HOW THE WORLD’S WORKING CLASS CAN CONFRONT CURRENT CHALLENGES POSED BY THE WORLD ECONOMIC CRISIS

HOW THE WORLD’S WORKING CLASS CAN CONFRONT CURRENT CHALLENGES POSED BY THE WORLD ECONOMIC CRISIS[1]

By

Femi Aborisade

aborisadefemi@gmail.com

 

Appreciation and Introduction

I wish to express profound gratitude to your Association for deeming me fit and proper to be invited to deliver a paper on how to confront the current challenges facing the world’s working class. I derive personal satisfaction, fulfilment and meaning from life only when I engage in reflections on the emancipatory struggles of the working class, not only within the national frontier but also on a world’s scale, without borders.

Broad Outline of Paper

This paper is structured as follows:

1.    Description and current state of the global economic crisis

2.    Identification of the challenges posed by the global economic crisis

3.    How to confront the challenges

DESCRIPTION AND CURRENT STATE OF THE GLOBAL ECONOMIC CRISIS

In September-October 2008, there was a financial crunch in the US. The immediate cause was rooted in the housing market. Since the late 1990s, the US Federal Reserve Board had sought to prevent a major economic crisis by flooding the American economy with cheap consumer credit - workers whose real wages had stagnated or shrunk had been encouraged to borrow in order to maintain demand for goods and services. It was the inability of numerous borrowers in the housing sector to repay, which is technically called ‘subprime defaults’ that caused the onset of the financial crunch. The subprime default-induced financial crunch has caused great unhappiness, not only for the victims who stood to lose their homes; it has also hurt investors and bankers in the housing market and threw the world economy into recession in 2009 – after several years of relatively strong economic growth.  The ‘subprime sickness’ has been able to spread to other sectors of the economy internationally for various reasons – factors that justify existence of international trade, existence of one single world economy based on intrinsic interdependence of national economies and particularly because so many banks are usually exposed to housing mortgages, directly or directly, in the processes of repackaging and reselling mortgages as security for credits. The spread of risks involved in the syndication of financial credits among banks internationally also means the spread of crisis whenever the bubble bursts.

The crisis in the US housing market of 2008 precipitated a global economic crisis. This crisis has been described as the biggest global economic and financial crisis since the Great depression of the 1930s. It is estimated to have brought about a contraction in international trade and output that is unprecedented in the past 60 and 80 years, respectively. In 2009, GDP in European Union (EU) dropped by 4% and in the US by 3%, levels not experienced since the Great Depression of the 1930s (Schettkat, 2010: 185). Global trade flows started to decline in the first quarter of 2008. Though decline in global trade came to a halt in the second quarter of 2009 in both volume and value, and indeed began to recover in the third quarter of 2009 with GDP growth recovery around the world, trade still remains below the pre-crisis levels.

Output growth which expanded at more than 5 per cent per year in 2006 and 2007 fell to 3.0 per cent in 2008 and declined by 1.1 per cent in 2009. Industrial economies were the first to be hit, with growth rates dropping from 2.7 per cent in 2007 to 0.6 per cent in 2008, and falling by 3.5 per cent in 2009.

While production outputs started recovering early 2010, employment has been slow to pick up. Many of those who lost their jobs during the crisis period remain unemployed. This also implies that new jobs are not being created to meet the needs of young people just joining the labour market. Workers who have managed to retain their jobs continue to suffer severe losses in their incomes as real wages have declined. For developing countries, demand and prices for their export commodities severely declined. This may have prolonged consequences. (Jansen, M. & Uexkull, 2010, ILO, 2009).

It should be noted however that during 2009, the governments of most of the OECD countries flooded their economies with credit and central bank interest rates were reduced to record low levels.  This action succeeded in refloating the world economy – at least in the short term.  So, for example, the World Bank is now predicting 3.8% growth of the African economy in 2010 and 4.8% for Nigeria.  However, many of these countries now have much higher levels of debt and it is not clear how these debts can be reduced without provoking another recession.

 

THE CHALLENGES

The topic of this paper and the above attempt to capture the state of the crisis suggest that the world economic crisis has generated certain challenges for the world’s working class. It is therefore appropriate to identify and breakdown the challenges before we can meaningfully discuss how to confront them effectively. This subsection is devoted to this task.

Effects of the Crisis on Output and Employment

In Table 1 below, the year 2007 is used as a benchmark because the crisis began to take effect in the second half of 2008.

