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Governance of Globalization: The ILOContribution

by Robert Kyloh1

1. Introduction

ue to a combination of fiscalDrestraint, industrial relationsrevisionism, and globalization, the

nexus that trade unions had come to expectbetween improvements in aggregateeconomic prosperity and social advancesappears to be under threat. It is ironic thatparallel improvements in profits and pay,or the living standards of workers, shouldstart to dissolve in the period whenprogress in so many other fields is rapidlyadvancing. In the last ten years, progresstowards global prosperity, peace and thedominance of parliamentary democracyhave accelerated. Unfortunately this hasnot produced a more equitable distributionof wealth, jobs for all that seek them, or ageneral sense of confidence in governmentand those that guide public decisionmaking. On the contrary, today, workingwomen and men increasingly feel

frustrated and cheated out of their fairshare of the peace dividend and theincreases in prosperity. They view theworld as being increasingly polarised intotwo halves: the “haves” and the “havenots”. Many attribute these failures to theemergence of the global market.

The term “globalization” is frequently usedamong economists, politicians and policymakers when describing the increasinginterdependence of countries. This processhas several components including acultural dimension. For the economistshowever it is usually defined as anexpansion in the volume and variety ofcross-border transactions in goods andservices, a dramatic increase ininternational capital flows and also themore rapid and widespread diffusion oftechnology. Some of the factors facilitating2

these economic trends include

- reductions in trade barriers throughregional or multilateral tradeagreements;

- rapid expansion of foreign directinvestment by multinationalcompanies;

- reduced barriers to internationalcapital transfers, resulting inmassive equity funds and other Draft, comments welcome (e-mail: kyloh@ilo.org). The1

author is a member of the ILO’s Bureau for Workers’Activities. This paper, therefore, adopts a trade unionperspective and does not necessarily reflect a tripartiteconsensus within the ILO. Special thanks to DerekRobinson from the Institute of Economics and Statistics, Outlook, “Globalization: Opportunities and Challenges”,University of Oxford, for comments on the draft. May 1997, p66.

International Monetary Fund, World Economic 2

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speculative financial flows across that consumers benefit from a wider choicenational borders; and of products and services at lower costs. It is

- modern communication facilities portrayed as a win-win situation. Moreoverresulting in a dramatic increase in many high profile individuals andthe speed of such transfers. organisations consider that increased

economic interdependence will improve theIt appears to many workers that these prospects of lasting peace and stability.trends have enabled capital markets to They see a strong link between thecapture control of the political process and integration of national economies andtheir demands now drive the decision military security. making process. Governments, regardlessof their political persuasion, appear The official ILO perspective on these issuesincreasingly powerless to make decisions on lies somewhere between these polarizedeconomic or social policy without carefully positions. The Organisation is generallyconsidering how the young money market optimistic about the net impact of freemanagers will react and the effect this will trade and increased foreign investment onhave on the national currency or balance of economic growth and the level ofpayments. At the same time, many workers employment. However, it acknowledgesbelieve these developments have that as economic competition acrossencouraged macho-managerialism which is national borders intensifies the incentivereflected in competition between companies for employers and governments to reduceto cut labour costs and shed labour for the labour costs is augmented. This may havesake of impressing equity fund managers made governments more reticent to ratify,and forcing up the stock market value of or implement, International Labourthe enterprise. Conventions. Also the risk of labour

An alternative, and majority view among in an increasingly interdependent worldeconomists and politicians, sees recent economy. moves towards free trade and increasedinternational investment as the most The ILO views globalization as “policy-positive economic development in the past driven”. The changes that have occurredcentury. According to this perspective, the result from deliberate and carefully3

more efficient allocation of resources and considered government decisions to openexploitation of comparative advantagesbetween countries will raise producivity,boost economic growth and provideincreased prosperity for all. It is argued

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exploitation and inequalities is heightened

Sachs J. “Globalization and Employment”, 3

International Institute for Labour Studies, Geneva, 1996.It is also notable that in their public statements virtuallyevery Government in the OECD region, regardless ofpolitical perspective, and a majority of developing countrygovernments, favour more open economies and reducedtrade barriers. However their policies may not always International Labour Conference, June 1997, “The ILO,accord with these sentiments. Standard Setting and Globalization”, p 3.

