Time for a new social deal

The global crisis has developed around three key stages. The first one starts with the financial crisis caused partly by the subprime crisis in the US and global imblances between the different economic blocks, leading subsequently to the rescue of a large part of the banking system. The second stage is the crisis of sovereign debts- which has offset the effects of fiscal stimulus plans in the US and Europe, leading to a tightening of public finances which will worsen current sluggish growth. The third stage of the crisis concerns social reaction against fiscal austerity and wage cuts from the poorer as well as the protests on the other side of the mediterranean sea due to massive speculation on food products.

This sequence will transform radically the world with greater instability and conflict around the control of raw materials and the fight to secure energy supply. In this scenario, governments need to be more attentive to the needs and aspirations of people.

The 2010 Social Watch report* warns about the danger of increased poverty and social deprivation. The highest costs of the crisis are born by the poor, who lost their jobs and their homes, and had also to pay to save the banks in the form of higher taxes. This social injustice , as showned by protests in Northern Africa, is not sustainable any longer.

Measuring progress against the Millenium Development Goals, not only in terms of income per capita, but in terms of 'capabilities' (or access to rights), the report shows that there has not been any progress since 2000 (whilst poverty had decreased in the previous decade). The Basic Capability Index (Bci), a synthetic index including mortality among children below five years, reproductive health and basic education, has showed slower progress during the last decade (+3%) compared to the previous one (+5%) for all countries. During the same period, per capita income increased about 19% over 2000-2009 (17% over 1990-1999). This indicates that higher income growth was not accompanied by more rapid social progress, despite international efforts to reach the Millenium goals.

In the countries which are today affected by massive protests, the report notes that there has been a marked deterioration of the Bci. This indicates that further aid and larger access to trade from developing countries become today an ethical imperative in order to avoid social chaos. Banks were saved with thousand billions of dollars, but not the poor who would need much less to be given a decent life.

It's time for a new social deal.

* see Social Watch report 2010 "After the fall" http://www.socialwatch.org/sites/default/files/Social-Watch-Report-2010.pdf

Social watch is a network of 400 NGOs including Oxfam, Amnesty and WWF present in 62 countries.