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A critical look at Justine Greening’s uncritical faith in private sector development

8 February 2013

Justine Greening’s speech to the ONE campaign yesterday was a ramble through her brief, and some of it was decent stuff. I think she was right to suspend aid to Rwanda, for instance, although President Kagame’s regime has a much longer charge sheet than the military intervention in DRC that precipitated the decision. The commitment to put 30% of the DFID budget into conflict-affected and fragile states was a move I backed at the time her predecessor Andrew Mitchell made it. And the TUC is working with her officials on the campaign to ensure the UN Commission on the Status of Women reaches an agreement on violence against women and girls next month in New York.

There were other elements of the speech which I found less convincing. She recognises the need to justify DFID’s work to the taxpayers who fund it, but she said nothing about reinstating previous DFID programmes to explain that work to, and win support from, the British people.

What worried me more, though, was her approach to the role of the private sector in development.  It is increasingly clear that this is an ideologically driven agenda, rather than a rational attempt to mobilise every option in the cause of development.

I don’t disagree with her argument that the private sector can play a positive role in development. But her speech gave no evidence of any understanding that the private sector might first of all “abstain from doing harm” as the Hippocratic Oath puts it. Because the private sector is responsible for quite a lot of harm in developing countries. If it was judged by the same criteria as Rwanda or Uganda, or as Andrew Mitchell judged Malawi, DFID would have suspended its private sector development work altogether.

Look at tax evasion, which costs developing countries $350bn a year – many times more than they receive in aid from the developed countries which such multinationals also deprive of cash. Putting some real effort into international agreements on cracking down on tax havens and other abuse would make far more impact than meeting the UN target of spending 0.7% of GNI on overseas aid, and it would arguably be a lot more popular with the electorate.

Or look at the way multinationals treat their workers. Unilever is held up as a sterling example of corporate social responsibility, and they do, at least, recognise trade unions globally. But as Justine Greening was lauding the private sector’s role in job creation, Oxfam were releasing a report (admittedly, with Unilever’s blessing) revealing widespread exploitation and abuse of workers’ rights at a Unilever plant in Vietnam. And from 2000-2009, before the impact of the global financial crisis, Unilever slashed its global workforce by nearly half, from 295,000 to 164,000 by replacing secure, permanent jobs with insecure temporary work. Arguably, that single move has wiped out all the good that Unilever’s expensive corporate social responsibility programme has done, and it’s just one aspect of the complaints global union federation IUF has made over the years.

DFID itself could do so much more in its direct contracts with the private sector, as my colleague Ben Moxham argued this week. He drew attention to DFID’s newly launched but lamentably outdated procurement policy, which he contrasted with the base code of the union-backed Ethical Trading Initiative which DFID helps to fund! That base code is drawn from the labour standards of the International Labour Organisation, which Andrew Mitchell stripped of DFID funding in a move which the House of Commons Public Accounts Committee found failed to recognise that it is a standard-setting body, not a number-crunching service provider.

On World Day for Decent Work last October, the TUC published a scorecard of DFID’s activity, and found it wanting, despite good work on issues such as social protection. We are working with DFID officials to try to improve their performance, and it is good to see from Justine Greening’s speech that DFID is now committed to delivering jobs as part of its private sector work, despite previously arguing that there was no reliable way to measure the jobs impact of development programmes (apparently it is possible to measure the jobs created by the private sector. Who knew?)

It’s good news that Justine Greening has recognised that while developing country governments have fetishised growth at any cost, even jobless growth, what poor people want is work. Now she needs to recognise that what they need is decent work. She could start by taking lessons from the organisation that first elaborated that concept: the tripartite (yes, it includes employers as well as trade unions) ILO.

Owen Tudor is head of the TUC European Union and International Relations Department

One Comment leave one →
  1. Blue permalink
    8 February 2013 17:24

    “I think she was right to suspend aid to Rwanda”. So what exactly do you think this will achieve?

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