Social Europe

politics, economy and employment & labour

  • Themes
    • Strategic autonomy
    • War in Ukraine
    • European digital sphere
    • Recovery and resilience
  • Publications
    • Books
    • Dossiers
    • Occasional Papers
    • Research Essays
    • Brexit Paper Series
  • Podcast
  • Videos
  • Newsletter

The G20, the private sector and the vaccine, debt and climate crises

Katie Gallogly-Swan and Rebecca Ray 30th October 2021

G20 leaders meeting in Rome must recognise that only public purpose, not private profit, can tackle interconnected global crises.

G20,Rome,climate,vaccine,debt
Some way to go on all of these (Kraft74/shutterstock.com)

In their recent communiqué, Group of 20 (G20) finance ministers admirably committed to using ‘all available tools for as long as required to address the adverse consequences of Covid-19’—in particular for those most affected.

Since the pandemic developed, governments around the world have taken extraordinary steps to support their economies, forcing the closure of ‘non-essential’ businesses, locking down borders and unleashing a wave of economic and health measures. While not all responses have been equally effective, one fundamental lesson has become clear: governments—particularly in wealthy countries—can marshal unprecedented interventions, at scale, when needed.

Eighteen months on though, critical weaknesses persist. Global vaccine inequity is perpetuating the pandemic. Economic instability and lack of fiscal space threaten another lost decade of development for many low- and middle-income countries. Despite escalating climate disasters, only 2 per cent of the total fiscal response to Covid-19 and the recovery from the ensuing economic crisis has gone into clean-energy measures. Progress on addressing the interlocking global crises of Covid-19, economic instability and climate change has effectively stalled.

Stymying progress

As G20 leaders meet in Rome this weekend, they will be keen to show support for a more prosperous future. In doing so, there can be no delay in confronting a feature common to these challenges—the role of a few financial and pharmaceutical giants in stymying progress.


Our job is keeping you informed!


Subscribe to our free newsletter and stay up to date with the latest Social Europe content. We will never send you spam and you can unsubscribe anytime.

Sign up here

First, equal access to vaccines and a more mutual and co-operative global approach to research and manufacturing have been foregone in favor of consolidating the supremacy of a few major pharmaceutical companies. Despite renewed commitments to donate vaccines, the waiver on intellectual-property obligations proposed by South Africa and India at the World Trade Organization in October 2020, to support increased manufacture of cheaper Covid-19 products, is languishing in diplomatic manoeuvres.

Several G20 countries continue to block this potentially transformative initiative, effectively protecting the monopoly rights of the pharmaceutical giants—whose vaccine success was largely thanks to significant public investment at the outset of the crisis. As well as leading to avoidable human suffering and loss of life, according to the International Chamber of Commerce failure to achieve global vaccine access stands to cost the world economy $9.2 trillion.

Refusal to participate

Next, a sovereign-debt crisis is looming in the global south, exacerbated by the pandemic and the refusal of private creditors to participate in debt restructuring or relief negotiations. The G20 has suspended bilateral payments for low-income countries (LICs), delaying around $5.7 billion worth of payments in 2020—developing-country debt increased by around $500 billion in the same period. This Debt Service Suspension Initiative is due to end in December but the G20 ‘Common Framework for Debt Treatments’, intended to restructure debt with distressed countries, is yet to show signs of being operational, though launched over a year ago and with manifest demand from debt- and climate-vulnerable countries for major debt restructuring.

So far, G20 leaders have not compelled participation from private bondholders and commercial creditors, despite repeated entreaties. This ensures failure for debt-relief initiatives. Private creditors comprise about one-fifth of LIC debt and about three-quarters of middle-income-country debt, continuing to collect repayments throughout the crisis while health budgets have been depleted. Without meaningful engagement from the creditors holding out, G20 debt-relief efforts will do nothing to steady global economic instability.

Major stumbling block

Finally, amid significant government commitments in the run-up to the United Nations Climate Change Conference (COP26) opening tomorrow in Glasgow, private investment in carbon-intensive industries remains a major stumbling block to rapidly reducing emissions.

As the largest public lender to coal projects, China’s recent announcement to build no new coal plants abroad is rightly being celebrated. Private-sector investors are however responsible for about 82 per cent of all coal investment worldwide, so government pledges alone aren’t enough to eradicate emissions.

The recently-released Production Gap report from the United Nations Environment Programme revealed that existing energy plans would lead to about 240 per cent more coal being produced worldwide in 2030 than would be consistent with keeping global heating to 1.5C above pre-industrial levels. An InfluenceMap study shows that even among climate-focused investment funds over half—including those associated with the major investment houses BlackRock and State Street—remain implicated in fossil-fuel firms and other major polluters.