Jansen & Uexkull (2010) established that world GDP declined by 1.1% in 2009. While some countries experienced positive but lower rate of growth, others experienced negative growth in output. On the whole, global employment level was still positive but low (+0.7%) in 2009. It slowed down substantially in all regions of the world, except the Middle East, and turned negative in the worst affected regions – developed economies and EU, Central and Southern Europe and CIS. In the sub-Saharan Africa, output dropped from 6.8% in 2007 to 3.7% in 2009. In the same period, employment fell from 3% to 2.8%.  These effects are presented in a tabular form below:

 

Table 1: (Real) GDP AND EMPLOYMENT GROWTH BY REGION, 2009 VERSUS 2007 (IN PERCENTAGES)

World/regions	2007 (GDP)	2009 (GDP)	Difference	Employment (2007)	Employment (2009)	Difference
World	5.2	-1.1	-6.2	1.9	0.7	-1.2
Developed economies and European Union	2.6	-3.5	-6.2	1.4	-2.5	-3.9
Central and South Eastern Europe (Non-EU) and CIS	7.6	-6.5	-14.1	2.1	-2.2	-4.3
East Asia	11.2	6.1	-5.1	0.9	0.9	0.0
South-East Asia and the Pacific	6.5	0.5	-6.1	2.5	1.7	-0.8
South  Asia	8.7	5.0	-3.7	2.4	1.8	-0.6
Latin American and the Caribbean	5.7	-2.5	-8.2	2.1	0.2	-1.9
Middle East	6.1	1.4	-4.7	3.0	3.7	0.7
North Africa	5.8	3.7	-2.1	2.7	2.4	-0.3
Sub-Saharan Africa	6.8	1.2	-5.7	3.0	2.8	-0.2

Source: ILO (2010). Global employment trends, January (cited in Jansen & Uexkull, 2010: 33).

 

 

 

 

 

EFFECTS ON EMPLOYMENT AND WAGE LEVELS

The period 1995-2007 was generally characterized by relatively favourable economic context. Since then, there has been dramatic economic downturn. In the growth years, the wage system was characterised by stagnation in real wages relative to productivity gains, growing wage inequality, excessive executive pay, distorted incentive structure in the financial sector which encouraged risk taking and short term profits rather than sustained company performance.

Based on a sample of 53 countries for which official wage statistics were available, the ILO (2009) has estimated that global growth in average wages declined from 4.3 per cent in 2007 to 1.4 per cent in 2008. While a majority of countries could maintain declining but positive wage growth in 2008, more than a quarter of countries experienced flat or falling monthly wages in real terms. They included USA (0.0 %); Austria (0.0 %); Costa Rica (0.0 %); South Africa (-0.3%); Germany (-0.6%); Switzerland (-0.7%); Israel (-0.9%); Japan (-0.9%); Singapore (-1.0 %); Mauritius (-1.0 %); Kazakhstan (-1.1 %); the Republic of Korea (-1.5 %); Panama (-2.8 %); Mexico (-3.5 %); Ecuador (-4.1 %); Iceland (-4.8 %); and Seychelles (-15.5 %). Taiwan, China and Hong Kong, China recorded declines of 3.6% and 6.2% respectively (ILO, 2009: 2-3).

The 2009 ILO study also revealed that compared to the 2008 annual average, the real wages in the first quarter of 2009 fell in more than 35 countries for which data were available.    

The same ILO study (2009) has established some relationships between variations in GDP per capita rates and wages. In the last ten years before the crisis, wages had increased at a slower rate than the economy. On the average, each additional 1% growth in annual GDP was associated with a 0.75% growth in annual growth of wages. However, the more recent pre-crisis period of 2005-2007 witnessed a stronger association – 0.91%. But in 2008 and 2009, during the crisis, considerable variations have been witnessed. While some countries have managed to maintain positive wage growth despite the recession, others have implemented wage cuts. The differences could be accounted for by differences in the strength of the trade union movement, trade union coverage, collective bargaining coverage, and policy responses to the crisis.

Widening wage inequality: Though there is limited data to prove this, the ILO (2009) reports that it appears the crisis has widened wage inequality – the ratio which measures the distance between the 10 per cent of highest paid workers and the 10 per cent of the lowest paid workers.

The crisis and minimum wage: The ILO (2009) wage study suggests that many countries, including developed, developing and transition countries tend to fix their minimum wages at 40 per cent of average wages. In the pre-crisis period, more than 70 per cent of the countries sampled increased minimum wage levels by an average of 5.7 per cent per year in real terms, that is, after adjusting for inflation.  During the crisis, based on a sample of 86 countries, more than half of the countries have increased minimum wages in real terms, that is, by a rate higher than the rate of inflation; the other countries have allowed inflation to erode the real value of wages. 