See for example the views expressed by Donald4

Johnston, Secretary General of the OECD in the FinancialTimes, February 21, 1997: “Drive to cut costs worries newhead of the OECD”. The ILO Director General has alsodescribed globalization as “an unequalled factor ofprogress and peace”, in “The ILO, Standard Setting andGlobalization - Report of the Director General”, 1997.

ILO, World Employment Report 1995 and World Employment5

Report 1996/97.

ILO, Report of The Director General to the 6

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their borders, to promote trade and The trade union movement in the Unitedfacilitate international investment. The States estimates that in the first threeprevailing international economic years of operation NAFTA has resulted inenvironment is not the product of the loss of 420,000 jobs for Americanexogenous factors that must be workers. Similar concerns aboutfatalistically accepted. The ILO therefore globalization are evident acrossadvocates that the process should be more industrialised countries and unrest willcarefully controlled, or governed, primarily spread to the newly industrialised countriesby national governments to ensure that the as workers perceive that their job prospectseconomic benefits of increased trade and are being undermined by even cheaperforeign investment are fairly distributed; labour in China and Indonesia. To arrestthat certain basic labour rights are these trends and reduce resistance in theuniversally recognised and applied; and electorate to trade liberalisation willthat states are encouraged to progressively require the establishment of institutionalimplement other labour standards as arrangements that effectively preventglobalization increases economic growth exploitation and promote a fair distributionand provides opportunities for promoting of the benefits of economic integration.social progress. In this governance processa supporting role is envisaged for This paper addresses a series of questionscoordinated action by relevant related to these concerns. Section two ofinternational organisations in assisting the paper places the present globalizationnational governments reach a balance debate in a historical context. It reviewsbetween economic efficiency and social how previous periods of trade liberalisationequity. led, after a considerable lag, to the

Government guidance of globalization is mechanisms to help govern and control thenot a goal in itself and it is not necessarily excesses of open economies and marketintended to slow the pace of economic forces. Section three is concerned withintegration. On the contrary, the overriding quantitative indicators about theobjective is to avoid exacerbating magnitude of recent increases in trade andundesirable labour market practices which foreign investment flows; it also touches onare already generating a “backlash” the variation in trends between regions.against open economies and fuelling Section four considers the consequences ofprotectionist tendencies. For example, in globalization, concentrating on thethe United States opposition to NAFTA, qualitative impact on workers and tradesuspicions of the World Trade unions. The final section describes the ILOOrganisation, and the proliferation of low- and trade union response to these trendswage insecure jobs has generated and makes some tentative suggestions toconsiderable public resistance to furthertrade liberalisation at either the regional ormultilateral level.7

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establishment of institutions and

Financial Times, “Fast track drifts into the slow lane”,7

7 May 1997. fallen 36 percent in nominal terms.

Press Statement by Richard Trumka, Secretary-8

Treasurer of the American Federation of Labor-Congressof Industrial Organisations (AFL-CIO), 5 May 1997. TheAFL-CIO also argues that NAFTA has failed to helpMexican workers because since 1993 average hourlycompensation for Mexican manufacturing workers has

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further develop this initial response. In position of the poor. particular the final section concentrates onthe proposals to enhance the governance of Rapid economic advances did take placeglobalization and examines what during the nineteenth century but theadditional economic policies and expectations of workers were not realised ininstitutional linkages are required to their life times. Instead the massivemoderate, and thereby sustain, moves investments in technology and increases intowards a global market. trade that occurred during this period only

2. Governing Globalization - A Historical Perspective

ccording to most characterisations ofArecent trends, the world has neverwitnessed anything like the current

economic transition and disintegration ofeconomic borders. While it is true thatthese developments are unprecedented inextent and magnitude, in substance therehave been important precursors. Over onehundred years ago at the time of theindustrial revolution a number of similartrends emerged. In this period the level ofinternational trade expanded dramaticallyand in fact the share of trade (exports andimports) in national GDP was higher in theperiod from 1870 to 1913 than it is today.9

