Report on meeting between Iraqi trade union leaders, IMF and World Bank, under the auspices of the ITUC
Washington DC, 10 September 2009
This meeting, held on 10 September 2009, marked the continuation of the recent exchanges between Iraqi trade union leaders and World Bank and IMF staff. This followed a first meeting between the Iraqi trade unions, World Bank and IMF held in Amman in March 2007, and a consultation for the World Bank Group Interim Strategy Note for Iraq FY09-11 with Iraqi civil society representatives, including trade unions, held in Amman in December 2008.
The meeting came at a time when the IMF was working on a new Article IV Report and was engaged in negotiations with the Iraqi government on a new economic programme that could be supported by the IMF. After five years of reengagement and with the improved security situation, the World Bank is continuing to deepen its engagement in Iraq’s development beyond emergency reconstruction and recovery efforts. In this context, this timing was considered a good opportunity for the IFIs and the Iraqi trade unions to meet and discuss areas of importance to the trade union leaders linked to Iraq’s economic and social development.
In the welcoming statement, the Director of the ITUC/Global Unions Washington Office set the context and noted the evolution of the dialogue between Iraqi trade union leaders and the World Bank and IMF. While welcoming these joint meetings, he said that these exchanges led to a number of agreements made by the international financial institutions (IFIs), documented in the joint report from the first meeting in March 2007 in Amman, but also included some missed opportunities. Prior to this meeting, the IMF Iraq Mission Team had not met with the Iraqi trade unions since the initial March 2007 dialogue, (although the IMF Resident Representative has stated that the Fund maintained regular contacts with trade union representatives). The World Bank Iraq Country Team had included Iraqi trade union leaders in a civil society review of its draft Interim Strategy Note in December 2008, but it was not clear to the trade unions that their suggestions were taken on in the final version. The Director also noted that the Bank did not follow through on its 2007 commitment to include trade unions in the development and design of a programme to reform the food distribution system.
Prior to the meeting, the ITUC circulated a draft timed agenda outlining key trade union concerns. The welcoming statement was followed by an opening statement from the Iraqi trade union leaders (annexed to this report). Continuing to follow the agreed agenda, the IMF mission and the World Bank country team responded to the request for updates on their current engagements in Iraq with brief introductory presentations. The trade unionists proceeded to introduce thematic topics of conversation, highlighting their concerns about social safety nets, pension reform, the administration of oil revenue, the implementation of World Bank projects and consultations with the IFIs. A summary list of conclusions is presented at the end of this report.
IMF presentation
The IMF Mission Chief acknowledged the timeliness of the meeting, and presented a short overview of what the IMF sees as its successes in Iraq: achieving macroeconomic stability, alleviating a heavy international debt burden (through work with the government and external creditors), and rebuilding institutional capacity (specifically the Central Bank and the Finance Ministry). In the IMF’s view, undervalued domestic oil prices had led to smuggling the commodity outside the country and the expansion of the black market in Iraq. By raising domestic oil prices, demand was lowered and the smuggling was alleviated. The IMF also helped the government bring monetary expansion under control and stabilize the exchange rate. Although Iraq still has a substantial external debt, the successful implementation of recent IMF programmes facilitated the reduction of Iraq’s debt to the Paris Club of donor countries by 80%, or about $50 billion. While there is still more work to be done, the Central Bank can now manage foreign exchange reserves and supervise the banking system. The Ministry of Finance has an increased capacity for public financial management, although a lot more work remains to be done in that area too.
Iraq’s state budget has benefited from high oil prices, and savings have absorbed the budget shortfall since the dramatic decrease in oil prices in late 2008. However, the lower level of oil prices requires the government to contain spending, while increasing efforts to increase oil production. Increased investment in the oil sector would result in an increase in oil production.
World Bank presentation
The Iraq Senior Country Officer thanked the Iraqi delegation and ITUC for organizing the meeting and expressed appreciation for their participation in the meeting in Amman in 2008, which has helped the Bank in hearing from different perspectives and in finalizing their Interim Strategy Note (ISN), which was presented to the World Bank’s Board in March 2009. The World Bank’s key objectives in Iraq are to continue the current portfolio of support and reconstruction, to improve governance and management of public resources and to support private sector development.
The current World Bank portfolio includes projects in areas such as infrastructure, social sectors including health and education, public financial management and banking reform. Examples of key analytical work are a Poverty Assessment and a planned Public Expenditure Review. For new projects, the ISN includes an envelope of US$500 million, and the Bank is now discussing with the government of Iraq how it would like to use these funds, including the prioritization of future projects. The World Bank clarified its role in Iraqi development, emphasizing that it funds projects that the government then implements (which was seen in an independent evaluation as successful in building capacity in Government). The Bank further emphasized its willingness to listen to civil society concerns.
Topic 1: Social Safety Nets
The trade union leaders responded to the introductory presentations through the thematic structure of the circulated meeting agenda. The first discussion addressed Iraqi workers’ experience of weakening social safety nets. The trade union leaders questioned the IMF about restrictions on the Iraqi government’s public expenditure and the World Bank about its attitude towards possible changes to labour legislation that the Bank had originally commented on in 2005.
