Global Financial Crisis; impact on jobs, workers and Trade Unions

1. Global Financial Crisis; impact on jobs, workers and Trade Unions Jayasri Priyalal Director, UNI Apro Finance Sector Activities IFJ Asia-Pacific Regional Meeting 12-13 February 2009, Hong Kong

2. Presentation Outline • “Current Crisis in the Global Financial Markets” – Economic>>> Political Crisis • Driving and Restraining forces behind the financial crisis • Causes and Effects – on Workers and in Real Economy • Threats and Opportunities for Trade Unions • Trade Unions & Global Union Federations -Role >> Way forward

3. Current “Financial Crisis”Networth of countries as at January 2009.doc • Started as sub-prime crisis in US “market correction” “meltdown” and still ongoing crisis: Recession, Depression? Political? • Two of the five largest investment banks in Wall Street collapsed – Fee based income from RMBS* of these five banks amounted to US$ 2000 Billion (2003-2007 ) 3 Bn was paid out to 5 CEO’s • Asset destruction process in all OECD banks are on – No one knows what is the exact loss – bailouts, handouts packages are on trial & error basis • Stock market indices are at pre – 1998 levels • US and Europe in recession, Japan and Korea stagnant • ILO predicts unemployment increase of 20 Million • Increase in poverty, Less than 1 US$; 40 Mn & 2 US$; 100 Mn • * RMBS – Residential Mortgage Backed Securities

4. Driving and Restraining Forces • Neo-liberal lobby- Free Market, Rational Expectation theory – “Think Global & Act Local” mentality • Lightly regulated financial industry • Liberalized globally inter-linked financial market players • Imperial “CEO” Private Equity’s Hedge Funds, Rating Agencies, • Shareholder value driven IFI’s • Illusion; self-regulation for low cost capital low risk – SLICE & DICE the risks through out global markets • Anti – Globalization lobby/academics • GUF’s/ITUC, Civil Society organizations • Governments through bail out packages – tax payers money ? Who pays tax ? • National Regulatory Authorities – pumping liquidity in to markets • UN Agencies ???? IBRD?

5. Causes & Effects • Unequal distribution of wealth • Global monopolies/oligopolies • Blind faith in Market mechanism – regulatory in-action • Loosening the Capital and tightening the labor • Promote “individualism” against collectivism • Tax heavens – gaps in tax laws • Profit engineering through hi-tech devil derivatives and financial products • Regulatory arbitrage • Wage stagnation, reduction in purchasing power, imbalance in real economy – Destruction of jobs and transforming in to work • Drop in wages, no income backed investment – UNSUSTAINABLE debt – Middle class working poor • Weakened bargaining power of trade unions to negotiate better terms – less union coverage • Banks do financial intermediation at local level and disintermediation at global level • Loss of Trust confidence in the system – Brands • Illusion “Too Big To Fail” – Financial institutions loaded with “toxic” assets

6. “Unionism will only succeed if the members are united and active” Now: Let’s “Think Locally and ACT Globally” “Those workers, who are currently not in unions, are the future of the trade union movement” Organizing is the job of all who believe in Social Justice: Design campaigns to win things which you cant win industrially Convergence in industry; New Allies, New Tools – finding friends to fight with you Voice for the customer/society and provide them the collective strength to challenge the ‘race to the bottom’