The “Great Recession”: from a financial crisis, to a jobs crisis to a new labour market model | Canadian Labour Congress

Introduction

On September 15, 2008, the collapse of an American investment bank triggered a paralysis in the global financial system that turned into a global economic and jobs crisis.

Once the financial crisis on Wall Street hit Main Street, the crisis spread rapidly crippling economies, reducing business and global trading and — within a few months — forcing more than 30 million people out of work globally.

In the last two years, all around the world, there has been a dramatic loss of good jobs, with increases in precarious employment situations, along with a rise in numbers of the working poor. The ILO estimates that 100 million women and men have fallen into absolute poverty in the last year.

In Canada, up to half a million Canadians working full-time have been laid off during the jobs crisis. There were still about 400,000 fewer permanent jobs in the spring of 2010 than before the jobs crisis began.
The origin(s) of this jobs crisis

This recession, the deepest global recession since the Great Depression of the 1930s, is blamed on the unacceptable behaviour of the financial industry and an insatiable greed for profit. But the financial industry is not alone in holding the blame. This over-the-top drive for profit was facilitated by political allies who deregulated financial rules and removed protective regulations that were in place precisely to prevent another financial collapse like the Great Depression.

Many are now calling for the re-establishment of rules and regulations, such as the elimination of short-term performance bonuses and better control of cash and assets held by banks.

The G20 Summit will explore what is needed to prevent another financial crisis and rebuild the financial industry on a more solid basis. While re-establishing strong regulations to protect the world against another crisis is necessary, more will is needed to address deeper fundamental problems in our economy.
More needs to be done

Over the last three decades, as global economic growth was fuelled by vast increases in consumption and debt accumulation, deep imbalances developed in trade between countries and in the distribution of wealth within and among them.

As the global economy grew, workers’ wages stagnated or did not keep pace with productivity. This contributed to huge imbalances in countries where the income gap deepened, with the rich getting richer and the poor getting poorer.

Meanwhile, in order to strengthen exports, low wage countries kept earnings low, thus accelerating trade imbalances with other countries.

To correct these imbalances labour markets everywhere must be made to provide full employment and decent work for everyone.
The challenge

Strong labour standards and unions promote greater economic equality and fairness at work. Labour standards further improve the economic growth and efficiency of labour markets.

The liberalization of trade and investment flows has also brought about severe downward pressures on labour standards and contributed to the erosion of worker and trade union bargaining powers across the global economy.

Other key components of the current growth model, such as privatization, deregulation of domestic markets and the deliberate “flexibilization” of the labour market, have further contributed to the weakening of bargaining rights, minimum wages, social protection, such as unemployment benefits, and labour standards.

While labour rights and collective bargaining seem to be well-established in a some countries, the general trend is toward the opposite. Private sector union density is in sharp decline almost everywhere in the industrial world and remains low in most rapidly industrializing developing countries.

To reverse this trend, the G20 governments must abandon the labour market model that is now in place and adopt strategies and policies to re-balance the distribution of wealth both within and among countries.
Action points

With the bringing together of major economies from the North and South the G20 Summit is in a good position to foster better co-ordination of macroeconomic policy and to prevent a “Great Recession” from becoming another “Great Depression”.

The G20 could build a framework for effective regulation of the global financial system. At the Pittsburgh Summit Its member governments acknowledged the jobs’ crisis, invited the participation of the International Labour Organization (ILO) and requested input from labour Ministers to the G20 Summit.

In order to help re-balance the distribution of wealth within and between countries, G20 leaders must ensure that there is no return to “business as usual” and call on immediate action to:

* tax speculative trading through the introduction to a financial transaction tax (FTT), also known as the Robin Hood tax,
* commit to a core set of labour standards and rights, backed by an effective ILO system of surveillance,
* strengthen the ratification and implementation of ILO conventions on collective bargaining, tripartism, minimum wages, labour standards and social protection,
* accelerate international cooperation for developing global regulations on banks, tax havens, etc.
* acknowledge the link between international trade, investment and finance.
http://www.canadianlabour.ca/news-room/publications/great-recession-financial-crisis-jobs-crisis-new-labour-market-model