Facilitating profit-maximisation

As evidenced during the pandemic, the state hasn’t necessarily shrunk—governments still largely command legislative power to take decisive action. But there is undeniable evidence that it has been moulded to prioritise facilitating profit-maximisation and the unhindered movement of capital around the world, encouraged by rankings such as the recently discontinued World Bank ‘Doing Business’ report.


We need your support


Social Europe is an independent publisher and we believe in freely available content. For this model to be sustainable, however, we depend on the solidarity of our readers. Become a Social Europe member for less than 5 Euro per month and help us produce more articles, podcasts and videos. Thank you very much for your support!

Become a Social Europe Member

Government action thus focuses on ‘attracting investment’ and improving ‘competitiveness’ through slashing taxes, rights and standards, rather than pursuing productive investment policies which tackle inequalities and improve lives. A strengthened social safety-net, labour rights, public services, industrial policy—all desperately needed in the face of the pandemic—are effectively curtailed.

At the G20 meeting this weekend, leaders have the opportunity to establish a new consensus to rebalance power towards public priorities and mutual prosperity, using regulatory tools to shape and influence private-sector activity towards tackling global challenges.

Positive and negative incentives

With the help of a waiver on intellectual-property rights related to vaccines, G20 governments which host pharmaceutical companies can use positive and negative incentives to push them to share their technology and know-how, securing a global vaccination drive to end the pandemic.

Powerful creditor countries in the G20 could also compel private creditors to participate in debt-relief initiatives, using legislative safeguards against litigation in financial centres such as London and New York. Multilateral bodies such as the International Moneary Fund and the World Bank can help co-ordinate these efforts, with the ambition to establish a multilateral debt workout mechanism, having announced their intention to roll out a green debt-swap platform in time for COP26.

Equally, private-sector investment in fossil fuels is dominated by companies incorporated in G20 countries, whose governments can regulate this activity into non-existence and instead guide investment into expanding renewables, with the requisite support for equitable and just transitions in fossil-fuel-dependent economies.

If G20 members are serious about ending the pandemic, rebuilding a strong global economy and addressing climate change, they will need to use ‘all available tools’ to address the power imbalance between the public and private spheres.

Nothing less than the public health and wealth of the world depends on it.

Katie Gallogly Swan
Katie Gallogly-Swan
Katie Gallogly-Swan works on climate and development at the United Nations Conference on Trade and Development. Previously, she worked at Boston University’s Global Development Policy Center, on how trade, development finance and climate policy can enable a global just transition, and at Oxfam and ActionAid, on economic, climate and gender policy.
Pics1 2
Rebecca Ray

Rebecca Ray is a senior academic researcher at the Boston University Global Development Policy Center. She holds a PhD in economics from the University of Massachusetts-Amherst . She works on the nexus of international development finance, particularly China’s role in reshaping the global financial landscape, and sustainable development, particularly in Latin America.

You are here: Home / Politics / The G20, the private sector and the vaccine, debt and climate crises

Most Popular Posts

Russian soldiers' mothers,war,Ukraine The Ukraine war and Russian soldiers’ mothersJennifer Mathers and Natasha Danilova
IGU,documents,International Gas Union,lobby,lobbying,sustainable finance taxonomy,green gas,EU,COP ‘Gaslighting’ Europe on fossil fuelsFaye Holder
Schengen,Fortress Europe,Romania,Bulgaria Romania and Bulgaria stuck in EU’s second tierMagdalena Ulceluse
income inequality,inequality,Gini,1 per cent,elephant chart,elephant Global income inequality: time to revise the elephantBranko Milanovic
Orbán,Hungary,Russia,Putin,sanctions,European Union,EU,European Parliament,commission,funds,funding Time to confront Europe’s rogue state—HungaryStephen Pogány

Most Recent Posts

reality check,EU foreign policy,Russia Russia’s invasion of Ukraine—a reality check for the EUHeidi Mauer, Richard Whitman and Nicholas Wright
permanent EU investment fund,Recovery and Resilience Facility,public investment,RRF Towards a permanent EU investment fundPhilipp Heimberger and Andreas Lichtenberger
sustainability,SDGs,Finland Embedding sustainability in a government programmeJohanna Juselius
social dialogue,social partners Social dialogue must be at the heart of Europe’s futureClaes-Mikael Ståhl
Jacinda Ardern,women,leadership,New Zealand What it means when Jacinda Ardern calls timePeter Davis

Other Social Europe Publications

front cover scaled Towards a social-democratic century?
Cover e1655225066994 National recovery and resilience plans
Untitled design The transatlantic relationship
Women Corona e1631700896969 500 Women and the coronavirus crisis
sere12 1 RE No. 12: Why No Economic Democracy in Sweden?

