(Singapore 10/11 February 1998)

Asian working men and women are paying the price of the failure of their governments, multinational banks and the international financial institutions to prevent a financial crash of unprecedented proportions undermining the fundamental strengths of the regions’ economy. Unemployment is mounting rapidly in Thailand, Korea and Indonesia. Wages are falling and prices of essential commodities rising. The danger of serious food shortage is re-emerging in the worlds’ fourth largest nation, Indonesia, as agricultural production suffers under the twin threats of drought and financial collapse. After decades of sacrifice and hard work, often under the repression of military-backed authoritarian governments, working people are angry, confused and frustrated that through no fault of their own, they face the ruin of their efforts to work themselves and their families out of poverty.

The shock waves of the massive flight of finance over the six months from July 1997 to February 1998 are still spreading around the region and worldwide.The social repercussions of the crash are deepening and threaten to undermine the efforts to stabilise financial markets and renew growth. Unless the world backs a major effort to arrest the growth of unemployment and poverty and start a restart growth in Asia, the world economy could slide into a serious recession. At the same time urgent action is needed to fix the weaknesses in the global governance of international finance to ensure that recovery is soundly based and a similar bubble of speculation can never again get out of control.

Asian trade unions, backed by their counterparts worldwide, are ready to play their role in arresting decline and building recovery. Their task is to voice the fears and needs of working men and women who are the victims of forces beyond their control. It is to convert anger and frustration into constructive proposals to ease hardship, preserve and create employment, to restructure companies and build with governments and employers the social and economic institutions needed for successful competition and co-operation in a global market. Strong, free and democratic trade unions are an essential ingredient for a resumption of development on new firmer foundations. The Forum welcomed commitments by the IMF and the World Bank to full and regular consultations with unions.

Building recovery in Asia

The scale of the challenge facing Asian countries requires a broad-based national consensus over the sharing of the costs of the collapse and the priorities for building recovery. The watchwords of the process are participation, transparency and accountability. Markets fail if investors, workers and consumers lose confidence in money. But markets cannot create confidence; that is the task of governments through laws, regulations and institutions that channel initiative into productive investment and deter speculation.

The crisis originated because key decisions were not open to scrutiny by democratic institutions such as free media, elected legislatures and democratic trade unions. Honest and open government, that respects human dignity and the rule of law is not a luxury that can be postponed until a wealthy elite, and their international financiers, believes it can trust the voice of the people. Recovery requires the urgent implementation of a series of practical measures that command confidence because they have been developed openly by a partnership of democratically elected governments, and responsible trade unions and employers. Well-intended expert advice from international bodies backed by substantial financial support can help but only if it too is based on the principle of transparency, accountability and participation.

Asian trade unions call on the International Labour Organisation, in close collaboration with the World Bank and other international financial institution, to work out a regional social action plan with governments, unions and employers as a matter of urgency. The action plan should focus on both social and employment programmes to address the effects of the crises and development of the labour laws and institutions needed for a soundly based and durable recovery. A strategy to address the plight of migrant workers and to secure their rights in the future is a top priority for regional level discussion.

Reviving Growth in Asia

Asia was largely reliant on export led growth during its period of spectacular expansion. A greater emphasis on the growth of domestic markets through the progressive improvement of wages is needed in the recovery. However, excessively depreciated currencies, crippling interest rates and restrictive fiscal and monetary policies mean that at present the only stimulus for a rebound is a massive export drive. This is a highly risky strategy. It will further imbalance the structures of the Asian economies, which are in desperate need of investment in the basic infrastructures of their increasingly urban societies, and create serious tensions on world markets. Restoring the balance of payments through exports to industrialised countries is part of the solution but a broadening and deepening of domestic markets and intra-Asian trade must be the main focus.