Studies in post crisis impacts on employment: Reinhart and Rogoff (2009)

Further studies have been conducted into the impacts of the crisis on employment and the tendency that emerges is deepening unemployment. Reinhart and Rogoff (2009) analyzed a sample of 14 historical banking crises and found that on average, unemployment rose 7 percentage points above pre-crisis level and the shock to the labour market lasted about five years. It has been found that unemployment in the US continued to increase for 16 and 20 months after the country moved out of the 1990/91 and 2001 recessions respectively. Furceri and Mourougane (2009) also argue that past crises in the Organisation for Economic Cooperation and Development (OECD) countries raised structural unemployment rate and thus had permanent effects. 

Effects on undernourishment

The United Nations Food and Agricultural Organisation (FAO) (2009) has predicted that the number of undernourished people will increase from 915 million to 1,020 million, with much of the increase caused by the global economic crisis. There has been a tendency for the number of undernourished people to rise. It rose from 873 million in 2004-2006 to 915 million in 2008. However, the rise in the stated number between 2004/2006 and 2008 had been accounted for by global food price crisis. As from 2007, prices of important basic food items rose to unprecedented levels. Increases in food prices tend to affect the poor more than the rich because the former tend to spend a higher proportion of their income on food.

Effects on exchange rates

The global economic crisis also brought about greater volatility in international exchange rates. Changes in exchange rates tend to have strong repercussions on trade. Depreciation in currency values makes exports cheaper but makes imports more expensive. In conventional economics, exports are said to be competitive and exporters profitability enhanced. But when compared with the value of the said exports in the local market coupled with the fact that imports become more expensive, the so called advantage of a devalued currency is cancelled out. Jansen & Uexkull (2010) have analyzed exchange rates movements of 161 countries during the acute stage of the global economic crisis. The analysis was based on the currency value fluctuations relative to the weighted average of four major convertible currencies – the US dollar, the Euro, the Japanese yen and the British pound. The authors found that with the exception of the high-income non-OECD countries, on average, all currencies depreciated in the fourth quarter of 2008, when the crisis started. The 12 per cent rate of currency depreciation (against their values at the beginning of 2007) in upper-middle income countries was the strongest; though some value recovery was later recorded. Low-income countries were also equally strongly affected but with a relatively smaller rate of depreciation which steadily reached its peak at 11 per cent below the level in 2007. Lower middle income countries were less severely affected with an average of 5 per cent below their 2007 values. In high-income OECD countries, a trend towards appreciation at the beginning of the crisis was reversed; the third and fourth quarters of 2008 saw substantial depreciation, from minus 4 per cent to plus 8 percent. Though, this trend was partially reversed in the second half of 2009. As stated above, only the group of high-income non-OECD countries were largely unaffected. 

EFFECTS ON WORLD MERCHANDISE EXPORTS AND IMPORTS BY REGION, 2008-2009

 Based on the work of Finger (2010), data from WTO and other sources, Jansen & Uexkull (2010) have also reported an acute and global effect of the global economic crisis on world exports and imports. They found that though world merchandise trade recorded about 15 per cent growth in 2008, this dropped by 30 per cent in the first quarter of 2009. Though all world regions experienced export drops of above 20 per cent in each case, the drop was sharpest in Commonwealth of Independent States (CIS) countries, and in Africa and Middle East – regions that are important exporters of fuel and metals and which had benefitted from price rises in 2007/2008. The drop by 50 percentage points in exports in Africa and Middle East was deepest. (See the Table below).

 

TABLE 2: EFFECTS OF THE GLOBAL ECONOMIC CRISIS ON WORLD MERCHANDISE EXPORTS AND IMPORTS & BY REGION, 2008-2009 (Table shows percentage changes over preceding year, based on dollar value)

World/Regions	2008 exports	2009 exports (Jan-Sept)	2008 imports	2009 imports (Jan-Sept)
World	15	-30	15	-30
Western Europe	11	-30	12	-32
Asia	14	-24	20	-27
North America	11	-27	8	-30
South/Central America	21	-25	30	-32
CIS	35	-45	32	-41
Africa and Middle East	31	-50	26	-21

Source: Jansen & Uexkull, 2010: 31

 

EFFECTS ON WORLD TRADE IN SERVICES

The declines are not limited to merchandise exports and services. Borchert and Mattoo (2009) reported that trade in services, and particularly in financial, transport and tourism services dropped significantly during the crisis, even though trade in a range of business, technical and professional services continued to grow.

