In an interconnected world, coronavirus needs a coordinated global response

The coronavirus outbreak has exposed the fragility of our globalised and interconnected economies and the power imbalances that underpin them.

Many workers in the UK have been badly affected by the impacts of coronavirus, which is why the TUC has been pushing the government to protect jobs and livelihoods.

But our everyday lives are also interconnected with workers around the world through global supply chains, trade, and through international institutions like the IMF and World Bank – where our government has influence.

The ILO estimates that the COVID-19 crisis will wipe out 6.7 per cent of working hours globally – the equivalent of 195 million full-time workers. Manufacturing, retail, accommodation and food services, and business and administrative activities are most at risk. Two billion workers in the informal economy (mostly in emerging and developing economies) will be hit hardest.

That’s why coordinated international action by governments and international institutions to support frontline workers, protect jobs, deliver social security for all, and boost the real economy when the recovery comes is so vital.

And we need to address the historic power imbalances between the Global North and Global South that have undermined development and sustained exploitative relationships.

Brand power and the fall-out from the pandemic

Western brands' supply chains often end in countries with poor labour laws or enforcement, which means the wages of workers can easily be squeezed. These countries also commonly lack other social protections to help people in a crisis, so even where companies are making sure their suppliers are paying employees enough to live on, a shock like this can leave workers with nothing.

The garment sector, with its mainly young, female workforce, has been badly affected by the COVID-19 pandemic. In Bangladesh, an estimated one million workers have been fired or furloughed as global fashion brands cancel or suspend orders. And in Cambodia and Vietnam factories are closing because of declining orders from Western clothing brands and shortages of materials from China.

Many Western brands are taking advantage of embedded power imbalances and shifting the risks and losses onto suppliers and their workforce by cancelling orders of goods already made or in the process of being made, or delaying payments. This could throw millions of workers deeper into poverty. That can’t be right. What happened to the obligation on companies to respect human rights?

Consumers need to remember this when normality returns. Fast fashion isn’t just cheap because people are paid very little for their work, but because the pricing model is designed to drop those workers at the first sign of trouble.

The TUC is a board member of the Ethical Trade Initiative, which has moved swiftly to publish guidance for members during the COVID-19 pandemic. The focus is on ensuring workers receive payment for completed work, urging dialogue with suppliers over ongoing orders and proposing collective action on the long-term social protection for workers. We’d like to see an even stronger lead from the ETI, but as a minimum all brands should use this guidance.

IMF and World Bank loan prescriptions are bad for health and wellbeing

Strong public health systems like our NHS are vital to dealing with the COVID-19 pandemic. But many poor, indebted countries are forced to prioritise debt repayments over spending on public services. At least 46 low-income countries spent a greater share of GDP on debt servicing than on healthcare systems in 2018.

A Eurodad study of IMF loan conditions in 26 countries in 2018 also concluded that:

“Budget constraints as a consequence of loan conditionality risk compromising a country’s capacity to scale up public investment to provide essential health services, while public employment reductions have a heavy impact on the health sector and the enjoyment of the rights to health.”

And rather than looking at the evidence on strengthening public services, the dogma of privatisation and deregulation prevail.

The World Bank and IMF are among international institutions criticised by the UN Special Rapporteur on extreme poverty and human rights for “aggressively” promoting privatisation, which he states “often involves the systematic elimination of human rights protections and further marginalization of the interests of low-income earners and those living in poverty”. It’s often Western, multinational companies that benefit from this.

The IMF also plays a key role in shaping social safety nets in many countries.

Social security is a right, and according to the UN it should be available, adequate, affordable and accessible. ILO Recommendation 202 sets out guidance for member states on achieving this.

The importance of social security is acknowledged in the UN Sustainable Development Goals (SDGs) which calls on governments to implement nationally appropriate social protection systems and measures for all, including floors, and by 2030 achieve substantial coverage for all.

However, these aims are consistently undermined by the IMF, which continues to favour an approach of narrowly targeting benefits in its programmes, based on proxy means testing, which leaves many falling through the social safety net.

The call by IMF’s Executive Director for a coordinated multilateral response is welcome, as is new funding committed by the IMF and World Bank to support the response to the pandemic. We recognise that the UK government has contributed £150m to the IMF’s Catastrophe and Containment Relief Trust, which provides debt relief, as part of a package of measures.

But any funding needs to come without economic conditions, so governments can decide what is in the national interest working with trade unions through social dialogue.

Ahead of the World Bank and IMF Spring Meetings in April, Global Unions (which the TUC is part of) is calling for the Bank and Fund to produce a plan to coordinate economic stimulus, public health action, debt relief, and support for a global fund for universal social protection.

We need:

• Coordinated international action by governments and international institutions, with social dialogue, which supports frontline workers, protects jobs, ensures social security for all, and boosts the real economy when the recovery comes.
• An approach to the recovery which promotes equalities and supports achieving the UN Sustainable Development Goals, including decent work for all.
• A Binding Treaty on Business and Human rights and mandatory due diligence down global supply chains.
• Sweeping debt relief and a sovereign debt workout mechanism
• Policy space, free from economic conditionality, so governments in poorer countries can decide what is in the national interest through social dialogue.