The IMF clarified that it does not insist that the public food distribution system be reduced, but rather looks at what the government is able to finance. The IMF typically prefers replacing general systems that benefit everyone with a targeted cash-based transfer system, which reduces the programme cost. The IMF asserted that it is interested in the best way to support the poor, and welcomes the trade union views.
The trade unionists voiced their opposition to the cash transfer system as a replacement for provision of essential food items. While agreeing that food distribution benefits should not be available to those with high salaries, the current salary eligibility (less than $1,200/month) excludes broad populations whose fixed salaries exceed this limit but do not have the purchasing power to afford the inflated prices for food. In the experience of Iraqi workers, the cost of living increase has far outpaced any salary increases since the US invasion of Iraq in 2003 and is the result of the IFIs’ policies to reduce government subsidies, including those for fuel. The trade unions do not support “handouts,” but ask the IFIs to recognize that people in Iraq are living in a crisis situation. The current targeting standards do not take into account the cost of living in their assessments.
Welfare benefits such as food distribution are often important parts of Iraqi workers’ income. They are particularly important in the current Iraqi context, where workers don’t have the ability to negotiate alternatives, such as increased salaries. Even if targeting is a good idea, it represents real losses for those above the poverty line. The trade union leaders noted that food subsidies were reduced virtually by decree, without the input of those who would be most affected, including workers. Furthermore, the Iraqi trade unions had not been invited to a World Bank workshop on food distribution, held in Amman in June 2009[1].
The Bank recognized that reforms will be more successful with the involvement of broad social dialogue, which it encourages as a technical assistance and service provider. The Bank also pointed out that transfers account for a large share of income for the Iraqis where 28 percent go to the poor and 21 percent to the non-poor. The food rations constitute the largest transfer programme in Iraq, but it is inefficient as a safety net because it is universal and doesn’t target the poorest and most vulnerable population in Iraq. Furthermore, it creates a distortion in the economy and domestic food market. This is where the technical assistance from the World Bank can play a role. The World Bank has been supporting the government of Iraq in developing a social safety net programme in the form of a new cash-based transfer system intended for poverty reduction and poverty mitigation by supporting programmes that provide job placement and training as needed for the unemployed. The programme is intended to reach the most vulnerable groups in Iraq including the disabled, unemployed, orphans, divorced or widowed women, etc.
The ITUC asked the World Bank if it would urge the government to include the trade unions in discussions about social safety net reforms. The Country Program Coordinator agreed to broach the subject of including unions in specific policy dialogue with the government, and to identify opportunities for dialogue. The ITUC suggested that the World Bank and the IMF keep the trade unions informed about their efforts to include them in policy decisions.
The Social Protection Economist for the MENA region from the World Bank addressed the labour law issue. He clarified that the World Bank does not have an active ongoing dialogue on labour markets with the Iraqi government but should it come up in the future, the Bank would consult with the unions pending government agreement. In the Bank’s view, labour code reform is only one aspect of labour market legislation, and has relatively limited impact because it applies only to formal sector employment and is better enforced in public sector employment. The World Bank is currently working on a technical assistance programme to show how to use targeting to provide cash benefit and other social assistance interventions for the most vulnerable and to encourage the private sector take a larger role in job creation.
The ITUC noted that Iraq is one of only nine countries in the world with neither mandatory severance payments nor unemployment benefits. Combined with deficiencies in the labour law and weak social safety nets, this makes Iraqi workers extremely vulnerable. The World Bank and the trade unions agreed that unemployment insurance is important for workers’ protection.
Topic 2: Pension and civil service salaries
The World Bank’s Social Protection Economist explained the Bank’s view that a successfully reformed pension system would improve sustainability without compromising benefits. When the pension reform project began, Iraq had insufficient records and no updated database. The World Bank has been assisting with improving administrative capacities, and helping to implement the 2007 amendment to the pension law at the request of the government. The authorities are also working to expand benefits to informal economy workers and are currently focusing on expanding protection to the elderly. The World Bank believes that unions should have a role in the development of the pension system to the extent that the government agrees.
Trade union representatives pointed out that, to date, Iraqi trade unions have been excluded in the design and implementation of the pension reform programme. As workers are both the primary contributors and the primary beneficiaries of national pension systems, it is imperative that their organizations be directly involved in any proposed restructuring.
Topic 3: Oil revenue and budget administration
The trade unions asked the IFIs to explain their role in drafting new legislation of the oil sector, and asked if the World Bank had followed up on the unions’ 2008 suggestion that there be a civil society oversight committee of the oil sector, noting that the Bank had supported a similar model in an oil extraction project in Chad.
Recognizing that the oil sector in Iraq needs strengthening, trade unions see Iraqi citizens and Iraqi workers at the foundation of this process. In 2006 they opposed the draft oil legislation in order to protect the resource and are wary that bringing in foreign companies introduces another element of insecurity, noting the inclination of these companies not to hire Iraqi workers.
