People's Stories Livelihood

Jobs with a decent minimum wage are the basis for recovery in an increasingly unequal world
by Evelyn Astor, Sharan Burrow
ITUC, Equal Times
Nov. 2021
This year’s Nobel Prize in Economic Sciences was awarded to US-based economists David Card, Joshua Angrist and Guido Imbens for real-world research in the 1990s that empirically demonstrated that the idea touted by conservative economists, that higher minimum wages mean fewer jobs, is not based on fact.
The researchers used a ‘natural experiment’ to study the effects of a minimum wage increase in New Jersey, which raised it to the highest minimum wage rate in the country at the time – a move that received strong opposition from business leaders.
The researchers studied the effects of minimum wage increases in the fast-food industry in New Jersey, comparing it to a control group of fast-food restaurants in eastern Pennsylvania, right across the border where the minimum wage did not increase. The researchers found that relative to the fast-food restaurants in Pennsylvania, restaurants in New Jersey increased employment by 13 per cent after the minimum wage was increased. This was despite the fact that the minimum wage was increased during a recession.
The findings shook the economic establishment at the time. However, since then, numerous other empirical studies have further challenged the theory that minimum wage increases cost jobs.
In Brazil, minimum wages increased in real terms by upwards of 60 per cent from 2003 through 2012, with no noticeable employment impacts.
An increase in minimum wages in Indonesia in the 1990s was met with an increase in formal employment as well as a decrease in informality, with local demand also increasing.
The introduction of the minimum wage in Germany in 2015 was not met with the massive job losses that were initially predicted by many economists; the employment effects were negligible, while income security for low-income earners was significantly boosted.
However, despite the mounting evidence, the unproven yet influential theory that raising minimum wages directly leads to job loss has continued to persist – a myth peddled by conservative economists, major industry organisations such as the American Chamber of Commerce and some international organisations such as the International Monetary Fund.
“Raise minimum wages as a matter of urgency”
The Nobel Prize is a serious indictment against those who have argued against decent minimum wages for workers, representing an international rejection of the now debunked economic narrative that wage increases are bad for workers and the economy. It has taken some 30 years for the facts to be given prominence over a damaging and groundless theory, with millions of workers kept in poverty as a result.
According to the International Trade Union Confederation Global Poll, 76 per cent of the world’s people find the minimum wage is not enough to live on. In-work poverty remains rampant globally according to the International Labor Organization (ILO), with 300 million workers in emerging and developing countries earning less than US$1.90 per day, and a further 430 million workers in emerging and developing countries earning between US$1.90 and US$3.10 per day.
Some 266 million workers are paid less than the minimum wage, either because they are not legally protected or because of non-compliance.
And global real wage growth has stagnated compared to productivity and economic growth in recent decades, which has contributed to widening income inequality.
The economic desperation experienced by workers is compounded by the fact that half of the world’s population lacks any form of social protection, and an additional 22 per cent lack comprehensive protection in line with ILO standards.
With the award of this prize, ensuring workers’ adequate incomes through raising minimum wages and enhancing social protection should now be seen by governments as a matter of urgency.
Such measures are not only vital in order to provide workers and their families a floor of income security, but should also be seen as investments. Raising minimum wages has been shown to reduce poverty and inequality, support increased consumption and demand for local goods and services, contribute to productive economic activity, and support inclusive growth.
ITUC research has shown how investing an additional 1 per cent of GDP on social protection can lead to significantly increased employment, tax revenue, and nearly double the returns in GDP terms.
Governments must ensure minimum living wages, taking into account the cost of living for workers and their families, and developing them together with social partners. They must have the force of law, and non-compliance must be met with strong and dissuasive sanctions.
Social protection systems, likewise, must be strengthened and extended to cover workers in all forms of work as well as those in the informal economy. Such measures will not destroy jobs, but rather help build the basis for a new social contract, allowing for a robust, fair and inclusive economic recovery, with jobs, decent work and resilience.

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The production and burning of coal, oil and gas was subsidised by $5.9tn in 2020
by France 24, DW, Guardian News, agencies
Oct. 2021
Fossil fuel production to increase to 2040 and beyond, undermining Paris Climate Agreement
Governments plan to produce more than double the amount of energy from fossil fuels in 2030, than the amount that would limit global warming to the Paris Agreement level of 1.5°C.
