Fighting Poverty and Unemployment: A Political Choice

The Summit of the seven most industrialized countries (G-7) is scheduled to begin on June 15, in Halifax. Development and Peace hopes to take advantage of this event to express its vision of development, and to propose a number of significant reforms to the Canadian government. Development and Peace's vast experience in North-South solidarity leads it to defend the neediest and most marginalized populations- and to advocate social and economic policies designed to combat poverty, create productive employment, and redistribute resources, so that all sectors of society may benefit and improve their living conditions in dignity.

Unemployment and poverty are products of the economic system

Our experience, combined with that of our Southern partners, enables us to establish fundamental links between prevailing economic trends, unemployment, poverty, and democratization. Because it is becoming more subservient to the whims of the market, the economy is no longer meeting people's most basic needs. While it is true that the present economic system produces wealth, it distributes it inequitably. In Canada as elsewhere, widespread poverty and unemployment bear eloquent witness to this phenomenon.

Neoliberalism, which requires the State to relegate economic control to market forces and competition, is expanding rapidly. More than ever, multinational corporations are scouring the planet in search of cheap labour and low production costs. Parallel to the growth of multinationals, is the ability of investors to instantly move billions of dollars from one part of the planet to another, with the sole objective of speculation, and without government control of any sort. In fact, governments have become increasingly vulnerable to the whims of financial markets, competing with one another to attract foreign capital. The crisis which ensued as a result of the devaluation of the peso in Mexico last December, is one such example. The Mexican population paid a high price: the cost of staple foods increased overnight by 10 to 30%, interest rates sky-rocketed, and inflation soared out of control. This severely affected the poor, who constitute about 45% of the total Mexican population.

Canadian businesses, meanwhile, do not hesitate to lay off workers in Canada and transfer their operations to countries where labour standards are lower.

Glaring inequalities

Not since the 1930s in both Britain and the United States has the income gap between rich and poor been wider. In 1992, the richest 20% of Americans enjoyed incomes 11 times greater than those of the poorest 20%, compared to only seven and a half times in 1969.

The gap between rich and poor is growing world-wide. Between 1960 and 1991, the share of world income garnered by the richest 20% of the world's population went from 70% to 85%, while the poorest 20% saw their share drop from 2.3% to 1.4 %1/1. One fifth of humanity, living for the most part in the industrialized countries, consumes over 80% of the world's income.

Canada is not immune to these inequalities. Over 1.2 million children (almost one in five) live in poverty and 21,000 low birth weight babies are born every year.

Other statistics illustrate the gravity of poverty in Canada:

Possible actions

Decisions about unemployment, poverty and marginalization cannot be limited to finding band-aid solutions, as is often the case in Canada and elsewhere. We must take a critical look at our development choices and guarantee people's participation in decisions which affect their lives.

The current situation requires social and economic policies aimed at fighting poverty, creating productive employment, and redistributing resources, so that all sectors of society may improve their living conditions with dignity. Governments must also make sure that budget cuts do not fall disproportionately on women and poor people.

A number of measures can and must be instituted to help correct these imbalances. In Canada, for example, emphasis on high interest rates results in a slower economy and reduced job creation. Canadian fiscal policies should also be reformed to ensure that resources are distributed more equitably, and in a manner which is fair to all.

The following actions should be considered, both in Canada and around the world, so that all of humanity may benefit from the economy.

1. Reducing the Debts of Heavily Indebted Countries

We demand that Canada lobby international financial institutions to forgive or significantly reduce the debt burden wherever this would favour social development. Furthermore, we demand a 100% bilateral elimination of the public debt for heavily indebted low-income countries, and a bilateral reduction of 50% of the debt for heavily indebted middle-income countries. Commercial banks should follow suit by reducing the private sector debts of heavily indebted countries.

2. Transforming the International Financial Institutions

Democratizing the World Bank and the IMF is a priority internationally. We demand that Canada, which allocates substantial amounts of money to these two institutions, propose reforms which will render them more democratic and more accountable to the United Nations for their actions. The current structures leave Southern countries with little influence.

It is just as essential that Canada's representatives to the World Bank and the IMF present Parliament with detailed reports outlining Canada's interests and points of view. This information will determine whether the substantial sums allocated to these two institutions are well spent, and that they reflect the principles and values advocated by Canada.

3. Taxing International Financial Transactions

The idea of a world tax on international currency exchange transactions is gaining support internationally. Originally proposed by the 1971 Nobel Prize for Economics laureate James Tobin, it is being advocated today, most notably by the United Nations Development Program (UNDP). This tax would lessen speculation. Currency exchange rates are subject to the whims of private speculators who have the power to make or break any nation's currency. According to the UNDP, a tax of 0.05% per transaction (Mr. Tobin suggests 0.5%) would raise $1,500 billion US annually, which could then be used to fight poverty.

4. Attaining Full Employment

Canada and the provinces should institute measures aimed at attaining full employment. Studies show that such policies can result in huge benefits. This opinion is shared by the International Labour Office (ILO), which estimates the number of unemployed and under-employed people in the world at 850 million.

These are but a few of the reforms that are needed and which are being advocated by many social change groups. Essential is the right of every person and every society to develop-and to enjoy the economic, political and cultural conditions without which development cannot occur.


1/ UNDP. 1995 World Report on Human Development. Economica, French version p. 37.

Posted by Information Habitat: 14 June, 1995