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World’s Labor Federations React to Financial Crisis with Proposals from Re-regulation to Socialism

Sunday 16 November 2008, by Dan LA BOTZ

Labor unions around the world have reacted to the financial crisis and the economic recession with words and actions reflecting their national experience, their political ideology, and their leaderships.

Unions and workers have already seen the financial crisis and the growing recession result in the closing of plants and offices, in shorter workweeks, pay cuts, and loss of health benefits and disappearance of billions from pension plans. The International Labor Organization (ILO), a tripartite organization of government, business, and unions, has predicted that unemployment could rise by 20 million, from 190 to 210 million in 2009. ILO Director-General Juan Somavia said that “the number of working poor living on less than a dollar a day could rise by some 40 million — and those at 2 dollars a day by more than 100 million.” Unions in the developing world have also faced a crisis of rising food prices and falling petroleum prices, and all face the deteriorating environmental situation. The major labor federations’ responses vary greatly.

While almost all federations have given expression to workers’ fear, frustration, and anger, the political programs and calls to action that they put forward differ fundamentally. In all countries surveyed, the labor movement is divided into rival federations, often along ideological lines. No one federation speaks for all workers in any one country. Few unions have suggested a desire to initiate a major struggle over the crisis, and almost none talk about the need to end the capitalist system. Yet virtually all federations, even the most conservative, have felt it necessary to speak out on the damage to working-class lives and the need that the world’s governments do something for working people.

We look here at response from around the world from the moderate American, Canadian and European confederations to the more radical Latin Americans and Japanese.

The International Trade Union Confederation

The International Trade Union Confederation (ITUC), which represents 168 million workers in 155 countries and territories and has 311 national affiliates, called for “reshaping the management of the global economy” to serve workers. The statement reads:

"Resolving the financial crisis must go hand in hand with concerted international action to stimulate jobs and growth so that the imminent danger of world recession is averted, and economies are launched on paths of just and sustainable development.

The essential task of regulating financial markets, so as to shut down the option of a return to business as usual and a repetition of today’s debacle, must be one component of a wider agenda to reshape the management of the global economy.

The imbalances which have seen real wages fall or stagnate, at the same time as capital has reaped record profits, need to be redressed. Organising and bargaining rights, recognized internationally, must be enforced universally so workers can have real influence over their lives and their futures. The trade agenda, mired in the impasse of the Doha Round, can only move forward once it is based on the imperatives of decent work, development, rights and equity."

Various ITUC/CSI affiliates throughout the world — and some unions which are not affiliated with the world body — took stronger or weaker positions.

Chinese Labor

The All China Federation of Trade Union (ACFTU), led by the Chinese Communist Party and closely tied to the Chinese Communist government, held its 15th National Congress in mid-October just as the first waves of the international financial crisis and world recession were beginning to wash up on the shores of Asia. The ACFTU chose Wang Zhaoguo to serve a third term as president of the federation. He also serves as vice chairman of the Standing Committee of the National People’s Congress, the national legislature.

Wang presented a report to the Congress which represents approximately 200 million Chinese workers, the world’s largest labor federation, in which he stated that during the last thirty years as China reformed its economy the ACFTU also reformed, innovated, and continued to protect employees’ interests.

While he did not touch directly on the current economic issues, Wang said that against the new background of building socialism with Chinese characteristics, the country’s trade unions had undertaken the responsibility of becoming mass organizations that unite employees to insure that they enjoy democratic rights. The ACFTU, he said, is also dedicated to promoting social harmony.

Meanwhile the economic downturn hit the industrial province of Guangdong, the center of China’s export industry, and, in particular, the toy industry. Half of the province’s toy companies were reported to have gone out of business during 2008. While Wang spoke at the Congress in Beijing, thousands of workers protested at closing toy factories in Dongguan in Guangdong province. At the Xixian factory in Shenzhen, which produces for the luxury watch retailer Peace Mark, some 600 workers engaged in a two-day sit-in at the factory, demanding they be paid wages owed them.

Japan’s Zenroren

The Japanese Trade Union Confederation, Rengo, “asked Prime Minister Fukuda to cut income tax, increase welfare payment and consider support measures such as distributing the national oil reserve to small and medium enterprises, etc, as emergency measures for people suffering from steep rise of prices of necessities of life.” Rengo affiliates and local unions also organized rallies and demonstrations in support of these measures.

