September 12, 2000
The World Bank's "World Development Report" has recognised that radical measures need to be taken to reduce extreme poverty, but is still coming up with recommendations for action which, by its own analyses, have failed, said the ICFTU today.
"The World Bank appears to want to continue its love affair with privatisation and the need for market access as the cure for the world's ills, despite its own analysis of examples such as the former communist countries, which shows that this was not the key to the success of those which had successfully transformed their economies", said ICFTU General Secretary Bill Jordan. Mr Jordan's remarks are based on an extensive examination by ICFTU economists of the new World Bank report which is being released today (September 12).
The report describes how almost one quarter of the world population now falls into the category of the "extremely poor", who have to live on less than $1 a day. This is despite unprecedented growth of some of the most industrialised countries. One of the World Bank's suggestions for improving the poor's situation is for them to accumulate "assets", including basic services such as education and health care, which it suggests can then be removed from the public sphere. However, at the same time it acknowledges that large-scale privatisation - for example in the provision of potable water - has exacerbated the problems faced by poor people.
The Report touches on the question of core labour standards, which it agrees are worthy targets for economic development, but concludes that "empirical evidence on the benefits of unionisation and collective bargaining is generally quite mixed". This is surprising since recent evidence suggests that there are strong links between freedom of association and high economic growth, and so it is disappointing, says the ICFTU, that the World Bank is not prepared to use its huge financial clout to promote core labour standards both to governments and the private sector.
The Report's findings and recommendations are also contradictory on the topic of social protection. On the one hand the report recognises that people will never climb out of poverty without some public assistance for confronting risks such as old age, and unemployment, as was illustrated so clearly during the Asian financial crisis which resulted in terrible economic hardship for workers in countries such as Korea. Yet while citing the example of East Asia where social assistance programmes would have helped the unemployed the Report, rather oddly, asserts that "not every country needs to set up a comprehensive social safety net", and overtly discourages measures such as unemployment insurance.
In another chapter on "Managing Economic Crises" which blames the restrictive fiscal policies which were applied to solve the crisis in Thailand for actually increasing poverty, the report says that in such situations "Safety nets and social assistance programmes targeted to poor people should be protected if not expanded," again contradicting its own claim that comprehensive social safety nets are not needed.
Finally, the report proposes increasing official development assistance, targeting the poor, and suggests that there should be increased international efforts to increase debt relief for highly indebted poorer countries, which the ICFTU has long argued for.
However, disappointingly given its proclaimed commitment to reducing poverty, the World Bank has not, up till now, followed up its recommendations with a reform of its own policies and practices. Instead it appears to be continuing with its simplistic free-market strategies for solving poverty, which by its own admission have failed.
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