Moreover, at that time there were similarexpectations and propaganda generatedabout the rewards to be derived from anopen economy. Workers were told that acombination of free trade and technologicaladvances would create a new era ofprosperity, improvements in workingconditions and advances in the relative

resulted in increased returns to capital. Atthe same time workers who moved from arelatively secure and sustainable livelihoodon the land to the urban slums and“sweatshops” that were created to producetextiles and other goods for export sawtheir living standards decline.

Several authors have described how theadvent of industrialization led to a newclass of factory owners who argued thateconomic survival depended upon theexistence of a cheap and abundant supply oflabour. They used their political influence10

to reduce the protection provided todomestic agricultural industry. Theresulting increase in foreign competitionled to a reduction in agriculture prices andforced the least efficient farmers andtenants to leave the land. Labour flooded tothe cities and these workers had little, ifany, choice but to accept relatively lowwages and poor conditions. Many authorshave described how the traditional ways oflife and the labour market norms that hadgoverned society for centuries, were tornapart during the Industrial Revolution.Workers became raw materials to bebought and sold as labour market flexibilityreached its peak.

The long term ramifications of these Some authors believe that the historical compa-risons9

with the nineteenth century are overstated. They point outthat the world trading system is now more extensive, thatemployment in the tradable sector represents asignificantly larger proportion of total employment andthat linkages that now exist in the world financial markets mation, Beacon Press, 1957, and Kapstein, E. “Workersare unparralled. and the World Economy”, Foreign Affairs, May/June 1996.

See, for example, Polanyi K. The Great Transfor-10

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developments for social peace and economic It would seem that many powerful policystability were apparent to at least some makers from the Polanyi generation sawemployers and policy makers at the time. these developments through similar eyesFor example in the early 1800's the and decided to try to prevent aindustrialist Robert Owen made proposals reoccurrence of these events. Thisto regulate working conditions in each commenced at the international level withnation in accordance with minimal the Paris Peace Conference in Januaryinternational standards. From this early 1919 which established a Commission on11

stage it was evident to some people that International Labour Legislation. Davidopen economies and the pressure of Morse has pointed out that while some ofinternational trade competition could exert the delegates to the Peace Conference maya powerful negative influence on working have thought it surprising that labourconditions in the absence of coordinated should be given a prominent priority inaction at the international level to protect their deliberations, “there was generaland promote better labour standards. On recognition that the ferment and instabilitythe workers’ side there were various which characterised the world of labourconferences held and organisations formed and industry in 1918 and 1919, particularlythroughout the second half of the last in Europe, called for immediate andcentury that advocated international action constructive action.” Perhaps the mostto improve the distribution of income and lasting contribution of the Peacethe welfare of workers. Conference was the drafting of the

These warnings and proposals for the institution to promoting “lasting peacecoordinated action to help govern the first through social justice”. From the outset,wave of globalisation fell on deaf ears. No the promotion of social justice provided theconcrete action was taken to prevent the Organisation with a mandate to influenceabuses of open economies from escalating key components of national andinto significant social and political tensions. international economic policy. SpecificWith the benefit of hindsight authors such reference is made in the Preamble of theas Karl Polanyi, writing at the end of the Constitution to the “prevention ofsecond World War, argued persuasively unemployment, the provision of anthat the unravelling of economic and labour adequate living wage”. market regulations in the nineteenthcentury caused such social and political It is evident from the preamble to theupheaval in the early twentieth century, Constitution that the founders did notthat it culminated in the collapse of the conceive of the ILO’s mandate in narrowworld economy and two world wars. legal or technical terms. They laid down12

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Constitution of the ILO which dedicated

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principles of justice and humanity as theguiding lights for the Organisation, which Morse, D. The Origin and Evolution of the ILO an Its11

Role in the World Community, Cornell University, 1969,p 6. Morse indicates that two other industrialists, Hindleyin England and Legrand in France, also advocated theadoption of international labour conventions in the 1830sand 1840s.

