Wanted: Democracies for people that build fair and sustainable economies

People are taking to the streets around the world in mass protests that all have something in common: the economy is not working for people.

Social unrest has spread across many countries in the last year. From Argentina, Brazil, Chile and Ecuador in Latin America, Haiti in the Caribbean, to Algeria, Eswatini, Morocco, Sudan and Zimbabwe in Africa, Lebanon in the Middle East and Hong Kong in Asia, people are suffering from austerity, corrupt elites and repression. There are dozens more countries where the same fears have taken hold.

Even in countries which are established democracies, corporate and elite capture of the state and the media, and the malign external influence of bodies like the IMF and World Bank with their failed economic prescriptions, have made protest the only option for people to be heard.

The surprised response of the authorities has all too often been repression or minor concessions when people are crying out for real democracy, real social progress and real economic improvements.

What is making governments so out of touch with people?

We are living with an age of anger driven by the despair felt by an increasing number of the world’s people who feel abandoned by their governments. Indeed, the trust that is so vital for functioning democracies has been broken.

When 84% of people say that the minimum wage is not enough to live on, and when 60% of working families — including middle-income families — are living on the edge, the central question has to be why? Why, when the world is three times richer than it was just 20 years ago, has wealth not been shared?

Why have governments abandoned employment regulation so that 60% of all work is now informal work with no minimum wage, no rights, no rule of law?

It’s hardly surprising that only 37% of the world’s people feel that they matter to their governments.

As UN Secretary-General António Guterres has said, “It is clear that there is a growing deficit in trust between people and political establishments, and rising threats to the social contract.”

The ITUC calls on all governments and multilateral institutions to respect their citizens’ rights to freedom of assembly, freedom of speech and freedom of association, including the right to strike. We repeat our call, echoed in the ILO Centenary Declaration, for a New Social Contract for the 21st century.

To seed hope and rebuild trust with people, we need a plan to deliver:

- A New Social Contract between workers, employers and governments that restores trust in democracy through social justice.

- Democracy that acts in the interest of people. This means measuring a broader scope of government accountability that goes beyond GDP.

Reliance on GDP as an economic indicator has hidden rising inequality, environmental destruction and gender gaps

GDP is the dominant measure of wealth, but it is an incomplete measure of economic progress, and indeed it can be used to undermine social progress.

It does not capture how growth is distributed. As a single measure of success without transparency or accountability for distribution, GDP simply assumes growth translates to higher living standards, which is not the case. It neglects environmental sustainability and presents a gender-biased understanding of production.

Economic growth as measured by GDP has not been shared with workers, and there is a global slump in labour income share creating both the despair and the stagnation in global demand.

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Evolution of the labour share of income Source: IMF (2017)

The wealthy are capturing the majority share of global income which, apart from the immorality of this, is generating historic levels of inequality that are recognised as both a social and an economic risk.

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The rise in income of the top 1% versus the stagnation of the global bottom 50%, 1980–2016 Source: World Inequality Report (2018)

Countries need to reform accountability and report to people on indicators that make a difference to their lives. This will generate hope for a better future.

Reforming Government Planning and Reporting

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Some countries are moving beyond GDP. The New Zealand treasury must consider the social and environmental impacts of policies and not just GDP in its economic planning. Likewise, Italy’s budget law requires that twelve indicators, including on equitable and sustainable well-being, must be reported to the Parliament every year before budget discussions. Bhutan has developed a Gross National Happiness index (GNH), considering a number of domains including psychological well-being, health, time use, education, environmental sustainability and living standards, which it considers before GDP to inform policy.

These trends must spread rapidly and herald a deep reform of democratic responsibility.

People will only trust their voice matters when we have democracies for people.

General Secretary of the International Trade Union Confederation. Representing the world's working people.

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