“The drama of 2011 will be cuts in state and municipal budgets in the United States”

This is what George Soros said in Davos this week in an interview I saw on CNBC. He went on to say that the issue was “very political”. Soros explained that the republicans wanted to weaken the unions, who were the main supporters of the Democratic Party. Cutting state and municipal budgets will cut heavily into public service staffing and therefore union membership.

Soros is an insightful thinker. Coming straight after a Global Unions’ conference on organizing in Washington last week, it was striking to hear the billionaire “retired” hedge fund manager and philanthropist come out with the same analysis as trade union leaders. In Washington, ITUC General Secretary Sharan Burrow pointed out that union membership in the private sector in the US was down to 7 percent while public sector membership was still high. “So you would expect the public sector unions to be the target of the anti-union forces”, she said. NEA President Dennis van Roekel and AFT President Randi Weingarten highlighted this trend with riveting examples of attacks on teachers and their unions in the US. Paul Moist, President of the large Canadian Public Sector Union, CUPE, had a similar story to tell.

I had the task of presenting the joint union plan to combat this assault, arising out of the successful conference “Quality Public Services: Action Now!” held in Geneva last October. That plan focuses on the local level, where ordinary families need good public services, and will feel the brunt of the cuts.

The plan is very clear that this must be a campaign directed to all working people – not only those in the public sector. It will focus on the reality of the cuts in essential services. It will aim to show that “Quality Public Services” is not an abstraction but concrete and real. It will get underway in cities and regions around the world, for the cutting of public services at local level is common to many countries. It will really link the global with the local.

The plan was approved at the Council of Global Unions meeting at the OECD in Paris this week. For more details, go to www.qpsactionnow.org.

From Paris, several of our union leaders headed for Davos, to try to get key union messages heard there. I checked the CNBC website for the Soros interview. I found the quote at the top of this item. He made the point that in the US, states are required to balance their budgets, and since tax revenue has dropped and additional Federal funds are unlikely, they will have to cut spending. This is precisely the point we made after the crisis first hit two years ago, and reiterated when the trend of fiscal consolidation gathered momentum in 2010, as we saw at the G8 and G20 summits of Toronto and Seoul. He also said that the fiscal crisis now affecting many US states was somewhat like the one that hit countries like Greece and Ireland in the Eurozone – an interesting point.

But I couldn’t find on the website what I heard Soros say about the politics and the union-busting agenda. I wonder why. Did I just dream it? Or was that part not included because it did not fit the narrative coming out of business circles these days?

Education: everyone’s interest; nobody’s priority?

Two recent events highlighted the dilemma we face as we strive to get priority for education in a time of fiscal constraint.

The first was the World Economic Forum’s (WEF) Summit of Global Agenda Councils last month in Dubai.

The second was a trade union consultation last week with President Nicolas Sarkozy of France, as he takes up the chair of the G20 (as well as the G8) for 2011.

In Dubai, the Global Agenda Council on Education did some soul-searching on the fact that education did not get a high score on a priority rating exercise, nor it seemed in planning for the annual meeting in Davos. Yet there was a lot of inter-action with other Councils, and what came out was that everyone was interested in education, and everyone had an opinion to express.

President Sarkozy broke new ground by consulting with trade unions and others shortly after taking up the G20 chair, following the Seoul Summit. He stated that he wished to identify priorities for the G20 in an inter-dependant global economy, and then to address those priorities systematically through meetings of ministers and officials leading up to the next summit to be hosted by France in November 2011. He will also consult with other G20 leaders early in the process, starting with a meeting with US President Obama in early January.

When I asked if that included education ministers, he replied “why not? Perhaps they could be included in the meeting of labour and employment ministers” he added, turning to his Labour Minister, who looked less than enthusiastic. But then Mr. Sarkozy continued that he did not want to “banalize” the G20 “with meetings of G20 sports ministers, for example”. As soon as I got the chance, I challenged this view, stating that “far from being banal”, education was at the core of major questions facing G20 countries. Then we got to an issue that did seem to capture attention – youth unemployment.

In Dubai, the focus was on identifying systemic risks facing the global community – risks like new financial crises, climate change, food supply, shortage of water, epidemics, terrorism, new conflicts, even a renewed risk of nuclear weapons being used. Part of the process was to have exchanges between Global Agenda Councils aimed at pinning down these systemic risks. When Sharan Burrow and John Evans from the Council on Employment and Social Protection joined the Education Council for such an exchange, the risk that came out was that posed by the huge percentage of unemployed young people in many countries – young people who are neither in school, nor in vocational training, nor in the world of work. Very often they are engaged in illegal activities – drugs and other forms of trafficking, gang activities, even militias of different kinds, or yes, even terrorism. The risks for social cohesion are great. Youth unemployment is a veritable time bomb ticking away in all our societies. And the risk is not limited to any one country. It cuts across national borders, just like the risks of financial speculation or environmental risks, they are transnational.

Sharan and John were key players in setting up the meeting with President Sarkozy a few weeks later. Sharan referred to the huge risk of youth unemployment in her opening remarks. But, when we made the link with education towards the end of the meeting I felt – at last - that we were getting attention.

Everyone is interested in education. Like many other political leaders, Nicolas Sarkozy has made speeches, written letters, stressing the importance of education for future generations. But there have been too many “motherhood and apple-pie” speeches, and not enough real action.

Education is everyone’s interest, but nobody’s priority –until leaders recognize that there is also urgency to defuse the time bomb of out of school, out of work youth.

That is why EI General Secretary Fred van Leeuwen has written to President Sarkozy stating there is urgency, as well as a need for long-term work on education. That is a message we have to carry to every political leader for them to express more than interest, but to make education one of their highest political priorities.

Is it time to rethink our strategy?

The global banking crisis hit us more than two years ago – in August 2008. Meeting just a month after the fall of Lehman Brothers, the EI Executive Board foresaw the risks for education funding and called for a campaign to focus on education as a key investment in sustainable recovery. EI Officers and staff worked on a campaign strategy that was endorsed by the Board in March 2009 and pursued by EI and many member organizations through the remainder of 2009 and into 2010.

This strategy combined global advocacy with national and local action. We worked with our coalitions of Global Unions and the Global Campaign for Education to get our key messages to the G8 and to the G20 as well as the UN, the OECD, the World Bank, ILO and UNESCO. Our messages on education as an investment not a cost, and on maintaining funding commitments for EFA, were carried forward nationally during the Global Action Weeks of 2009 and 2010.

By the time the EI Board met in December 2009, we knew that the big risk for education was the push by many governments towards so-called “exit strategies”, which would translate into budget cuts in many OECD countries, and reduced aid budgets for the developing countries.

In the wake of the Greek debt crisis and destabilization of the Euro zone, by the time the G20 met in Toronto in June 2010, the focus had shifted from stimulus to fiscal consolidation. This trend was confirmed at the latest G20 in Seoul last week, overshadowed by the US-China tension on trade imbalances and currency exchange rates.

And education is virtually nowhere on the agenda.

Today it is time to rethink.

The situation does vary significantly among countries – as three EI’s surveys of member organizations have shown. There are some bright spots. But in general, our campaign to put education in the spotlight in all countries and wherever leaders meet seems to have run out of steam.

There are both external and internal reasons for this.

Externally, the environment is far from favourable, as the pendulum of economic orthodoxy has swung back to cost-cutting of national budgets. The political environment in many countries has not been favourable either.

Internally, we have not maintained the vital link between global advocacy and national/local action that we talk about all the time. We have to ask ourselves why. Is it because national member organizations are overtaxed with the daily exigencies of responding to national situations? Talking with colleagues from other sectors, such as the banking industry, we are not alone. As one Global Union colleague put it: “Our national members are too busy putting out the fires at home to give much attention to our global calls for action”. Yet, we all recognize that the crisis was and remains a global one; that the way out must also be sought globally.