Polanyi, K. op.cit.12

Morse, op. cit, p 4.13

Constitution of the International Labour14

Organisation.

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were to be pursued, pari passu, with people. The inclusion of theseeconomic prosperity. The objectives of the unambigious obligations in theOrganisation were to be attained through Philadelphia Declaration reinforced theestablishing international labour standards concept of a reciprocal relationship betweenand the collection and distribution of economic and social policy after theinformation on labour and industrial economic catastrophe of the Greatconditions. These were, and remain today, Depression and the Second World War,important means of action to influence which wreaked havoc and hardship on thesocial and economic developments. Whether working men and women of the world.or not they provide the Organisation withsufficient power to ensure these social The Declaration made clear that theprinciples are translated into practice competence of the Organisation extendedwhen they are perceived by some to be beyond labour market policies into fields asinconsistent with their short term diverse as fiscal, monetary, trade andeconomic interests is of paramount development policy. The Philadelphiaimportance to the debate about Declaration states that the achievement ofglobalization. This issue is examined in the social objectives requires “effective nationalfinal section of this paper. and international action, including action

After the second World War and the avoid severe economic fluctuations, toexperience with hyper-inflation during the promote the economic and socialinter-war period, as well as the demise of advancement of less developed regions ofthe gold standard, the set of international the world, to assure greater stability ininstitutions with an economic mandate was world prices of primary products, and toexpanded. The Bretton Woods institutions promote a high and steady volume ofwere established to promote economic international trade...” Therefore the ILOdevelopment, maintain “sound money” and has always recognised, and has had tosafeguard the international financial contend with, the limitations imposed onsystem. To maintain a sense of balance the world of labour by exogenous factorsbetween these desirable economic like the collapse of the internationalobjectives and broader social and labour financial system, economic recession andconcerns, the ILO mandate in the fields of the vagaries of world trade. international trade and macroeconomicpolicies had already been made more In adopting the Declaration of Philadelphiaexplicit. Meeting in Philadelphia in mid- the world’s leaders recognised the1944, prior to the end of the war, the ILO importance of creating a system of checksConference adopted a Declaration of basic and balances in the international system toprinciples. The Declaration of Philadelphia balance economic development, theentrusted the ILO with a special promotion of trade, protection of theresponsibility to examine all international international financial system and promoteeconomic and financial policies andmeasures in order to ensure that they werecompatible with social policy objectives andconsistent with promoting the welfare of

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to expand production and consumption, to

Declaration concerning the Aims and Purposes of the15

International Labour Organisation, Annex to theConstitution of the ILO, section 4.

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enterprises were created. In addition, were never put into operation, aduring the 1980's, politicians of varying continuation of these national level trendspolitical persuasions were convinced about may mean there will be no controls over thethe virtues of foreign competition and social consequences of increasedmobile capital as a way to inject the market competition for trade and foreignmore forcibly into the world of labour and investment. In these circumstancesthereby contain inflation. By opening the questions arise about the sustain ability ofdomestic market to greater competition open economies. Fear about the impact ofthey would “stiffen the backbone” of open economies is already spreading rapidlymanagement in their resistance to trade in many industrialised countries and theunion demands for higher wages and protagonists of the protectionist creed aresimultaneously force industry to to be found across the political spectrum.implement cost cutting efficiency measures. These issues are taken up further inAt the same time by securing reciprocal Sections 4 and 5. trade openings in competitor countries,scope was created for the largest and mostaggressive domestic companies to expandinternationally and reap profits by movingproduction facilities off-shore if tradeunions were not prepared to accept lowerreal wages and compromise on workingconditions. The race to the bottom hadbegan.

