Bob Harris, EI's Senior Consultant to the General Secretary, shares information and commentary on the impact of the financial crisis on education funding, and how education can be part of the solution.
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!
The G20 “shrinking agenda”: how the Canadian host gutted the G20 of substance
Labels: EFA, G20, G8, GUFs, ILO, ITUC, MDGs, OECD |
EDUCATION RESOURCES AND TAXATION – A POLITICAL STRATEGY
Labels: G20, IMF, ITUC, MDGs, OECD, TUAC |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
IMF Head : “The crisis is not over”
Labels: G20, IMF, ITUC, TUAC |“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.
G20 : They were singing our song
Labels: G20, G8, ITUC, MDGs, TUAC |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
Thinking about the unthinkable
Labels: G20, Global Unions, ITUC, Krugman, TUAC |A few weeks ago I wrote about the notion of a “jobless recovery”, ie a recovery for the financial markets, but not for the real economy, nor for employment (see blog posting of 10 June). I concluded that a “jobless recovery just doesn’t make sense”.
Well, as we head into the Northern summer break, that is just what seems to be happening. Stock markets are up – in many cases to the best level in over 6 months. Banking institutions like Goldman Sachs have announced – believe it or not – record profits, and have paid back their bail-out money to the government. Bonus payments to high fliers are back up too – despite castigation from political leaders including President Obama of the US, and Chancellor Merkel of Germany. This week French Finance Minister Christine Lagarde said banks that have started paying guaranteed bonuses again are an “absolute disgrace” and should be reined in by governments at the next G20 Summit in September (www.FT.com, 22 July 2009).
Meanwhile, announcements of job cuts and lay-offs come out daily in country after country, affecting local communities across the planet.
Writing in the New York Times a week ago, Paul Krugman stated: ’the American economy remains in dire straits, with one worker in six unemployed or underemployed’, even as Goldman Sachs announces a record quarterly profit and a return to outsize bonuses (Paul Krugman: “The Joy of Sachs”, NY Times, 16 July 2009, www.NYTimes.com). Krugman writes that rescuing the financial system without reforming it will only make another crisis more likely.
Six months ago, Trade Union leaders at the Council of Global Union, the ITUC and TUAC felt that the crisis was the occasion to push for a resetting of balances – a better balance between employee bargaining power and financiers, a better balance between resources for the public and private sectors, a start on the tough issues of global imbalances in trade and financial flows.
What we are seeing instead is a return to the very behaviour that led to the crisis in the first place. The industrial and financial landscape has been shaken up, but is settling back into a new configuration with the same underlying structure.
“Jobless recovery” seemed unthinkable. But it may be upon us – at least until the next crisis.
ILO Jobs Pact; ITUC updates on the crisis
Labels: G20, G8, ILO, ITUC, UN |The ILO Jobs Pact adopted in Geneva on 16 June 2009 provides guidance for unions to negotiate with governments and employers to maintain and create employment. The Jobs Pact can be found at http://www.ilo.org/wcmsp5/groups/public/---ed_norm/---relconf/documents/meetingdocument/wcms_108456.pdf. The Pact emphasizes the importance of training and skills developments and support for quality public services.
The Pact was also recognized at the recent G8 +20 Summit in Italy, and the ILO is invited to attend the third G20 Leaders Summit in Pittsburgh, 23-24 September.
The ITUC is keeping all national affiliates informed on the Jobs Pact as well as key international efforts to address the consequences of the financial and economic crisis. Details of the latest ITUC circular describing key events and developments at agencies like the IMF and the Financial Stability Board (FSB) can be found at http://www.ituc-csi.org/IMG/pdf/No_37_-_Global_Crisis.pdf. (It is available in English, French and Spanish). For the ITUC evaluation of the recent UN Summit on the Financial and Economic Crisis and its Impact on Development go to http://download.ei-ie.org/Docs/WebDepot/Trade%20Union%20Evaluation%20on%20the%20Outcome%20of%20the%20UN%20Conference%20on%20the%20Economic%20Crisis.doc.
UN Summit on financial crisis fails to rise to the challenge
Labels: ITUC, MDGs, UN |The United Nations is the only universal institution bringing together all the nations of the earth. It has a priori more legitimacy than the G20. The disappointment in the UN’s efforts to address the financial crisis, and especially its impact on developing countries, are therefore all the more disappointing.
The UN conference on the world financial and economic crisis and its impact on development provided for continued discussion, but in no way measured up to the extreme gravity of the situation, civil society participants said as the conference ended on June 26.
Gemma Abada, ITUC representative to the UN in New York said: “the titanic is sinking and governments are thinking about the arrangement of the deck chairs”. There is a major gap between the penetrating analysis and recommendations of Nobel Prize winner economist (and former World bank Chief Economist) Prof. Joe Stiglitz, and the outcomes approved by governments. Preparations for the conference had been in disarray with competing drafts for an “outcome document”. The conference was deferred at the last moment from the first to the last week of June. Finally, it was attended by 140 out of the UN’s 192 member states, and only one head of government (from Ecuador). The document made some references to the need to achieve the MDGs and to defend education and health (points that were strangely missing in the General Assembly President first draft). But as Gemma Adaba of the ITUC said, the declaration was “so unclear on decisive action”.