That’s according to the 2021 Production Gap Report, released this week by leading research institutes and the UN Environment Programme (UNEP).
Over the next two decades, governments are projecting an increase in global oil and gas production, and only a modest decrease in coal production. Taken together, these plans mean that fossil fuel production will increase overall, to at least 2040.
Current plans would lead to about 240 per cent more coal, 57 per cent more oil, and 71 per cent more gas production in 2030, than would be consistent with limiting global warming to 1.5°C.
Global gas output is projected to increase the most between 2020 and 2040, continuing a trend of long-term global expansion inconsistent with the Paris Agreement.
Reacting to the report, the UN Secretary General António Guterres said, “It is urgent that public financiers as well as private finance, including commercial banks and asset managers, switch their funding from coal to renewables to promote full decarbonization of the power sector and access to renewable energy for all”, he said.
Since the beginning of the COVID-19 pandemic, countries have directed over $300 billion in new funds towards fossil fuel activities.
“The research is clear: global coal, oil and gas production must start declining immediately and steeply to be consistent with limiting long-term warming to 1.5°C,” says Ploy Achakulwisut, a lead author on the report. “However, governments continue to plan for and support levels of fossil fuel production that are vastly in excess of what we can safely burn.”
The 2021 Production Gap Report provides country profiles for 15 major producer countries: Australia, Brazil, Canada, China, Germany, India, Indonesia, Mexico, Norway, Russia, Saudi Arabia, South Africa, the United Arab Emirates, the United Kingdom and the United States. The country profiles show that most of these governments continue to provide significant policy support for fossil fuel production.
“Fossil-fuel-producing nations must recognize their role and responsibility in closing the production gap and steering us towards a safe climate future,” says Mans Nilsson, executive director at the Stockholm Environment Institute. “As countries increasingly commit to net-zero emissions by mid-century, they also need to recognize the rapid reduction in fossil fuel production that their climate targets will require.”
Christiana Figueres, the UN climate chief when the Paris climate deal was signed, said: “We must keep fossil fuels in the ground. A safe future has no space for any new fossil fuel extraction. The shift to clean energy must be accelerated in order to maintain human activity now and protect human wellbeing tomorrow.”
Christophe McGlade, a senior analyst at the International Energy Agency (IEA), said: “Ongoing research underlines how the rhetoric of tackling climate change has diverged from reality. None of the net zero pledges made to date by major oil and gas producing countries include explicit targets to curtail production.”
The report is produced by the Stockholm Environment Institute (SEI), International Institute for Sustainable Development (IISD), ODI, E3G, and UNEP. More than 80 researchers contributed to the analysis and review, including numerous universities, think tanks and other research organizations.
Oct. 2021
"Economists have grossly undervalued the lives of young people and future generations who are most at threat from the devastating impacts of climate change".. “Discounting has been applied in such a way that it is effectively discrimination by date of birth”, says Professor Nicholas Stern, Chairman of the Grantham Research Institute on Climate Change and the Environment at the London Scool of Economics.
Many economic assessments of the climate crisis “grossly undervalue the lives of young people and future generations”, Prof. Nicholas Stern warned ahead of the Cop26 climate summit in Glasgow.
Economists have failed to take account of the “immense risks and potential loss of life” that could occur as a result of the climate crisis, he said, as well as badly underestimating the speed at which the costs of clean technologies, such as solar and wind energy, have fallen.
Stern said the economics profession had also misunderstood the basics of “discounting”, the way in which economic models value future assets and lives compared with their value today.
Recent research shows people born today will suffer many times more extreme heatwaves and other climate disasters over their lifetimes than their grandparents.
Stern’s remarks are based on a paper to be published in the Economic Journal of the Royal Economic Society and made to mark the 15th anniversary of the landmark Stern review on the economics of the climate crisis in 2006. It concluded that the costs of inaction on climate were far greater than the costs of action and that the climate crisis was the biggest market failure in history.
Since the publication of the report, carbon emissions have risen by 20% and Stern was scathing about much of the economic analysis that has informed policymakers. “Cavalier treatment of risk, and the missing of the very rapid technical progress, means the models have been profoundly misleading,” he said.