We will have to rethink how EI can help its member organizations join global advocacy to national action. Our campaign website “Hands-up for Education” needs revamping. It is hardly used anymore. Mea culpa: entries on this blog have not been as frequent either!

After the successful Quality Public Services: Action Now! Conference in Geneva last month, a new attempt will be made to mobilize locally, with joint campaigns to defend and promote public services in selected cities around the world.

But, if we are honest with ourselves and objective in our evaluation, the time has surely come to rethink our strategy for defence of education. Any suggestions?

A LITTLE BIT UTOPIAN

“When the untapped potential of a child meets the creative imagination of a teacher, a miracle occurs.”[1]

The vocation of teaching is, or ought to be, one of constant renewal. “New thinking, new approaches” is the title for the session in which I'll be speaking at the OECD Education Ministers' Forum tomorrow. Actually, this title sounds more like a slogan. When political decision-makers call for “new thinking, new approaches”, they often mean looking for ways of saving money. But the real challenge is to bring about fresh approaches where they count most - in the classroom. And the challenge for policy makers is to create the conditions enabling that to happen.

Over-emphasis on narrow “metrics” won't do it. There are things in education you can't measure. Policies like linking teachers' pay to student performance won't do it either. Such approaches are inherently reductionist. They overlook something essential about education: the miracle of opening young minds to knowledge, to their own capacities, to creativity, to motivation.

Jacques Delors proposed 10 years ago in a report for UNESCO on Education for the 21st century, four “pillars of learning”. Learning “to know”. Learning “to do” (skills). Learning “to be” (realizing one's potential). And learning “to live with others”. Good teachers build on these four pillars to foster a complete learning experience for their pupils. Their reward actually comes from seeing those miracles come about, day after day, year after year. It doesn't come from performance-related pay.

Sounds a little bit utopian? Maybe. Delors called education “the necessary utopia”. And that's really what motivates many, many teachers. That little bit of utopia is what keeps them going.

[1] Mary Hatwood Futrell, Founding President of Education International

Education and auto-insurance

‘Why should education be any different than auto-insurance?’ This was the question posed to teacher leaders at a forum in Edmondton, Canada, last week. The question was put by Peter Cowley of the Fraser Institute, a right-wing think tank funded by some major corporations. Cowley’s argument was that the State should require all auto owners to have auto-insurance, but should not be the provider. By analogy, while the State should require that education be compulsory for all children, there was no reason, he suggested, why the State should be the provider. Cowley argued for a diversity of providers, competing with each other, thereby, he said, raising the overall quality of education.

The Canadian Teachers’ Federation had invited Cowley to its President’s Forum, held prior to the Annual General Meeting, precisely in order to hear the arguments being used to attack the concept of public education as we know it. His presentation was juxtaposed with an analysis of the neo-conservative agenda by Bruce Campbell, of the Canadian Centre for Policy Alternatives. While the Cowley presentation certainly succeeded in getting the adrenalin flowing for the participants, the point was that it reflected views more widespread than we would like to think in many countries, not least in the United States and in Europe. There are many who agree that education is important, but who also hold that provision should come more from the private sector. Somehow, it is felt, the private sector will put in the resources. This generally turns out to be wishful thinking, so the next level of argument is that competition should be introduced into the public sector in order to encourage efficiency. Hence the movement for Charter schools in the USA.

Along with increased competition come league tables, comparisons within and between countries, and the push for performance pay. The merit, if it can be called that, of the Cowley presentation was that it confronted teacher union leaders with the need to restate the case for public education. Nothing can be taken for granted. Nor is it sufficient to bemoan or deride the neo-liberal arguments. They must be addressed.

In the 21st century, the case for quality public education for all is as powerful as it ever was. At the Forum, it was put by CTF Secretary General Calvin Fraser under the heading ‘What should be the promise of public education?’ Calvin described the early history of public education in Canada and the notion of ‘the common school’, which became the basis for community development, national progress, and individual success in a country of immigration and great natural and human diversity. This is a history that can be repeated in every other industrialized country today. It is a basis for citizenship and participation in democracies. Why then, do we witness this movement to move away from public education, even to denigrate it, and to search around for something else to take its place?

We can debate the reasons for this shift in thinking among significant segments of opinion. That it is ideological in nature is certain. But what is the basis for applying this particular ideology, that of the market and competition, so persistently to education? My own conviction is that it is all a matter of interest. The rationale for pursuing policies that deepen economic inequality is very much the same as the rationale for policies that increase rather than diminish educational inequality. In both cases, the rationale is dictated by short-term particular interests, while the longer term common interest is neglected.

It is also certain that this continuing ideological pressure on the concept of public education has consequences for public funding. It leads naturally to starving public education of badly needed resources. There is pressure to ‘do more with less’. A vicious circle is set up, of diminishing resources and of more reasons to criticize public schools – leading to proposals for alternative forms of provision. This vicious circle has to be broken. We have to build, or in some cases rebuild, a consensus in political discourse that public education is the foundation for national, community and individual progress. To achieve that consensus, we have to build, or rebuild confidence in the quality of public education.

Rebuilding the consensus of public support for quality public education is eminently do-able, for there remains a strong reservoir of public support. But it will not just happen by itself. It will take the mobilization of education unions and their members, actively engaging with other actors of civil society which share our values. This must be the basis for our advocacy whether at the G20, the international institutions, or with each national or local government.
Tough political choices on public funding lie ahead. In this context, talk of other means of educational provision, of alternatives to public provision, is dangerous. The auto-insurance analogy is superficial but seductive. It would be unwise to under-rate it. We have articulated in our own circles the case for education as a public good, not a commodity. Our challenge is to take that case convincingly and credibly to wider communities, and to do so with a clear political agenda.

The G20 “shrinking agenda”: how the Canadian host gutted the G20 of substance

Unfortunately, the Toronto G20 met our expectations – which were very low! On the Monday before-hand, WTO Director General Pascal Lamy told the ITUC Congress in Vancouver that the summit had a “shrinking agenda”. Before that, on Friday 18 June, I participated on behalf of Global Union Federations in a consultation with Canadian Prime Minister Stephen Harper, host for the G8 and G20 “twin summits”. Although Global Unions made points on defence of the public sector in the face of “exit strategies”, we had few illusions about Mr Harper’s interest – or lack thereof – in education.

When you read the brief Leaders’ Declaration, you have to wonder how the Canadian government justified the expense to Canadian taxpayers. The cost was widely reported in local media as running up to $1.3 billion, with security costs 8 times those of the previous G20 in Pittsburgh. $1.3 billion would go a way towards closing the financing gap for Education for All! But EFA is not mentioned in the G20 Declaration. Instead it is referenced in an annex to the G8 Declaration on accountability for MDG commitments. The G20 Declaration gives a one-line mention in another annex to “appreciation” for the work of ILO and OECD on a training strategy (http://www.ei-ie.org/en/news/show.php?id=1292&theme=ei&country=canada).

It was not for want of trying. EI affiliates in Canada, the CTF and FPUQ, wrote excellent letters to their Prime Minister, while CTF held a well-attended press conference, and achieved good media coverage, especially e-media. The Presidents of US affiliates NEA and AFT wrote a formidably well-argued joint letter to President Obama, backed up by a personal note from the AFL-CIO President to the US “Sherpa” (top official) for the summits. EI key messages were included in the Global Unions’ Statement to the G8 and G20. And EI participated on behalf of Global Unions in the consultation with the host Prime Minister.

That consultation was itself indicative of the approach of the host government. Flanked by two of his Ministers, for Labour and Human Resources and Skills, as well as his “Sherpa”, Stephen Harper said he would just “listen” to the trade union presentations. Thanks to well-framed questions put to him by ITUC’s Guy Ryder, Harper was drawn into a more interactive exchange with the delegation than he probably intended. He was articulate and politically astute. Neither of the Ministers said a word. While we felt that getting Harper to engage in the exchange was a small “plus”, at the end of the day it did not change much. It was to be contrasted with the convening, on the eve of the G8, of a B-20 summit of business leaders, at the invitation of the Canadian PM, and a commitment by the G8 to finance with public funds worthwhile business initiatives!

