Author: SCH

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UNI/GS/11-2007/0077-EN

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Global Financial Crisis
Foreword
This brief report looks at the global financial crisis that has been impacting economies world-wide.
Financialisation of the economy is out of control and is beyond control. Bank regulators should have seen this storm coming and they did not.
Even several months into the crisis, we still do not know the extent of the bad debts on the accounts of banks.
Some heads have rolled from Bear Stearns, Merrill Lynch and Citibank - CEO departures with handsome farewell payoffs; in the case of Merrill Lynch over $150 million.
World-wide, it is estimated that over 100,000 jobs have been lost in financial institutions. The price paid by workers will be high, as the crisis is impacting economic growth world-wide.
We will work with the ITUC on improving bank supervision and regulation. The UNI Finance Global Union has taken on the responsibility of working to improve supervision and to ensure that “the blackbox” of modern financial instruments does not wreak further havoc on the global economy.
Philip J. Jennings
UNI General Secretary
November 2007

Causes and Developments
The financial turmoil was triggered by the sub-prime mortgage crisis in the United States. Sub-prime mortgages are higher risk housing loans offered to people with poor credit ratings or on low incomes.
The booming sub-prime market started to turn sour when a series of interest rate rises made monthly repayments too expensive. Unable to meet payments, many borrowers have been defaulting on these loans. As problems in the US sub-prime mortgage market began to emerge, world stock markets witnessed their first big wobble in February 2007. And by the end of September, there were no signs that the crisis had run its course. Ben Bernanke, the US Federal Reserve chairman, said 20 September that delinquencies and foreclosures in the sub-prime mortgage market were likely to rise further as the housing downturn evolves.
The consequences of the US mortgage crisis have been worsened and spread round the world because much of the sub-prime debt has been resold as part of wider debt packages, with a lack of transparency of the overall scale of the problem and as to which financial operators are holding the worthless or devalued securities. This uncertainty has further sapped confidence in the financial system, leading to a liquidity crisis, where investors prefer to hold cash, gold or safe securities (short-term government bonds), while avoiding any riskier credit lines. Banks are reluctant to lend each other money, preventing them and other companies from raising the funds they need to keep operating smoothly. Businesses that rely on a constant flow of cheap credit are particularly vulnerable.
Hedge funds were among the first victims of the financial crisis, including the in-house hedge funds of some leading banks. Later, it became clear that European banks were among those holding a lot of US sub-prime debt. Some German sectoral or regional banks, generally reputed for their prudence, were hit hard. Contagion then started to affect operators that, though not exposed to US sub-prime debt, had used conditions of cheap and easy credit to fund risky practices, which collapsed in the general liquidity crisis.
The mid-September run on Northern Rock, the UK’s biggest mortgage lender, was triggered by the announcement that the Bank of England had promised it emergency funding. Masses of customers continued to pull out their savings until Chancellor Alistair Darling, keen to restore faith in British banks, pledged the Bank of England would guarantee all existing deposits.
While other European banks had been hurt by investments tied to shaky US mortgages, Northern Rock’s sub-prime exposure was small. Instead, the bank ran into trouble because the liquidity crisis undermined its risky business model. Northern Rock relied heavily on raising money in the capital markets, rather than on consumer deposits, to finance its mortgage lending. And with banks increasingly reluctant to provide credit, Northern Rock faced the possibility of being unable to meet existing obligations. One observer described Northern Rock as “an accident waiting to happen,” since it was far too dependent on the money markets to finance the growth in its lending.
The run on Northern Rock shows how the problems on the US mortgage market are the immediate but not the sole cause of the current financial crisis. US economist Paul Krugman: “The origins of the current crunch lie in the financial follies of the last few years, which in retrospect were as irrational as the dot.com mania. The housing bubble was only part of it; across the board, people began acting as if risk had disappeared.”
Central Banks have injected billions of dollars of short-term loans into the global banking system, to keep it functioning.
On 17 August, the US Federal Reserve reduced its discount rate, the rate at which it lends to banks. In order to prevent the US economy, the world’s largest, from slipping into a recession, the Fed then cut its benchmark federal funds rate by half a percentage point, from 5.25% to 4.75%, on 18 September. In explaining its move, the Fed said: “The tightening of credit conditions has the potential to intensify the housing correction and to restrain economic growth more generally.” Some business economists fear that the crisis is not over and that the Fed might have to cut interest rates further.
The turbulence on financial markets has also confronted the financial authorities with a host of regulatory issues (transparency, rating agencies, non-regulated entities, funding strategies, due diligence capability, etc). These are discussed in section three.
Since the financial turmoil is likely to last for a while, more shocks can be expected. US Treasury Secretary, Hank Paulson, warned 11 September that the crisis of confidence in credit markets was likely to last longer than any of the financial shocks of the past two decades; that is to say, longer than the turmoil that followed the Asian crisis and the Russian default of the 1990s or the Latin American debt crisis of the 1980s. The complexity and global distribution of the securities at the heart of the credit crisis would prolong it.