As we can see globalization is certainly nota spontaneous process, nor the result ofonly exogenous forces. Rather it resultsprimarily from a series of deliberatedecisions by governments who weremindful of both the benefits of trade foreconomic growth and the trouble it wouldcause traditional trade unions.Governments have decided to open theireconomies with the dual objective ofgenerating faster economic growth andgreater discipline in the labour market. Bypursuing these dual objectives,governments are in danger of destroyingthe institutional mechanisms that theypromoted at national level to moderate theworst excesses of market forces in the wakeof past experiences with globalization.Given that international institutionalmechanisms for governing globalization

3. Recent trends in trade andinvestment: globalization orpolarisation?

his section outlines some keyTstatistics and quantitativeindicators related to the expansion

in trade and investment. The analysis isfar from exhaustive and is merely designedto provide a glimpse into the magnitude ofthe globalization process.22

The word “globalization” gives rise toconnotations of a universal developmentthat includes all regions, all countries andall persons. However, the term“globalization” is something of a misnomer,since one of the greatest problems with therapid expansion of trade and investment is

For a more detailed analysis of recent trends see22

United Nations Conference on Trade and Development(UNCTAD), Trade and Development Report; UNCTAD,World Investment Report (various issues); IMF, WorldEconomic Outlook, 1997; ICFTU, The Global Market-Trade Unionists Greatest Challenge, document preparedfor the sixteenth World Congress of the ICFTU, Brussels,1996.

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that, so far, the trends have been exclusive The uneven pace of change is also reflected- rather than inclusive. In other words, in the growing importance of intra regionalcertain regions and particular countries are trade which has increased more rapidlyparticipating in a dramatic fashion, while than interregional trade. This trend hasothers have been bypassed. Globalization been facilitated by the establishment oftherefore raises major equity questions at regional trading blocs such as thethe international level, in addition to European Union, NAFTA; MERCOSURlegitimate concerns about the impact on and more recently the Asian free tradelow-skilled jobs and income distribution at Agreement (AFTA) and the Asian-Pacificthe national level. Economic Cooperation (APEC) agreement.

A few facts help to illustrate the evident from the fact that about a third ofconcentrated nature of foreign investment all world trade is estimated to consist ofand trade expansion. The share of trade intra-firm trade between multinational(exports plus imports) in national GDP, the parent companies and their foreignso-called trade ratio, has increased in most subsidies. While trade between differentregions over the last twenty or thirty years multinational companies constitutebut the rate of change varies significantly. another third of all trade in the world. In Asia the expansion has been dramatic,going up from around 67% in 1960 to about The stock of foreign direct investment100% by 1992; for the OECD region as a (FDI) is now estimated at over 2.5 trillionwhole the increase has been less dollars, and has been growing at a ratespectacular but still strong (from around double that of world trade, which in turn40% in 1950 to about 58%in 1992); in Latin has been increasing at about twice as fastAmerica the growth has been very as the growth of world output. In the earlymoderate; while in Africa the trade ratio 1990s, FDI slowed somewhat butactually declined between 1950 and 1992. accelerated dramatically again from the23

The IMF has estimated that the regions middle of the decade. In total there areshare of world trade fell from 3% in the about 40,000 multinational companies inmid-1950s to 1% in 1995. the world, yet only 100 of the most24

By contrast - Hong Kong, South Korea, account for approximately one-third of allSingapore and Taiwan - with total annual FDI. The economic power is also reflectedexports six times larger than the whole of in the level of sales of the multinationalAfrica - have been increasing their exports enterprises which topped 5 trillion dollarsby more than 10% a year for the last two in 1992, which surpassed the total value ofdecades. Other Asian countries such as world exports, yet they employ only 2-3China, India, Vietnam and Indonesia have percent of the global work force.benefited significantly from rapidlyincreasing international trade. Companies based in industrialized

The exclusive nature of trade is also

powerful multinational corporations

countries accounted for about 95% of FDIoutflows in the 1980s and received about75% of the inflows. This has alteredsomewhat in the 1990s and by the middle of

UNCTAD, Trade and Development Report, 199623

IMF, op.cit.24

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exacerbating disparities in the worldeconomy. In early 1997, a high levelmeeting of African employers reached thefollowing conclusion:

“For African countries, the major concernis that globalization must not lead to thewidening of the gap between theindustrialised and developing nations.Strategies must be put in place in order toensure that Africa takes its rightful placein the global economy.” 26

