Posted: Tuesday, 18 November 2008

International labour leaders met with G-20 heads of government before the summit to speak to a major statement which called for immediate, co-ordinated action to avert a global jobs crisis, and fundamental reform of the de-regulated global financial system which got us into this mess.

The most disappointing outcome of the summit is that governments failed to agree to a concrete plan of immediate action to stop the world economy from spiralling down into a global depression led by huge job losses and a collapse of house prices, household spending and business investment.

It is welcome that leaders, notably including Prime Minister Harper, recognized that cuts to interest rates and bailing out the banks will not be enough, and that governments will have to invest directly in a significant and co-ordinated way to save jobs and turn the global economy around. However, no specific commitments were made which would have an immediate positive impact.

On a more positive note, the G-20 leaders turned down efforts by some, notably the outgoing Bush Administration and the Canadian government, to set aside the call for new international rules to regulate global finance, as advocated by the global labour movement and some European and developing country leaders.

Working parties will be set up with important mandates to address a wide range of issues over the next four months, including the compensation of senior executives, regulation of highly risky and complex financial products (such as credit default swaps, excessive leverage, the behaviour of credit rating agencies), the need to ensure that all governments regulate adequately, and the need to extend regulation to hedge funds and other financial mechanisms that take huge risks with other people's money.

While most important financial issues which the global labour movement wanted to be addressed are at least now on the table for discussion by working groups, the main forums of discussion will be the Financial Stability Forum and the International Monetary Fund. Both of these institutions advocated very light regulation until very recently, and failed to anticipate, let alone prevent, the current financial crisis.

The G-20 leaders did call for reform of both the Financial Stability Forum and the IMF to increase the role of large developing economies, but they provided no assurance of a reform process that would allow for input beyond the narrow world of central bankers and government finance officials.

G-20 leaders (other than Japan) also failed to come up with new resources to protect developing countries from a crisis which was not of their making.