G20 finance ministers fall flat on jobs, disappoint on financial reform

Brussels, 21 February 2011 (ITUC OnLine): The international trade union movement has sharply criticised the failure of last week’s meeting of G20 Finance Ministers to focus on the global employment crisis.

“The Finance Ministers have failed to grasp the depths of the global jobs crisis, with world unemployment of at least 205 million and a whole generation of young people facing a lifetime of unemployment or underemployment. The G20 leaders need to send them back to the drawing board to come up with real initiatives to create jobs, and indicators on which success can be measured,” said ITUC General Secretary Sharan Burrow.

The conclusions adopted by the meeting include a series of key indicators for economic recovery, but in a bizarre twist, employment has been left off the list. The text includes scant references to jobs and provides no indication of a constructive approach to tackling unemployment, with several G20 members focusing almost exclusively on cutting government expenditure as their main policy approach.

“Massive cuts to government expenditure as some of these governments are doing must really be a magic solution, because there is no evidence at all that it will generate jobs and growth – only greater inequality and social exclusion,” said Burrow.

Although the meeting did not specifically endorse a Financial Transactions Tax as called for by current G20 host President Nicolas Sarkozy, the references to “systemic levies” are encouraging.

“The Ministers did begin some much-needed steps on regulating banks and finance, but there is no sign of the determination required to rein in the obscene and destructive bonus culture which helped drive the world into crisis,” said John Evans, General Secretary of the OECD Trade Union Advisory Committee.

Reforms to the governance of the secretive Financial Stability Board (FSB), have been timid at best on regulatory reform. “The FSB needs to set aside the self-interest of bank executives which has been a dominant force in its decisions to date, and start regulating in the interests of the real economy,” said Evans.

The depth of the problem on financial regulation is underlined by the fact that as concerns regulation of “shadow banking”, the Ministers are still asking the FSB for reports instead of moving ahead with regulation some 2½ years after the start of the crisis.

While there are some positive moves in other areas of financial regulation, notably concerning financial groups which are “too big to fail”, too much authority is still being left to the various national regulatory bodies, increasing the risk of major and potentially damaging differences between countries.

“The G20 leaders meeting later this year face a huge challenge on global employment. Unfortunately their Finance Ministers have let them down badly, and a great deal of work now needs to be done to make up for this failure,” said Burrow.