Nevertheless, as labour leaders we were clearly the object of a charm offensive by this right-wing politician. Harper has run a minority government for 4 years. In the Toronto Star the next morning I read an article on his strategy to outflank the left by supporting expansion of the publicly-run Canada Pension Plan. The article quotes CLC chief Ken Georgetti as lavishing praise on the decision, stating that the Conservatives have “felt the heartbeat of Canada on this one”. (Toronto Star, Sat June 19, 2010).

This all seemed to be consistent with what I observed in the consultation. An astute politician moves from his core base, in order to build support in the centre and create conditions for governing with a majority rather than a minority. The Toronto Star columnist notes, however, that ‘Harper’s strategy with popular social programs is not to eliminate them but to transform them over time into forms that he and his political base find more ideologically amenable’.

Harper proposed a photo with all of us in front of the G20 flags, with Ken beside him. It was rather obvious that we served mainly as a backdrop for the playing out of some domestic Canadian politics. Meanwhile, I thought of all our members, in the G20 countries and in 160 other countries, and the millions of children in those countries, who face education budget cuts and see the prospect of achieving Education for All recede over the horizon!

We knew that for the Canadian G8 and G20 summits, our task was to put down “markers”. This we did. The strong EI delegation at the ITUC Congress in Vancouver, backed by the many EI and PSI delegates in national delegations, succeeded in getting the ITUC to adopt a 7th priority on Defence of the Public Sector and Education and Health for All.

Our work to get EFA and Teachers on the G20 agenda must continue through the upcoming UN Summits and the G20 in Seoul, Korea, in November. By the time the G20 convenes again in France in June 2011, just before the EI World Congress in July, we want to see concrete proposals in place. Ambitious, hugely ambitious. But necessary!

At the G20: Close the financing gap; support qualified teachers

Statement by Bob Harris to the World Economic Forum,
Global Redesign Initiative Summit, Doha, 30-31 May 2010

Session on “Rebuild in Depth: Education”

If we are to rebuild in depth, we must start with people.

The premise of the Global Agenda Council on Education Systems is contained in the Universal Declaration of Human Rights: “Everyone has the right to education”.

Yet more than 60 years after that declaration was adopted at the United nations, and just 5 years before the new target date for achievement of Education for All, there are still 72 million children of primary school age out of school, and about the same number unable to go on to secondary school or to pursue relevant vocational education. The challenge was laid out clearly in the inspiring keynote address by Queen Rania yesterday.

The quantitative statistics for children and young people in school are actually significantly better than they were a decade ago. That is in itself a sign of hope. But today we face a challenge of quality in education, and linked with that, a challenge of relevance.

The issue of quality confronts us at 3 levels:
1. The statistics don’t tell the full story. Children registered for school may not all attend, and many drop out. This is of particular concern for girls.
2. When you have 100 children or more in a classroom, with a teacher who did a 3 week course after his/her secondary school, you do not have quality.
3. When schooling in such classes is limited to rote-learning, you do not have the quality of learning required for the 21st century.

The challenges of quality and relevance are there in all countries. But in the developing countries, the quality of education is a key factor in emerging from cycles of poverty and in achieving autonomous growth.

Desmond has spoken of the financing gap that has to be closed to achieve Education for All. I will speak of the people gap. We know from UNESCO that 10 million more qualified teachers will be required by 2015 to replace those who will retire and to meet the basic EFA goals.

In both cases, closing the financing gap, and closing the people gap, the approach we must take is essentially a bottom up approach. In addition to the report which you will find on your USB key, and copies are available here, we have produced side papers that make that clear. In the global community of the 21st century, we need a framework that creates opportunities for that bottom-up approach.

In both cases, we need leadership. We need political leadership. But also leadership from the international community, from the business community, from civil society, from the teaching profession, and from our universities. The engagement of all these actors is the key to an effective response to the challenge.

In Davos this year, when we presented our preliminary report, we heard many expressions of willingness to engage. There was consensus around the notion that people are the key, the people of education, and especially the teachers. In an age of unprecedented challenges, opportunities and risks, we need a new vision of teaching. It is a vision that recognizes that learning will be life-long, in school and out of school. It is a vision that will help children and young people to equip themselves for the skills they will need in the 21st century – to fulfill their potential, for themselves and for their communities. It is a vision that teachers will be able to apply the science of pedagogy, and the art of teaching to enable every child, every young person, to achieve his or her potential as a person and as a member of society.

But these teachers must themselves be equipped to fulfill this vision. There are 60 million teachers in the world today – internationally the largest professional group in the world, present in every community, and at least 10 million more needed within 5 years. This is a huge challenge. It engages the responsibility of all governments and it requires the engagement of all those groups I mentioned earlier.

The education and professional development of teachers is essential to systemic success. Our Global Agenda Council proposes a “Global Partnership for Teacher Education” to mobilize financial, human and intellectual resources in support of national initiatives to train qualified teachers.

We need a fresh approach to the mobilization of resources, and re-ordering of priorities. Investing in teacher education and professional development has often not happened yet it is precisely this investment that can have the biggest impact on quality. And it is not enough to recruit and train teachers. Frameworks for mentoring and professional development are needed 1) to assist these qualified teachers to improve their teaching skills, and 2) to enable teachers to develop throughout their careers, and 3) to motivate them.

Successful corporations know the importance of good human resource practices. Education Systems should do no less. Systemic failure to apply best practice translates into the loss of potentially good teachers, undercutting the effect of recruiting new teachers.

There is enormous potential to use the tools of the 21st century to support teachers. We recommend building on existing instruments to develop an Educators, Professional Development Portal and exchange capability. We recommend dissemination and localization of UNESCO’s framework on ICT competency for teachers, developed with three of the Forum’s leading constituents in the IT field. Multistakeholder support can be mobilized for the extension free broadband access for schools and teachers around the world.

The teaching profession is organized in much of the world through Education International and its national unions, bringing together teachers from pre-school to university. The profession is actively engaged in debates on issues of accountability, ethics, development of competency profiles, self and peer assessment. In all these questions the logical intergovernmental interface is UNESCO. Our GAC sees a leadership role for UNESCO. Responding to the challenges of rapidly changing world can be daunting. When Jacques Delors presented UNESCO’s report on education for the 21st century (Learning the Treasure Within) he described teaching as “the noblest of professions”. But the daily reality faced by 60 million teachers is often far from that aspiration.

Society expects much of its teachers, and those expectations are not diminishing. Global mobility means our societies are increasingly diverse, and even the most developed societies are increasingly unequal. It is an oversimplification to distinguish between the developing and the developed countries, for through migration the world comes into every community. In addition to their other tasks, teachers must encourage every child to take pride in his or her cultural identity, while respecting the cultural identity of others, and each school community must function according to that principle.

In another session yesterday, I heard Dennis Snower call for increased mobility of teachers facilitated by recognition of teacher education qualifications.

Even before the crisis there was the challenge of relevance for young people entering the job market for the fist time. Already, youth unemployment, whether in developing or so-called developed countries, is far too high. Now with fiscal consolidation in the OECD countries, there is a very real risk of a lost generation. G20 Labour and Employment Ministers met in Washington in March and presented their recommendations to President Obama for the G20 Leaders. They have stated clearly that a skills strategy is vital to sustainable recovery, and to a just transition toward green growth. And they also stated that quality basic education was the foundation. Again, if we are to expand VET, as we must, we should address the issue of training for VET teachers and instructors, which in turn raises questions of mobility between teaching and industry. Good work is being done on this at the ILO and the OECD. Importantly, this is an area where there is common ground between employers and trade unions, and scope for really practical work at the national and regional levels.

