Do not pass the burden of the global economic crisis onto the workers and people!

2009-03-30 00:00:00

The G-20 member countries, which comprise 85% of global gross national product and 80% of world trade, met last November in Washington, D.C. They will again hold their leaders’ summit in London on coming April 2. In light of worsening global economic crisis, these member countries are claiming their role as “problem solvers.” However, we the undersigned organizations are deeply concerned about the G-20 members’ analysis of and proposed solutions to the global crisis. And we strongly urge refrain from passing economic burden onto the workers and people.

In preparation for the London Summit, the Finance Ministers and Central Bank Governors Meeting was held last March 13 and 14. The meeting produced a communiqué that outlined cooperation in areas of “Restoring Global Growth” and “Strengthening the Financial System,” such as: fight all forms of protectionism, maintain free trade and investment, expand fiscal stimulus packages, disclose information about hedge funds or their managers, adopt regulatory oversight of all credit rating agencies and compliance with the International Organisation of Securities Commissions (IOSCO). These areas are expected to be the main agenda at the G-20 London Summit and will be central to the ensuing joint declaration.

However, we the undersigned organizations question whether the aforementioned measures for review at the Summit are in fact genuine solutions. We also question whether the leaders of the G-20 and other invitees such as the World Trade Organization (WTO), the International Monetary Fund (IMF), the World Bank and other institutions should in fact claim themselves to be the “problem solvers” of the global crisis. These institutions, in short, are all complicit in promoting neoliberal policy reforms, free trade and free investment, and financial globalization. Moreover, while the G-20 pronounces “the root causes of the current crisis” as being “unsound risk management practices, increasingly complex and opaque financial products” and others areas, we the undersigned maintain that the recent world economic crisis in fact stems from a systemic contradiction intrinsic to capitalism so nobly advanced by these institutions. And so, action measures for consideration by the G-20 are merely temporary fixes to sustain a “failed” system—not a fundamental overhaul of the system that created the current crisis. We hold that genuine solutions must begin by safeguarding the livelihood of workers, their families and people.

Therefore, on the occasion of the G-20 London Summit, the Korean Confederation of Trade Unions (KCTU) and social and civil society organizations of South Korea urge more fundamental measures in the fight against the global economic crisis:

First, regulation and control over financial capital must be profoundly strengthened. The system for financial capital to control real economy, one of the root causes of the current crisis, must be dismantled and the central bank must be subject to democratic and public control, and speculative financial capital must be controlled strictly. To enforce this, a global taxation system must be established for stock trades and all financial transactions and trades. At the same time, banning of speculative financial products, reduction of investment banks, elimination of tax heaven, and public control on credit rating agencies must be initiated. Moreover, the South Korean government’s enforcement of the Financial Investment Services and Capital Markets Act and the plan of easing separation of banking and commerce, which liberalize and inflate the financial capital, must cease immediately, while at the same time regulatory oversight of fiscal and speculative capital must be strengthened. We the undersigned also oppose ‘unconditional bailout’ to banks and financial institutions, which in effect shift the damages caused by speculators onto the public. Such vast transfer of wealth is tantamount to taking money from the working families to pay the world’s richest bank stockholders. Hence, losses incurred by financial speculations must solely be borne by the involved parties. There must need policies to ratify and strengthen the public nature of banks and financial institutions including nationalization of banks.

Second, the misguided debate between “protectionist trade” and “free trade” must be transcended to conceive and promote a more fair and pro-labor global trade system. Notably, we the undersigned strongly oppose the trade policies of the present Lee Myung Bak Administration, which brashly advanced a bilateral Free Trade Agreement (FTA) with the US and EU under the pretext of tearing down protectionism. It must be clearly noted that the FTA is one of the major institutions that induced the current crisis, as it greatly undermined restrictions on financial services and expedited flexibilization of labor market and privatization. Moreover, the FTA brought upon a series of disasters, such as the breakdown of self-sustainable food production, basic services to the working class due to privatization of public services, and access to medicine and rights to information due to stringent intellectual property agreements.

Third, creation of decent jobs, discouragement and prohibition of layoffs, protection of wages, and security of livelihood and employment of workers are most fundamental to surmounting the economic crisis. Flexibilization of the labor market enforced for the past 30 years under the auspices of the “Washington Consensus” has utterly failed. In this regard, backward and detrimental labor laws such as Precarious Workers Act and Minimum Wage Act enacted by the Lee Myung Bak Administration and its anti-labor policies must cease and desist immediately. Employment policies must not be founded upon “internships,” short-term contract labor, and other labor conditions that inflame labor instability, but on decent jobs in areas such as public and pro-environmental services. Wage reduction, which in fact worsened the Great Depression of the 1930s, must be avoided at this time. Wage gaps must be minimized and the minimum wage must be increased.

Fourth, social services must be strengthened to protect the socially disenfranchised. Unemployment insurance, unemployment wages, basic standard of living, and other public policies must be expanded and strengthened.

Fifth, there needs to be a fundamental reform of the global economic system to create a more fair and responsible system that transcends financial regulation and oversight to encompass even world trade and investment. The present system must be abandoned, while a new dialogue on ecologically and socially sustainable global economic model must commence. Under this process, participation by trade unions, civil society organizations, and other stakeholders must be promoted and safeguarded. At the same time, policies and rules of the IMF, World Bank and WTO, root causes of current crisis, must be fundamentally overhauled and changed.

We oppose any shift of burden upon the workers, their families and people across the world during the current process of resolving the global economic and financial crisis, the worst since the 1930s. We are deeply concerned that the voices and opinions of trade unions and working people are being excluded in the process of seeking worldwide solutions. We firmly believe that genuine solutions will be found when the livelihood of workers, their families and people is held at the highest regard.

Korean Confederation of Trade Unions, Korean Peasants’ League, Korean Progressive Solidarity, We Won’t Pay for Your Crisis Coalition

March 26, 2009