trading nations, Australia was one of the few to have a positive trade balance with China – the booms in both countries were linked.

As the crisis hit, trade slumped, so revenues took a dive. Like the US and Chinese leaders, Rudd introduced a major stimulus package, including big amounts for infrastructure, notably for modernization of schools. So the Federal budget announced in parliament this month swung from surplus to deficit. This is classic Keynesian economics – build up fiscal surplus during the good times, then use that surplus to stimulate the economy out of recession in the bad times (these days, economists talk of building in “counter-cyclicality”, which is desirable, as against “pro-cyclicality”, which is not).

Discussing the surplus/deficit issue in layman’s terms, I share an observation of one of my brothers, John Harris. “Sure, we had a big fiscal surplus” he said “but at the same time we had a huge deficit in infrastructure”. A former school principal, John now has responsibility at one of our Universities for student teaching practice in schools. He gets to visit lots of schools – public and private - throughout the state. “It’s a disgrace to see how many of our public schools were allowed to run down, while the government was building up those surpluses” he said.

So what is a deficit really? Is it just the economists’ fiscal deficit? Or is it also the real deficit in terms of neglected infrastructure, including dilapidated schools? It is the same issue in the United States, where the Obama Administration is using the stimulus package to start repairing infrastructure after years of neglect, to modernize schools, and to strengthen public facilities like bridges, while moving towards a green economy. Information coming out of China suggests they have the same idea there, with an urgent need to put resources into earthquake proof schools, a need shown tragically by the huge death-toll of children and teachers in the Sichuan earthquake, while stimulating the domestic economy.

Part of our campaign strategy everywhere should be to emphasize the deficit in our public facilities, including our schools, colleges and universities. Let’s not leave the debate over “what is a deficit” to the economists and the politicians. We should try to re-set the agenda for that debate by talking about the deficit in the facilities where teachers work and students learn.

Startling revelations!

Today, I’m attending the TUAC Working Group on Economic Policy at the OECD in Paris. Watch here tomorrow for some startling revelations about what the IMF and the Central Banks knew before the crisis –and failed to tell us!

Also tomorrow: Upheaval at the UN

ITUC advises there is much confusion about the draft outcome document of the UN General Assembly (see my item of 11 May http://fundingeducation.blogspot.com/2009/05/un-high-level-paper-ignores-education.html). The special session on the financial crisis, due to start in New York next Monday, is now likely to be deferred!

HANDS UP FOR EDUCATION!

Today EI launches the new campaign site: HANDS UP FOR EDUCATION.

The site will be a vital tool in EI’s campaign to make education part of the solution in the investment plans of governments around the world, as countries search for a way out of the global financial and economic crisis. EI advocacy at international institutions and summits has to match and to be matched by the advocacy of each national member organization. The key to success is to link our global action with our national and local action. Innovative features such as the google map showing news from individual countries will help to make that link. Often, education union leaders have said that learning about developments in other countries is one of the most valuable outcomes of attending an international meeting. The website will make it possible to get that information on an ongoing basis. Added to that will be the latest news from the international scene. That is why the site will be such an important tool.

This blog FUNDING EDUCATION: CRISIS WATCH complements the campaign site. The aim is to provide rapid updates on news and decisions affecting funding for education, as well as commentary and opinion as events unfold.

The details of funding for education – and the effects of the crisis - vary greatly among countries. In some countries there have been drastic cuts already in education budgets, staffing numbers and wages. In other countries, we wrote a week ago, the worst is yet to come, as the crisis begins to affect on government revenues. Through the website and the blog we will try to share as much of this country-specific information as possible.

In all countries, there is a powerful case to be made for the role of investment in education in developing more sustainable, fairer economies in the future. All levels of education have a role to play – from the preschool sector, through the compulsory years of primary and second education, to vocational training, and higher education and research. We make the case that investment in each of these sectors – and in the people of education, the qualified professionals and the support staff – will pay off for each society far more than sinking more billions into more financial engineering.

Yet, it is all too appealing for governments and others who make up the power structures of our societies to fall back into a ‘business as usual’ approach, and to avoid or divert the more fundamental questions posed by the crisis. Already, as the stock markets recover some of their massive losses and some corporations announce results that are not as bad as feared, there are voices minimizing the extent to which the system has been shaken to its core. This is the very time for education unions to mobilize, to demonstrate convincingly to public opinion that serious investment in education is necessary. Today’s announcement by EI is a step in that direction.

