IMPACT OF THE CRISIS ON EDUCATION

UPDATE ON ECONOMIC DEVELOPMENTS

REPORT TO THE EI EXECUTIVE BOARD1-3 December 2009

Bob Harris

Since March 2009

Financial markets have recovered significantly

Upswing continued in 2nd and 3rd quarters – to October 2009

USA:Dow Jones 2005-2009

The German stock market

Consumer confidence plummetted to mid-2009

Then began to recover

An indicator of global trade:Baltic Dry Index (BDI) 30 October 2009

TUAC trade union advisory committee to the OECD CSC commission syndicale consultative auprès de l’OCDE

1.190.000 hits for "recession is over“

Jul 25, 2009The Recession Is Over SlateThe Recession Is Over!What America's best economic forecaster is saying.By Daniel GrossPosted Tuesday, July 14, 2009

Sept. 15, 2009

Bernanke declares 'recession is very likely over'Unfortunately, unemployment will come down slowly

OECD composite leading indicators (CLI) show signals of recovery; Paris, 6 November 2009

CLI for the OECD area increased by 1.3 point in September 2009 and was 3.4 points higher than in September 2008.

TUAC trade union advisory committee to the OECD CSC commission syndicale consultative auprès de l’OCDE

CLI for China increased by 1.6 point – 7.0 points higher than a year ago

But unemployment increased steeply in Industrialized countries

OECD does not project much improvement in employment in 2010 - 2011

TUAC trade union advisory committee to the OECD CSC commission syndicale consultative auprès de l’OCDE

Increasing unemployment despite “financial” recovery – the US as a case in point

What recovery?

Unemployment Rate Rises to 10.2%, Offering Little Reassurance to Job Seekers

Unemployment rate, seasonally adjusted, Oct. 2007 – October 2009

And the impact in developing countries is dramatic World Bank, 26 November 2009:

• 43 low-income developing countries are suffering from the combined effects of the food, fuel and economic crises

• Financing shortfalls to cover core needs amount to $11.6 billion for these countries

• 90 million more people will be living in extreme poverty, on less than $1.25 a day, by the end of 2010

Shanta Devarajan, World Bank chief economist for the Africa region:

“One of the most disturbing statistics we found is that when you have these kinds of growth slowdowns, infants die - you could lose about 30,000 to 50,000 infants before their 1st birthday”

“It took about six months for the economic crisis to hit Africa. Africa’s growth rate dropped from 4.8% a year in 2008 to about 1% in 2009”

Prospects for Central & Eastern Europe and Central AsiaThe World Bank, 26 November 2009

No respite in sight for emerging Europe and Central Asia, says the region’sChief Economist Indermit Gill:

• Economic growth across the region – a negative 6% in 2009, with severalcountries in the negative 10% range. Official unemployment has increasedfrom 8.5 million to 11.5 million. The actual number of unemployed may bemuch higher.• Fiscal deficits are expected to more than triple in some countries and force

governments to work with smaller budgets.

“Instead of the number of poor falling by about 15 million this year, it willactually increase by almost 15 million. So we are seeing a bigdifference of essentially about 30 million poor” says Gill.

TUAC trade union advisory committee to the OECD CSC commission syndicale consultative auprès de l’OCDE

Global Economic Prospects for 2010 – according to the IMF

TUAC trade union advisory committee to the OECD CSC commission syndicale consultative auprès de l’OCDE

Overview of the IMF-World Economic Outlook Projections for the G20

TUAC trade union advisory committee to the OECD CSC commission syndicale consultative auprès de l’OCDE

The IMF on unemployment

The IMF’s Chief, Dominique Strauss-Kahn:Rome 30 October:

“There is some good news, but the crisis is not over. There is no recovery until there is recovery of employment”

London 23 November :“The global economy remains in a holding pattern - getting better, but still highly vulnerable”

THE ILO:

THE FINANCIAL AND ECONOMIC CRISIS:A DECENT WORK RESPONSE

Time-lags: Schematic comparison of stock markets, employment,public revenues and public debt

Oct Nov Dec Jan Feb Mar Apr May June Jul Aug Sep Oct Nov Dec Jan Feb Mar20082009 2010

Stock markets

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Public revenues

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Public debt

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G20 G20 G20

uncertainties??

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Employment

Dubai sends markets into turmoil

Dubai crisis shakes markets

THE WALL STREET JOURNAL.Friday – Sunday, November 27, 2009

LE TEMPS – Economie et FinanceSamedi 28 novembre 2009

“Dubai montre que la crise n’est pas finie”

Europe Friday November 27 2009FINANCIAL TIMES

THE BIG THREATS TO PUBLIC EDUCATION

Declining public revenues

“Exit strategies” toreduce deficits

Dominique Strauss-Kahn, London 23 November

“The old growth model is dead”“The old model under which households in the USA and elsewhere propelled the global economy with their voracious appetite for consumption, is dead – or at least on its last legs”

“This shift would be helped by stronger social security systems and higher spending on health and education”

“Exit too soon, and you kill the recovery. Exit too late, and you sow the seeds for the next crisis” “Exiting too early is costlier than exiting too late”

PARADIGM CHANGE

From: Global imbalancesInequityCasino capitalism

To: Decent workJust transition to green jobsEquityHealth and education

A paradigm for sustainable recovery

THE UNWANTED PARADIGM

Back to:A new cycle of massive profit-taking

Monetary easing of Oct – Dec 2008 created liquidityStimulus packages were financed by banks

So: “Bank bonuses make a come-back”

The Wall Street Journal, 14 Oct 2009:23 firms will pay $140 billion this year – back to 2007 levels

A new round of speculation – until the bubble bursts againAnd this time, no more room for monetary easingor fiscal stimulus !

THE FINAL WORD

EFA Global MonitoringReport 2009