Trade in transport services however followed the downturn in merchandise trade. In air transport, the downturn was driven by declines in air freight. But international passenger traffic declined by only 4.7 per cent by the first nine months of 2009 and even increased slightly in October 2009. The United Nations World Tourism Organization (UNWTO) (2009) reported a 7 per cent decline in arrivals for the first 8 months of 2009 but estimated that the decline for the whole of 2009 would be around 5 per cent. However, the UNWTO (2009) has reported a contradictory outstanding positive development of tourism in Africa, noting that the number of international tourist arrivals continued to rise in the first eight months of 2009 by nearly 4 per cent while all other regions declined by between 5 and 8 per cent. This positive development shows that unions should not allow employers in the air transport industry in Africa to attack workers welfare under the guise of so called world economic crisis.

Challenges in the International industry

The 41^st Congress of the ITF has recognised continuing trend of economic globalisation as a challenge to the trade union movement, internationally. It declared that ‘The world economy is becoming increasingly based on the globalisation of production, markets and ownership.  This system of globalisation exerts intense pressure for the creation of a more liberalised global transport system. The process of privatisation and commercialisation has already had a major impact on transport in many regions of the world, and it continues to affect transport services virtually everywhere. Even where transport employers have not yet been fully privatised, their transformation into structures which can easily be opened to private capital is the first step in a continuing process of liberalisation. Even in those countries where governments are reluctant to go down this path, there is increasing pressure on them from international institutions to do so’.

The 41^st Congress of the ITF declared that “The neoliberal programmes of bodies such as the World Bank and regional development banks continue to have a serious negative impact both on the quality of transport services and on the employment and working conditions of transport workers”. The Congress thus reaffirmed its “opposition to any form of transport restructuring, including privatisation, which has a negative impact on jobs or workers’ conditions and rights and which is implemented without the agreement of the unions concerned;

 

Challenges in the Local Industry

The neoliberal challenge identified by the ITF has equally registered negative impacts in the Nigerian aviation industry.

A basic neo-liberal assumption is that there is a relationship between efficiency and profitability on one hand and the size of the workforce on the other and that PEs are inefficient because they are overstaffed. This is also the perspective of the BPE as revealed by its Director General, Bala (2004:9) when he stated that ‘overstaffing of labour….may dissuade potential investors’. Therefore, workforce shedding is seen as a necessity in the economic reform process. In the words of Bala (2004:14), ‘the problem of labor redundancy in public enterprises as illustrated by the preliminary survey conducted by our labor advisors based on data collected from about 27 enterprises, is clearly indicative of the necessity to downsize the surplus labor’.

Therefore, job losses are not just end products of privatization; they often occur before and in the process of executing the policy. The BPE (2005:29) also pointedly stated this labour policy framework - that staff rationalization and legal reform to legitimize turning the previous public monopolies into private monopolies ‘would be undertaken’ before privatization or concession. The experience of the Nigeria Airways Limited (NAL) best illustrates this tendency. Before the Nigeria Airways Limited (NAL) was liquidated, the size of the workforce was reduced steadily, from over 10,000 in 1983, the number fell to 4,250 by 1993, as a result of arbitrary retrenchment. This is shown in the tabulation below:

TABLE 3: NIGERIA’S AIRWAYS STAFF STRENGTH, 1981-1993

Year	Staff Strength
1981	7,232
1982	9,955
1983	10,163
1984	9,371
1985	9,791
1986	8,326
1987	7,368
1988	4,585
1989	4,573
1990	4,427
1991	4,450
1992	8,830
1993	4,250

Source: Anyanwu et al, (1997:360)

 

By the time of its liquidation, NAL had only 1,774, including 601 staff in its four subsidiaries (BPE, www.bpeng.org/10/Index.asp as at 3 July 2006).

Apart from direct privatisation, other forms of privatisation and anti-labour policies and practices are being experienced in the aviation industry, as discussed below:

1.    Increasing introduction of private monopolies into the aviation industry, in spite of the inherent dangers and national sovereignty security implications.

2.    Instances of increasing private monopolies in the aviation industry are concession agreements involving revenue points in all the nation’s airports.

