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Today's Top News
Union Leaders Condemn Delegates on Crisis Response
The gloom surrounding this year's World Economic Forum descended into confrontation yesterday as international labor leaders launched a withering attack on the 1,400 business executives and 41 heads of government at Davos over what the labor leaders alleged was their failure to respond effectively to a deepening crisis of their own creation.
Guy Ryder, the general secretary of the International Trade Union Confederation (ITUC), said that the current financial turmoil had triggered a social timebomb that would lead to deepening civil unrest and soaring crime.
The comments from the confederation, which represents 168 million workers in 157 countries, are the most ferocious example yet of a backlash that has persuaded many who attend frequently to stay away from Davos this year. Yesterday Alistair Darling, the Chancellor, became the latest political figure to stay away from the meeting, after a similar move by David Miliband, the Foreign Secretary.
Mr Ryder, speaking as strikes involving hundreds of thousands of workers erupted across France and Germany, told The Times: "We are on the road to serious social instability, which could be extremely dangerous in some countries to democracy itself."
He said: "Davos does not make me at all confident. I don't see any of the leadership here that is needed to get us out of this crisis . . . There is very little contrition here."
The ITUC warned that around the world more than 50 million jobs could be lost this year and that more than 200 million people would be driven into absolute poverty. The confederation said that the financial crisis had arisen because of "rampant speculation and financial profiteering" and that new global financial architecture needed to be established to "support regulation and ensure coherence".
Sharan Burrow, the president of the Australian Council of Trade Unions, said that the world was now witnessing the human cost of "casino capitalism" as the impacts of rising unemployment and home repossessions and of plunges in savings and pension funds hit millions of families.
Ms Burrow said: "Why shouldn't working people be angry? Their money is being used to stabilize the financial system, but it is their wealth, their jobs and the welfare of their children that is being stripped away."
The ITUC said that it was calling on business and political leaders in Davos to agree on a comprehensive recovery-and-reform package to protect jobs and kick-start a recovery, including a coordinated fiscal stimulus, a strengthening of unemployment and social security schemes and emergency IMF loans for developing countries without austerity conditions.
The worsening atmosphere of blame and retribution in Davos came after the publication this week by the Geneva-based International Labor Organization of figures which showed that global unemployment would rise to 230 million this year, or 7.1 per cent of the world's workforce.
Stephen Roach, the chairman of Morgan Stanley Asia, said that US consumers were only at the start of a rebalancing phase that would last several years and cut spending and boost saving levels. He said that global growth would be anemic at about 2.5 per cent for the next three years.
However, Mr Ryder issued a blunt assessment of this year's World Economic Forum. "The certainties that have defined Davos for the past ten years have collapsed," he said. "We are witnessing the collapse of an entire system of ideas."
The remarks reflected a growing theme at the WEF of who to blame for the crisis - an issue that Bill Clinton sought to address at an earlier session. The former US President said: "There's a lot of fear out there in the economy . . . But I also believe that this is not the time to pick new fights, either. We have to get out of this together."
It came as Jean-Claude Trichet pointed the finger at financial markets calling on them to refrain from putting pressure on banks to hold on to more capital as that was aggravating the economic downturn.
The European Central Bank President said: "It is not our position, and we will do all that we can to pass the message that we are not in agreement with that. That would augment the pro-cyclicality of the present period."
Since the collapse of Lehman Brothers last September, investors have been increasingly wary of those banks with relatively low capital ratios, thus encouraging banks to hoard funds at the expense of lending to business and investing. "What the markets are suggesting is not appropriate," he said and called on banks to resume normal business practices and regain some of their lost confidence.
Private companies "have to get back to a normal horizon of investment," he said.