WISHFUL THINKING ?

In recent weeks there have been glimmers of hope that economic recovery may be just a little further down the road. Major share markets have recovered some of their massive losses. Some first quarter banking company results were not as bad as feared. Housing starts in the US are not declining as fast as before. The government elections in India boosted the emerging economy, as did the clear election result there.

Government leaders around the world are understandably highlighting every piece of good news, or at least, not as bad as feared news, and the media often tends to go along. After all, everyone is hoping that the worst may be over.

Unfortunately, however, there is still plenty of bad news. During the first quarter of 2009 Europe had its worst fall in GDP since the Second World War. The IMF still sees no recovery before late 2010, if then. The impact of the financial crisis on the real economy continues. World trade stagnates - countless ships lie idle off Singapore and other major ports. Worst of all, job losses continue to grow.

So are the politicians, and the media, engaging in wishful thinking?

The reality is that no one really knows when recovery will begin. The very fact that optimists are now predicting (hoping for, wishing for?) recovery in 2010 is itself an indicator. Less than a year ago, these were the people talking of an upturn in 2009.

Writing in the Washington Post, David Ignatius suggests something more fundamental is blocking recovery. “What if the mistake of the ‘90s was that we strapped a casino to our economy and let the roulette wheel take control?” he asks. Ignatius makes the point that so-called “toxic assets” are still clogging the financial system and are unlikely to be cleared by government initiatives (including the Federal US government’s public-private investment program - known as P-PIP).

Beyond that is a general point that unless and until the fundamentals of our economies are placed on solid foundations, rather than on the quick-sands of speculation, recovery will be illusionary. Investment in education and training is one key factor in building those solid foundations.

Without such investment, politicians and officials tempted by creative financial engineering along the lines of P-PIP and equivalents in other countries are likely to find that their hopes for economic recovery are just so much wishful thinking.

Roumanie - grève suspendue

BUCAREST, 4 mai 2009 (AFP) - Les enseignants roumains, qui prévoyaient d'observer une grève mardi pour protester contre le gel de leurs salaires, ont décidé de suspendre ce mouvement, à la suite de négociations avec le ministère de l'Education, ont annoncé lundi leurs responsables syndicaux.

"En décidant de suspendre cette grève nous voulons faire un geste envers le gouvernement, mais cela ne veut pas dire que nous abandonnons ce mouvement", a déclaré Marius Nistor, président de la fédération Spiru Haret.

Selon lui, une décision définitive sera prise mercredi, après de nouvelles négociations avec le ministère.

Les enseignants avaient menacé d'observer trois jours de grève courant mai, pour protester contre une réduction de 160 millions d'euros du budget de l'Education, doublée d'une baisse de 70% en 2009 par rapport à 2008 des fonds alloués à la recherche.

A l'issue des discussions avec les syndicalistes, la ministre de l'Education Ecaterina Andronescu a annoncé que le niveau des salaires serait maintenu courant 2009, tandis que des fonds supplémentaires seraient trouvés pour la recherche.

Auparavant, le président Traian Basescu avait appelé les enseignants à la "responsabilité", faisaint état des "difficultés" de l'Etat à trouver des ressources pour financer les dépenses publiques.

"Il s'agirait de faire preuve de responsabilité que de comprendre que la crise peut être surmontée uniquement par la solidarité", avait estimé le président dans une allocution télévisée.

Frappée par la crise économique, la Roumanie a contracté un prêt d'environ 20 milliards d'euros auprès du Fonds monétaire international (FMI) et de l'UE, s'engageant en échange à réduire le déficit budgétaire, en gelant notamment les salaires dans le secteur public.

Source: Ivo de Crée, ITUC and Harold Tor, EI

The crisis gavely affects Africa, says OECD

The 2009 African Economic Outlook (AEO) covers 47 African countries, up from 35 last year. The report finds the region gravely affected by the global economic downturn. Following half a decade of above 5 per cent economic growth, the continent can expect only 2.8 per cent in 2009, less than half of the 5.7 per cent expected before the crisis. The AEO’s authors anticipate growth rebounding to 4.5 per cent in 2010. Growth in oil-exporting countries is expected to fall to 2.4 per cent in 2009 compared to 3.3 per cent for the net oil importers.

Source: OECD, from Nancy Knickerbocker, EI
http://www.africaneconomicoutlook.org/en/home/

Dutch youth leader: follow youth to reduce unemployment

The future of graduation students of the MBO (middle level applied education/vocational training), including their contact details, must be recorded over the next four weeks, to avoid their long-term unemployment.