The IMF stated that it has had only limited involvement in this area. The IMF agreed that the issue of oil legislation is clearly a pressing one that needs to be solved. It continues to advise the government to maintain transparency and accountability, in order to be able to attract investment to the sector.
The Sector Manager of the World Bank’s Energy and Transport Department (MENA region) thanked the trade unions for the opportunity to engage on this topic, and stated clearly that the Bank has no role at all in developing the Iraqi oil law. Where the World Bank is involved to some extent is in oil revenue administration. Recently the Iraqi government asked the World Bank for a grant to select and employ independent consultants to develop a National Energy Strategy. The trade unions stated their opposition to such a grant, stating that Iraq could and should hire local advisors.
The Lead Economist for Iraq at the World Bank explained the Bank’s work as mainly directed through technical assistance on public financial management, advising the government on revenue use through assistance with drafting budgets and estimates, strengthening public accounting systems and identifying areas of fiduciary weakness. This relates to another area of assistance, where the Bank gives advice on the prioritization of expenditures. The Poverty Reduction Strategy plays an important role in this process, and the Bank can advise the government to include important social sectors. The Bank is also helping Iraq’s candidacy for the Extractive Industries Transparency Initiative (EITI) process.
On the general issue of the government’s budget management, the unions expressed their concern that the IFIs’ advice to rationalize government expenditures will further weaken social safety nets. From the union perspective, the government should be spending more, not less, to alleviate poverty. The trade union leaders observed that the Iraqi government still has no tallies of subsidy beneficiaries, and that the national budget is neither comprehensive nor transparent. The World Bank Lead Economist agreed that the budgetary process needs to be strengthened but that it is evolving, partially through government reforms. The IMF agreed with the trade union leaders that the budget needs to be comprehensive and transparent, also to be able to combat corruption.
Topic 4: Project Implementation
The trade union leaders expressed scepticism about many of the World Bank’s initiatives in Iraq and insist that the core labour standards must be respected in the projects that the bank finances. They felt that the Bank must set an example in maintaining good practices regarding the freedom of association, health and safety standards, non-discrimination and other basic labour rights.
In other countries, the World Bank usually consults with workers in the public sector when they are affected by restructuring. However, since the current labour law, inherited from the Saddam Hussein regime, considers trade unions to be illegal in the Iraqi public sector, the unions have not been consulted despite the fact that public sector workers are the most affected by the IFIs’ programmes and policies. They expressed the view that the World Bank should consult with the trade unions directly, without relying on government approval. The trade unions feel that the discussion about core labour standards in project implementation is not just talk about regulations, but that commitment to these standards must be ingrained in efforts to develop the industrial sector, create jobs and establish effective social safety nets.
The Bank’s Country Program Coordinator stated that it is helpful to hear first-hand the realities of the Iraqi context, and agreed that job creation is one of the number one priorities. The Bank is working hard to adapt social safety nets to address layoffs by helping the government generate an environment conducive for job creation. She is aware of the progress made at the international level (between the ITUC and World Bank headquarters) on promoting core labour standards, noting that this language is in the World Bank’s standard bidding document and in the International Finance Corporation Performance Standards.
The Lead Economist reiterated that the efforts to restructure state owned enterprises were being undertaken simultaneously with projects to address social safety nets, and with projects to develop the private sector, as part of the overall economic reform process.
A Solidarity Center representative asked for details about the Bank’s follow-up project evaluation. Trade unionists have observed the chain of sub-contractors to be problematic, and project standards (including health and safety) to be very low. The Senior Country Officer explained that the World Bank has a variety of evaluation processes, including a post project evaluation, a quality assurance group that looks at ongoing projects, fiduciary monitoring (implemented by Iraqi consultants), and task managers responsible for each project who regularly report on project implementation. The Sector Manager for Energy and Transport (MENA) testified that he had people report directly to him regarding the specifics of each project. The ITUC reminded the World Bank that in their December 2008 meeting, the trade unions volunteered their assistance with on the ground monitoring of core labour standards.
Conclusion
All participants agreed that the meeting was a timely one, and that it represented part of a reinvigorated dialogue between the Iraqi trade unions and the IFIs on Iraq’s economic and social development. The ITUC summarized the main points of discussion from the meeting:
Iraqi unions say that social safety net targeting is not necessarily a problem, but when it results in hurting workers on a fixed income, it is an important issue. The trade unions underscored the need for to develop a responsive welfare mechanism concurrently with any changes in food distribution and also to work on a labour law reform that protects workers’ rights to organize and engage in collective bargaining.
With regard to unemployment benefits, the World Bank agreed with the need to introduce them in Iraq. The trade unions emphasized the need for a formula to be adopted that involves the representatives of the beneficiaries, i.e. the workers’ organizations.
