Statement to Ministerial Finance Dialogue 1

FfD Forum 2019

Statement to Ministerial Finance Dialogue 1 – “Promoting inclusive growth and reducing inequalities” on behalf of Civil Society FfD Group (including the Women’s Working Group on FfD)

Delivered by Mamadou Diallo, Deputy Secretary General, ITUC

15 April 2019

1. Working poverty remains a major challenge across the globe – and I am not talking about people living in poverty, but about people working and not being able to sustain themselves and their families. In the last years, despite unprecedented growth, wages levels are continuously falling and income inequality widening. In 2017, wages reached its lowest growth rate since 2008, remaining far below the levels obtained before the global financial crisis.
2. It is necessary to counter the false and prevailing economic narrative that raising wages, expanding social protection and the presence of trade unions and collective bargaining, are bad for growth and foreign direct investment.  On the opposite, real wage increases and social protection expansions can increase consumption and strengthen aggregate demand, boost productivity, contribute to the formalisation of work, and boost the economy whilst reducing inequality and creating a level playing field.
3. Considering that the working poor account for more than 700 million people, meeting the SDGs and reducing inequalities by 2030 will be impossible if issues around wages are left unaddressed.

How can fiscal policies be more effective in strengthening inclusive growth and reducing inequalities?

• It is important to mobilise domestic resources in order to support the extension of national social protection systems. In this respect, social protection systems should be extended to ensure universal coverage through a combination of contributory social security and social protection floors, in line with ILO standards. Measures to extend social protection to workers in all forms of work, based on the principles of solidarity and risk sharing, is moreover crucial to address the vulnerability of workers globally linked to rapid changes of the organisation of work and to fight informal economy.
• It is also critical that governments ensure effective application of fair fiscal policies, ensuring contributions from business. This is key to financing investment for decent and sustainable work. Stronger efforts and time-bound commitments to address the erosion of tax revenues and profit shifting, as well as, tackling tax evasion and tax havens are also fundamental in this respect.
  • The IMF has estimated that up to 10% of the world’s GDP is held in tax havens.  Financial transparency and automatic sharing of information is an essential method to address such challenges.
• Financial transaction taxes should also be discussed as a source of revenue and a method to curb risky and speculative behaviour that does not benefit sustainable development, decent work or economic growth.

I would like to finish my intervention by stressing the need for governments to ensure domestic legal frameworks that enforce the ILO Conventions on freedom of association and collective bargaining. And integrate the UN Guiding Principles of Business and Human Rights.

Business do also have homework to do with integrating themselves the UN Guiding Principles of Business and Human Rights, the OECD Guidelines on Multinational Enterprises and the OECD Due Diligence Guidance for Responsible Business Conduct.

Thank you.