The National Confederation of Trade Unions (Zenroren), Japan’s more militant labor federation, having experienced a financial crisis in the 1990s does not subscribe to the idea that labor unions should simply accept a tax-funded bailout of the banks. Yoshikazu Odagawa, Secretary General of Zenroren, National Confederation of Trade Unions, issued a statement on behalf of his union that assessed the previous crisis and described the union’s response to the current one. It is worth citing at length:

"The Japanese economy in 90’s experienced ’the lost decade’ after the burst of the bubble economy. In this period, the Japanese government repeatedly injected huge amounts of tax money into the banks and initiated mergers and acquisitions among these financial institutions. Other ways of bailing out the banks were to keep low interest rates and to create tax deductions especially for them. As a result, some mega-banks improved. However, the accumulated government deficit has dramatically increased, and they have been attacking the pension and health insurance systems. Big downsizing and government attacks drove the people into grave frustration and poverty.

The banks that had been injected with tax money became crazy for securitizing money and joining the money game, at the same time they became more reluctant to lend money to small business. It is absolutely clear that financial bailout of the 1990’s had no impact on improving people’s lives.

Japanese banks and security companies are suffering from the current financial crisis, but I want to make it clear from our experience that a taxpayer-funded bailout does not work for people and small businesses.

The current financial crisis that began in the US has had a direct impact on the Japanese working class. Skyrocketing prices of gas, food and raw materials have had a detrimental impact on workers’ lives and standards of living, particularly those of low wage workers. There has also been a serious impact on farmers and fisher folk.

Another phenomenon in Japan is deteriorating employment security caused by an increasing number of business bankruptcies. We have also seen increasing bankruptcies among small- and medium-sized enterprises because of bank’s reluctance to lend or credit withdrawal. In the first half of 2008, bankruptcies increased by 15%. Japanese auto manufacturers have already begun to reduce 20,000 employees.

Zenroren has set up a special struggle committee to break through the crisis, and campaign for employment security, demanding that the government provide support for workers and small businesses through such measures as tax cuts and financial subsidies. International labor union solidarity must be strengthened to control arrogant speculators and strengthen labor protection." (Translation by Keisuke Fuse.)

The European Trade Union Confederation

The European Trade Union Confederation (ETUC) issued its London Declaration, proclaiming that “The world financial crisis must be a turning point and cause a complete change in the way the financial world works.” The ETUC wrote that where public money has been invested into financial institutions there should be “public influence and control so causing a fundamental change in behavior.” The European unions demanded “government action to ensure that funds are available for investment in the real economy, helping develop green jobs and technologies and sustainable development.”

The ETUC also said that there should be “help provided for workers affected, for householders threatened by eviction, for pensioners threatened with poverty in old age, for entrepreneurs seeking investment capital.” The unions aid, “It is not fair that the main beneficiaries [of a rescue] might be those who caused the mess.” Finally the ETUC called for an “urgent return of public policy attention to the major issues of income and wage inequalities.”

French CGT and Spanish Unions

In France, the labor movement has already been engaged in October in action in defense of state owned property, particularly the Post Office.

The General Confederation of Workers (CGT), a large and important labor federation, reacted to the crisis with a strong rejection of the American financial model which had been imposed on Europe and the world during the last two decades. The CGT called for a new national development strategy that would focus on the development of workers through training, providing workers with job security and new social services, and investment in research and new products. The CGT has also called for tripartite — government-banks-unions — conferences focused on the future of the bank workers, who in France are unionized.

Leaders of the General Union of Workers (UGT) and Workers Commissions (CCOO), the two principal labor federations of Spain, called the crisis “grave” and “serious” but also expressed confidence in the labor policies of Spain’s president José Luis Rodríguez Zapatero of the Socialist Party. Asked by the press if they would call a general strike, they said no because strikes were called to defend workers, not in response to a general economic crisis.


Unfortunately there has been little reaction to the crisis so far from the Turkish labor movement, according to Cigdem Cidamli, one of the editors of the labor website Sendika.Org.

On October 21 the Public Employees Trade Unions Confederation (KESK) called the other broader labor organizations, such the People’s Houses, organizations based in poor neighborhoods that fight against neoliberalism and for social rights, to discuss a general program to confront the crisis.

“We proposed under the general title of ’defending the right of people to live and to work against the crises’ some concrete demands about employment, banks, debts and social rights, but it seems still some time needs to pass for the movement to move in that direction,” said Cidlami. “The People’s Houses will have a big demo in Ankara on 2nd of November after a foregoing campaign against the AKP government and the crises and we hope this may create some general motivation to act together with others on this direction.”

Latin American Unions

The Latin American situation is quite different because of the social and political movements of more than a decade on that continent against the “Washington Consensus” — the U.S. free trade policy implemented by the U.S., the International Monetary Fund (IMF), and the World Bank. For decades Latin American unions have engaged in general strikes, virtual national uprisings, and political movements that have brought center-left or left-wing governments to power in Brazil, Argentina, Venezuela, Bolivia, and Ecuador. Unions in much of Latin America defend social property and some fight for socialism.