Like the Labour and Employment Ministerial , our GAC strongly supports the move to place education on the G20 agenda. Education and skills are factors in a smart strategy for sustainable recovery. We see the need for the active engagement of the emerging economies through the G20, and to go beyond the valuable declarations already made by the G8, to a more wholistic approach to education, as a factor of human development in the 21st century.

It means putting the emphasis back on people, investing in people through education. And that also means a renewed effort to put new emphasis on and mobilize support for the people of education – the teachers.

Europe : Facing financial turbulence (and a return of the cloud ?)

In Rome on Tuesday I joined a TUAC delegation in consultations with the Italian Chair of this year’s OECD Ministerial Council meeting, the OECD Secretary General, and Ambassadors representing the Vice-Chairs from Australia and Norway, as well as the employers through BIAC. This was the most substantive preparation for a Council meeting involving the social partners in my memory, and for the first time TUAC and BIAC will participate throughout the Council meeting.

Italian labour union colleagues briefed us beforehand that the Italian Finance and Economy Minister, Giulio Tremonti, who will chair the Council after an opening by the Italian PM, Silvio Berlusconi, had a reputation for independence and was able to function in the government with considerable autonomy. Still, I was not really prepared for the extent to which we seemed to find common ground on analysis of the financial and economic crisis. When I commented that the global economy was like the volcano in Iceland, both containing the threat of new eruptions, I could see the point resonated. “It is like the question of whether there was a World War I and a World War II, or whether it was just one event, with the second phase caused by failure to resolve the problems arising out of the first phase” he said.

The Greek debt crisis was foremost in everyone’s mind, with the risk of “contagion” to other countries in the Eurozone, starting with Portugal and Spain. John Evans, TUAC General Secretary, urged the OECD to be more upfront on the Eurozone crisis, as we pressed the point that “back to business as usual” would just set the scene for the next eruption. (see 5 February entry for my comments on the emerging crisis in Greece, Spain, Portugal and Ireland).

It is not so often that as EI we get to meet with Finance Ministers – in our case it is more likely to be Education, or Employment and Labour Ministers. So it was interesting – and worthwhile – to put our case to a Minister who not only will chair a significant gathering of Finance and Trade Ministers this year (the OECD Ministerial) but also has a reputation among his peers around the world as an independent thinker.

As we left, Mr Tremonti handed out copies of a lecture he gave at the Party School of the Central Committee of the Communist Party of China in Beijing last November. Its title was “The causes and political effects of the first global crisis”. I read it on the way to Paris. It is not what you might expect from a senior minister in a right-wing coalition government. And the message that comes through clearly is that Tremonti believes we are in for even more serious upheaval unless there is a paradigm change. His answer? He calls it the “global standard” – a set of principles that should be accepted by governments as well as private actors as forming a global rule base for a globalized economy. At the OECD, he is pressing for a “Declaration on Propriety, Integrity and Transparency”. We thought it might work if linked with the “Merkel Charter” bringing together substantive parts of existing international instruments on labour standards and trade. Chancellor Merkel had convened a meeting with the Head of the ILO, WTO, OECD, IMF and World Bank in Berlin the previous week. Interesting that two right of centre European politicians are leading the move for new global standards!

Yes, we do need new global standards. But will it be too little, too late to stop the turbulence? The next day, Greek unions held a general strike. Despite the efforts of the unions to hold a massive peaceful demonstration, violence broke out, tragically taking the lives of three bank employees, and unfortunately fulfilling our often repeated warnings about the risk of breakdowns in social cohesion.

And the cloud of volcanic ash returned to close airports in Ireland and Scotland. Unanticipated and recurring natural events, a man-made disaster in the making for the Eurozone economies, a major environmental threat in the Mexican Gulf due to the breakdown of technology – all these events show that the arc of history never falls back into a neat linear progression. Those who believe so, and advocate “back to business as usual”, are engaged in wishful thinking of delusional proportions!


Links:

• Giulio Tremonti’s lecture “The causes and political effects of the first global crisis” - http://download.ei-ie.org/Docs/WebDepot/G.Tremonti%20lecture%20Communist%20Party%20Beijing%20Nov%202009.doc
  
• The “Merkel Charter” - http://www.financialtaskforce.org/2010/04/28/joint-press-release-by-german-federal-chancellor-oecd-secretary-general-wto-director-general-ilo-director-general-imf-managing-director-and-world-bank-president/

Globalization and speculation

Six years ago, at EI’s 4th World Congress in Porto Alegre, Brazil, I had the privilege of introducing the Congress theme: “Education for Global Progress”. I made the point that we tend to assume that economic progress will continue, indefinitely, without setbacks, in a kind of linear progression. But that is not the lesson of history. The reality is that in the course of human progress there are all kinds of ups and downs, surprises and shocks. In that address I identified three risks – breakdowns in social cohesion, politico-religious extremism, and irreparable damage to the environment. All three risks remain evident today. But history also has a way of coming up with surprises, of producing events that nobody had really foreseen.

The financial crisis was foreseen, by a number of recognized economists, as well as the global trade union movement. But the warnings were ignored. On the other hand, the paralysis of European aviation because of volcanic ash from Iceland happened without warning. As the disruption to air travel quickly extended across the globe, public authorities and airlines in 20 European countries scrambled to find answers. They sought answers from specialists in the uncertain sciences of seismology and meteorology. At the time of writing, they are trying to re-open airports, and then figuring out how to manage the consequences of volcanic ash clouds that may continue to drift across the continent for months to come.

So global economic progress is taking a double whammy: first the man-made financial crisis, then an awakening of nature which impacts on a key sector of the economy.

Both of these events certainly show how the global economy is interlinked. Disruption spreads rapidly to affect all countries, albeit to varying degrees. That is the inherent down side of globalization. These events ought to demonstrate a key point that we try to emphasize again and again at Education International, and more broadly, through the Global Union movement. This key point is that in today’s world, we need cooperation, mutual support, solidarity if you will, more than ever. We need cooperation to clean up after the financial crisis, to put regulations into place to prevent a new crisis, to restore global trade, and to re-create employment. We need solidarity to confront effectively the ravages of nature: earthquakes, tsunamis, erupting volcanoes, tempests and viruses. This lesson ought to be obvious.

Speculation

Sadly other recent news items show that the obvious lessons are still ignored – that the spirit of “everyone for him/herself” is very much alive and well. In the US, the SEC has launched a case against Goldman Sachs, charging this leading bank with selling bad investment instruments as the sub-prime crisis developed, even while it continued to sell those same investments to clients. In Europe, attempts to resolve the debt crisis in Greece are hampered by massive speculation on the bond markets. It is reported that speculators, including hedge funds and the like, are now targeting Portugal. By betting against countries with economic problems, the major speculators make a lot of money for themselves while making it more difficult for rescue packages to work (since the cost of refinancing of public debt is increased).

Ordinary people pay the price for the actions of the speculators. As public sector spending is reduced, teachers and other public employees are among the first affected. Then the prospects for recovery of the broader economy are seriously jeopardized by cuts in education, health and other public services.

There are issues of values. There are also issues of the incapacity of regulatory control. Global governance (through summits and a patchwork of international agencies) is inadequate. Speculators can easily pursue their own interests at the expense of the greater good. There is growing frustration that the lessons of the financial crisis are being pushed aside by the mentality of “back to business as usual” – at least until the next crisis. Meanwhile, nature’s awakening in Iceland ought to remind us that adaptation to unforeseen change requires cooperation. Ultimately, global progress will be more likely achieved through cooperation than through competition.

EDUCATION RESOURCES AND TAXATION – A POLITICAL STRATEGY

Back to cutting of funds for public service – that is the order of the day, as many countries try to reduce their deficits going out of the crisis. The pressure is on in Greece right now, a member of the eurozone, followed by Spain, Ireland and Portugal, as well as Eastern European countries, while aid budgets for developing countries are also being slashed.