That is the first step which is needed to avoid soaring youth unemployment as a consequence of the economic crisis.

This is the opinion of Hans de Boer, expressed in his advice “Tegen de Stroom in” (“swimming against the tide”) that he presented today to the government for an action plan against youth unemployment. According to the former president of association MKB-Nederland and ex-captain of the Youth Task Force Youth Unemployment, youth are likely to be heavily affected by the crisis.

According to De Boer, it is especially risky to lose sight of young people when they leave school. “Not that this is only about problematic youth, but they just have bad luck with this crisis in the labour market.” He points to expectations that unemployment among young people under 27 will rise from about 80,000 to about 150,000 unemployed.

Teachers and deans in MBO education have to talk to students approaching graduation about work and/or continued schooling, according to De Boer. The registration of students’ contact information before they leave school, places schools in the position to contact students approximately half a year after their graduation, in October, to see how they are doing.

Youth who do not work and are not in education, have to be assisted in returning to school or to take up an apprenticeship. According to De Boer, annually approximately 1 million jobs are still available, even in a recession. A campaign to better align supply and demand on the labour market alignment should be established.

Funding is also not the problem according to De Boer. In the crisis package of the Dutch government, 250 million Euros has been reserved for the fight against youth unemployment in the coming years.

Furthermore, De Boer welcomed the agreement of employers and unions, to offer a job or training position to school leavers, after three months of unemployment. 25,000 apprenticeships have already been approved. In this set-up young people will earn a little more than social benefits, and the employers is compensated for half of this amount through wage subsidies.

Source: NRC, Netherlands (from Mireille de Koning, EI)
http://www.nrc.nl/binnenland/article2240138.ece/De_Boer_volg_mboers_om_werkloosheid_te_beperken

Fonds mutuels et de solidarité face à la crise

Aujourd’hui, c’est le lancement à Paris du Réseau Education et Solidarité, fondé par l’IE, l’Association Internationale de la Mutualité et la Mutuelle Générale de l’Education Nationale (France). L’Assemblée Constitutive sera composée d’environ 300 délégués de 59 pays.

Les fonds mutuels des enseignants, tel que les mutuelles pour la santé, pour les compléments de caisse de pensions ou encore pour les assurances, ont une base commune avec le mouvement syndical, fondé sur le concept de la solidarité. Ce concept est plus pertinent que jamais dans le contexte de la crise mondiale provoquée par la privatisation à outrance et l’avarice des acteurs d’un marché dérégulé. Mais quelques grandes caisses de pension des enseignants ont aussi participé dans les hedges funds, private equity et partenariats publics-privés.

Hasard du calendrier, le Wall Street Journal d’avant-hier cite le Directeur de l’Ontario Teachers Pension Plan dans un article sur une tentative par un « hedge fund mogul » de mettre la main sur le discounter Target Corp. Est-ce vraiment le rôle de nos caisses de pension de participer à ce genre de « deal making » ?

Le Secrétaire Général de l’IE, Fred van Leeuwen, posera lors de l’ouverture aujourd’hui des questions sur l’investissement éthique de ces fonds, sur le rôle des représentants des membres, sur le besoin de transparence, sur les perspectives de renforcer la confiance des adhérents. Comme Fred, je crois dur comme fer au concept de solidarité des mutuelles qui ont existé dans certains pays depuis plus d’un siècle, et qui ont tant contribué à la sécurité et au bien-être des enseignants. Dans le contexte de la crise, un « retour aux sources » de nos fonds de solidarité est plus que jamais nécessaire.

Sources :

1. Réseau Education and Solidarité http://www.educationsolidarite.org/accueil.html
2. Wall Street Journal, 12 May 2009

Latvian GDP contracts by 29%

Two weeks ago the IMF forecasted a drop in GDP for the Baltic nations of over 10%. But the Wall Street Journal reported yesterday that Latvia’s GDP contracted a massive 29% in January-March 2009, compared with the same 3 months in 2008. Annual contraction for this year is now predicted to be at least 20%, far more than contractions in past crises like 12% for Argentina and 13% for Indonesia. The social consequences of those earlier crises were dramatic in those two countries. In Latvia, the Prime Minister said his government plans to continue slashing spending and public sector wages.

