Need for adequate regulation, not more reckless deregulation Although Global Unions have long called for the IMF to promote greater regulation of the global financial system, it was only this past month that IMF managing director Dominique Strauss-Kahn seemed to echo the international trade union movement’s demands for better regulation.

“This crisis is the result of regulatory failure… We must ensure it does not happen again,” he wrote in an article published in September.

Global Unions’ statement urges the IFIs’ member-country governments gathering in Washington next weekend to mandate the IMF to develop appropriate international regulatory frameworks of the financial sector and coordinate national regulatory reforms. The process must include consultations of organizations such as the ITUC, whose members are sustaining heavy job losses because of the financial debacle. Said the
ITUC’s Guy Ryder: “It would be unacceptable that the private financial sector, which put the world economy into the current mess, would have greater influence over the design of new regulations than those who are suffering the consequences of the inadequate regulation that the private institutions lobbied for.”

Global Unions have also demanded that the World Bank cease to use its Doing Business publication to encourage developing countries to deregulate their economies, citing its abuse in IFI country reports and
by many outside the IFIs eager to do away with any and all labour market regulation. “It is ironic that in the past four weeks the World Bank has been heavily promoting the 2009 edition of its bible of across-the-board deregulation, Doing Business, at the same time that the financial sector is collapsing in the US and other countries because of inadequate regulation,” said Ryder.

The ITUC has frequently noted that Doing Business (DB), which is the World Bank’s highest circulation publication, falsely claims that the deregulation it promotes results in higher economic growth and increased
job creation. Last June, the Bank’s own Independent Evaluation Group agreed with this assessment when it “found no statistically significant relationships between the … DB indicators and growth rates” and that, “no significant association emerged between … [the DB indicator on] employing workers and employment”. By giving the highest ratings to countries with the least labour regulations, DB has been used to pressure developing countries to do away with provisions such as minimum wages, recourse against unjust dismissal and mandated contributions to health care or old-age pensions, thus adding to the difficult situation already faced by many workers in these countries.

Observing that the IFIs will face exceptional global challenges at this year’s annual meetings, Global Unions

re asking the IFIs to respond more fully to the needs and priorities of all of their member countries.

Said Ryder, “The food and financial crises and other challenges like climate change will have stronger adverse effects on poorer countries. The IFIs must reform their governance structures so that developing countries have an equal voice in determining how to confront these problems.”

Commenting on the discussion on governance reform expected to take place at the World Bank during the meetings, Ryder added, “Nothing short of voting parity for developing countries is acceptable. The lender-borrower relationship that has defined decision-making in the IFIs is no longer appropriate given the global scale of these challenges.”

The ITUC represents 168 million workers in 155 countries and territories and has 311 national affiliates.