3.    A concrete example of the increasing private monopolies in the aviation industry is the BOT agreement between the Federal Airports Authority of Nigeria (FAAN) and BI-Courtney Ltd. According to union sources, the agreement had been secretly entered into two years before it was made public. It involves hand over of the General Aviation Services Terminal (GAT) to BI-Courtney aviation services Ltd. The GAT contributes 40 per cent of the total revenue generated by the Federal Airports Authority of Nigeria (FAAN). There is therefore no economic rationale for the concession agreements. Indeed, the Federal Airports Authority of Nigeria (FAAN) maintains 23 Airports, inclusive of the new Akwa Ibom Airport and pays the remuneration of about 5,000 active workers and 4,000 pensioners from the internally generated revenue (IGR) from the viable airports (i.e. Murtala Mohammed Airport, Lagos; Mallam Aminu Kano Airport, Kano; Port Harcourt International Airport, Port Harcourt; Margret Ekpo International Airport, Calabar; Nnamdi Azikwe International Airport, Abuja), without receiving any subvention from the Federal Government of Nigeria. The secrecy in which the concession deal with BI-Courtney is shrouded informs the refusal and/or failure of BI-Courtney Ltd to pay the following debts owed to the Federal Airports Authority of Nigeria (FAAN): N1bn performance bond, N200m maintenance bond, and N800m for services rendered to BI-Courtney Ltd. The concession agreements, including the one involving BI-Courtney are executed illegally, in breach of the Act which establishes the Federal Airports Authority of Nigeria (FAAN) and empowers it with the power to develop, operate and maintain airports within the Nigerian Airspace and provide all necessary services and facilities for the safe, orderly, expeditious and economic operations of air transport. That Act (CAP 5, LFN, 2004) has not been repealed or amended to accommodate the concessions so far executed. The concession agreement with BI-Courtney amounts into losses, not only for the Federal Government and Federal Airports Authority of Nigeria (FAAN), it also means a loss to the workforce. For example, the Federal Airports Authority of Nigeria (FAAN) school land which caters for the education of workers has been left out of the BOT scheme. It is therefore imperative for the union to insist on a total reversal of all the concession agreements, including the one involving BI-Courtney Ltd.

4.    Labour Casualisation: There are various forms of labour casualisation in the age of globalisation. It includes contract staffing, outsourcing and so on. One of the disastrous effects of labour casualisation is resistance to unionisation by employers. These anti-labour practices portend grave dangers not only to jobs and workers welfare, they also pose challenges to safety and security in the aviation industry. Unfortunately but expectedly, the anti-labour practices which have been embraced by public authorities serve as examples for the private companies in the industry to emulate. The private companies and public authorities that engage in labour casualisation and other anti-labour practices include:

1.         Federal Airports Authority of Nigeria (FAAN)

2.         Skyway Aviation Handling Company Nigeria Ltd. (SAHCOL)

3.         Nigerian Civil Aviation Authority (NCAA)

4.         Nigerian Airspace Management Agency (NAMA)

5.         Nigeria Meteorological Agency (NIMET)

6.         Bristow Helicopters Nigeria Ltd. (BH)

7.         Pan African Airlines Nigeria Ltd. (PAAN)

8.         Aero Contractors Company of Nigeria Ltd. (AERO).

 

EFFECTS OF THE GLOBAL ECONOMIC CRISIS ON DESTRUCTION OF THE SOCIAL FABRIC OF THE FAMILY INSTITUTION

An email, which is ordinarily meant to make readers laugh was recently forwarded to me. Though the essence was to excite laughter, in my opinion, it shows how far the economic crisis tends to destroy human beings sense of decency and self respectability, and particularly the extent it has gone to break down the social fabric which the family as an institution represents. The email goes thus:

 

“Have a laugh:

A husband working abroad wrote to his wife:

‘Dear Sweetheart,
I can't send your allowance from my salary this month because the Global
market crisis has affected me; so I am sending 100 kisses.
Your loving husband, B’

His wife replies:

Sweetheart Dearest,

Thanks for the 100 kisses. Find below the list of expenses I paid with the kisses:
1. The Milk man agreed on 2 kisses for one month's milk
2. The electricity man agreed not to disconnect us for only 7 kisses
3. Your landlord comes everyday to take 3 kisses instead of the rent
4. The Supermarket owner did not accept kisses only, so I gave him
'other' items. Hope you understand?
5. Other miscellaneous expenses amount to 40 kisses
Please don't worry about me, I have a remaining balance of 35 kisses and
I should be able to manage till the end of the month with the balance.
Shall I plan the same for next month? Please Advice.

Your ever loving Sweet Heart, J”

 

MITIGATION POLICIES: HOW TO CONFRONT THE CHALLENGES

Several short and long term measures have been advocated and implemented across the globe to mitigate the negative effects of the global economic crisis and to possibly avert future occurrences. However, it must be realised that the measures being advocated are not value-free. In other words, they tend to be informed by different worldviews or class interests. From the standpoint of the working class, confronting the challenges posed by the economic crisis and neoliberal globalisation must begin with the responsibility of understanding correctly, the root cause of the crisis.

·         Understand the root cause of the global economic crisis and the neoliberal challenges facing labour: Formulating appropriate response to the global economic crisis can only be achieved when the nature of the crisis or the root cause is correctly understood.