So far, world investment banks may have lost as much as $30bn from bad debts linked to the global financial crisis, it was reported on 16 September. Analysts predicted they would have to write-off 10% of $300bn of agreed loans.
There have as yet been no major collapses in the private equity business. But firms that PE funds have formerly held and loaded with debt are trailing on stock markets. Also, the PE buyout business has plunged, as M&As have become rarer and, when they do still occur, industry investors are being favoured over private equity firms. In the first half of the year, leading PE firms had already started to shift their strategy. And investors have been willing to pay more into their distressed debt (vulture) funds, which bet on rising numbers of bankruptcies. But the financial crisis could still catch up with private equity. Meanwhile, the private equity-related debt generated by the buyout boom of the past few years is aggravating the strain on banks and investors.
Implications for the Real Economy and Jobs
To what extent will volatile and tighter credit markets, which are expected to continue for some time, affect the real economy and jobs? Will the financial authorities be able to ease the credit crunch and contain its effects within the financial sector? Much will depend on whether they can prevent housing markets from sinking into a depression. But monetary authorities may feel that their options are limited by the persistence of high oil prices and rising food prices.
The economic forecasts recently made by various institutions reveal growing concern, as previous forecasts have generally been revised downwards (see column three in the table below).
Economic Growth Forecasts 2007-2008
*NABE = National Association for Business Economics
According to the IMF's Global Financial Stability Report (GFSR), released 24 September, financial markets are likely to go through a protracted adjustment period following recent financial turbulence triggered by the collapse of the US sub-prime mortgage market.
Global economic expansion is likely to be slowed, and if “financial conditions deteriorate further, the global financial sector and real economy could experience more serious negative repercussions". If, so far, emerging economies have weathered the turbulence relatively well, that is in part because global growth has continued. Economic activity could be reduced through various channels: tighter and more expensive credit could aggravate the housing downturn and curtail corporate investment worldwide, and falling equity prices [on shares, houses] could reduce consumer spending.
Earlier, the IMF’s Managing Director had warned: “If the reduced availability and increased cost of credit for housing causes a larger than currently projected downturn in the U.S. housing market, this could adversely affect consumer demand, reducing both growth and the demand for imports in the U.S. This in turn could reduce growth in countries that export to the United States. If difficulties in credit markets become worse, there would be direct effects on investment and indirect effects on confidence.” On the other hand, “major emerging markets like China and India will grow at above or close to double digit rates. Together these two countries are expected to contribute over one-fifth of total global growth in 2007”.
An interim assessment presented 5 September by the Chief Economist of the OECD, the 30-nation group of leading economies, notes that economic prospects are “clearly less buoyant and more uncertain” and that “downside risks have become more ominous”. For the United States, “our growth estimates may err on the upside, since it has not yet been possible to fully evaluate the negative impact of credit market turbulences on economic activity. In any event, consumer resilience will be tested by mortgage rate resets, tighter credit standards, weaker collaterals [house values] and slower job creation.” The OECD also predicts slower growth in the euro area.
In the United States, retail sales and industrial output both slowed in August, as the economy felt the strain from the housing slump and credit squeeze. In the housing market, the number of home foreclosure filings - default notices, auction sale notices and bank repossessions - was 36% higher in August than in July and 115% higher than in August 2006. There could be a new wave of foreclosures, as a large number of mortgage rates are to be reset. October is expected to be a peak month, with the interest rates on some $50 billion worth of loans poised to go up dramatically.
Government data released 27 September showed sales of new US homes declining 8.3% to a seven-year low in August. The chief executives of government-sponsored home financing agencies said the housing slump will not bottom out until late 2008 and that the slump means that the US economy faces a 40-45% risk of recession.
US employment as measured by the Labor Department declined by 4,000 in August – a small change, but the first monthly decline in four years. More worrying, the Labor Department reduced its previous estimates for employment growth in June and July by a total of 81,000 jobs.
The number of persons employed part-time for economic reasons, at 4.5 million in August, was 359,000 higher than a year earlier. This category includes persons who indicated that they would like to work full time but were working part time because their hours had been cut back or because they were unable to find full-time jobs. In another sign of job market weakness, temporary employment continued to trend down.
Employment continued to fall in manufacturing and construction. Construction employment has fallen by 96,000 since September 2006. But health care added 35,000 jobs in August, and management and technical consulting services 7,000.
According to an analysis by the independent Economic Policy Institute (7 September), the Labor Department’s report “provides the first solid evidence that economic turmoil in financial markets has found its way into the job market”.
The EPI notes that, on a yearly basis, wages were up 3.9% in August, a solid rate that is likely to beat inflation, barring unforeseen price spikes. “However, if the pervasive weakness [shown in the Labor Department’s] report continues, any wage pressure in the job market will shortly begin to let up, and wage growth will slow. This, in turn, will show up as weaker consumption and ultimately slower overall growth, reinforcing the trend in weak hiring of recent months.”