The theory of discounting had not been related to its ethical foundations, he added, or allowed for the risk that global heating will make future generations poorer.
Political action has been slow since 2006, Stern said, because of the persistence of the “damaging” idea that climate action cuts economic growth.
“The economic question now is: how do we manage the radical transformation we have to make in the world economy in the next 20 or 30 years?” he said. “How do we promote the 2% or 3% extra investment we’ll need – which is a very valuable investment, not a cost.”
A whole range of policies are needed, Stern said, including carbon pricing, regulation, product standards, investment in research and reform of capital markets. A critical factor is the provision of large-scale, low-cost finance to fund the low-carbon transition, especially in developing countries.
The Stern review was criticised by some when published as exaggerating the risks of the climate crisis. “The idea that I was alarmist is just laughable in retrospect. We underestimated the dangers. The costs of inaction were very worrying 15 years ago – they are immensely worrying now.”
Oct. 2021
IEA: Progress on cutting global emissions 'far too slow'. (DW)
The International Energy Agency has long been accused of undermining climate action. Now, ahead of a global climate summit, it has called on governments to make stronger commitments.
Investment in renewable energy will need to triple by the end of this decade if the world's climate pledges are to be met, the International Energy Agency (IEA) said.
The IEA, which advises governments on energy policy, released its annual World Energy Outlook (WEO) report, just weeks before the United Nations COP26 summit in Glasgow.
Critics have long accused the IEA of underestimating the speed at which the world could switch to renewables, thereby undermining the fight against climate change.
But in this year's WEO report, the IEA has urged governments to make stronger commitments to cut greenhouse gas emissions.
Renewable energy sources, such as solar, wind, hydropower and bioenergy, need to form a far bigger share in the rebound in energy investment after the coronavirus pandemic, the Paris-based agency said.
The IEA noted that demand for renewables continues to grow. However, "this clean energy progress is still far too slow to put global emissions into sustained decline towards net zero" by 2050.
Mans Nilsson, executive director of the environmental group Stockholm Environment Institute, told DW that the IEA has gradually moved toward a "more distinct tone urging decision makers to mitigate climate change."
"Traditionally, the IEA has been rather 'soft' on fossil energy and bearish on the potential of renewables. Their overly pessimistic forecasts of the development of installation costs for solar and wind have been infamous," he added. "This has now been rectified," he said, adding that he believes the IEA seems "still too positive on oil and gas."
"In a way, it is a shift to a more rational and realistic view on the energy transition", Nilsson said.
"Many governments have relied on the IEA in the past to justify their support for fossil fuels," said David Tong of the Price of Oil non-governmental organization, which advocates transitioning to clean energy.
"At COP26, governments will compromise their credibility if they ignore the IEA's guidance now, when it's finally more consistent with the 1.5-degree limit they agreed to in Paris," he told DW.
"We need our leaders to stop listening to fossil fuel CEOs and instead follow the science. Will they back up net zero and 1.5 degree commitments with immediate action to stop new oil, gas and coal extraction, and surge money into clean energy and efficiency solutions?"
* While the UN Paris climate agreement emphasis is focused on net zero targets by 2050, most climate scientists are calling for immediate targets for 2030 of at least a 45-50% reduction in carbon emissions.
Meeting the 1.5C target will not prevent extreme weather worsening or sea levels rising, but it is seen as vital for avoiding runaway impacts on humans and the planet, including large-scale hunger, mass migration, and general chaos.
The IEA dubious claim that the outcome of the COP26 summit will lead to a 1.8C temperature increase by 2050, if all the manifestly inadequate incremental commitments are realized is simply not credible.
Oct 2021
The fossil fuel industry benefits from subsidies of $11m every minute, according to analysis by the International Monetary Fund.
The IMF found the production and burning of coal, oil and gas was subsidised by $5.9 trillion dollars in 2020, with not a single country pricing all its fuels sufficiently to reflect their full supply and environmental costs.
Experts said the subsidies were “adding fuel to the fire” of the climate crisis, at a time when rapid reductions in carbon emissions were urgently needed.
Explicit subsidies that cut fuel prices accounted for 8% of the total and tax breaks another 6%. The biggest factors were failing to make polluters pay for the deaths and poor health caused by air pollution (42%) and for the heatwaves and other impacts of global heating (29%).