The UN Secretary General has exhorted member states to take decisive action. But they have been found to be wanting. The Pittsburgh G20 summit on 24-25 September will be “crunch time” for global coordination of an effective response to the crisis. The UN General Assembly will open its general debate in New York on 22 September and G20 leaders are expected to attend a high level session of the Assembly on 26 September. So there is the prospect of moving from decisive action at the US-hosted G20 Summit in Pittsburgh to broader legitimacy for global action at the UN. Such decisive action is a year overdue, for the full extent of the global crisis became apparent in September 2008. Whether the leaders of G20 and other nations will at last rise to the occasion remains to be seen.
Links:
The Outcome document is available in English, French and Spanish at the following website:
http://www.un.org/ga/search/view_doc.asp?symbol=A/CONF.214/3&referer=http://www.un.org/ga/econcrisissummit/&Lang=E
Recent headlines: Financing for Development Civil society engagement http://www.ffdngo.org/
World Bank confirms sharp drop in financial flows to developing countries
Labels: developing countries, G20, Global Unions, IMF, ITUC, World Bank |Six months ago many in the South thought the financial crisis was mainly a problem of the North. In February, however, the head of the IMF, Dominique Strauss-Kahn warned that the impact on the developing countries could be devastating. In March, financier and philanthropist George Soros wrote in the Financial Times that the G20 had to take action to prevent both a financial and a human catastrophe for the countries of the South. This was in the lead-up to the London G20 Summit which announced a trillion US dollars of funding for the IMF to support countries in difficulty – developing countries of the South, and Central and Eastern European countries.
Now the World Bank confirms the warnings. In its Annual Global Development Finance report released yesterday, the bank says private capital flows to developing countries will fall almost to just one quarter of 2007 levels – to $363 billion for all countries from $1,200 billion in 2007. This drop in private flows is huge.
But it comes on top of a likely sharp drop in Official Development Assistance from government aid agencies – that is the pattern of previous downturns in the North. Moreover, NGOs and foundations have contributed significant resources for development in recent years, but they have been hit by the crisis too, especially US endowments.
The IMF funds are not the solution. Firstly, the actual contributions have not yet reached the one trillion ($1,000 billion) level promised in London. Secondly, they are being allocated subject to “old” IMF conditions, notably cuts in public sector spending. A colleague from Angola told the ITUC Executive Board yesterday that her government had announced a 30 percent cut in public sector spending for next year – and other developing countries will do likewise.
The World Bank said yesterday that developed nations are misguided in focusing efforts on restoring demand in their own economies. Prospects in developing countries will impact on growth prospects in the developed countries too, the Bank warns.
We agree. The trade union movement said that all along – see the Global Union Declaration to the G20 Summits in Washington and London.
When will they listen? And when will they act?
Sources: Global Unions Washington office, Financial times
Conflicting views on recovery – G8 Finance Ministers versus reality
Labels: G8, IMF, Italy, ITUC, OECD, TUAC |This mild optimism does not reflect reality. The day before, John Evans, TUAC General Secretary, told the Council of Global Unions that unemployment will double over the next two years. The optimistic projections coming out from Finance Ministries, the IMF and the OECD all assume that the banking system will start working again. This is not happening. The view that recovery will come soon is based on no rational analysis, but rather on wishful thinking. Unemployment figures just received by ILO and OECD confirm this reality. ILO has revised its estimates again, now up to 59 million extra unemployed. OECD reported an increase in unemployment of 7.8% in the OECD countries in April alone.
Guy Ryder, ITUC General Secretary, reported to the CGU General Secretaries on Friday that the situation had become more not less bleak. “I am increasingly concerned that we may be sleepwalking into something horrific, not just for 2 or 3 years, but for the next 2 or 3 decades” Guy said.
G8 Development Ministers also met in Rome on Friday.
Link: Summary of global unions’ view http://www.actionforglobalhealth.eu/news/g8_representatives_of_civil_society_met_minister_frattini
A “jobless recovery”?
Labels: BWI, ITGLWF, ITUC, UNI, WEF |Real recovery will have to be led by consumers, and that requires raising incomes, with more equity of distribution. One of the big challenges said Neal Kearney of ITGLWF is “how to keep workers in the middle of a recession: downturns should be used for upskilling”. Philip Jennings of UNI stressed the risks of youth unemployment and threats to social cohesion. Anita Normark of BWI said we had to deal with climate change while charting a road to recovery. Tim Noonan of ITUC gave an example of the impact of an unexpected event such as the outbreak of swine-flu on employment. Lee Howell from the WEF staff made a remark that caught my attention “the current recession is transformational. But we don’t know what’s on the other side”. Rick Samans, WEF Managing Director, agreed that the global community was accumulating risks. “One of the lessons from this crisis is that we should be on the watch for other big risks” he said.
In an attempt to get a better understanding of global risks, the WEF has launched an ambitious network of Global Agenda Councils, some 70 of them, linking together about 1500 leaders from all regions, from business as well as civil society, to discuss challenges ranging from economic balances, to ecosystems, to pandemics, to terrorism. Global Unions are invited to play an active role. EI will be invited to councils on Skills Gap and Technology and Education.
The meeting concluded with a discussion that I initiated on “Investment in people” and what that really means. For talk of a “jobless recovery”, is like saying a “recovery without people”. And that just doesn’t make sense!
Next: Shaping up for the G20 in Pittsburgh
Education International 2009