LO President Wanja Lundby-Wedin met with IMF in the US
In January, the head of the International Monetary Fund (IMF) Dominique Strass-Kahn received a group of leading representatives from the international trade union movement in Washington. From Sweden the President of LO Wanja Lundby-Wedin and chief economist Lena Westerlund participated in this meeting.
At the meeting the effects of the global financial crisis and what governments should do to reduce these effects were discussed as well as how the viewpoints of trade union organisations could be safeguarded in the work of the IMF in a better way.
To open the meeting, Wanja Lundby-Wedin said that the crisis in the world is deeper and more difficult than we believed earlier and that it will hit the developing countries particularly hard.
In Europe and in the Nordic countries we can also see serious effects. Iceland is an obvious example where the wage-earners are seriously affected now, due to irresponsible acts within the banking world and lack of political consciousness of responsibilities.
Economic stimulus packages
The LO President stated that governments with strong public finances should quickly start economic stimulus packages at about 2 per cent of the GDP, according to what the ETUC has demanded during the autumn.
One per cent of GDP, now recommended to the Member States by the EU, is too low when taking into account the hard effects on jobs the crisis leads to. When governments stimulate their economies in order to handle the acute crisis, they should give priority to both investments and consumption.
Social safety nets
Governments should take the opportunity to build up social safety nets which become permanent and able to reduce the effects of future declines. Based on financial policy governed by rules which can automatically maintain the demand in downward turns, they are automatic stabilisers.
Generous unemployment insurances based on stable rules are an indispensable part of these social nets. They give security as well as contribute to economic efficiency, Wanja Lundby-Wedin said and urged IMF to recommend this to countries in crisis and to refrain from demanding tax reductions which jeopardize the financing of the security systems.
Finally Wanja Lundby-Wedin emphasised that trade union organisations should have greater possibilities to give their viewpoints in all contexts where decisions are taken, which are of importance to wage-earners.
A more open ECB
This is one reason why the ETUC has demanded a more open European Central Bank (ECB) and that a council of the social partners should be linked to the Bank, the President of LO Sweden informed.
Dominique Strauss-Kahn agreed with the President of LO that the economic stimulus packages should be about two per cent of GDP on the average, and that certain countries could need to do more.
Strauss-Kahn stated furthermore that European countries are behind when it comes to decisions concerning financial support through government budgets and that a co-ordination of efforts should be done since it is twice as efficient. If a country with resources does not carry through stimulus packages, it takes advantage of other countries, Strauss-Kahn argued.
Other trade union speakers at the meeting were the General Secretary of the International trade union organisation (ITUC), Guy Ryder, as well as representatives from Latvia, Pakistan and Hungary.