Source: Wall Street Journal, 12 May 2009

US: Obama looks to Higher Education Institutions to Solve Financial Problems

Positive developments are underway in the US, as President Barack Obama puts higher education in the centre of his policy goals. In a speech delivered last Friday 8 May, addressing the job creation and job training, President Obama referred to the loss of another 539,000 jobs in the US in the month of April, bringing the unemployment rate to its highest point in 25 years. As a solution to this problem, he identified higher education as the key to recovery.

Now, if we want to come out of this recession stronger than before, we need to make sure that our workforce is better prepared than ever before. [...] In a 21st century economy where the most valuable skill you can sell is your knowledge, education is the single best bet we can make -- not just for our individual success, but for the success of the nation as a whole.

He looked to community colleges as instrumental in solving the unemployment problem, announcing a relaxation of federal rules to make it easier for unemployed Americans to enrol for more education or training, particularly in Community Colleges.

First, we'll open new doors to higher education and job training programs to recently laid-off workers who are receiving unemployment benefits. And if those displaced workers need help paying for their education, they should get it -- and that's why the next step is to make it easier for them to receive Pell Grants.

President Obama aims to enable unemployed persons to benefit from a combined system of Pell Grants - which currently cover tuition at almost every community college in the US - and unemployment benefits across the US in order to help those who are studying to support their families at the same time. President Obama has asked his Secretary of Education, Arne Duncan, and his Secretary of Labor, Hilda Solis, to work closely with states and institutions of higher learning and encourage them not only to allow these changes, but to inform all workers receiving unemployment benefits of the training programs and financial support open to them.

This is a positive development in the struggle against the financial crisis. The affirmation that higher education is a central pillar to economic recovery is welcome.

Source: Higher Ed (online journal) from Monique Fouilhoux, EI.

More information at: http://www.insidehighered.com/news/2009/05/11/unemployed
For President Obama’s speech go to: http://www.whitehouse.gov/the_press_office/Remarks-by-the-President-on-Job-Creation-and-Job-Training-5/8/09/

UN high-level paper ignores education!

On Friday 8 May, the President of the UN General Assembly released his first draft for the “Outcome Document”, to be adopted by Heads of State and Government at the “UN High-Level Conference of the World Financial and Economic Crisis and its Impact on Development”, New York 1-3 June.

BUT NOT A WORD ABOUT EDUCATION!

At first read the draft is a mixture of UN jargon, liberation theology and proposals for a bunch of new global entities (8 in all!). Many trade unionists and civil society activists will agree with much of the social and economic analysis – the references to values and ethics, and to the need to preserve Mother Earth. But it is hard to see this document as the basis for decisions that will get us out of the crisis!

Source: ITUC New York office. Link: First Draft of the Outcome Document

The current President of the UN General Assembly is Father Miguel d’Escoto Brockmann, former Foreign Minister of Nicaragua

IMF bailout conditions for Bosnia

IMF announced a new $1.5 billion loan. Among the conditions announced in the brief press release announcing the loan are "fiscal consolidation and public sector wage restraint"

IMF rescue packages are imposing the same conditionalities as in the past, including public sector budget and wage cuts. This is in contradiction with IMF Head Strauss-Kahn's call for "coodinated global stimulus". (See also Romania)

For more information: http://www.imf.org/external/np/sec/pr/2009/pr09151.htm

Source: Global Unions Washington office

13 billion euros IMF bailout for Romania

The IMF has announced a €13 billion (about US$17 billion) emergency lending agreement with Romania, which has been under negotiation for the past two months. The IMF's loan will be supplemented by €5 billion from the EU and smaller amounts from the World Bank and other sources.
According to the lending agreement, Romania will be required to reduce its fiscal deficit to under 3 per cent of GDP by 2011, from close to 5 per cent of GDP where it is currently. The IMF released a detailed press release about the loan yesterday:
http://www.imf.org/external/np/sec/pr/2009/pr09148.htm

The worst is yet to come

While some countries have already felt the impact of the financial crisis on education budgets, for others that impact will hit later in 2009 and in 2010. Dave Robinson, labour economist and representative of the CAUT, Canada, described the experience of earlier recessions at a TUAC meeting in Paris last week.

Typically, he said, an economic downturn impacts on public sector budgets, including education some time after a full-blown economic crisis hits bottom. So in this most serious crisis since the 1930s, the worst is still to come for education budgets in many countries.

(CAUT: Canadian Association of University Teachers. Dave also works with EI on higher education and trade issues.)