U.N. warns austerity plans damage economic recovery

GENEVA (Reuters) – Austerity measures being adopted by many industrialized world governments in the wake of the 2008-09 financial crisis are undermining economic recovery, a United Nations report said on Wednesday.

Cuts in spending on health, education and other social programs in both rich and poor countries, it asserted, threaten to turn back decades of social progress, block new job creation and derail efforts to eradicate poverty.

"The growing pressure for austerity measures, ostensibly for reasons of fiscal consolidation, is putting at risk social protection, public health and education programs, as well as the economic recovery measures," the report said.

If governments give in to these pressures, they could jeopardize the sustainability of the recovery, which was at best uncertain and fragile, it declared.

"Continued support for stimulus and other recovery measures is needed to strengthen the momentum of output recovery and to protect the economic and social investments that underpin future growth."

The study, "The Global Social Crisis-Report on the World Social Situation 2011," was presented at the world body's European headquarters in Geneva by its main author, Malaysian -born U.N. Assistant Secretary-General Jomo Kwame Sundaram.

CHINESE, ASIAN EFFORTS

Sundaram, a development economist who has taught at both Harvard and Yale universities in the United States, told a news conference that Asian countries, including China, had made strong efforts to sustain economic recovery programs.

Their exports to the West had helped drive the overall post-2009 recovery, he said. But if demand from richer countries tailed off as austerity slashed disposable incomes, Asian economies would also drop back.

The report made no specific reference to the current problems of European countries in the euro zone and outside it, which have been heightened by the political and social turmoil in debt-burdened Greece.

But its thrust was implicitly critical of European Union member countries and the U.N.'s International Monetary Fund (IMF), which are pressing Greece to push on with tough austerity measures as a condition for a bail-out loan.

Portugal, Ireland and Spain -- all users of the euro -- and Britain which stayed out of the common currency have all introduced austerity programs involving cuts in social services and are all facing varying degrees of social unrest.

The U.N. report said responses to the crisis had not addressed what had sparked it.

"For example, financial reform in major economies has not matched initial expectations and exposes the recovery to new abuses, excesses and vulnerabilities," it asserted. "There are signs that this is already happening.

"Progress in addressing other structural causes of the crisis have also been limited....income inequalities continue to grow, global balancing is limited and global demand remains depressed.

"The failure to address the root causes of the crisis will impede a sustainable recovery," the report said.

(Editing by Philippa Fletcher)

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UN warns belt-tightening damages economic recovery

Thursday, June 23rd, 2011 14:02:00

GENEVA: Austerity measures being adopted by many industrialised world governments in the wake of the 2008-09 financial crisis are undermining economic recovery, a United Nations report said on Wednesday.

Cuts in spending on health, education and other social programmes in both rich and poor countries, it asserted, threaten to turn back decades of social progress, block new job creation and derail efforts to eradicate poverty.

"The growing pressure for austerity measures, ostensibly for reasons of fiscal consolidation, is putting at risk social protection, public health and education programmes, as well as the economic recovery measures," the report said.

If governments give in to these pressures, they could jeopardise the sustainability of the recovery, which was at best uncertain and fragile, it declared.

"Continued support for stimulus and other recovery measures is needed to strengthen the momentum of output recovery and to protect the economic and social investments that underpin future growth."

The study, "The Global Social Crisis-Report on the World Social Situation 2011," was presented at the world body's European headquarters in Geneva by its main author, Malaysian -born U.N. Assistant Secretary-General Jomo Kwame Sundaram.

CHINESE, ASIAN EFFORTS

Sundaram, a development economist who has taught at both Harvard and Yale universities in the United States, told a news conference that Asian countries, including China, had made strong efforts to sustain economic recovery programmes.

Their exports to the West had helped drive the overall post-2009 recovery, he said. But if demand from richer countries tailed off as austerity slashed disposable incomes, Asian economies would also drop back.

The report made no specific reference to the current problems of European countries in the euro zone and outside it, which have been heightened by the political and social turmoil in debt-burdened Greece.