The other side of the deficit-cutting equation is the endeavor to increase revenues through taxation. An example of the fix many governments are in is the case of the tax inspectors of Greece. The government, under pressure from the European Commission and Central Bank, wants them to step up revenue collection. But at the same time, the tax inspectors’ allowances are to be cut. So they will go on strike and won’t collect taxes! Ironic isn’t it?

In a way, the same scenario is being played out on a much larger scale with funding for education. Political leaders declare that more must be invested in education. Then they cut education funds so as to reduce the deficit, and in so doing, they cut the very investment that they agreed was needed for long-term growth!

UNESCO and the UN have confirmed that we have to find a way to close a funding gap of US$ 16 billion in order to achieve universal primary education by 2015. Billions more are needed in the developing countries to develop secondary and higher education, and to invest in vocational training for skills. Investment is needed too for quality and equity in the emerging and industrialized economies. Yet resources are being cut. How can the conundrum be resolved?

Finding the resources

The resources are actually there, in the global economy. It is a question of distribution, and the key is that dirty word “taxation”. Now when politicians and ideologues say “cut taxes”, we think of yours’ and my taxes, don’t we? Nobody likes to pay more taxes, and we’d all prefer to pay less. Ronald Reagan and Margaret Thatcher played on these normal human reactions rather simply but cleverly, and they helped set in motion three decades of cuts in public sector funding. They succeeded in persuading voters that the word “tax” referred essentially to personal income taxes. (Although, over those same three decades, it became economic orthodoxy to hike up indirect taxes, such as VAT, which impact on all consumers, and disproportionally affect wage and salary earners.)

Then there are corporate taxes. The same orthodoxy said they had to be reduced as much as possible, in order to encourage employment. National enterprises had political clout and were adept at using the employment/investment card to defend their interests. So revenue was tightened all round, and it become the conventional electoral wisdom that cutting public resources was the right thing to do.

But while this debate went on, over those same three decades, the world’s economies became globalized. We have global companies, global supply chains, global financial markets, and the players in these phenomena of the global economy can largely avoid paying taxes at the national level. It is that lack of symmetry between global generation of wealth, and failure to contribute to national public needs, that is very much at the heart of the conundrum.

This is the story that the voters need to hear about. We can have debates about personal or corporate taxation at the national level. But unless we address the fact that global entities largely escape their taxation obligations, we will continue to be stuck in a political dilemma. The resources are there in the global economy. The question is how to get them to communities, where they are needed for investment in education, health and other areas of social need.

Taxing global companies and their transactions

This week about 80 civil society organizations, including ITUC and TUAC, put the case to the IMF for a Financial Transactions Tax (FTT). Such a tax would generate enough resources to fund achievement of the Millennium Development Goals (MDGs) including the US$ 16 billion funding gap for education. Moreover it would help stabilize financial markets. The G20 has already mandated the OECD to tackle the issue of tax havens, although there is still a long way to go to deal with the corporate, as distinct from the personal use of tax havens. But nobody has really got to grips yet with the central question of global tax avoidance by global companies. These companies have ways to minimize their taxation that national companies do not have – through smart accounting across their global empires. Recently, the French public television channel, Antenne 2, ran a documentary revealing how little global companies (including French-based ones) paid in comparison with national companies – especially the small and medium enterprises which provide most employment. The resources for investments in education and other public sector needs are right there – in the accounts of the global companies.

An epic struggle

Make no mistake. An epic struggle is underway. We see that in the US, where a reform-minded President is confronting powerful interests. We saw it in Davos last week, where the chairman of the largest private equity firm in the world warned the Australian government of an investment “chill” following efforts to collect taxes on a windfall deal by one of his rivals.TPG, another private equity firm, made an estimated 400% profit (yes that was 400%) out of a complex takeover and refloating of a major national retailer. The bankers are resisting mightily the G20 leaders attempt to recover taxpayers’ bailout money or to tighten regulation of the financial sector. They actually find a return to the bonus culture to be justified, and they use amazing arguments to avoid paying a fair share of taxes on those bonuses.

In these circumstances, while confronting those abuses, it would also makes sense to go for a political strategy aimed at showing the voters in democracies that global corporations must be required to pay fair and reasonable taxation. We are not putting the focus here on individual taxpayers, nor on national small and medium enterprises – but on global corporations. Voters generally do not know that, through large-scale tax minimization, resources from the global economy are being withheld from nations and communities.They must be informed. Governments must be shown that winning access to these resources is the way forward. Then, and only then, will we see easing of pressures on public sector funding, pressures which affect education investment and future prospects in virtually every country.



Links:

To the IUF's Private Equity Buyout Watch article - Blackmailing the Taxman, from Davos to Sydney http://www.iufdocuments.org/buyoutwatch/2010/02/blackmailing_the_taxman_from_d.html#more



for the communiqué just issued by the ITUC for the G7 finance ministers’ meeting taking place this weekend in Iqaluit, Nunavut, Canada.

http://download.ei-ie.org/Docs/WebDepot/G7%20Finance%20Meeting%20Must%20Resist%20Bankers%20Backlash.pdf

Reforming funding for EFA

The Global Monitoring Report 2010 (GMR) released in New York on 19 January warned that the world is not on track to achieve the goal of universal primary education by 2015. With 72 million children still out of school, the aftershock of the global financial crisis threatens to deprive millions of children in the world’s poorest countries of an education (link: http://www.unesco.org/en/efareport/).

As GMR Director Kevin Watkins stated there remains a great financing gap – 16 billion US dollars – which has to be closed in order to achieve the goal. And Kailash Satyarthi, Global Campaign for Education, stated that, yet again, the most vulnerable children are the ones who miss out. UN Secretary General Ban-Ki Moon said “education should never be an accident of circumstance”.

These issues were laid squarely on the table at the World Economic Forum in Davos last week. EI pointed out that the so-called “Fast-Track Initiative” is simply not doing the job. Too few countries benefit, there are too few donors, there is too much bureaucracy, and there is not enough involvement of key stakeholders. So EI is pressing for a new approach, such as a Global Fund for Education, with strong stakeholder participation, including the voice of teachers. EI’s proposal for reform of funding for EFA is winning support – but we are not there yet.

Davos was however the setting for some frank talking on the role of teachers. EI’s General Secretary told a well-attended private session with leading CEOs and university leaders: “Just putting an unqualified person in front of a class of 250 children doesn’t provide education for them”. Fred van Leeuwen was immediately backed up by UNESCO Director General Irina Bokova. Although this was a private session, and “off the record”, you can read Ms Bokova’s comments on the UNESCO website: (http://www.unesco.org/new/en/unesco/about-us/who-we-are/director-general/). “Education is a cause that must be taken up by the G8, the G20, and the international financial institutions” Ms Bokova said to a special WEF plenary session on education the next day. Queen Rania of Jordan said “Education is not just another social issue, it’s the social issue – one that underpins progress in all global challenges we face today, from alleviating poverty, hunger and HIV to building stability, fighting climate change, and more”.

Governments have the prime responsibility, but the private sector can support through advocacy and working with the education unions, said Fred. The biggest challenge is to recruit enough qualified teachers, and professional development is the other key factor in educational quality, he added.

In coming weeks, I’ll be working through the WEF’s Global Agenda Council on Education – and with other EI, CGE, and Global Union colleagues - on the issue of reform of funding for EFA. We simply have to break through on that if we are to achieve the EFA Goal, and to give 72 million children a chance.