Setting fossil fuel prices that reflect their true cost would cut global CO2 emissions by over a third, the IMF analysts said. This would be a big step towards meeting the internationally agreed 1.5C target. Keeping this target within reach is a key goal of the UN Cop26 climate summit.
“Fossil fuel price reform could not be timelier,” the IMF researchers said. The ending of fossil fuel subsidies would also prevent nearly a million deaths a year from dirty air and raise trillions of dollars for governments, they said.
“There would be enormous benefits from reform, so there’s an enormous amount at stake,” said Ian Parry, the lead author of the IMF report.
“Some countries are reluctant to raise energy prices because they think it will harm the poor. But holding down fossil fuel prices is a highly inefficient way to help the poor, because most of the benefits accrue to wealthier households. It would be better to target resources towards helping poor and vulnerable people directly.”
The G20 agreed in 2009 to phase out “inefficient” fossil fuel subsidies and in 2016, the G7 set a deadline of 2025, but little progress has been made. In July, a report showed that the G20 countries had subsidised fossil fuels by trillions of dollars since 2015, the year the Paris climate deal was reached.
“To stabilise global temperatures we must urgently move away from fossil fuels instead of adding fuel to the fire,” said Mike Coffin, senior analyst at the thinktank Carbon Tracker. “It’s critical that governments stop propping up an industry that is in decline, and look to accelerate the low-carbon energy transition, and our future, instead.
The International Energy Agency (IEA) said in May that the development of new oil and gas fields must stop this year to meet climate goals.
The IMF report found that prices were at least 50% below their true costs for 99% of coal, 52% of diesel and 47% of natural gas in 2020. Five countries were responsible for two-thirds of the subsidies: China, the US, Russia, India and Japan. Without action, subsidies will rise to $6.4tn in 2025, the IMF said.
Proper pricing for fossil fuels would cut emissions by, for example, encouraging electricity generators to switch from coal to renewable energy and making electric cars an even cheaper option for motorists. International cooperation is important, Parry said, to allay fears that countries could lose competitiveness if their fossil fuel prices were higher.
“The IMF report is a sobering reading, pointing to one of the major defects of the global economy,” said Maria Pastukhova, at the thinktank e3g. “Fossil fuel subsidies have been a major stumbling block in the G20 process for years,” she said.
Ipek Gencsu, at the Overseas Development Institute, said: “Subsidy reform requires support for vulnerable consumers who will be impacted by rising costs, as well for workers in industries which simply have to shut down. It also requires information campaigns, showing how the savings will be redistributed to society in the form of healthcare, education and other social services. Many people oppose subsidy reform because they see it solely as governments taking something away, and not giving back.”
The G20 countries emit almost 80% of global greenhouse gases.
* Fossil fuel producing countries are lobbying IPCC against climate action.
Some of the world’s biggest coal, oil, beef and animal feed-producing nations are attempting to strip a landmark UN climate report of findings that threaten their domestic economic interests, a major leak of documents seen by Unearthed has revealed.
The revelations – which show how this small group of nations is attempting to undermine the International Panel on Climate Change’s (IPCC) major upcoming assessment of the world’s options for limiting global warming – come just days before the start of crucial international climate negotiations in Glasgow.
They come from a leak of tens of thousands of comments by governments, corporations, academics and others on the draft report of the IPCC’s ‘Working Group III’ – an international team of experts that is assessing humanity’s remaining options for curbing greenhouse gas (GHG) emissions.
The documents passed to Unearthed show how fossil fuel producers including Australia, Saudi Arabia and the Organization of Petroleum Exporting Countries (OPEC), are lobbying the IPCC – the world’s leading authority on climate change – to remove or weaken a key conclusion that the world needs to rapidly phase out fossil fuels.
* The IEA is misguided to advance nuclear power (see: Fukushima Daiichi nuclear disaster, Chernobyl Nuclear disaster, Three Mile Island nuclear meltdown, byproduct nuclear waste that remains radioactive for thousands of years); those who promote carbon capture and storage - to prolong fossil fuels - a totally unproven and wildly expensive non-solution, and any notion of geoengineering is an extremely dangerous proposition.


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