Accordingly governments, together with the IMF, the World Bank and the governments which contribute tot he emergency support programmes must:

Heading off World Recession and Preventing Currency Crises

Starting at the G8 Employment Conference in London on 21/22 February, government of the leading industrial nations should launch a policy initiative to:-

i implement a co-ordinated global growth strategy which supports balanced growth and sustained domestic demand particularly in Asia, through increased funding for the IMF and World Bank, the expansion of domestic consumption and public investment in Japan, the maintenance of an accommodating US monetary policy, and low real interest rates in the EU as part of a framework for growth and employment in the context of Economic and Monetary Union;

ii establish an International Commission to make rapid recommendations on the regulation of international financial markets through the Bank of International Settlements, the IMF and the OECD;

iii reform the structures and policies of the IMF and World Bank to ensure the observance of core labour standards and human rights, and the development of a social dimension to recovery programmes; and

iv ensure that the danger of a revival of protectionism is countered by a commitment to the observance of the ILO’s core labour standards in the global trade and investment system.

Reforming the International Financial Institutions And the Supervision of Financial Markets

There is an urgent need to review the role of the IMF and World Bank, as called for by the UN’s Copenhagen Summit for Social Development, so that programmes of lending to countries in balance of payments difficulty are based on good governance and respect for human rights, increased employment and the reduction of poverty, and not austerity and deregulation. The crisis of confidence evidenced by the Asian crisis extends to the international financial institutions themselves. The principles of transparency, accountability and good governance which they are rightly advocating as part of their programmes in Asia must be fully reflected in their own statutes and operations. Increased funding and stronger powers to urge action before crisis situations develop must be based on a new mandate founded on the democratic rights of citizens of the member countries of the IMF and the World Bank.

In a global economy where the effect of massive swings in currency flows have far-reaching effects on hundreds of millions of people, it is remarkable that few rules restrain the working of international financial markets or ensure that national regulatory authorities enforce common standards of banking practice, information disclosure or corporate governance. The G8 countries in which most of the main financial centres are based, in collaboration with the IMF and the World Bank, should therefore establish an International Commission with terms of reference to report urgently on the institutional and policy changes needed to prevent a repeat of the latest bout of financial turmoil that has so seriously damaged the Asian economies.

This enquiry should cover:-

Trade Union Action

In following up the conclusions of the ICFTU/APRO Forum,

National Federations will:-

• Present the statement to governments, the employer organisations and the local representatives of the IMF, World Bank and Asian Development Bank;

• Press for the setting up or strengthening of high level national tripartite councils;

• Hold the IMF and the World Bank to their promises of regular consultations;

• Publish a report of the Forum in trade union journals and translate the statement into national languages;

• Discuss in their own decision making bodies further measures to strengthen the representation of workers in the crisis period by for example hot-line complaint services for laid off workers;

• Counteract those who seek to divide the community on ethnic or religious lines by scapegoating particular groups; and

• Urge governments to ratify ILO core labour relation standards Conventions where they have not already done so.

The ICFTU/APRO will:-

• Stand ready to assist national union centres activities to promote the policies summarised in this statement by, for example, collecting and disseminating information on union actions and views;

• Seek regular discussion with the IMG, World Bank, Asian Development Bank and the APEC on the crisis;

• Urge employers to set up a regional association as a vehicle for discussions on matters of mutual interest with APRO;

• Promote tripartite partnership based on stronger commitments to freedom of association and the right to organise and bargain collectively;

• Develop publicity materials to assist union members understanding of the causes and consequences of the crisis and the union’s response;

• Undertake conferences and seminars to broaden understanding and support for its proposals; and

• Organise women’s as well as youth workshops on the crisis and union strategies to represent women and youth workers hit by its effects.

ICFTU (together with APRO, TUAC, ETUC and the ITS) will:-

• Organise an international delegation to present this statement to the Managing Director of the IMF and the President of the World Bank;

• Press the ILO Governing Body to develop an action plan including the urgent convening of a regional tripartite meeting on employment;

• Urge the G8 countries to launch a co-ordinated response to the crisis including the establishment of an International Commission on financial market regulation;

• Present the statement to the OECD and through TUAC urge the Organisation to develop the social and employment dimensions of its work with Asian countries;

• Present this statement to the Presidency and the Commission of the European Union on the occasion of the ASEM Summit in London (2-4 April); and