Links:

• EI warns that public spending cuts will slow economic recovery
  http://www.ei-ie.org/en/news/show.php?id=1184&theme=ei&country=global
• Global Campaign for Education urges improved education funding http://www.ei-ie.org/en/news/show.php?id=1177&theme=educationforall&country=global

Blocking Reforms

The sense of near-panic that pervaded Davos 2009, one year ago, has gone. For the financial sector, it is back to business as usual. For the captains of industry from the real economy the worries are still there. For they know that there will be no recovery of the real economy without recovery of jobs – and the latest ILO report released this week is not good for the OECD countries. The emerging economies, like China, India and Brazil, are doing better, but not the 30 industrialized economies in the OECD group.

Labour leaders are getting more of a hearing in Davos this year. ITUC, TUAC and UNI are pressing the case for reform of financial markets, and EI is working for reform of international cooperation for Education for All. We are getting a hearing, and I guess that must be a step in the right direction.

But is there any real change in the air? That is the big question. Wherever we raise the case for reform, the defenders of business as usual come back with their tired arguments. One of the expressions heard often around Davos this week was “Don’t they get it?” The answer, unfortunately, but realistically, is “No, they don’t”.

Despite the worst financial crisis since the Great Depression of the 1930s, despite a near meltdown of the global economy just one year ago, short-term profit-taking is alive and well, and those who benefit most will do “whatever it takes” to keep it that way by blocking reforms that were agreed as necessary just a few short months ago.

There were fewer major political leaders in Davos this year. They were back home, like the US leadership trying to reset the drive for reform, like the German and Australian leaders who judged they needed to address domestic issues, or they were in London at the conference on Afghanistan.

Today, EI General Secretary Fred van Leeuwen meets in private session with Forum constituents to urge them to throw their weight behind reform of international cooperation for financing of education. Industry leaders from the real economy seem to understand that Education for All is part of the key to real and sustainable recovery. We’ll see if they are willing to help overcome those who want to block reform.

Links:

• EI warns that public spending cuts will slow economic recovery
  http://www.ei-ie.org/en/news/show.php?id=1184&theme=ei&country=global
• Global Campaign for Education urges improved education funding http://www.ei-ie.org/en/news/show.php?id=1177&theme=educationforall&country=global

Careful optimism and tough realities

At year’s end, the signals for the future of the global economy are mixed. On the one hand, recovery of the financial markets continues – with some fluctuations. On the other hand, all the experts state that unemployment will remain stubbornly high – some improvement is foreseen in the US, China, Brazil, India, Australia – but in general 2010 will be a year of confronting very tough times, for millions of working families.

Time-lags mean that public revenue in many countries will get worse before they get better, with the threat of so-called “exit strategies”, to write down debt, looming for all our public services, notably education. And great uncertainties are still there for Greece, Venezuela, Ukraine, Ireland, Italy, Spain, Portugal – the list goes on.

And the developing countries in all this!

Maybe cautious optimism for the experts. But tough, tough realities for many, many people!

Dubai World - Fast Track/Global Fund for EFA

Dubai hit the headlines last week, shaking financial markets with the news that its flagship investment company, Dubai World, had announced a delay in meeting payments on billions of US dollars of debt. As one financial newspaper put it “Dubai montre que la crise n’est pas finie” (Le Temps, Economie, 27 novembre 2009).

Much of the reporting in financial papers has turned around the question of whether Dubai is an isolated case that could be contained, or was a harbinger of more shocks to come, “like the canary in the cage”, as one paper put it. Just as the OECD and the IMF began to speak cautiously about recovery from the crisis, the announcement by Dubai World renewed doubts that spread quickly around the global community.

For the Dubai announcement came on top of other signs that all is not well. Four Eurozone countries, Portugal, Ireland, Greece and Spain, face increasing difficulty in financing their public debt. Experts say the risk of sovereign default, as in the case of Iceland, is increasing. Meanwhile, public sector budgets are being slashed, with a direct impact on schools and teachers.

Investors are hoping that if any one of the four Euro zone countries faces the dire prospect of sovereign default, the other Eurozone countries would come to the rescue. In the case of Dubai World, similar hopes that neighboring Abu Dhabi would come to the rescue remain unanswered for the time being. Meanwhile, several Central and Eastern European countries, notably Hungary, Latvia and Ukraine, face similar situations. In their case, the IMF has intervened, with the well-known problems of conditionalities, with dramatic consequences for schools and teachers.

So even if OECD and IMF Global Indicators seemed to be pointing in a better direction, there is plenty of room for doubt. As unemployment remains high in the wake of the crisis, as public revenues continue to decline, there is an additional risk of more shocks that could knock this timid recovery right off course.

Fast Track/Global Fund for EFA

Ironically Dubai was also the setting for a major conference I attended 2 weeks ago – the meeting of the World Economic Forum (WEF) Global Agenda Councils. Best known for its annual meeting in Davos every January, WEF has embarked on an ambitious programme to engage some 1500 individuals from diverse backgrounds – business, governments, civil society and academia – in a comprehensive “redesign” of global institutions. WEF Founder Klaus Schwab suggests that the world is desperately in need of such an ambitious undertaking to address three fundamental problems:
a) Global market failures;
b) Sovereign state failures;
c) Inter-governmental failures.
The initiative is pursued through 76 “Global Agenda Councils”, each composed of about 20 people. While none speaks for his or her government, agency, company, university or organization, they bring together in each Council both depth and diversity of experience. I participated in the Global Agenda Council (GAC) on Education Systems together with Kailash Satyarthi, GCE Chairperson.

There is an important difference between this initiative and the Davos annual meeting or the regional meetings convened by WEF around the world. Davos is the occasion for hundreds of panel discussions and networking, with no attempt to record conclusions – the value is said to be in the exchanges. The Global Agenda Councils, on the other hand, have been invited to bring forward recommendations, and proposals as to how those recommendations can be implemented. This makes the process more than a “talk-shop”. It is explicitly action oriented.

The intellectual and conceptual drive behind the process comes from people like Rick Sammans, who was Chief Adviser on International Economic Affairs to former US President Clinton, and Mark Malloch-Brown, former Administrator of UNDP and UK Minister of Development in the Blair and Brown governments.

The GACs hold regular “virtual meetings” using video-conferencing over the internet, with documents and opinions exchanged on a dedicated website platform. They met physically in Dubai 20-22 November.

The GACs are grouped together in nine “clusters”, the GAC on Education Systems being in the cluster entitled “Creating a Values Framework”. In Dubai, opportunities were provided for interaction within and between “clusters”. The process there was a wild ride: the opposite of sedate processes in the UN and agencies like UNESCO or the ILO. It was fast-moving, stimulating, chaotic, at times perplexing. But ultimately, I think, productive.

The important thing is that out of this process is emerging a real opportunity for breakthrough on issues which are critical to EI and its member organizations, notably on the global mechanisms for driving forward towards Quality Education for All.

With other Global Union leaders present in Dubai, I wondered at the setting in which we found ourselves. Anita Normark, General Secretary at the Building Workers’ International, was invited with some construction executives to the top of the Burj Dubai Tower, the world’s tallest building, which was supposed to open next month. Anita enquired into the working conditions of the thousands of non-unionized workers on that spectacular building site – all brought in by labour agencies from Asia and African countries. This is the darker underside of the glamour of Dubai.

That glamour has been tarnished by the announcement of Dubai World. There are lessons to be drawn here more broadly about the human cost of exuberant speculation, and about the global impact of such speculation. Dubai wanted to be the centre of world attention, constructing the tallest building, inviting the WEF, and so on. It has however become the centre of attention in a less desired and less glamorous way.

Going for growth? Or back to business as usual?