The specifics of pension reform were not discussed in detail. The trade unions maintained that the World Bank’s multi-pillar model has produced poor results in other countries, even before last year’s financial collapse and argued that since this is an issue where unions’ members are directly affected, they must be consulted.
The IFIs stated that they are involved in the oil sector only in accounting and revenue management. They heard the trade unions’ concerns about the operation of the sector. The IFIs were requested to consider again the civil society committee model for oversight of oil revenues that the World Bank has supported in other countries. .
The World Bank representatives noted the progress the Bank has made in addressing core labour standards (CLS) in the context of the operations it finances. Specifically, it was noted in that IFC’s new Performance Standard 2 adopts all CLS as a requirement for investment and now IBRD also applies it for procurement of major public works. A complaints mechanism for the CLS requirement has been created at IFC; the ITUC explained to the Iraq team that it is working with the Bank to set one up as well as other implementation mechanisms and that the unions in Iraq should be seen a key partner for monitoring implementation of the CLS in the Bank’s projects in Iraq.
The issue of consultations came up constantly through the meeting. There are a number of issues of mutual concern that would benefit from more regular consultations between the IMF, the Bank and the trade unions. Unions are consulted in the context of IMF and World Bank programmes in many countries, and there are many benefits of doing the same in the case of Iraq. The Bank and the Fund expressed appreciation for the chance to hear the independent and critical perspectives on their work that trade unions expressed and welcomed the opportunity to continue the dialogue in the coming year.
The IMF’s representative stated that the Fund would also be happy to continue the consultation process, which it found very useful.
The Iraqi trade unions emphasized their views as presented in the opening statement, and acknowledged the IFIs’ intention to continue to consult with trade unions in the future.
Annex A:
Opening Statement of Iraqi Trade Union Leaders
We, the Iraqi trade unions, express the voices of millions in Iraq. We have our own perspective on the conditions and demands of both IFIs, which are in direct contradiction with the interests of the people of Iraq, especially workers.
Observing the following:
1. Restricting government expenditure and the role of the state is in sharp contrast with the interests of the Iraqi people.
2. The increased [domestic] price of hydrocarbons has increased the cost of transportation and cost of living, which has affected many industries and projects, leading to unemployment.
3. Millions of people depend on the food distribution system – diminishing this system will make life difficult for many, particularly the deprived and the unemployed.
4. Any upcoming loans from the IMF are small in comparison with the actual revenues of the Iraqi government from oil.
5. The layoffs of workers and privatization has catastrophic repercussions in society today, and the reduction in civil service salaries is bad for the Iraqi people.
6. The conditionality of the IMF and World Bank agreements bring about massive layoffs and will not support the reform of the labour law at all.
7. Oil revenue belongs to the Iraqi people and can generate wealth and protection for all sectors of society.
8. Public crises bring about the need for broader social responsibility, as witnessed in previous crises, for example the global crisis of 1929- 1932 and the current one. The state of Iraq is experiencing this current crisis, and which is why we need to overcome it through [public] intervention to support social protection, education, electricity services, the sectors of health and safety, and public services
All these issues conflict with policies of the IFIs at present. The Iraqi government authorities have not consulted with trade unions, or asked us to participate in the drafting these policies, or in their implementation. We pointedly condemn this lack of consultation, and demand inclusion in all future meetings and to be contacted directly [by the IFIs] despite our fundamental position against IFI programmes and policies. Annex B:
List of Meeting Participants
Iraqi Trade Union Leaders
Rasim Al Awadi, President, General Federation of Iraqi Workers (GFIW)Hassan Juma'a Awwad, President, Iraqi Federation of Oil Unions (IFOU)Falah Alwan, President, Federation of Worker's Councils and Unions in Iraq (FWCUI)Nebell Mulhim, Foreign Affairs Officer, Kurdish General Workers Syndicates in Iraq (KGWSI) Sardar Mohammed Rasheed , President, Iraqi Kurdish Worker's Syndicates and Unions (IKWSU)
ITUC
Peter Bakvis, Director, ITUC/Global Unions Washington Office
Francesca Ricciardone, Research Officer, ITUC/Global Unions Washington Office
Solidarity Center
Lisa McGowan, Senior Program Officer, MENA Region
Mohammed Al Kadhim, Advisor for Iraq Program
Erin Radford, Program Officer, Egypt
World Bank
Pilar Maisterra, Country Program Coordinator
Jonathan Walters, Sector Manager, Energy and Infrastructure
Janet Dooley, Senior Country Officer
Jorge Araujo, Lead Economist
Andras Bodor, Social Protection Economist (MENA)
Surat Nsour, Operations Officer, Human Development (MENA)
Arvo Kuddo, Senior Labor Economist
Najat Yamouri, Senior Communications Officer
IMF
Ron van Rooden, Advisor, Middle East and Central Asia Department (MCD)
Maria Oliva, MCD
Tilla McAntony, External Relations
[1] Post meeting note: this is a reference to a workshop held in June at the request of the Secretary General of the Council of Ministers who prepared the participant list which included the Undersecretaries from the relevant ministries. No one else was invited.