AFL-CIO said that US workers were being hit by housing foreclosures as well as by increasing personal debt and rising health care costs. The union centre sees the Labor Department report as “a clear sign that the crisis in the housing market and related turbulence in capital markets are having effects on the real economy,” noting that, even before, job creation had been slower than in any other economic recovery after WWII.
An indication of trends in the immediate future is provided by the survey of job-cut announcements compiled by Challenger, Gray & Christmas, an outplacement firm. The survey covers job-cut announcements reported in major media outlets, thereby foreshadowing actual layoffs. The number of US job cuts announced by corporations increased by 85% in August from July, to a total of 79,459, according to the firm’s survey released on 5 September. Job cut announcements were 22% higher than in August last year.
Nearly half the August announcements came from the financial sector, as dozens of mortgage and sub-prime lenders caved under the pressure of a sinking housing market. Financial job-cut announcements totalled 35,752 in August, the highest monthly total for the industry since the survey began in 1993.
And the job-cut announcements haven't slowed in September. They include plans by Countrywide Financial Corp. (CFC), the US's largest mortgage lender, to eliminate 10,000 to 12,000 workers, about 20% of its workforce.
The European Commission warned 11 September that the expected slowdown in the Eurozone’s economic growth could worsen into 2008. But Jean-Claude Trichet, President of the European Central Bank, sounded more optimistic in his presentation to the European Parliament: “The latest data on unemployment indicate improving labour market conditions [in the euro area] and the global economic activity is expected to remain robust, as the likely slowdown in the United States is expected to be largely offset by the continued strong growth in emerging markets.”
Uncoordinated US Fed and ECB interest rate policies could further strengthen the euro against the dollar. That would dampen petrol and other import costs, but also curtail exports and economic growth. Some EU countries, including Denmark, Spain and the UK, are also experiencing a slowdown in their housing sector.
An index of purchasing managers in the Eurozone’s service sector dropped four points in September, its largest monthly decline ever, suggesting that commerce is slowing faster than analysts had predicted. Some economists see that as evidence that the global financial crisis has now seeped into Europe’s underlying economy.
Business confidence in Germany, the largest EU economy, fell in September for the fourth month in a row, according to the Ifo institute’s business climate index, which covers about 7,000 firms. Analysts attribute the downtrend to business uncertainty about the impact of the financial crisis on the real economy, new record highs in the oil price, and the euro-dollar exchange rate.
Proposals for Regulatory Reform
Various bodies have made proposals on how to improve the functioning of the financial system, in order to deal with the crisis or to prevent a re-occurrence. The central question is whether discussions will produce effective proposals, and whether those proposals will be implemented and how: by self-regulation or by government regulation? Another question is whether enough will be done for the people at the bottom of the pile: people losing their homes or worried about their savings deposits and the employees of banks facing closure or restructuring.
The IMF's Global Financial Stability Report (GFSR), released 24 September, defines key components of the regulatory framework as: Greater transparency “Accurate and timely information about underlying risks are critical components in the market's ability to properly differentiate and price risk. … Greater transparency is needed on links between systemically important financial institutions and some of their off-balance sheet vehicles.” Funding “financial institutions need to make sure that they have robust funding strategies appropriately suited for their business model and that such funding strategies can accommodate stressful conditions.” Better risk monitoring, including greater incentives for the originating lenders to monitor risk. “Generally, the "originate and distribute" business model may need to be re-evaluated to ensure that [such] incentives are present.” Improvements by rating agencies Differentiated ratings scales for complex securities could alert investors to the risk of more rapid ratings deterioration in such instruments, compared to, for instance, traditional corporate or sovereign bonds. Due diligence Investors should ensure their portfolio allocation decisions are not overly reliant on rating agencies, and that such ratings should not be used as a substitute for appropriate due diligence. Better valuation of complex financial products, including liquidity risk where such securities are held as collateral. A wider risk perimeter “The relevant perimeter of risk consolidation for banks has proved to be larger than the usual accounting or legal perimeters. The result is that risks that appear to have been distributed may yet return in various forms to the banks that distributed them. … new instruments or structures may mask off-balance sheet or contingent liabilities.” The IMF has also called for better consumer protection and more financial education.
The OECD’s Chief Economist, Jean-Philippe Cotis, acknowledged, “Recent developments have revealed serious imperfections in the functioning of US housing markets and, more broadly, in credit markets worldwide”. He added: “Markets will learn from recent mistakes through the usual “learning-by-doing” process. Such progress may nonetheless be enhanced by improved regulation. There may be a need, for instance, for more encompassing supervision of US sub-prime mortgage markets, with greater attention to non-bank originators which have often evaded effective scrutiny. As well, there may be a case for a more active fight against predatory lending, including through better disclosure and education. More transparency also seems to be called for in credit markets, where securitisation has made risk assessment increasingly difficult for many investors, leading to widespread loss of confidence. Given the swathe of re-ratings in recent months, more pugnacious and inquisitive rating agencies could help bring this about.”