The financial meltdown of 2008 should be located in the inherent weakness of the capitalist system to take society forward in the current period. The growth of the global financial system has its origin in the decline of profit rates in the productive/manufacturing sector, particularly since the early 1970s and the failure to sufficiently restore them from the low levels they had reached by the 1980s, in the industrial world. Though accounts of declines in rates of profits vary from scholar to scholar, there is unanimity that there have been declines. Kliman (2009: 3-4) for example gives the trend of average rates of profits in the US to be 28.2 per cent in 1941-1956, 20.4 per cent for 1957-1980 and 14.2 per cent for 1980-2004. On his own part, Lapavitsas (2009: 13) produces the following profit rates figures for the US – from 12/13 per cent in the 1980s to about 10 per cent through the 1990s and then falling to about 5/6 per cent in the current decade. The problem of the tendency of profit rate to fall and the actual falls have influenced the banks to shift focus from lending for productive activities to scrambling for alternative outlets for profits in areas that are not directly connected to the generation of value and surplus value. These outlets usually consist in purely speculative gambles in unproductive spheres such as real estate, commodities markets, shares, and so on, whose prices by nature hardly have any relationship with the reality of actual value created in the productive sectors of the economy. Investors in those speculative outlets tend to have an illusion of rising profits until the bubbles burst. (Choonara, 2009: 83-85). Estimation of profits in the balance sheet based on rising prices of assets in the non-productive sectors is what Blackburn (2008: 69) has called ‘fantasy valuation’. This refers to the tendency of the financial sector to swell far beyond the scale justified by the value created in the productive sector of the economy.  In this context, Husson (2008: 2) opines that financial crisis should be seen as ‘a call to order by the law of value’. Since finance in itself does not create new value, profits must be obtained from the productive sector of the economy. Thus, the collapse of some unprofitable big companies in the financial sector has the capacity to drag down the profitable companies in the productive sector.

 

Marx (1972: 465-468) also terms this phenomenon ‘fictitious capital’. However, ‘fictitious capital’ neither means the capital does not exist nor does it involve some kind of fraud. Rather, it is investment in ‘paper claims’ over a share of value to be produced. The fact that fictitious capital entitles the owner to a stream of income makes it appear like real capital, which the owner or beneficiary can throw into production to generate value or loan out for interest (Choonara, 2009: 105).  Examples include bonds issued by the government, which entitle bond holders to a share of future revenue to be generated by the government, or share purchase in companies which entitles shareholders to a portion of surplus value to be generated by the company in the future. The market prices of the shares might rise or fall depending on how the income inflows compare with alternative investments. In this process of ‘fictitious accumulation’, companies’ shares tend to be pushed well above the actual value of its assets. However, there is nothing like a permanent reservoir of fictitious accumulation because it is possible for a portion of the capital to find its way into production as it may happen when assets are sold or loans taken and ploughed into real production. But in the end, the burst of the bubbles, in the long run, tends to force the economy into line with the actual value created.

 

·         Nationalisation: Trade unions should advocate nationalization of all ailing private companies, including the banks, and renationalize all previously sold public enterprises and put them under democratic management and control of the workers in those enterprises. This is the logical measure that flows from a correct understanding of the root cause of the global economic crisis. While the economic crisis has forced many capitalist advocates to recognise that the crisis is rooted in the limits of the capitalist logic, majority of them have recoiled from drawing the necessary conclusions in terms of advocating the system that negates capitalism. Nationalization is one of the fundamental lessons to be learnt from the measures being taken internationally to tackle the current economic meltdown. Thus, in September 2008, the US Government carried out the takeover of the mortgage giants Freddie Mac and Fannie Mae, in what a US Professor of history termed the ‘greatest nationalisation in the history of humanity’. Nigeria cannot afford to turn its back to the direction faced by the rest of the world. Therefore, it is not enough to bail out failing private enterprises with public resources; they ought to be nationalized and put under democratic management and control of the workers, who work in them, so that the surplus generated can be available for public goods, including funding of education. The use of enormous public resources to bail out private companies is nothing but socialization of private losses. Rather, such resources should be used to provide for the welfare of ordinary people and enhance their purchasing power.

·         Need to redirect economies towards wage-led, domestic-driven growth, rather than the traditional export oriented production.

·         Need to redirect social policy towards state responsibility to ensure citizens’ realisation or enjoyment of their social and economic rights (e. g. employment or unemployment benefits) as fundamental rights, which also contributes positively to development.

