ILO head warns of backlash against globalisation

Bangkok (Reuters) - The head of the International Labour Organisation (ILO) hit out on Tuesday at what he called the international casino economy and said that trade and financial policies had to be geared to meet the needs of ordinary people.

Such tailoring of policies would stave off a politically dangerous backlash against globalisation, said Juan Somavia, the Chilean director-general of the Geneva-based ILO.

Unless developing countries saw that new technologies and free markets were delivering jobs and social progress, the assumption that ever-closer global economic integration is inevitable would be called into question.

"This idea that globalisation is untouchable is not true," Somavia told a summit of the UN trade and development agency, Unctad.

More than 3 000 delegates from 190 countries are attending the week-long meeting which ends on Saturday.

"Policies can be changed and I would say more: policies need to be changed. If policies are not changed . . . this model of globalisation will not continue for the very simple reason that it is not delivering the goods for enough people," he said.

"I find the situation frankly worrying and even dangerous politically."

Technological progress was opening new economic vistas but was also creating a digital divide that risked fuelling a backlash by the poor and unemployed.

"It's the lack of that consensus that can bring the whole damn house down," Somavia said. Create jobs

He said that the task for international institutions was to put job creation and social issues at the heart of the policies they design for developing countries. Monetary policy could be more growth-oriented to spur investment and jobs. "I would like to see the international organisations dealing with financial matters giving much more importance to productive capital, which produces goods, creates jobs, etc, than to a casino economy that has financial flows moving all over the place," he said. Nor was there any reason why budgets had to be balanced on the backs of the weak of society by cutting social expenditure.

Somavia said it was obvious that developing countries were not benefiting from global trade rules either. 
A report published by Unctad this week said the world's 48 poorest countries had seen their share of world trade drop by 40 percent between 1980 and 1997.

"The fact is that for the large, large majority of developing countries this trading system does not deliver for them the possibility of including yourself in the global economy in ways in which you can develop decent work at home," Somavia said. The ILO head, who sidestepped the controversial issue of whether labour standards should be enshrined in the next round of global trade talks, said he was not calling for revolutionary changes to the world economic order.

Rather, he said, it was a question of making changes so free markets were made to work for everyone. 
"Unless market fundamentals respect the fundamentals of the life of people, this model of globalisation will not continue," Somavia said.