In a hearing before the European Parliament, the President of the European Central Bank, Jean-Claude Trichet, raised various points: “The degree of complexity of some products that are designed for the purposes of re-packaging and selling debt instruments has become overwhelming” for those buying them and even for those designing them. The very small number of large global rating agencies is a real issue for the present functioning of global finance. “Potential conflicts of interest, where they exist, would have to be dealt with and possible benchmarks for improved behaviour could be worked out. … An important lesson of the current risk re-pricing is that investors must never take the opinion of rating agencies as a substitute for their own credit analysis and due diligence.”
“The current events highlight the importance of further improving financial sector surveillance activity by financial regulators and the risk management practices of financial institutions.” According to Mr Trichet, “the new Basel II capital accord, which is currently being implemented, will bring substantial benefits in this sense. Indeed, Basel II strongly relies on significantly improved risk management in determining the appropriate capital buffers for banks. Despite these improvements, the degree of sophistication of financial markets calls for constant investment in stress-testing practices in order to ensure that banks are aware of the potential losses they might accrue even in highly unlikely scenarios.”
Further reflection was needed on how to deal with all non-regulated entities, said Mr Trichet. In that connection, he called for rapid implementation of the recommendations on hedge funds of the Financial Stability Forum, which he described as an international consensus. The Financial Stability Forum (FSF) brings together senior representatives of national financial authorities, international financial institutions, international regulatory and supervisory groupings, and committees of central bank experts. The recommendations can be found at http://www.fsforum.org/press/PressRelease-FSF_HLI_Update-final19May07-2.pdf. Mr Trichet also said: “The main channels of propagation of the present turbulences have been the non-regulated constituency of so-called conduits and special investment vehicles … we have to improve very substantially our handling of conduits and special vehicles.”
In the EU, the European Commission plans to review credit rating agencies, including a probe of the industry's voluntary code. The Commission is considering whether new legislation is needed. EU Financial Services Commissioner, Charlie McCreevy, has called on the EU and the US to join forces to investigate the role of credit rating agencies.
EU officials are also concerned about the risk that the continuing liquidity squeeze in world financial markets might cause a crisis in a cross-border financial institution, similar to the one that struck Northern Rock, the UK bank and mortgage lender. According to a committee of EU finance ministry and central bank officials, there are 46 cross-border banking groups in the EU, and 21 of those have significant operations outside their home country. It is felt that the EU needs to further address the question of who should bear the burden of a bank rescue, should the need arise.
In the United States, laws that would give new authority to US banking regulators to police unfair and deceptive mortgage lending practices have been approved by a key parliamentary committee. Under the new law approved by the House Financial Service Committee, the regulators would be able to stamp out deceptive advertising. The low mortgage rates that are advertised often revert to higher rates after introductory periods, putting low-income borrowers into difficulty. The Bill may be considered by the full House of Representatives in October.
At the international level, the US government has requested the Financial Stability Forum (FSF) to review the safety and soundness of the international banking system.
In order to tackle the lack of confidence between banks, the head of the UK’s Financial Services Authority has called on the country’s banks to indicate their exposure, whether direct or indirect, to the US sub-prime mortgage sector. The FSA’s chairman said clarity over the scale of the problem was needed to help the credit markets return to normal. That banks have been unwilling to lend to each other is partly because they do not know each other’s exposure to sub-prime mortgage debt.
People who borrow money to buy houses must be better protected against abusive practices. There should be minimum down payments, and the abolition of escalating, "teaser" interest rates and other devices that encourage people to borrow more than they can afford.
There must be much greater government assistance to the many sub-prime borrowers and others who are now finding it difficult to pay or refinance their existing mortgages. Taxpayers’ money must not be used to bail out mortgage lenders unless they are obliged to alleviate and refinance home owners’ debt. Also, governments should look at innovative ways to bring about the renegotiation mortgage loans. Such action might help to stop house-building downturns turning into a housing slump and economic recession.
There is a need to review and strengthen public insurance of savers’ money when a financial institution closes down. The Northern Rock crisis has demonstrated the potential for runs on banks in a time of growing financial turbulence, many banks to choose from, and customers being able to use the Internet to transfer money. To preserve customers’ confidence, a public insurance scheme must be able to refund depositors within days of a bank going bust. A more difficult question is where the ceiling on insured deposits should be set. It needs to be sufficiently high to reassure most depositors. But an unlimited guarantee would make it easier for big investors to encourage banks to take excessive risks. Under a European directive of 1994 all EU countries must protect depositors’ money up to 90% of the first 20,000 euros. Backed by the US government, the Federal Deposit Insurance Corporation (FDIC) repays at least the first $100,000 of savers' money. Refunds are rapid: within days, according to FDIC.