·         Development of Economic Stimulus Package: Since the outbreak of the world economic meltdown, various countries have developed different state interventionist policies meant to put money in the hands of the people so as to bring about economic revival in the context of the current economic downturn. Across the globe, more than $2trn has been spent on various types of stimulus packages.

·         Specific consumption subsidies

·         Generic consumption subsidies

·         Freedom of association and enforcement of the right to collective bargaining against  employers who tend to advocate sector specific subsidies and measures that protect capital against labour, e.g. those that permit labour flexibility, measures supporting lowering the cost of labour, production subsidy to encourage production for export, etc. 

·         Job promoting/creation measures, e. g. through investment in infrastructures and social services, health, education, public housing, etc. For example, Germany adopted a program of Kurzarbeit, shorter working hours and lower pay. Trade unions should however advocate shorter working hours without loss in pay.

·         Reduction in tax liabilities. For example, US granted tax credits in personal income tax; UK reduced value added tax from 17.5% to 15%.

·         Increased National Minimum Wage and wage indexation: Another lesson to be learnt from measures being taken internationally in stimulating the economy is raising of the minimum wage. For example, in the U.S., the Federal minimum wage has been raised with effect from 24 July 2009 from $6.55 (N1,048.00) per hour to $7.25 (N1,160.00 at the prevailing exchange rate of N160:$1) per hour. Though most States have their own minimum wage rates, employers are required to pay whichever is higher. According to a CNN report (cited in Vanguard, 27 August 2009: 33), an economist with the US Economic Policy Institute (EPI) asserts that the wage increase will inject $5.5 billion worth of extra spending into the US economy over the next year. But in Nigeria, the minimum wage rates (N7,500 at the federal level and N5,500 at the state and local government levels) which were fixed since 2000 and the recent review has not been implemented, despite the fact that the 1999 Constitution provides for a National Minimum Living Wage (Section 16(2)(d). For the minimum wage to be an effective economic stimulator, wage indexation should operate such that wages and salaries rise as inflation rises.

·         Compelling the State/government to accept that “labour is not a commodity”. The perspective that labour is a commodity is a perspective that only those who are capable of producing over and above what they are paid should be provided for by the society. But a society that declares labour not to be a commodity is one that is prepared to extend social security measures to all vulnerable groups who are in need of protection, such as a basic income, regardless of whether they are employed or not employed, and whether they work in the private or public sector.

·         Measures to reduce inequalities, in income and wealth and to prevent unsustainable consumption patterns. This category of measures will find support in the state funding the poor’s access to basic means of life such as health, nutrition, education, minimum physical infrastructure, including sanitation, electricity, transport and communication links. Thus, the concept of reliance on market forces as determinants of production will find no place in the context of pervasive abject poverty of the majority. Eliminating inequalities and preventing unsustainable consumption patterns also require aligning the compensation systems in the entire economy such that there is a kind of uniformity in compensation structures, based on requirements of material need, educational or professional qualification and years of practical experience rather than salary differentiation on the basis of the sector of the economy, which is responsible for the excessively odd remuneration packages of the top executives in the banking and oil sectors, for example.

·         Need for concrete analysis and updates of concrete local and international circumstances, country by country, sector by sector, industry by industry, in order to identify appropriate concrete measures to advocate in dealing with the negative effects of the crisis.

·         Need for an international program of action based on the international character of the crisis.

·         Local resistance strike actions and international solidarity strike actions as inevitable methods of struggle. National and international experiences have shown that that is the language understood by the employers. In recent time, the strike weapon has been successfully applied in Zimbabwe and elsewhere. In September this year, the pilots of Air Zimbabwe went on strike in support of full payment of $2,500 monthly pay. The airline was paying at least $1,200 a month. Two planes were abandoned on the run way in the course of the action and all flights of the airline had to be cancelled. For international comparison of pilot remunerations, depending on airlines, see http://www.willflyforfood.com/airline-pilot-salary/. Also, in the first quarter of 2009, the Australian air traffic controllers had to threaten strike action in defence of unlimited sick leave (and new collective agreement involving pay rise) whereas their employers, Airservices, sought to limit it to 15 days as it obtains in other industries and government departments.  Similarly, the year 2010 has been marked by series of strike action in virtually all continents in the aviation industry. The February 2010 strike by French air traffic controllers forced flight cancellations out of Paris. The dispute between British Airways and the 11, 000 memberships of British Airlines Stewards and Stewardesses Association is also remarkable. The British Airways proposed a pay freeze in 2010 and to switch about 3,000 employees to part-time status, with the aim of reducing staff costs by 140 million pounds in 2010. Air France cabin crew and other unions around the world, from air traffic controllers to refuellers, to ground and flight staff and the International Transport Workers Federation, had to call solidarity strike with workers at British Airways (BA), starting from 27 March 2010. The press reported an Air France union representative as saying: “Anything we can do to support the British Airways staff in their strike will be done …. We will be showing solidarity with our colleagues”. Similarly, the recent strikes in South Africa, involving over a million public sector workers and backed by 33 affiliates of the COSATU, the South African trade union federation, is further confirmation of the potency of strike in defense of workers’ rights. The strike was for a wage increase. During the strike, a striking teacher stated that the typical public sector worker’s wage of 7,000 Rand a month [i.e. US$950] was grossly inadequate. During the strike, the government revised its offer to a 7.5% wage increase and an 800 Rand (i.e. US$109) housing allowance. Even within Nigeria, the university sector unions, led by ASUU, won 53% wage increase, in spite of the so called global economic crisis. Whereas the Nigerian State salvaged the Nigerian banks by over N1.82trillion during the crisis, government and employers tend to hide under the global economic crisis to deny workers their rights.   