Washington DC, 10 September 2009
This meeting, held on 10 September 2009, marked the continuation of the recent exchanges between Iraqi trade union leaders and World Bank and IMF staff. This followed a first meeting between the Iraqi trade unions, World Bank and IMF held in Amman in March 2007, and a consultation for the World Bank Group Interim Strategy Note for Iraq FY09-11 with Iraqi civil society representatives, including trade unions, held in Amman in December 2008.
The meeting came at a time when the IMF was working on a new Article IV Report and was engaged in negotiations with the Iraqi government on a new economic programme that could be supported by the IMF. After five years of reengagement and with the improved security situation, the World Bank is continuing to deepen its engagement in Iraq’s development beyond emergency reconstruction and recovery efforts. In this context, this timing was considered a good opportunity for the IFIs and the Iraqi trade unions to meet and discuss areas of importance to the trade union leaders linked to Iraq’s economic and social development.
In the welcoming statement, the Director of the ITUC/Global Unions Washington Office set the context and noted the evolution of the dialogue between Iraqi trade union leaders and the World Bank and IMF. While welcoming these joint meetings, he said that these exchanges led to a number of agreements made by the international financial institutions (IFIs), documented in the joint report from the first meeting in March 2007 in Amman, but also included some missed opportunities. Prior to this meeting, the IMF Iraq Mission Team had not met with the Iraqi trade unions since the initial March 2007 dialogue, (although the IMF Resident Representative has stated that the Fund maintained regular contacts with trade union representatives). The World Bank Iraq Country Team had included Iraqi trade union leaders in a civil society review of its draft Interim Strategy Note in December 2008, but it was not clear to the trade unions that their suggestions were taken on in the final version. The Director also noted that the Bank did not follow through on its 2007 commitment to include trade unions in the development and design of a programme to reform the food distribution system.
Prior to the meeting, the ITUC circulated a draft timed agenda outlining key trade union concerns. The welcoming statement was followed by an opening statement from the Iraqi trade union leaders (annexed to this report). Continuing to follow the agreed agenda, the IMF mission and the World Bank country team responded to the request for updates on their current engagements in Iraq with brief introductory presentations. The trade unionists proceeded to introduce thematic topics of conversation, highlighting their concerns about social safety nets, pension reform, the administration of oil revenue, the implementation of World Bank projects and consultations with the IFIs. A summary list of conclusions is presented at the end of this report.
IMF presentation
The IMF Mission Chief acknowledged the timeliness of the meeting, and presented a short overview of what the IMF sees as its successes in Iraq: achieving macroeconomic stability, alleviating a heavy international debt burden (through work with the government and external creditors), and rebuilding institutional capacity (specifically the Central Bank and the Finance Ministry). In the IMF’s view, undervalued domestic oil prices had led to smuggling the commodity outside the country and the expansion of the black market in Iraq. By raising domestic oil prices, demand was lowered and the smuggling was alleviated. The IMF also helped the government bring monetary expansion under control and stabilize the exchange rate. Although Iraq still has a substantial external debt, the successful implementation of recent IMF programmes facilitated the reduction of Iraq’s debt to the Paris Club of donor countries by 80%, or about $50 billion. While there is still more work to be done, the Central Bank can now manage foreign exchange reserves and supervise the banking system. The Ministry of Finance has an increased capacity for public financial management, although a lot more work remains to be done in that area too.
Iraq’s state budget has benefited from high oil prices, and savings have absorbed the budget shortfall since the dramatic decrease in oil prices in late 2008. However, the lower level of oil prices requires the government to contain spending, while increasing efforts to increase oil production. Increased investment in the oil sector would result in an increase in oil production.
World Bank presentation
The Iraq Senior Country Officer thanked the Iraqi delegation and ITUC for organizing the meeting and expressed appreciation for their participation in the meeting in Amman in 2008, which has helped the Bank in hearing from different perspectives and in finalizing their Interim Strategy Note (ISN), which was presented to the World Bank’s Board in March 2009. The World Bank’s key objectives in Iraq are to continue the current portfolio of support and reconstruction, to improve governance and management of public resources and to support private sector development.
The current World Bank portfolio includes projects in areas such as infrastructure, social sectors including health and education, public financial management and banking reform. Examples of key analytical work are a Poverty Assessment and a planned Public Expenditure Review. For new projects, the ISN includes an envelope of US$500 million, and the Bank is now discussing with the government of Iraq how it would like to use these funds, including the prioritization of future projects. The World Bank clarified its role in Iraqi development, emphasizing that it funds projects that the government then implements (which was seen in an independent evaluation as successful in building capacity in Government). The Bank further emphasized its willingness to listen to civil society concerns.
Topic 1: Social Safety Nets
The trade union leaders responded to the introductory presentations through the thematic structure of the circulated meeting agenda. The first discussion addressed Iraqi workers’ experience of weakening social safety nets. The trade union leaders questioned the IMF about restrictions on the Iraqi government’s public expenditure and the World Bank about its attitude towards possible changes to labour legislation that the Bank had originally commented on in 2005.