But its thrust was implicitly critical of European Union member countries and the U.N.'s International Monetary Fund (IMF), which are pressing Greece to push on with tough austerity measures as a condition for a bail-out loan.

Portugal, Ireland and Spain -- all users of the euro -- and Britain which stayed out of the common currency have all introduced austerity programmes involving cuts in social services and are all facing varying degrees of social unrest.

The U.N. report said responses to the crisis had not addressed what had sparked it.

"For example, financial reform in major economies has not matched initial expectations and exposes the recovery to new abuses, excesses and vulnerabilities," it asserted. "There are signs that this is already happening.

"Progress in addressing other structural causes of the crisis have also been limited....income inequalities continue to grow, global balancing is limited and global demand remains depressed.

"The failure to address the root causes of the crisis will impede a sustainable recovery," the report said.

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Jobs Central to Recovery, Say IMF Leaders

Tuesday, 25 January 2011, 12:54 pm
Press Release: ITUC

(Washington D.C., 20 January 2011): The IMF Managing Director, Dominique Strauss-Kahn and World Bank President, Robert Zoellick agreed on the importance of employment, social protection, working with trade unions and broadening the distribution of economic growth in meetings with a 90-strong high-level trade union delegation in Washington D.C. this week.

“Income-led growth is the key to securing recovery and ending the kinds of social deprivation and misery we’re seeing in countries like Tunisia”, said ITUC General Secretary Sharan Burrow. “We have to stop the financial elites regaining control and sowing the seeds of an imminent new crisis at a time when workers are still suffering the unemployment caused by the last one.”

In response, IMF Managing Director Strauss-Kahn agreed that tackling the jobs crisis, in particular the tragedy of long-term unemployment with all its social consequences, was essential and said jobs would be a central priority for IMF actions in 2011. He expressed determination to mitigate the social impact in crisis-hit countries such as Romania, Greece, Pakistan, Latvia and Jamaica and reiterated the IMF’s commitment to working with the ILO to establish a universal social protection floor. Strauss-Kahn also condemned the unacceptable resumption of financial speculation by banks and bankers, resulting from the G20’s failure to carry through the financial regulation reforms they had begun in 2009, and called for a financial activities tax to change the culture of banking speculation.

“We differ with the IMF on the form of the tax, as we consider a financial transactions tax would better deliver the resources for development, climate action and quality public services the world desperately needs, but we strongly agree that action to regulate the financial sector and stop the speculators’ attacks on democratically elected governments must be taken at once,” stated Burrow.

World Bank President Robert Zoellick committed the Bank to consult trade unions effectively at national level, in countries such as Pakistan, Nepal and the Dominican Republic as well as sectorally and by improving their protocols of cooperation at global level. He laid great stress on the need to address the food price crisis, through Bank actions to enable nutrition for the most vulnerable and investments in seeds and fertilizers as well as by improving social safety nets. Zoellick further committed the Bank to support all the ILO core labour standards and to incorporate workers’ protections, such as maternity protection, into ongoing World Bank work on the labour market

Burrow responded, “We welcome Mr. Zoellick’s commitments to workers’ rights and tackling growth inequalities, and call on him to ensure full World Bank support for the ILO’s campaign for a universal social protection floor.”

The trade union delegation went on to meet the Executive Directors of the IMF and World Bank, the government representatives whose regular Washington meetings decide the loans of the two institutions, and impressed upon them the urgency of stepping up the institutions’ policies to tackle the global jobs crisis.

The meeting also discussed the structural policy recommendations for labour market reforms being promoted by the IFIs as well as the OECD. “Recommendations that call for weakening employment protection and wage setting machinery are totally flawed”, said John Evans, General Secretary of TUAC-OECD. “Countries that have had better employment performance during the crisis are those that have strong systems of social dialogue and labour market institutions. These need to be strengthened not weakened.”

Other sessions of the three-day series of meetings dealt with social protection, IMF actions on financial regulation, the World Bank’s requirements for protection of labour standards in loan programmes and the Bank’s “Doing Business” publication.

ENDS

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