Economic Crisis: A Response Based on Social Justice and Decent Work

By Somavia, Juan | Americas (English Edition), July-August 2009 | Go to article overview
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Economic Crisis: A Response Based on Social Justice and Decent Work


Somavia, Juan, Americas (English Edition)


WE ARE CURRENTLY FACING the worst world financial and economic crisis since the Great Depression of the 1930s. The situation is serious and continues to worsen at an alarming pace. In a matter of months, what looked like the problem of just a few banks led first to the collapse of the financial system of some regions and then to a worldwide economic downturn. Today we are faced with a real economic crisis that is leading us towards a social recession.

But let there be no mistake. The origins of the crisis do not lie only in financial speculation. They also lie in the structural imbalances of the current model of globalization. I am referring to a model that during the last three decades has overvalued the role of the market, devalued the role of government, and diminished the dignity of work and respect for the environment.

We know from experience that severe financial crises cause recessions that are extremely costly in economic, social, and human terms. In just a few months, the current crisis has endangered much of the progress the world has made in the last fifteen years in the area of poverty reduction. The ILO calculates that unemployment in the world will increase by more than 50 million in 2009, making this the first time in history that more than 200 million people will be unemployed in the world. It is likely that the hardest hit will be women, youth, and immigrants.

The crisis is also having a big impact on developing countries since most of them do not have the same tools (fiscal margin, social safety nets) that industrialized countries have. Furthermore, developing nations are being hit not only by increased unemployment, but also by growing poverty among working people (workers who earn less than two dollars a day) and by an increase in precarious work (self-employed workers and those who provide unremunerated labor to their families). The crisis is reversing, or at the very least stopping, the downward trend of these two indicators since 2007.

In the particular case of Latin America, the most recent ILO regional report indicates that the urban unemployment rate will rise again in 2009 after five years of continuous reduction. A decrease in export income, the result of falling international prices for raw materials, and a decline in remittances will also have a considerable impact on the region. It is encouraging to see that some countries have begun to introduce anti-crisis plans focused on employment as a primary objective. However, the region is still suffering from serious structural problems--high poverty levels, persistent social inequality, widespread economic informality, and insufficient social protection--that have yet to be resolved.

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