area	forecast (period)	revision of previous forecast	source	issued / September
G7	2.2% (2007)	down	OECD	5
United States	1.9% (2007)	down	OECD	5
	2.0% (2007) / 2.8% (2008)	down / down	NABE*	10
	2.2% (2008)	down	IMF/Reuters	18
Japan	2.4% (2007)	unchanged	OECD	5
Eurozone - 13 countries	2.6% (2007)	down	OECD	5
	2.5% (2007)	down	European Commission	11
	2.3% (2008)	down	IMF/Reuters	18

Securitisation and Other Tricks
Securitisation, a form of structured finance, is the process of pooling debt - mortgages, car loans, or credit card debt, for example - and packaging that debt as tradable securities, which are then sold to investors. The principal and interest on the debt underlying the securities is paid to the investors on a regular basis. Securitisation has evolved from its beginnings in the 1970s to become a multi-trillion dollar business, creating increasingly complex products.
In housing loans, this "originate and distribute" business model means that the mortgage broker (the originator) who makes the original loan is but the first link in a long, globalised process. The mortgage is pooled with others and sold to investment banks. They in turn package the claims into complex securities that leading rating agencies, whose fees are paid by the investment banks, have been willing to grade as safe investments. These mortgage-backed securities have then been eagerly bought in countries around the world by hedge funds, banks and other investors.
Making the structure even more risky was the manner in which banks bought those complex securities. They borrowed what were then cheap short-term funds to buy the long-term mortgage-backed securities. Banks, including secondary European banks, were borrowing money that had to be repaid or rolled-over every 90 days to fund their ownership - direct or indirect - of 30-year US home loans. They did this because they received more from the securities than they paid out in interest on their short-term borrowing. They could make an attractive return.
This classic liquidity mismatch collapsed when short-term lenders started to have qualms about the mortgage-backed securities. The banks were caught in a vice: short-term funding disappeared and there was a plunge in the value of the assets they held.
The blunders may be simple, but the terminology is impressive. “Conduits” and “structured investment vehicles” (SIVs) are the special off-balance sheet entities set up by banks to borrow the cheap short-term funds. To do that, they issue “asset-backed commercial paper”, not to be confused with “asset-backed securities”, which encompass mortgage-backed securities and “collateralised debt obligations”.

