Post MDG Summit

How to Achieve a Socially Responsible Recovery?

11 October 2010 | Minutes

Speakers: Stephen Pursey, Isolbel Ortiz, Matthew Martin, Cathy Pattillo
Chairs: Pamela Gomez, Oxfam


Stephen Pursey, ILO

  • Massive increase in unemployment; but also lots of informal work or underemployed; many with no social protection
  • Even before the crisis we had lack of jobs and inequality; stagnation of real wages – imbalances within countries too; decline of wage share in national income
  • Working with IMF on fiscal sustainability of social protection floor
  • Wages need to grow faster than productivity
  • “Macro policies” are more than fiscal and monetary, also labour market policies – wage increases, productivity in small enterprises
  • Need basic social protection systems, including in LICs – basic pensions, child support (esp linked to school attendance), employment guarantee schemes, basic health care (esp insurance systems)
  • Donors need to get behind these, including ifis, and to get tax systems built for this

Isabel Ortiz, unicef

  • MDG concerns: equity and achievement of he goals
  • 2009 fiscal stimulus was good in MICs, 25% of spending on social protection; overall IMF data shows social spending has gone up
  • But 2010/2011 – projected change in total government expenditure; review of 126 countries, 56  are contracting; real expenditure is the same problem
  • Adjustment measures for contractions will include: contract social expenditures; greater targeting of social protection; ending subsidies, cutting wage bill through salary cuts
  • Need to keep momentum to build social protection floors
  • Four country actions needed: incl alternative plans and policies

Matthew Martin, Development Finance International

  • To fill budget holes from crisis, we saw debt increase, regressive tax rises and then started cutting spending – need more aid as well as innovative financing
  • Period of 2006-2010 expenditure increase for FTI/education was only 1/3 of what was planned/needed; and education is better funded that other MDG goals
  • Two potential sources of finance – international taxation, domestic revenue mobilisation
  • Incl both dropping tax holidays for FDI; and cracking down on tax avoidance
  • This has to be taken care of in rich countries which are pushing unbalanced tax treaties
  • Taxing the financial sector (FAT, levy, FTT, etc) – we can get money up to $400 billion a year – needs to be distributed conditionality-free
  • It is not a financing constraint, it is a lack of political will

Cathy Pattillo, IMF SPD

  • Crisis impact on growth of LICs was less than expected – more resilience; faster recovery than previous crises
  • Resilience from counter-cyclical fiscal policy; including preservation/increases in social spending and public investment
  • Latest numbers show 2009 medium 10% growth in social spending; 17% growth in investment – enabled by good macro policies before the crisis, and debt relief
  • Countries with bigger policy buffers where able to use that space more; financing held up (aid, IFI loans)
  • This is counter-cyclical policy – now is time to rebuild policy buffers; return to medium-term sustainable fiscal positions
  • Real spending is expected to continue increasing in the medium term (over the next 4 years); of the LICs – 55 to increase, 6 to cut (the ones with high debt and high deficits)
  • Global growth is a big driver of growth in LICs; there will be a less favourable environment because of slow growth in rich world; so how to get more?
  • Infrastructure gap in LICs; more trade opportunities – as investment areas
  • Need to harness domestic revenues, raise domestic savings overall
  • Need to get fairer share of natural resource revenues
  • Could use a pro-development Doha round, before that – steps for better preferences for LICs
  • Agree on need for strengthening social safety nets and enhancing social protection; enhancing domestic financial systems would help


PC – timing and pacing of rebuilding policy buffers

Cathy – lack of reserve usage influenced by SDRs, yes they didn’t decline, but a lot of reserves were used

  • In terms of trade offs – worried about another downturn (not a double dip) – are countries going to be prepared?
  • Some fraction of countries that are well prepared; but some not well prepared and that influences our speed

Mark Harrison – why do you say MDGs for everyone everywhere – they were always only half of people

  • Why are jobs not part of the MDGs? Why don’t unions do more on the MDGs?

Isobel – key point of be aware of national averages, because some groups might be left behind

Stephen – Decent work is now part of MDG1

  • UNDAFS, PRSPS, and National Development Strategies are now more involving ILO/unions
  • We can link struggles because it is all about rebalancing

Elizabeth Stuart – looking at the downside risks; what about potential upside risks? Like more money for development from financial sector taxation?

  • Are you doing more upside scenarios? Like those done on Gleaneagles scenarios?

Cathy – we are continuing to work on Gleneagles scenarios; we are doing more analysis of non-concessional borrowing by LICs; including growth impact of investment which we are revising in context of DSF; but no scenarios on financial taxes

Matthew – unions are weaker now than before; inequality is still not part of popular opinion

  • PSIA is not happening on the Fund programmes; more so on the WB side – we need to know impact of Fund programmes
  • G20 – whole dynamic in the opposite direction from stimulus and growth; ideological changes in a few G20 governments
  • Architecture of shock facilities is inadequate at the IMF and WB, if there is another crisis we need a better architecture in place

Student from Brazil – problem about poverty reduction in Brazil is about quantity not quality; if another crisis comes maybe EMEs would be hard hit; what about MDGs in these countries

Albert Gian – dialogue is very fragile, we need to strengthen our discourse, MDGs are too weak; lets get labour and environmental groups involved in the discourse

Francesca from ITUC – we have been very involved in the MDG process – working on decent work, inequality and social protection

Stephen – we need to direct public anger at crisis – it needs to address the issues and provide solidarity, not be directed at protectionism

Isabel – MDGs are minimalistic, but we may not even achieve the quantity goals; need to have growth and human development together – this is the UN Development Agenda