The fact is, this gap has been widening overthe last few decades and without concertedaction the trend will continue. Tradeunions in Africa and those in South Asiannations such as Pakistan, Bangladesh,Nepal and Sri Lanka, have also focused onthe mounting disparities between theireconomies and the East Asian “tiger”economies. The danger is that employersand governments in Africa and South Asiawill be convinced that they need to competefor foreign direct investment through afurther lowering of labour standards. Thiswould only serve to exacerbate problemscreated in these regions through free tradezones, labour market deregulation andrestrictions on the activities of tradeunions. To avoid competitive deregulationof this nature the process of globalizationrequires greater coordination betweenrelevant international institutions andgovernments to focus competition on moreproductive outcomes. We return to thisissue in the final section of the paper.

4. The impact of globalizationon workers and trade unions

t is difficult to distinguish andIprecisely delineate the impact ofglobalization on the trade union

movement in the industrialized and newlyindustrialized countries that areunambiguously participating in thisprocess. Part of the problem in attemptingto systematically assess the consequencesof globalization arises from the fact thatthis process has been superimposed onother fundamental cyclical and structuralchanges that were already generatingsignificant challenges and causing tradeunions to adjust. These included aprolonged period of slow economic andemployment growth; rapid technologicalchange; significant demographic changesand associated challenges to the socialwelfare system in many countries; theexpansion of the services sector inindustrialised countries and the continuedgrowth of the informal sector in developingand transitional countries; an explosion ofnon-traditional forms of employment,including part-time, casual, contractlabour, homework, tele-working; thefeminisation of the labour force; theincreasing importance of labour migration;and the emphasis placed on numerical andfunctional flexibility in all labour markets. Some of these factors are desirable in theirown right, but clearly they have altered ourperspective of the average worker andcomplicated the task of a trade unionmovement attempting to attract and

Declaration of Johannesburg, adopted at the Seventh26

High-Level African Employers’ Conference, South Africa,29-31 January 1997.

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service potential members. It is difficult to reforms and have encouraged otherdispute the fact that, in the short term at governments to emulate these models.least, this combination of factors hasexerted a negative influence on trade In many countries the influence of tradeunion membership density, the coverage of unions has been further eroded bycollective bargaining and the industrial government neglect, or abolition, ofrelations strength of trade unions. tripartite forums for consultation over

When we go beyond these factors and extreme cases, the continued existence ofconsider the impact of increased trade unions is being attacked morecompetition in product markets, the directly through stringent restrains on theliberalisation of capital markets, the organising activities of unions andexpansion of trade and the growth of attempts to erode their financial base.foreign direct investment, we can fullyappreciate that the environment in which A more elementary factor undermining thetrade unions must operate today is more bargaining strength of trade unions, andcomplicated than that which prevailed contributing to the prevailing militanttwenty or thirty years ago. In many cases industrial relations milieu, stems from the27

globalization has no doubt encouraged reduced opportunity for trade unions toemployers, and some governments, to limit the extent of competition over wagesadopt a more hostile reaction to the and employment conditions in anclaims unions make on behalf of their interdependent world economy. Todaymembers, and even to oppose actively the labour costs are seen as a key indicator oftraditional functions of trade unions. This competitiveness by employers and investorsprocess began with moves by governments in traditional manufacturing or serviceto decentralise collective bargaining industries that are still dominated bysystems, remove administrative extensions “Taylorists” forms of production. Theto collective agreements and weaken financial markets virtually demand thatminimum wage regulation. These initial enterprises in these industries adoptdevelopments have been overtaken by moreextreme measures which aim to inhibitcollective bargaining at all levels whileexpanding managerial prerogative and thescope for employers to unilaterallydetermine employment conditions, or insome countries, the promotion of individualemployment contracts. These trends havebeen encouraged by internationalorganisations like the OECD and IMFwhich have praised the United Kingdomand New Zealand styled industrial relations

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broad economic and social issues. In29

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International Confederation of Free Trade Unions27

(ICFTU) op. cit. any decline in real unit labour costs.

