ILO Chief warns of austerity’s ‘toxic’ impact

In an interview with The Times newspaper, the head of ILO warned that austerity measures in southern European countries risk having “quite harmful consequences”. He was more positive about the outlook in Britain.

GENEVA (ILO News) – ILO Director-General, Guy Ryder, has warned in an interview with The Times, that governments in southern Europe were pursuing “toxic” reforms that are leading them towards further economic contraction.

In Spain, “it is remarkable that things have been as peaceful as they have been,” the London daily quoted the head of the International Labour Organization as saying.

“The lesson of Spain and elsewhere is that when you embark on this project in circumstances of very heavy economic contraction under conditions of austerity, you are not very likely to see benefits of it in a close time horizon,” Ryder told The Times. “You have to see how these policies interact with one another. Chemicals can interact sometimes in very toxic ways with quite harmful consequences.”

In Greece, reforms demanded by the Troika of official lenders – the European Commission, the International Monetary Fund and the European Central Bank – had the effect of “wiping the slate clean on decent and effective labour relations.” The austerity measures would make it “difficult if not impossible” for Greece to reach its deficit-cutting targets, Ryder said.

Spain and Greece plan to further reduce government spending in a bid to regain control of their debt. Austerity measures have led to wage cuts and a reduction of public services, and have triggered violent protests in several countries.

Ryder was more positive about the outlook in the United Kingdom, which he said was likely to avoid the “downward spiral” seen in southern Europe. “There do seem to be some modest green shots appearing and one has to hope that is going to continue.”

The British-born official became the 10th ILO Director-General on October 1.