In Brazil, the Confederation of Workers (CUT) helped to create Workers Party (PT) of the country’s president Luis Inácio Lula da Silva. The CUT published an anti-crisis program in July that, among other things, calls for “reducing the workday but at the same wages as a way for workers to participate in the increase in the productivity of the corporations.” The CUT also calls for an increase in the minimum wage with a cost of living index, government stabilization of food prices, and reduction or removal of taxes from food and other basic commodities. At the same time the CUT calls for tripartite forums to improve industrial competitiveness, examining productive chains to find the bottlenecks.

Venezuela: Unions for Socialism

In Venezuela workers are divided between the more conservative Venezuela Confederation Workers (CTV), the leftist National Union of Workers (UNT), and unions — left, right, and center — that remain independent of both. The UNT is a federation which backs President Hugo Chávez and his project for a Socialism for the Twenty-First Century. The UNT also strongly supported Chavez’s nationalization of the Bank of Venezuela. Stalin Pérez Burgos, a Coordinator of the UNT, said, “I am always pleased with these proposals from President Chávez, even though I don’t completely agree with the way in which it was done. I would have preferred that the bank was expropriated straightway [taken without compensation], but this is good . . . it’s a step forward.”

Another UNT leader, Orland Chirinos, said, “The government bank can offer more favorable credit to peasants, small producers, and merchants than the private banks, so that it will be preferred by small savers. But this is a limited and reformist measure if it doesn’t lead to the expropriation of all of the private banks so that that the government controls 100 percent of the financial system and so that it passes into the hands of workers, peasants, and the people.” However, some on the labor left have criticized Chavez’s nationalization of the bank because they see it as a measure intended to help save Spain’s Santander Bank.

North American Unions

The unions of the North American Free Trade Agreement (NAFTA) area — Canada, Mexico, and the United States — have spoken out on the crisis and the damage it will do. The U.S. labor federations, the AFL-CIO and Change to Win, both looked to a new Democratic Party administration headed by Barack Obama to change the country’s economic direction and help labor. Mexico’s independent unions joined in the National Dialogue adopted some time ago a program to confront the crisis.

President of the AFL-CIO John Sweeney emphasized re-regulation, infrastructure, and healthcare:

"The AFL-CIO calls on Congress and the Bush Administration to craft a program for rescuing the mortgage markets that is governed by people devoted to the public interest, that stops the tidal wave of foreclosures, and that provides liquidity, but not an open-ended subsidy, to the institutions that created and benefited from the practices that led to catastrophe. Congress must absolutely ensure that the administration’s plan is not just bailing out Wall Street, but also responds to the real pain on Main Street.

The AFL-CIO supports a program for stabilizing money markets and a ban on short selling in the financial services industry. Both are necessary to avoid a panic and the destruction of our financial infrastructure. But these steps are not permanent solutions to our economic and financial problems.

Permanent solutions can be found in the economic program of Barack Obama — re-regulation of the financial markets, a government focused on creating good jobs by investing in infrastructure and solutions to our energy crisis, health care for all Americans, a government that will protect and improve Americans’ retirement security, and a guarantee that American workers can bargain for their fair share of the wealth they create."

Change to Win also links American economic recovery and improvements for workers to the election of Obama. The Change to Win Coalition issued an eight point program which also emphasized infrastructure, green jobs, health care, education, and the Employee Free Choice Act (EFCA) which would facilitate union organization.

Canadian Labour Congress

Ken Georgetti, President of the Canadian Labour Congress, issued a statement that criticized Canada’s corporate elite and the government and called for a re-regulation of the economy.

"Canadian working families will bear the brunt of a deep economic crisis caused by a self-serving and arrogant corporate elite, aided and abetted by complacent and do-nothing governments. Our jobs and our pensions are at risk. Today, we demand nothing less than a fundamental change of course.

Immediately after the election, whoever is Prime Minister must develop an emergency national action plan with input from labour. This must include measures to audit, re-regulate and shore up our battered financial system, and concrete measures to save and create jobs through major public investments and changes to unfair trade deals."

Mexico: The Defense of Social Property

Mexico’s labor movement too is divided between the conservative Congress of Labor (CT) dominated by the Confederation of Mexican Workers (CTM) and the two independent alliances, the National Union of Workers (UNT) and the Mexican Union Front (FSM). These latter two alliances unions have been in a years-long battle to try to prevent the privatization of the Mexican Petroleum Company and the electric power generating industries. The Mexican Mine Workers Union (SNTMMRM) has been on strike at the Cananea mine for over a year over health conditions and in defense of the union’s autonomy. Mexican teachers in over half the country’s states have been on strike for over a month against a government alliance with their own union, the Alliance for Quality Education (ACE), because they believe it will harm their union, teachers, and lead to privatization of education.