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Global Financial Crisis

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Global Financial Crisis

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The Wal-Martization of the world: UNI’s global response

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The Wal-Martization of the world: UNI’s global response

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The Wal-Martization of the world: UNI’s global response

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The Wal-Martization of the world: UNI’s global response

1. EuroCommerce and Uni-Europa Commerce are the European social partners, which represent employers and workers in commerce and distribution. This industry employs more than 22.5 million people in the European Union, in 4.7 million enterprises. The value added of 13 per cent, which commerce and distribution create in the European Union area, contributes to the well being of all European citizens.
2. EuroCommerce and Uni-Europa Commerce are committed to corporate social responsibility (CSR) and welcome the Commission Green Paper on promoting a European framework for Corporate Social Responsibility1, the Commission Communication concerning Corporate Social Responsibility2, as well as the Council resolution of 2-3 December 2002, defining CSR as a “concept whereby companies integrate social and environmental concerns in their business operations and in interaction with their stakeholders on a voluntary basis”.
3. Trade is becoming global and spreads its operations worldwide. Corporate decisions and actions have repercussions on global markets, the environment and mankind. Few industries impact as strongly on the daily lives of all Europeans as commerce. The constant contact with customers has a decisive impact on the success of most enterprises and requires a tight interaction between companies, their employees, business partners in the supply chain and the surrounding society.
4. By their actions the European social partners for commerce endeavour to promote quality services, that are well adapted to consumer needs and expectations and are produced by well-qualified and engaged personnel, working under good employment conditions. In this context CSR has proven repeatedly that it can contribute positively to the competitiveness of enterprises in commerce.
5. While recognising the voluntary nature of CSR, and while promoting a balanced and broad approach to CSR, including economic, social and environmental issues as well as consumer interests, EuroCommerce and Uni-Europa Commerce, in their social dialogue, have committed themselves to contributing to the CSR agenda. In this context they have undertaken many initiatives related to CSR.

1COM(2001) 366 final.
2COM(2002) 347 final

EuroCommerce and UNI-Europa Commerce
Joint Statement on Corporate Social Responsibility

Promoting CSR in European commerce
6. In line with their activities in the sectoral social dialogue the social partners for commerce have reached a joint statement on combating violence in commerce (1995), a joint statement on combating child labour (1996), a joint agreement on fundamental rights and principles at work (1999), a joint statement on combating racism and xenophobia (2000), as well as a recent joint agreement on guidelines for age diversity in commerce (2002). They have produced vocational training material to encourage workers and management to use new technologies, thereby promoting life-long learning, and have organised high-level seminars and conferences on CSR.
7. CSR is part of a concerted effort by all those concerned towards meeting shared objectives by entering into dialogue with all stakeholders, including the company’s own personnel and their organisations. Therefore CSR does not only relate to external aspects, but also to internal aspects such as health and safety at work and management of human resources. Yet, CSR cannot replace compliance with national and European legislation, international labour norms or collective agreements.
8. EuroCommerce and Uni-Europa Commerce welcome the positive and active approach of many leading European-based international retailers and wholesalers to implement CSR policies, including through strengthening their social dialogue on the different levels of their structures, and through integrating CSR policies into the work of their European works councils. The European social partners invite all commerce companies in Europe, large and small, to share this approach.
9. Responding to the challenge of promoting social corporate behaviour, EuroCommerce and Uni-Europa Commerce, the social partners for commerce will endeavour to:
promote corporate social responsibility throughout business activities,
raise awareness about corporate social responsibility in European commerce and distribution, among enterprises and their workers, as well as among their own members and affiliates, including through dialogue, exchange of information, best practices and expertise,
inform on and further develop the social dialogue between employers and employees at European, national and company levels, on appropriate issues related to corporate social responsibility,
familiarise their members, as well as companies and their workers, about existing good practice, with a view to facilitate, if necessary, appropriate solutions for improving employment and working conditions while developing their business activities,
continue monitoring previous agreements and statements from their European social dialogue, and follow-up on initiatives which support the positive development of employment and working conditions, taking into account workers’ needs for employment security and companies’ needs to respond to changing consumer demands in flexible ways, and which increase the quality of services to the consumers.