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The ITUC has released a statement for the 2008 Annual Meetings of the International Monetary Fund and the World Bank to be held in Washington, 11-13 October 2008. The statement was prepared jointly with the Global Union Federations and Trade Union Advisory Committee to the OECD.

For more details please see the attached statement.



UNI Global Union had the opportunity to contribute to this submission and encourages support for the statement. Of particular interest to unions on private equity is this extract from point 35 on page 10:



Coordinated response to the financial crisis is lacking



35. There is growing consensus that lack of adequate financial sector regulation was a root cause of the 2007 financial crisis, which is the biggest shock felt by the financial system since the 1930s and has caused a global economic slowdown. Unfortunately, the policy responses, both to counter the impact of the financial crisis on the real economy and to avoid its repetition, have been far from adequate. At the International Financial Institutions’ (IFI) spring meetings of April 2008, Global Unions called on the International Monetary Fund (IMF) to lead a comprehensive response to the financial crisis that would include the development of new international regulatory frameworks, and were pleased to see the developing-country group at the IFIs (G-24) issue a similar appeal for “active policy coordination” and support the need “to strengthen the regulatory and supervisory framework” of the financial sector.



36. However the final communiqué of the IMF’s ministerial committee meeting (IMFC) in April limited itself to calling for “coherent action” by countries, reflecting G7 finance ministers’ stance, rather than endorsing the calls for a coordinated international policy response that IMF management had made prior to the meeting. The communiqué did not endorse Fund managements’ appeal for public interventions going beyond monetary and fiscal stimulus to avert financial sector collapse, nor was progress made on establishing a new crisis prevention credit line, the previous facility having expired in 2003. Despite the havoc that massive movements of speculative capital are having on some economies, no measure was announced for assisting countries in establishing controls to limit damaging movements of capital.



37. The absence of a coordinated response has meant that the global economic situation continues to deteriorate: important financial institutions in the US, where the crisis began in mid-2007, have not yet emerged from threatened collapse; latest data show some major industrialized economies to be on the edge of recession, despite the IMF’s upward adjustment of economic growth forecasts in July 2008; and several developing countries are rapidly finding themselves in serious economic difficulty. Many developing countries are finding it an arduous challenge to navigate between an upsurge in inflation, due to high costs of food and energy, and the possibility that monetary tightening may provoke recession. While the prospect of moderating prices for commodities may relieve some of the inflationary pressure, they will also erode the income of several developing countries whose growth has been dependent on commodity exports.



38. The international trade union movement believes that there is strong popular support around the world for international cooperation in pursuing comprehensive reform of private financial institutions to provide greater transparency, capital adequacy and greater systemic stability. Regulatory reform should cover both commercial and investment banks, but should also cover the “shadow banking system”, such as hedge funds, private equity and sovereign wealth funds. A new regulatory and supervisory framework must ensure transparency of all direct and indirect liabilities of banks, insurance companies

and other financial institutions and discourage excessive risk taking. Ensuring that these financial entities and their activities comply with the core labour standards should be one of the objectives of the process. The IMF is the only existing global institution that could take leadership in coordinating national regulatory reforms, and also in developing appropriate international regulatory frameworks.



39. Global Unions encourage the IMF to support the following measures:



• Broadening the IMF’s multilateral consultation process to address not only the repercussions of global economic imbalances between the US and Asia, notably on exchange rates, but also the serious impact of sharply increased food and fuel prices, especially in developing countries



• Creation of a new emergency credit facility for countries in financial

difficulty, unhampered by the policy preconditions that rendered the former Contingent Credit Lines, which expired in 2003, unusable



• Initiation of a process, including consultations with trade unions and other

interested parties in addition to private financial institutions, to create international frameworks for comprehensive financial regulatory reform, including commercial and investment banks as well as private equity funds, hedge funds and related financial activities that are non transparent, exploit unwarranted tax subsidies and contribute to financial market instability



• Submitting the draft guidelines for governing the investments and operations of sovereign wealth funds to consultations with trade unions and other interested parties; the discussions have so far been limited to exchanges between the wealth funds themselves and the IMF



• Creation of a fair and transparent sovereign debt restructuring mechanism for orderly work-outs of debts owed by developing countries



• Establishment of measures to protect national economies against destabilizing speculative capital movements, including a Tobin tax and capital controls put in place by national governments.







UNI and ITUC are asking for your support to contact your govenment to endorse the propositions contained in this statement and have provided a model letter that you may find useful to accompany the statement when you send it to the government. Please keep us informed of your actions and any response you receive. Thank you for your support.