The IMF clarified that it does not insist that the public food distribution system be reduced, but rather looks at what the government is able to finance. The IMF typically prefers replacing general systems that benefit everyone with a targeted cash-based transfer system, which reduces the programme cost. The IMF asserted that it is interested in the best way to support the poor, and welcomes the trade union views.
The trade unionists voiced their opposition to the cash transfer system as a replacement for provision of essential food items. While agreeing that food distribution benefits should not be available to those with high salaries, the current salary eligibility (less than $1,200/month) excludes broad populations whose fixed salaries exceed this limit but do not have the purchasing power to afford the inflated prices for food. In the experience of Iraqi workers, the cost of living increase has far outpaced any salary increases since the US invasion of Iraq in 2003 and is the result of the IFIs’ policies to reduce government subsidies, including those for fuel. The trade unions do not support “handouts,” but ask the IFIs to recognize that people in Iraq are living in a crisis situation. The current targeting standards do not take into account the cost of living in their assessments.
Welfare benefits such as food distribution are often important parts of Iraqi workers’ income. They are particularly important in the current Iraqi context, where workers don’t have the ability to negotiate alternatives, such as increased salaries. Even if targeting is a good idea, it represents real losses for those above the poverty line. The trade union leaders noted that food subsidies were reduced virtually by decree, without the input of those who would be most affected, including workers. Furthermore, the Iraqi trade unions had not been invited to a World Bank workshop on food distribution, held in Amman in June 2009[1].
The Bank recognized that reforms will be more successful with the involvement of broad social dialogue, which it encourages as a technical assistance and service provider. The Bank also pointed out that transfers account for a large share of income for the Iraqis where 28 percent go to the poor and 21 percent to the non-poor. The food rations constitute the largest transfer programme in Iraq, but it is inefficient as a safety net because it is universal and doesn’t target the poorest and most vulnerable population in Iraq. Furthermore, it creates a distortion in the economy and domestic food market. This is where the technical assistance from the World Bank can play a role. The World Bank has been supporting the government of Iraq in developing a social safety net programme in the form of a new cash-based transfer system intended for poverty reduction and poverty mitigation by supporting programmes that provide job placement and training as needed for the unemployed. The programme is intended to reach the most vulnerable groups in Iraq including the disabled, unemployed, orphans, divorced or widowed women, etc.
The ITUC asked the World Bank if it would urge the government to include the trade unions in discussions about social safety net reforms. The Country Program Coordinator agreed to broach the subject of including unions in specific policy dialogue with the government, and to identify opportunities for dialogue. The ITUC suggested that the World Bank and the IMF keep the trade unions informed about their efforts to include them in policy decisions.
The Social Protection Economist for the MENA region from the World Bank addressed the labour law issue. He clarified that the World Bank does not have an active ongoing dialogue on labour markets with the Iraqi government but should it come up in the future, the Bank would consult with the unions pending government agreement. In the Bank’s view, labour code reform is only one aspect of labour market legislation, and has relatively limited impact because it applies only to formal sector employment and is better enforced in public sector employment. The World Bank is currently working on a technical assistance programme to show how to use targeting to provide cash benefit and other social assistance interventions for the most vulnerable and to encourage the private sector take a larger role in job creation.
The ITUC noted that Iraq is one of only nine countries in the world with neither mandatory severance payments nor unemployment benefits. Combined with deficiencies in the labour law and weak social safety nets, this makes Iraqi workers extremely vulnerable. The World Bank and the trade unions agreed that unemployment insurance is important for workers’ protection.
Topic 2: Pension and civil service salaries
The World Bank’s Social Protection Economist explained the Bank’s view that a successfully reformed pension system would improve sustainability without compromising benefits. When the pension reform project began, Iraq had insufficient records and no updated database. The World Bank has been assisting with improving administrative capacities, and helping to implement the 2007 amendment to the pension law at the request of the government. The authorities are also working to expand benefits to informal economy workers and are currently focusing on expanding protection to the elderly. The World Bank believes that unions should have a role in the development of the pension system to the extent that the government agrees.
Trade union representatives pointed out that, to date, Iraqi trade unions have been excluded in the design and implementation of the pension reform programme. As workers are both the primary contributors and the primary beneficiaries of national pension systems, it is imperative that their organizations be directly involved in any proposed restructuring.
Topic 3: Oil revenue and budget administration
The trade unions asked the IFIs to explain their role in drafting new legislation of the oil sector, and asked if the World Bank had followed up on the unions’ 2008 suggestion that there be a civil society oversight committee of the oil sector, noting that the Bank had supported a similar model in an oil extraction project in Chad.
Recognizing that the oil sector in Iraq needs strengthening, trade unions see Iraqi citizens and Iraqi workers at the foundation of this process. In 2006 they opposed the draft oil legislation in order to protect the resource and are wary that bringing in foreign companies introduces another element of insecurity, noting the inclination of these companies not to hire Iraqi workers.
