Souvenirs de Cannes

I was in Cannes last week with CLC President Ken Georgetti for the G20 Labour Summit.  (I know, tough job.)

This event was arranged by the International Trade Union Confederation with the support of the French Presidency of the G20.

Our group as a whole, consisting of labour leaders from the G20 countries and leaders of  the International Trade Union Confederation and Global Unions,  met with Jose Manuel Barrosso, President of the European Commission; and the heads of the IMF, OECD, ILO, OECD,  UN  and WTO . Small sub groups of labour leaders met with some 14 heads of government. Ken Georgetti, for example, had the opportunity to meet for about half an hour with each of President Obama; Australian Prime Minister Julia Gillard; President Sarkozy of France; Prime Minister David Cameron ; and Dilma Rousseff of Brazil. (We even met with Harper before the summit.)

If the outcome of the G20 disappoints, as indeed it does, it was not because of lack of effort on the part of the international labour movement.

There was one positive, admittedly procedural, outcome.  The political communique read in part as follows;

“We are determined to strengthen the social dimension of globalization. We firmly believe that employment and social inclusion must be at the heart of our actions and policies to restore growth and confidence. We therefore decide to set up a G20 task force which will work as a priority on youth employment. We recognize the importance of social protection floors in each of our countries, adapted to national situations. We encourage the ILO to continue promoting ratification and implementation of the eight core Conventions ensuring fundamental principles and rights at work.  Convinced of the essential role of social dialogue, we welcome the outcomes of the B20 and L20 and their joint statement.”

This statement directly reflected the push by unions for an explicit employment and labour rights dimension to the ongoing policy co-ordination role of the G20, which would otherwise be confined to macro-economic policy co-ordination through the IMF, and financial re-regulation through the Financial Stability Board.   The G20 have now effectively institutionalized a continuing role for the ILO and the OECD with respect to employment issues, and the task force on employment will  involve the “social partners” and prepare a report for G20 labour ministers in the run-up to the next G20 Summit.

The champions of “social dialogue” and attention to the “social dimension”within the G20 have consisted of the core European countries with long-standing related corporatist traditions – notably Germany, France and Italy, despite their conservative governments – joined by Australia, the (very modestly)  union friendly Obama Administration, and, importantly, developing countries with left of centre governments with close ties to unions ie Brazil, Argentina, and South  Africa. This has been enough to overcome opposition from the most strongly neo liberal G20 countries, the UK and Canada.

Not to be naive, a task force on employment involving the “social partners” is a very far cry from an effective international agenda to re-connect productivity growth to wages, to maximize the creation of good jobs from any given level of growth, to reverse rampant inequality, and to arrest a descent into a new recession. And we are very, very  far from achieving a real floor of labour rights and social standards across the G20 and the global economy. (Consider only that Saudi Arabia is a G20 member!) But at least that part of the G20 agenda crafted at the worst stage of the crisis in from London and Pittsburgh which recognized the economic and human importance  of the “the crisis before the crisis ” – stagnant wages, precarious work, rising inequality – was modestly revived in Cannes.

When it comes to the core G20 role of macro-economic policy co-ordination to avert a relapse into recession, the Cannes summit was, of course, largely sidelined by the Euro crisis and its associated political divisions, and by continuing lack of agreement on whether the priority is growth and jobs, or fiscal austerity.

The G20 communique put it both ways.

On the one hand:

“Taking into account national circumstances, countries where public finances remain strong commit to let automatic stabilizers work and take discretionary measures to support domestic demand should economic conditions materially worsen. Countries with large current account surpluses commit to reforms to increase domestic demand, coupled with greater exchange rate flexibility.”

That could be read as a signal for the US to adopt Obama’s jobs program, for Canada to act, and for Germany, Japan and China to boost their domestic economies to allow others to export more so as to alleviate the need for domestic austerity.

On the other hand,

“Advanced economies commit to adopt policies to build confidence and support growth and implement clear, credible and specific measures to achieve fiscal consolidation”

That could, and will, be read, as endorsement of the intensified austerity policies now being imposed in France, Italy and throughout the Eurozone which will tip that region back into recession, perhaps sink the European banking system, and likely precipitate a new global downturn.

In guarded fashion,  even the IMF and the OECD will concede that unalleviated austerity will precipitate a new crisis. But the Euro area cannot summon the political will to avert a disaster ; the US is gripped by political deadlock; and China is not prepared to revalue its currency so as to balance global trade.

Underlying this political paralysis is acute fear of “the markets.”  Even as it is recognized that austerity all round will sink the banking system and lead to a collapse of  demand, the bond markets are demanding that some governments – France, Italy, Spain, Greece – cut spending and  lower wages through an “internal devaluation” to gain a larger share of the soon to be shrinking global market.

The G20 have been slow to reign in unregulated global finance. The communique did, however,  call for fulfilling past promises:

“We have decided to develop the regulation and oversight of shadow banking. We will develop further our regulation on market integrity and efficiency, including addressing the risks posed by high frequency trading and dark liquidity. We have tasked IOSCO to assess the functioning of Credit Default Swaps markets…. We will not allow a return to pre-crisis behaviours in the financial sector and we will strictly monitor the implementation of our commitments regarding banks, OTC markets and compensation practices.”

Well, maybe Mark Carney will run with those balls.

There was one encouraging note at Cannes that governments are prepared to face down finance to a limited degree. Support for a Financial Transactions Tax has been won from Europe and most major developing countries, leaving the US, the UK and Canada somewhat isolated in their adamant opposition.