Time to rescue the real economy
The current crisis has hit the financial sector hard. But what about
people and the real economy ? Though we don’t know how long and how
serious the financial crisis will be, we do know that if we fail to act
decisively, the impact on the lives, working conditions and hopes of
millions of people will be strong, global and systemic.
The current search for better financial regulation and a global
surveillance mechanism of checks and balances is a welcome step. But we
must reach beyond the financial system. This is not simply a crisis on
Wall Street; it is a crisis on all streets.
We need an economic rescue plan for working people and the real
economy, with rules and policies that deliver decent work and productive
enterprises.
We must better link productivity to salaries and growth to
employment.
People must have trust that the economy is working for them.
World must tackle rampant poverty |
This message is urgent. The International Labour Organisation has
completed a first estimate of how this crisis is going to impact the
day-to-day lives of people at all levels of society.
We project that world unemployment could increase by 20 million by
the end of 2009-surpassing the 200 million mark of global unemployed for
the first time. People working in such sectors as construction,
automotive, tourism, finance, services and real estate will be hit
hardest first.
What’s more, the number of working poor living on less than a dollar
a day could rise by some 40 million-and those living on two dollars a
day could rise by more than 100 million.
And grim as these numbers are, they could prove to be underestimates
if the effect of the current economic contraction and looming recession
are not quickly confronted.
Above all, we must focus on people, on enterprise, on the real
economy. What does that mean? Four things:
First, get credit flowing. Emergency measures have been and are being
taken.
Second, support those who are most vulnerable. That means a variety
of measures including pension protection, unemployment insurance and
credit for small and medium enterprises, which are a primary source of
jobs today.
Third, decisive public policies and smart regulation that rewards
hard work and enterprise once again. We are battered by the whirlwind of
a financial system that lost its moral compass. We have to come back to
the basic legitimate function of finance, which is to promote the real
economy-to lend so that entrepreneurs can invest, innovate, produce jobs
and products. Let’s get back to what finance is meant to do - to finance
the real economy.
Fourth, and critically, we must address the underlying challenges.
Long before the current financial crisis, we were already in a crisis of
massive global poverty and growing social inequality, rising informality
and precarious work-a process of globalisation that had brought
considerable benefits but for many had become unbalanced, unfair and
unsustainable.
We need to get the balance right and concentrate on rescuing people
and production. It’s about saving the real economy.
Let’s remember that people judge their lives and their futures mainly
through their life at work. Now more than ever, we must focus on making
sure the policies and support are in place to meet people’s core demand
for a fair chance at a decent job.
In order to keep economies and societies open, relevant international
organisations must come together to develop a new multilateral framework
for a fair and sustainable globalisation.
(The writer is the Director General of the International Labour
Organisation (ILO)) |