On 13 November a strong trade union delegation from TUAC met for a full morning with the OECD Liaison Committee, comprising the Ambassadors from the 30 Member countries, the Secretary General and his senior departmental colleagues. Speaking after TUAC President John Sweeney, I was asked to step in for ITUC and ACTU President Sharan Burrow, and with François Chereque, General Secretary of CFDT France, to introduce the discussion on macro-economic imbalances. One of our tasks was to challenge ”Growing for Growth” ,which is an annual OECD publication based on a neo-liberal economic approach of low taxation, minimal government and flexible wage policies. This is the statement:

Mr Secretary General, Ambassadors, Colleagues,

The OECD’s message for a stronger, cleaner, fairer global economy sounds great. The problem, of course, is how to achieve it. The G20 framework for strong, sustainable and balanced growth might be the beginning of a march leading to that goal. But for the moment it remains essentially a slogan, rather than a plan. The OECD proposal for an observatory, or mechanism, for policy coherence among the organizations included in the framework makes sense. But for it to work, it has to be determined from the outset that the “observatory”, and all six of the organizations in it, will be setting out to get the best and widest possible information and advice. Actively seeking the critical (in both senses of the word: critical input is necessary, and it is critical to have it) input of representative labour, as well as industry. OECD is well-placed to ensure this through TUAC, BIAC and their partner organizations, just as ILO is through ITUC and the IOE, for example.

The key to the “stronger” and “sustainable” is “balanced”. Much has been written and said about the global imbalances underlying the onset of the crisis. There was a conjunction of several imbalances. Together with the global imbalances in trade consumption, savings, and debt, we now know that the financial economy was completely out of balance with the real economy. We had a huge and growing imbalance in wealth and revenues, linked with imbalances in bargaining power. Essentially, the imbalances made it possible for some to reap huge benefits, while the majority of people struggled to hold on to diminishing jobs that provided more and more precarious returns.

And we had, for a quarter of a century, another imbalance – an imbalance between the private and the public sectors, driven ideologically by the notion that government was the problem, not the solution, and the populist politics of tax cuts. Getting balance between the market and the public sector as provider and as rule setter, and between resources for common public purpose and benefits for private gain, is one of the challenges. As Joseph Stiglitz says: “we need a massive rethinking of the role of governments and of the market”.

The imbalances all interact – like the components of a weather system – and we were hit by a global storm. TUAC colleagues will address one of the fundamental imbalances – growing inequity – in the next session.

A year ago, when the storm hit, we talked a lot about paradigm shift. Well, there has been paradigm shift. But not in the way we expected! We have not in fact shifted into a new and more balanced paradigm. On the contrary, we have shifted into a paradigm were the paradox of jobless recovery can actually occur, where financial markets can move into a new cycle of massive profit-taking. Worldwide monetary-easing and stimulus packages have created new opportunities for speculative profit-taking, while the motors of our economies splutter as they try to get going again – some more successfully than others. (Imagine a line of vintage cars starting up for a rally – some better than others!) Roubini explained (last week in the FT) the mechanics of this new paradigm. It is clearly not sustainable. Dominique Strauss-Kahn said in Rome a week ago: “there is no recovery until there has been recovery of jobs!” Slow recovery of the real economy means immense ongoing economic and social costs in each community. It also means diminishing public revenues, even while finance ministries and some international officials talk of “exit strategies” which will put more pressure on public resources.

This new, and I submit, unwanted paradigm, (let us agree on that) actually enables a further massive shift of resources from the many to the few, from future generations to the present – the very opposite of what makes sense for a stronger, clearer and fairer global economy.

What to do?

Our message today goes to the governments represented around this table. Standard finance ministry responses will not get us out of this. There has to be collective rethinking of the role of governments and of the market, and a combined macro effort to achieve better balances, equitable productive balances. In that macro effort, ethics and economic good sense lead in the same direction.

And our message goes to the OECD. Your paper refers to previous work in “Going for Growth”. We’ll be frank. “Going for Growth” will neither give OECD added value in its contribution to the global effort, nor help to change the unwanted paradigm. “Going for Growth” which also drives the OECD country reviews, will not help countries to achieve the balances that are crucial to sustainable recovery. OECD has built a reputation on indicators. But number crunching alone won’t do it, especially if you’re crunching the wrong numbers. GDP per capita as a benchmark does not give us the information we need, as you said Mr Secretary General. It does not give the same information as the median wage, which actually reveals growing inequality in the USA (the GDP benchmark) over time.

But OECD does have a major contribution to make because it is one organization that could lead the way in a whole of government approach. OECD is the only agency taking that approach. Your work on education, on labour and employment policy, on migration, on health, and on many other areas, gives OECD added value in the endeavor for policy coherence. OECD and ILO can work together to respond to the G20’s call for a new surge of education and training. Human development is the key to strength, fairness and sustainability. It’s going to need new and open thinking, and the contribution of actors like us.

Thank you.


Note : ”Growing for Growth” is an annual OECD publication based on a neo-liberal economic approach of low taxation, minimal government and flexible wage policies.

IMF Head : “The crisis is not over”

“There is some good news, but the crisis is not over” said IMF Head Dominique Strauss-Kahn, meeting with trade unionists, business leaders, academics and the Italian Labour Minister in Rome last Friday. “There is no recovery until there is recovery of employment”, he told the Italian media afterwards.

Sharing the platform with Strauss-Kahn, ITUC General Secretary Guy Ryder agreed that the G20 had brought the world “back from the brink” “but after the rhetoric of desperate men in October 2008, it is back to business as usual” said Ryder. “The financial sector is showing just 12 months later a capacity for collective amnesia”, he added.

Strauss-Kahn said the time-lag between recovery of the financial sector and recovery of the real economy would be on average 12 months (10 months in some countries, 14 months or more in others), and that recovery was likely to be sluggish at best.

Strauss-Kahn recognized in response to the criticism of ITUC, EI and Global Campaign partners that IMF conditionalities continue to be an issue in countries receiving IMF bail-outs, particularly low-income countries. Giving a detailed explanation of the IMF’s approach, he acknowledged that more needed to be done to create “social conditionality”. He said that 80 percent of IMF missions now met with national trade unions. (I noted the need for EI member organizations to make sure they are included in these national consultations). He now met personally on a regular basis with a group of 30 NGOs, including Oxfam, and was also reaching out to the academic community.

Strauss-Kahn also warned against premature moves by governments towards “exit strategies”, which mean attempts to draw back public debt used to finance stimulus packages. These “exit strategies” will pose major problems for the public sector down the track, because they will put immense pressure on public sector budgets.

As the world economy emerges from the biggest crisis in 80 years, resources for quality public services will become one of the defining issues of our time. Strauss-Kahn created a surprise by announcing that even the IMF had begun a study of taxation on international financial transactions, a concept that had been dismissed by orthodox economist before the crisis. The Global Unions’ proposed study on Corporate Taxation and Resources for Quality Public Services could not be more timely.

Speaking on the previous day in Rome on behalf of TUAC, I pointed out that social dialogue with unions and industry was considered to be normal when the Marshall Plan was launched for post-war reconstruction in Europe. “It should be just as normal for trade unions to be at the table of the G20 today, and especially at G20 created bodies like the Financial Stability Board (FSB)” I suggested, or as Guy Ryder put it “the Financial Secrecy Board”. So, yes, progress to report from Rome, but there is much hard work still to be done, with systemic advocacy by Global Unions linking closely with national action through their affiliates.

Financial recovery?

How can banks announce record profits and pay out massive bonuses again – so soon after the storm of October 2008 to March 2009? I put this question to Oliver Roethig, Head of the Finance Sector at UNI Global Union.

“It’s simple”, said Oliver “all these fiscal stimulus packages are financed by government debt, and banks organize the bond issues. Meanwhile monetary stimulus with interest rates near zero means money is cheap. Banks make money when the real economy goes up, and they make it when it goes down – they win both ways”, he concluded.

Oliver’s comments help to explain the paradox of financial recovery while the real economy struggles. It also checks out with a series of articles in recent days questioning the strength of the recovery in financial markets.

Writing in the New York Times, Wolfgang Münchau cites two key indicators showing that the US stock-market was over-valued last month by 35 to 40 per cent (IHT, 19/10/09, quoting Andrew Smithers: “Wall Street Revalued: Imperfect Markets and Inept Central Bankers”, Wiley 2009”.