The IMF stated that it has had only limited involvement in this area. The IMF agreed that the issue of oil legislation is clearly a pressing one that needs to be solved. It continues to advise the government to maintain transparency and accountability, in order to be able to attract investment to the sector.
The Sector Manager of the World Bank’s Energy and Transport Department (MENA region) thanked the trade unions for the opportunity to engage on this topic, and stated clearly that the Bank has no role at all in developing the Iraqi oil law. Where the World Bank is involved to some extent is in oil revenue administration. Recently the Iraqi government asked the World Bank for a grant to select and employ independent consultants to develop a National Energy Strategy. The trade unions stated their opposition to such a grant, stating that Iraq could and should hire local advisors.
The Lead Economist for Iraq at the World Bank explained the Bank’s work as mainly directed through technical assistance on public financial management, advising the government on revenue use through assistance with drafting budgets and estimates, strengthening public accounting systems and identifying areas of fiduciary weakness. This relates to another area of assistance, where the Bank gives advice on the prioritization of expenditures. The Poverty Reduction Strategy plays an important role in this process, and the Bank can advise the government to include important social sectors. The Bank is also helping Iraq’s candidacy for the Extractive Industries Transparency Initiative (EITI) process.
On the general issue of the government’s budget management, the unions expressed their concern that the IFIs’ advice to rationalize government expenditures will further weaken social safety nets. From the union perspective, the government should be spending more, not less, to alleviate poverty. The trade union leaders observed that the Iraqi government still has no tallies of subsidy beneficiaries, and that the national budget is neither comprehensive nor transparent. The World Bank Lead Economist agreed that the budgetary process needs to be strengthened but that it is evolving, partially through government reforms. The IMF agreed with the trade union leaders that the budget needs to be comprehensive and transparent, also to be able to combat corruption.
Topic 4: Project Implementation
The trade union leaders expressed scepticism about many of the World Bank’s initiatives in Iraq and insist that the core labour standards must be respected in the projects that the bank finances. They felt that the Bank must set an example in maintaining good practices regarding the freedom of association, health and safety standards, non-discrimination and other basic labour rights.
In other countries, the World Bank usually consults with workers in the public sector when they are affected by restructuring. However, since the current labour law, inherited from the Saddam Hussein regime, considers trade unions to be illegal in the Iraqi public sector, the unions have not been consulted despite the fact that public sector workers are the most affected by the IFIs’ programmes and policies. They expressed the view that the World Bank should consult with the trade unions directly, without relying on government approval. The trade unions feel that the discussion about core labour standards in project implementation is not just talk about regulations, but that commitment to these standards must be ingrained in efforts to develop the industrial sector, create jobs and establish effective social safety nets.
The Bank’s Country Program Coordinator stated that it is helpful to hear first-hand the realities of the Iraqi context, and agreed that job creation is one of the number one priorities. The Bank is working hard to adapt social safety nets to address layoffs by helping the government generate an environment conducive for job creation. She is aware of the progress made at the international level (between the ITUC and World Bank headquarters) on promoting core labour standards, noting that this language is in the World Bank’s standard bidding document and in the International Finance Corporation Performance Standards.
The Lead Economist reiterated that the efforts to restructure state owned enterprises were being undertaken simultaneously with projects to address social safety nets, and with projects to develop the private sector, as part of the overall economic reform process.
A Solidarity Center representative asked for details about the Bank’s follow-up project evaluation. Trade unionists have observed the chain of sub-contractors to be problematic, and project standards (including health and safety) to be very low. The Senior Country Officer explained that the World Bank has a variety of evaluation processes, including a post project evaluation, a quality assurance group that looks at ongoing projects, fiduciary monitoring (implemented by Iraqi consultants), and task managers responsible for each project who regularly report on project implementation. The Sector Manager for Energy and Transport (MENA) testified that he had people report directly to him regarding the specifics of each project. The ITUC reminded the World Bank that in their December 2008 meeting, the trade unions volunteered their assistance with on the ground monitoring of core labour standards.
Conclusion
All participants agreed that the meeting was a timely one, and that it represented part of a reinvigorated dialogue between the Iraqi trade unions and the IFIs on Iraq’s economic and social development. The ITUC summarized the main points of discussion from the meeting:
Iraqi unions say that social safety net targeting is not necessarily a problem, but when it results in hurting workers on a fixed income, it is an important issue. The trade unions underscored the need for to develop a responsive welfare mechanism concurrently with any changes in food distribution and also to work on a labour law reform that protects workers’ rights to organize and engage in collective bargaining.
With regard to unemployment benefits, the World Bank agreed with the need to introduce them in Iraq. The trade unions emphasized the need for a formula to be adopted that involves the representatives of the beneficiaries, i.e. the workers’ organizations.
The specifics of pension reform were not discussed in detail. The trade unions maintained that the World Bank’s multi-pillar model has produced poor results in other countries, even before last year’s financial collapse and argued that since this is an issue where unions’ members are directly affected, they must be consulted.