The UNT and the FSM, and other groups such as the Authentic Labor Front (FAT) and the Mexican Network Against the Free Trade Agreement (RMALC), joined with many other groups in the National Dialogue. In a conference held on February 4-5, 2005, the Second National Dialogue adopted the Non-Negotiable Minimum Program which may be said to be an anti-economic crisis program.

The Minimum Program gives us an idea of the kinds of issues Mexican unions have been concerned about even before the current crisis. It calls for: 1) no more privatizations; 2) a program of nationalization of industry; 3) national leadership by the manual and intellectual working class, peasants, students, small- and medium-sized business people, together with all who join in this program; 4) a new and qualitatively different democracy, a democracy of the people; 5) self-determination and nonintervention in the affairs of Mexico and other countries, and for no use of violence in international relations; 6) rejection of the terms of the Free Trade Area of the Americas (based on the North American Free Trade Agreement); 7) the economic, political, and cultural integration of Latin America and the Caribbean; 8) a significant reduction of the service of the external debt with the difference going to national development; 9) an end the robbery of the nation which the Fobaproa-lpab [bank rescue program] imposed, guaranteeing public education, protecting workers’ rights, and the Social Security [public health and pension] program; 10) reform of Article 27 to protect rural communities, strengthening infrastructure, credit opportunities, technical assistance, and subsidies which would raise productivity.

South African Unions Summer Strikes

Zwelinzima Vavi, General Secretary,Congress of South African Trade Unions (COSATU), spoke out on the crisis on October 22. “Truly this year has been a turning point both for South Africa and for the world economy,” he said. “To ensure that workers don’t end up paying for the global financial crash will require increased militancy, better organisation and more sophisticated engagement on economic policy both in South Africa and in solidarity with the global trade union movement.” Vavi stated that COSATU supported the position of the Alliance Summit of the African National Congress held on October 22. He summarized the position as follows:

"First, industrial policy must from now on prioritise employment creation. Joblessness remains extraordinarily high in South Africa, at almost 25% (using the narrow definition), and will likely get worse due to the current crisis. We need to ensure that government has a strategy to ensure that every sector of the economy, including the public services, contributes as much as possible to sustainable employment creation. That requires a huge change in thinking about industrial policy as well as government employment.

Second, the Summit agreed on the need to drive an agrarian development policy that will improve living conditions for the millions of rural poor, especially those who have long been left in the former Bantustans with inadequate infrastructure, services and land. We need to fundamentally rethink the government’s current proposals on land reform to achieve this end.

Third, fiscal and monetary policy must support the transformation of the economy, rather than simply giving capital whatever it wants. We realise that government cannot spend recklessly, and that government mustn’t let inflation get out of hand. But we also can’t put holding the line on spending and inflation above the interests of our people. And that means we need reasonably expansionary policies that support economic growth and increased opportunities.

Fourth, the summit reached important agreements on improving social security and the criminal justice system. In both areas, we need stronger government measures to improve conditions for working people and the poor.

Finally, and perhaps most importantly for future development, the Summit called for the creation of a developmental state. The two key steps to achieving that end are streamlining the Cabinet and establishing a planning commission. These systemic changes should help ensure a more consistent and rigorous approach to transformation of our society and the economy." [1]

South Africa, one of the largest and most important industrial economies on the African continent, has already been in crisis. Unemployment is officially at 25% but some estimate real unemployment at 40 percent. Rising costs for electricity, food and basic commodities led the to lead a national general strike this past summer. The strike stopped transportation and stopped businesses in many parts of the country, including coal and gold production. While such a general strike against rising prices does not necessarily lead to a clear victory, South Africa’s unions clearly registered the workers’ objection.

The situation in South Africa is complicated by the fact that the leaders of the ruling African National Congress Party (ANC) are engaged in a power struggle and there is tension between the ANC and COSATU.

With the financial crisis far from over and the recession deepening, the world’s labor federation, unions, and workers will be driven to develop more radical programs and to take more serious action to confront the crisis. The crisis will tend to push workers to the left, and the unions will be forced to move with them or lose control of the working class that they claim to represent.


[1] The full text of the ANC Alliance Summit can be found at:

* From Monthly Review’s MRZine:

* Dan La Botz is a Cincinnati-based teacher, writer, and activist. He is the author of Rank-and-File Rebellion: Teamsters for a Democratic Union (1990), Mask of Democracy: Labor Suppression in Mexico Today (1992), and Democracy in Mexico: Peasant Rebellion and Political Reform (1995), Made in Indonesia: Indonesian Workers Since Suharto (2001) and the editor of Mexican Labor News & Analysis, a monthly collaboration of the Mexico City-based Authentic Labor Front (FAT), the Pittsburgh-based United Electrical Workers (UE), and the Resource Center of the Americas. His writing has also appeared in Against the Current, Labor Notes, and Monthly Review among other publications.

Online 16 November