Hans Böckler Stiftung Advertisement

The macroeconomic effects of re-applying the EU fiscal rules

Against the background of the European Commission's reform plans for the Stability and Growth Pact (SGP), this policy brief uses the macroeconometric multi-country model NiGEM to simulate the macroeconomic implications of the most relevant reform options from 2024 onwards. Next to a return to the existing and unreformed rules, the most prominent options include an expenditure rule linked to a debt anchor.

Our results for the euro area and its four biggest economies—France, Italy, Germany and Spain—indicate that returning to the rules of the SGP would lead to severe cuts in public spending, particularly if the SGP rules were interpreted as in the past. A more flexible interpretation would only somewhat ease the fiscal-adjustment burden. An expenditure rule along the lines of the European Fiscal Board would, however, not necessarily alleviate that burden in and of itself.

Our simulations show great care must be taken to specify the expenditure rule, such that fiscal consolidation is achieved in a growth-friendly way. Raising the debt ceiling to 90 per cent of gross domestic product and applying less demanding fiscal adjustments, as proposed by the IMK, would go a long way.


DOWNLOAD HERE

ILO advertisement

Global Wage Report 2022-23: The impact of inflation and COVID-19 on wages and purchasing power

The International Labour Organization's Global Wage Report is a key reference on wages and wage inequality for the academic community and policy-makers around the world.

This eighth edition of the report, The Impact of inflation and COVID-19 on wages and purchasing power, examines the evolution of real wages, giving a unique picture of wage trends globally and by region. The report includes evidence on how wages have evolved through the COVID-19 crisis as well as how the current inflationary context is biting into real wage growth in most regions of the world. The report shows that for the first time in the 21st century real wage growth has fallen to negative values while, at the same time, the gap between real productivity growth and real wage growth continues to widen.

The report analysis the evolution of the real total wage bill from 2019 to 2022 to show how its different components—employment, nominal wages and inflation—have changed during the COVID-19 crisis and, more recently, during the cost-of-living crisis. The decomposition of the total wage bill, and its evolution, is shown for all wage employees and distinguishes between women and men. The report also looks at changes in wage inequality and the gender pay gap to reveal how COVID-19 may have contributed to increasing income inequality in different regions of the world. Together, the empirical evidence in the report becomes the backbone of a policy discussion that could play a key role in a human-centred recovery from the different ongoing crises.


DOWNLOAD HERE

ETUI advertisement

The EU recovery strategy: a blueprint for a more Social Europe or a house of cards?

This new ETUI paper explores the European Union recovery strategy, with a focus on its potentially transformative aspects vis-à-vis European integration and its implications for the social dimension of the EU’s socio-economic governance. In particular, it reflects on whether the agreed measures provide sufficient safeguards against the spectre of austerity and whether these constitute steps away from treating social and labour policies as mere ‘variables’ of economic growth.


DOWNLOAD HERE

Eurofound advertisement

Eurofound webinar: Making telework work for everyone

Since 2020 more European workers and managers have enjoyed greater flexibility and autonomy in work and are reporting their preference for hybrid working. Also driven by technological developments and structural changes in employment, organisations are now integrating telework more permanently into their workplace.

To reflect on these shifts, on 6 December Eurofound researchers Oscar Vargas and John Hurley explored the challenges and opportunities of the surge in telework, as well as the overall growth of telework and teleworkable jobs in the EU and what this means for workers, managers, companies and policymakers.


WATCH THE WEBINAR HERE

Foundation for European Progressive Studies Advertisement

The winter issue of the Progressive Post magazine from FEPS is out!

The sequence of recent catastrophes has thrust new words into our vocabulary—'polycrisis', for example, even 'permacrisis'. These challenges have multiple origins, reinforce each other and cannot be tackled individually. But could they also be opportunities for the EU?

This issue offers compelling analyses on the European health union, multilateralism and international co-operation, the state of the union, political alternatives to the narrative imposed by the right and much more!


DOWNLOAD HERE

About Social Europe

Our Mission

Article Submission

Membership

Advertisements

Legal Disclosure

Privacy Policy

Copyright

Social Europe ISSN 2628-7641

Social Europe Archives

Search Social Europe

Themes Archive

Politics Archive

Economy Archive

Society Archive

Ecology Archive

Follow us

RSS Feed

Follow us on Facebook

Follow us on Twitter

Follow us on LinkedIn

Follow us on YouTube