The IFIs stated that they are involved in the oil sector only in accounting and revenue management. They heard the trade unions’ concerns about the operation of the sector. The IFIs were requested to consider again the civil society committee model for oversight of oil revenues that the World Bank has supported in other countries. .
The World Bank representatives noted the progress the Bank has made in addressing core labour standards (CLS) in the context of the operations it finances. Specifically, it was noted in that IFC’s new Performance Standard 2 adopts all CLS as a requirement for investment and now IBRD also applies it for procurement of major public works. A complaints mechanism for the CLS requirement has been created at IFC; the ITUC explained to the Iraq team that it is working with the Bank to set one up as well as other implementation mechanisms and that the unions in Iraq should be seen a key partner for monitoring implementation of the CLS in the Bank’s projects in Iraq.
The issue of consultations came up constantly through the meeting. There are a number of issues of mutual concern that would benefit from more regular consultations between the IMF, the Bank and the trade unions. Unions are consulted in the context of IMF and World Bank programmes in many countries, and there are many benefits of doing the same in the case of Iraq. The Bank and the Fund expressed appreciation for the chance to hear the independent and critical perspectives on their work that trade unions expressed and welcomed the opportunity to continue the dialogue in the coming year.
The IMF’s representative stated that the Fund would also be happy to continue the consultation process, which it found very useful.
The Iraqi trade unions emphasized their views as presented in the opening statement, and acknowledged the IFIs’ intention to continue to consult with trade unions in the future.
Annex A:
Opening Statement of Iraqi Trade Union Leaders
We, the Iraqi trade unions, express the voices of millions in Iraq. We have our own perspective on the conditions and demands of both IFIs, which are in direct contradiction with the interests of the people of Iraq, especially workers.
Observing the following:
1. Restricting government expenditure and the role of the state is in sharp contrast with the interests of the Iraqi people.
2. The increased [domestic] price of hydrocarbons has increased the cost of transportation and cost of living, which has affected many industries and projects, leading to unemployment.
3. Millions of people depend on the food distribution system – diminishing this system will make life difficult for many, particularly the deprived and the unemployed.
4. Any upcoming loans from the IMF are small in comparison with the actual revenues of the Iraqi government from oil.
5. The layoffs of workers and privatization has catastrophic repercussions in society today, and the reduction in civil service salaries is bad for the Iraqi people.
6. The conditionality of the IMF and World Bank agreements bring about massive layoffs and will not support the reform of the labour law at all.
7. Oil revenue belongs to the Iraqi people and can generate wealth and protection for all sectors of society.
8. Public crises bring about the need for broader social responsibility, as witnessed in previous crises, for example the global crisis of 1929- 1932 and the current one. The state of Iraq is experiencing this current crisis, and which is why we need to overcome it through [public] intervention to support social protection, education, electricity services, the sectors of health and safety, and public services
All these issues conflict with policies of the IFIs at present. The Iraqi government authorities have not consulted with trade unions, or asked us to participate in the drafting these policies, or in their implementation. We pointedly condemn this lack of consultation, and demand inclusion in all future meetings and to be contacted directly [by the IFIs] despite our fundamental position against IFI programmes and policies. Annex B:
List of Meeting Participants
Iraqi Trade Union Leaders
Rasim Al Awadi, President, General Federation of Iraqi Workers (GFIW)Hassan Juma'a Awwad, President, Iraqi Federation of Oil Unions (IFOU)Falah Alwan, President, Federation of Worker's Councils and Unions in Iraq (FWCUI)Nebell Mulhim, Foreign Affairs Officer, Kurdish General Workers Syndicates in Iraq (KGWSI) Sardar Mohammed Rasheed , President, Iraqi Kurdish Worker's Syndicates and Unions (IKWSU)
ITUC
Peter Bakvis, Director, ITUC/Global Unions Washington Office
Francesca Ricciardone, Research Officer, ITUC/Global Unions Washington Office
Solidarity Center
Lisa McGowan, Senior Program Officer, MENA Region
Mohammed Al Kadhim, Advisor for Iraq Program
Erin Radford, Program Officer, Egypt
World Bank
Pilar Maisterra, Country Program Coordinator
Jonathan Walters, Sector Manager, Energy and Infrastructure
Janet Dooley, Senior Country Officer
Jorge Araujo, Lead Economist
Andras Bodor, Social Protection Economist (MENA)
Surat Nsour, Operations Officer, Human Development (MENA)
Arvo Kuddo, Senior Labor Economist
Najat Yamouri, Senior Communications Officer
IMF
Ron van Rooden, Advisor, Middle East and Central Asia Department (MCD)
Maria Oliva, MCD
Tilla McAntony, External Relations
[1] Post meeting note: this is a reference to a workshop held in June at the request of the Secretary General of the Council of Ministers who prepared the participant list which included the Undersecretaries from the relevant ministries. No one else was invited.
posted by General Union of Oil Employees in Basra at 11:37 ص
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