·         Collaboration with pro-working class civil society organisations, nationally and internationally, including bodies like the Amnesty International that has departments on labour issues. This approach has also been recognised and recommended by the 41^st ITF Congress meeting in Durban, 2-9 August 2006. It called for ‘alliances with civil society organisations that share trade union values’ in campaigning against neo-liberal privatisation agenda in the aviation industry.

·         There is a need to develop alternatives to neoliberal programmes. Indeed the 41^st ITF Congress encourages unions in the transport sector to develop “positive alternatives to neo liberal ideology” and “to put forward union alternatives”. Indeed, the 41^st Congress of the ITF declared it “believes that public transport should be accountable to the public interest rather than to the interests of global capital. Affordable public transport services and access to transport as a basic social right are also issues of concern to civil society...”. In reacting to issues at local factory, state, regional or national levels, trade unions should not only criticise what exists, we should also advocate well considered and researched alternatives. We should convincingly demonstrate that we are capable of running society, where the opportunity arises.

 

 

 

 

 

 

Bibliography

Borchert, I. and Mattoo, A. (2009). The crisis-resilience of services trade. In World Bank Policy Research Working Paper 4917. Washington DC: World Bank

Ghosh, J. (2010). Global crisis and beyond: Sustainable growth trajectories for the developing world. International Labour Review, 149 (2), pp. 209-225.

ILO. (2009). Global wage report: Update 2009. Geneva: author.

Jansen, M. & Uexkull, E. V. (2010). Trade and employment in the global crisis. Geneva and New Delhi : ILO and Academic Foundation (AF).

Schettkat, R. (2010). Will only an earthquake shake up economies? In International Labour Review, 149 (2), pp. 185-207.

Supiot, A. (2010). A legal perspective on the economic crisis of 2008. In International Labour Review, 149 (2), pp.151-162.

Torres, R. (2010). Incomplete crisis responses: Socio-economic costs and policy implications. In International Labour Review, 149 (2), pp. 227-237.  

United Nations World Tourism Organization (UNWTO). (2009). World Tourism Barometer, October.

 

Websites

http://knowledge.allianz.com/en/globalissues/microfinance/top_climate_stories/global_risks_2010_fiscal_crises_debt_banking.html?utm_source=google&utm_medium=cpc&utm_term=banking%20crisis&utm_campaign=Allianz%20Knowledge%20-%20NEW%20Banking%20Crisis

http://knowledge.allianz.com/en/globalissues/climate_change/top_climate_stories/global_risks_2010_tambourgi.html

 

http://knowledge.allianz.com/en/globalissues/microfinance/top_climate_stories/global_risks_2010_allianz_heise_debt_social_security.html

 

http://www.ilo.org/global/What_we_do/Publications/ILOBookstore/Orderonline/Books/lang--en/docName--WCMS_141911/index.htm

http://www.ilo.org/public/english/revue/download/pdf/s4ghosh.pdf

http://www.ilo.org/public/english/revue/download/pdf/s1supiot.pdf

(http://www.ilo.org/public/english/revue/download/pdf/s3schettkat.pdf)

http://www.ilo.org/public/english/revue/download/pdf/s5torres.pdf

http://www.ilo.org/wcmsp5/groups/public/---dgreports/---dcomm/---publ/documents/genericdocument/wcms_141464.pdf

 

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[1] Paper delivered on 8^th October 2010 to the National Executive Council Meeting (NEC) of the AIR TRANSPORT SERVICES SENIOR STAFF ASSOCIATION OF NIGERIA (ATSSSAN) held at Premier Hotel, Mokola Hill, Ibadan on 6th - 9th October 2010.