In other words, there is a new speculative bubble, just as there was in the lead-up to 2007-08. This new bubble could burst much more quickly than the last one, plunging financial markets back into chaos before the real economy gets a chance to recover.

The history of earlier depressions (1837, 1873 and the great depression of the 1930’s), tends to confirm this risk. Joe Nocera, writing on the same day, pointed out that some markets moved abruptly upwards in the ‘30s. “We tend to forget”, Nocera writes, “between 1935 and 1937 business began to boom again”. But in September 1937 the market crashed and the depression took hold again (Nocera: “In the ‘30s the experts were blind”, IHT, 19/10/09).

So we all need to be wary of talk of recovery until it is based on substance – which means recovery of the real economy.

Here is the real question. Writing on the same day in the Financial Times, under the heading “The Free Market is not up to the job of creating work”, Mort Zuckerman, editor in chief of US News and World Report states: “Today there is no evidence of job creation, quite the opposite”, before adding “labour markets have not faced such problems in more than 70 years”.

As global unions put it to G20 leaders in Pittsburgh sustainable recovery will come not from financial speculation but from consumer demand, based on full employment, decent work and a just transition to a green economy.

Education and training are critical to such a sustainable recovery of the real economy. Everybody - employers, labour leaders and governments - seems to agree with that proposition. But is that broad consensus being translated into policies and programmes, backed by adequate investments?

“Bank bonuses make a comeback”

This was the front page headline of the Wall Street Journal Europe on Wednesday.

Major US financial firms are “on-track” to pay about $140 billion this year. The Wall Street Journal analyzed 23 publicly listed firms so that figure does not include unlisted Hedge Funds or Private Equity firms!

The Journal says that asset managers and traders can expect to earn even more than they did in 2007, before the crisis. This week, JP Morgan also announced record profits for the third quarter. Stock markets have rebounded.

Yet unemployment keeps rising. So what is happening? A couple of months ago this blog dismissed the idea of a “jobless recovery”. But it is actually happening. After all the damage caused by irresponsible behavior, after all the massive government bailouts, the financial sector has gone back to earning big bucks. But millions of working families continue to face the consequences – lost jobs, lost houses. Thousands of small and medium enterprises are struggling to keep going. Local municipalities face cuts in revenues and cuts services.

There is a pervasive sense of exasperation – in the media, among political leaders. The exhortations of G20 leaders have evidently had little effect. While the opportunity to reap short-term profits is there, people in the finance sector will take what they can.

Back to that headline. US$ 140 billion would provide more than enough funding to meet the objectives of the Millennium Development Goals, including Education for All.

Today, we call on EI members to support the Global Call to Action against Poverty.

Somehow, we have to find a way of getting priority for equity and justice to the top of political and economical agendas!

G20 : They were singing our song

The G20 Leaders’ Statement from Pittsburgh reads well. They put “quality jobs at the heart of the recovery”. They will “strengthen support for the most vulnerable”. They will establish “a framework for strong, sustainable and balanced growth”. As they said in their first sentence, they met “in the midst of a critical transition from crisis to recovery, to turn the page on an era of irresponsibility…”. The ITUC was quoted as saying: “the Leaders got it” – on the need to place the emphasis on jobs, as the path to sustainable recovery. They also said some good things about training and skills. But the contribution of general education to society was not mentioned. They endorsed a proposal from President Obama to convene a meeting early in 2010 of G20 Employment and Labour Ministers, to support the ILO jobs pact and consider skills development policies. They reaffirmed their “historic commitment to meet the Millennium Development Goals”.

These commitments and affirmations were not included by chance. They were the result of a coherent case put toward systemically by Global Unions with significant work in many different capitals and at the EU. In Pittsburgh, in the space of two hours, labour leaders met with 10 out of the 20 leaders, including Presidents Obama of the US and Lula of Brazil, as well as the heads of key international agencies. The advocacy work was done, and done well.

Today the ITUC and TUAC stated: “Progress in Pittsburgh, but still far to go", especially on measures to give real assurance that it will never happen again. But youth unemployment was not mentioned.

Nevertheless, Global Unions got several statements they wanted. Now comes the hard part – getting governments around the world – whether in the G20 or not, to follow through on the commitments. This is going to be tough.

If we read the G20 statement carefully, it’s quite specific on issues like financial regulation. Remember, the G20 is still essentially the creature of Finance Ministries and Central Banks. On jobs, skills and training the statement is long on principle, “singing our song”, but short on specifics.

The G20 will replace the G8 as the preeminent summit on global economic issues. 2010 will be the transition year, with Canada hosting the G8 and G20 in June. So this gathering of the heavy hitters in the global economy is here to stay. But what will count most is what happens far below the summit – in the countries and communities of the world.

Link for G20 statement: http://www.pittsburghsummit.gov/mediacenter/129639.htm

Pittsburgh : the recovery summit ?

This week, on 24 and 25 September, Pittsburgh will host the third G20 Summit since the outbreak of the financial crisis just over a year ago. Will this be the recovery summit? Will these 20 Leaders take measures to prevent a repeat of the near financial meltdown of 2008, and most of all, lay the groundwork for sustainable recovery of the global economy?

Remember, even if stock markets have been rising, and some indicators in the US and Europe have removed the worst of gloom and doom, unemployment is still on the rise, and public sector budgets are being hit badly in many countries. In some case, as in Central and Eastern Europe, public revenues have already dropped dramatically. In other areas, public revenue cuts are only now starting to bite because of time lags. Even where national stimulus packages have helped, local government revenues have dropped drastically in many countries, in the US, Chile and Sweden, for example, and that means schools and teachers have been hit.

Earlier this month, there was a lot of talk of “exit strategies”, which is code for winding down stimulus packages and cutting back on public spending in order to reduce debt. There is less talk of that in the final days leading up to the Summit. Australian PM Kevin Rudd, UK PM Gordon Brown, French President Nicolas Sarkozy and US Treasury Secretary Tim Geithner, have all said that talk of ending stimulus packages is premature.

Some issues being highlighted:

From leaked letter from the Chancellor of Germany, the PM of Britain and the President of France:
3Stop financial practices that lead to the crisis, including inflated and inappropriate bonuses.

From leaked letter from the White House (by the US “Sherpa”, the top official advising the President):
3Address imbalances in the global economy
3Establish a framework for sustainable growth
3Prioritize jobs and skills for the 21st century
3Strengthen recovery in the poorest countries

By the IMF Director General:
3Rebalance growth – move away from countries having large surpluses while others have large deficits. The Ambassador of China to the US, however downplays the issue of global imbalances, and calls for action to avoid protectionism.

By the World Bank President:
3Don’t leave the poor behind

The US delegation, host for the Summit, is circulating a proposal to support the ILO Jobs Pact and to convene a meeting of ILO Labour Ministers and top education officials in the US in early 2010. The Obama administration underlines that skills development is fundamental to durable recovery. If this proposal is approved by the other G20 leaders, we have a good basis for moving forward with EI’s agenda – Invest in education: the smart strategy for recovery.


Source: Global Unions Washington Office

Links:

Global Unions Pittsburgh Declaration (pdf) http://download.ei-ie.org/Docs/WebDepot/0909t_g20_Pittsburgh_en.pdf

Proposed US workforce policy proposal (pdf) http://download.ei-ie.org/Docs/WebDepot/G20%20Pittsburgh%20US%20proposal.pdf

Letter by Michael Froman (pdf) http://download.ei-ie.org/Docs/WebDepot/Froman%20Letter%20on%20Pittsburgh%20Summit%20Agenda.pdf

Letter by Angela Merkel, Gordon Brown, Nicolas Sarkozy (pdf) http://download.ei-ie.org/Docs/WebDepot/lettreMerkelBrownSarkozy.pdf