In a statement to the International Monetary Fund (IMF) and the World Bank meeting, Somavia said, “The crisis of the international financial system has grave consequences for enterprises, workers and families around the world. Coming on top of still high food and fuel prices, its effects are provoking a slide into a recession that unless averted by prompt and coordinated government actions could be severe, long lasting and global.”
“We have abruptly moved from an era of changes to a change of era,” he added.
Somavia called for immediate action in four key areas:
Restoring trust in the international financial system – Somavia stressed that encouraging credit to flow quickly again, “before more serious damage is done to the productive capacity and social fabric of countries all around the world,” should be an immediate priority. Smaller businesses especially must be able to access credit lines.
Placing a floor under the downswing – In his statement, Somavia pointed out that the human, social and economic costs of a financial crisis are high. “There is reason to believe that the looming recession we now face could be particularly severe unless we react quickly to block the channels by which is spreads to hit the lives of the most vulnerable people and enterprises,” he said. He called for “automatic fiscal stabilizers” such as unemployment insurance systems, a strong public social security system, pension protections and public infrastructure investments to help place a floor under a downswing.
Redesigning the financial system – Somavia also stressed that rebuilding the regulations that govern capital markets is imperative. “Self regulation of finance markets has failed,” he said. “We need smart regulation and intelligent public policies.”
A new governance framework for sustainable development and a fair globalization – A crisis revolving around continuing worldwide poverty and social inequities among developing, emerging and advanced countries existed before this financial crisis, Somavia pointed out. “The increasing political questioning of the current globalization has its roots in imbalances in the relationship between the state, the market, society and individuals,” he said. “A sound and stable governance structure for globalization needs to establish a new balance.”
Somavia also called attention to the first World Day for Decent Work, which was established on Oct. 7 and mobilized in more than 100 countries.
“Developing a new stronger international institutional architecture that fosters a balanced and integrated approach to sustainable development can and must emerge from the present crisis,” Somavia said. “Developing integrated policies among relevant international organizations to generate Decent Work opportunities worldwide is one of the foundations of a sustainable recovery and a fair globalization.”