Global Deal - a way to reduce the economic impact of the pandemic

Labour market We are now experiencing the biggest health crisis in modern times. The Covid-19 pandemic is not only a threat to human health - the economic consequences of accelerating unemployment, bankruptcies and slowed economic development are threatening global growth in a disquieting way. The economic impact of the spread of the virus is likely to create greater negative health effects than the pandemic itself.

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The globalisation of recent years has enabled one billion people to get out of economic poverty - globally. Due to a powerful slowdown in the global economy as an effort to mitigate the spread of the pandemic, many people are now at risk of falling back into poverty.

Developing economies, such as southern African countries, run the risk of recession and thus eradicating the economic growth that has been achieved in recent years. In Ethiopia, for example, the UN argues that the ongoing shutdown of society is likely to claim more victims than the pandemic itself. A scenario that may also occur in other regions of the world.

The global trade union movement, with the ITUC at the forefront, demands immediate action to save jobs and to restart economies as quickly as possible. Sweden plays an important international role in pursuing economic and gender equality issues, among other things through feminist foreign policy. It is now high time to step up and strengthen the role as a driver for international solidarity, not least by increased contribution to sustainable solutions that respect workers' rights.

The resilience of a country or a region to global crises depends on how well-prepared and developed their systems are. In the wake of Covid-19 it can already now be concluded that the Nordic countries, with good welfare systems and well-developed social partners´ autonomy, are more resilient to the ongoing crisis than other countries, as regards the economic impact of the crisis.

In LO’s opinion, negotiations that benefit both workers and employers in the labour market – both nationally and internationally – are the most efficient way to regulate the labour markets and find long-term sustainable solutions. This is the reason for LO having joined the Global Deal and for playing a driving role in convincing others to do so – not least employers´ organisations.

Furthermore, LO considers that negotiations and social dialogue must be promoted in order to achieve real change. For this it is necessary to strengthen the skills and capacity of elected trade union representatives and company representatives. An international training program should therefore be established at the ILO Training Centre in Turin, with the aim of further developing and training in social dialogue in the spirit of Global Deal.

Another clear ambition must be to depoliticise the Global Deal and to correct erroneous perceptions of its content – often emanating from employer organisations. The assumptions made, based on irregularities and misinterpretations, have unfortunately impeded the accession process of, for instance, the employer organisation IOE. To be clear: the Global Deal is not to replace the ILO, nor to weaken its action. On the contrary, the Global Deal will constitute an instrument to materialise the ILO´s ambitions regarding social dialogue. Neither does the Global Deal compel employers to sign global framework agreements.

The Global Deal is a Swedish initiative with the OECD as the host structure. Recently, IKEA joined the initiative, and a growing number of employers, countries and trade unions become aware of the quality of international cooperation. It is therefore important for Sweden not to reduce the level of ambition for the Global Deal. On the contrary, now the time is right to increase the resources and intensify the cooperation with the ILO.

When the crisis is over and the economy back to normal, the prospects will look very different in different parts of the world. In order to reduce the risk that the developing economies will be affected even more seriously, it is vital that countries such as Sweden should combine their own national measures with international cooperation activities to strengthen the economies and resilience capacity of these countries. The Global Deal can provide opportunities for cooperation of this kind. Sweden must therefore pursue its ambitious policy for equality and against poverty – policy in which the Global Deal is part of the solution.

On 26 May, LO hosted a seminar on how the social partners, together with governments, can mitigate the negative effects of a health and economic shock. The way to achieve this is cooperation, solidarity and using well-functioning methods for equality and sustainable economic development. One such tool is the Global Deal.