Organisation for Economic Cooperation and28

Development (OECD), The OECD Jobs Study - Facts,Analysis, Strategies, June 1994; and the IMF, WorldEconomic Outlook, 1996.

Trebilcock, A. et al. “Towards Social Dialogue:29

Tripartite Cooperation in national Economic and SocialPolicy-Making”, ILO, 1994.Kyloh, R. “Tripartism on Trial”, ILO ,1995.

While the financial markets place considerable30

emphasis on labour costs and tend to push up the price ofshares in those companies that aggressively attempt toreduce employment levels or labour costs, it does notnecessarily follow that the proportion of labour costs intotal costs have increased or that this represents the bestlong term strategy for the company. This is because labourproductivity is likely to decline as the industrial relationsenvironment in the company deteriorates, thus preventing

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in FDI over the last decade. An alternative the union movement. Claims that theseroute chosen by many companies in jobs will be replaced by non-manualindustrialised countries is to create, or positions in the service sector is littleexpand, subcontracting arrangements with consolation to someone who has worked inproducers in low-cost developing countries. a steel mill for the last thirty years.In either case the impact is the same: thebargaining strength of employers is Few can understand the impact of theseenhanced and trade unions in forces more clearly than workers in theindustrialised countries are constantly clothing and textiles industry. Today thereconfronted by representatives of are 160 countries producing fashion goodsmanagement threatening company closure, for export into the markets of only 30or a curtailment of operations, unless nations. This forces countries, companieslabour costs are reduced. and workers into unprecedented

The exceptions to this general million jobs in this sector world-wide arecharacterisation are often to be found in low paid, insecure and often based inindustries that have shifted to new forms of Export Processing Zones where workers’work organisation, where emphasis is rights are often suppressed. Wages areplaced on innovation and knowledge. In often below subsistence levels and decliningthese enterprises less emphasis is placed on in real terms. Overtime is increasinglylowering labour cost to improve obligatory and often unpaid. Millions ofprofitability and instead competition children are employed in this sector.between enterprises focuses more on the Management by terror is common.quality of the product, service to thecustomer, marketing techniques and In many respects labour conditions intechnological advances. industries like textiles are returning to the32

The negative consequences of globalization establishment of the ILO. This industry,for workers are magnified in particular perhaps more than any other, demonstratesindustries. It is essentially in low-tech that the traditional link between increasedindustries like steel, textiles and clothing economic prosperity and improved labourthat the competition from low cost standards has disappeared. As indicated inproducers is most intense and is exerting the second section of this paper the textiledownward pressure on wages and industry was in the vanguard of theemployment. These industries have industrial revolution and the deteriorationtraditionally constituted the “back-bone” of in labour standards that occurred in the

competition with each other. Most of the 30

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standards that prevailed prior to the

Evans, op. cit. also argues that firms within the32

OECD region are becoming polaralised between those thatcompete almost entirely in terms of labour costs and of the trade unions to the tripartite meeting“knowledged based firms” that depend for their success on “Globalization of the Footwear, Textiles and Clothinginternal functional flexibility of workers. Industries: Effects on Employment and WorkingSee also Sengenberger, W. “Labour Standards: An Conditions”, ILO, Geneva, 1996. A summary of theseinstitutional framework for restructuring and presentations is contained in ILO, “Note on thedevelopment” in Sengenberger, W. and Campbell, D. (ed) Proceedings”, (TMFTC/1996/11). See also press statementsCreating Economic Opportunities: The Role of Labour by the General Secretary of the International Textile,Standards in Industrial Restructuring, ILO, 1994. Garment and Leather Workers’ Federation.

For further details see presentations made on behalf33

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last century. In that period “sweatshops”, progress are to mitigate the seriousindustrial diseases and gross forms of problems and maximise the potentialworker exploitation were the price paid for benefits provided by the new economicfree trade and the global aspirations of framework, it will require concerted actionprofit seeking employers. Today, after and support from internationalmany decades of marginal improvements, organisations with a mandate to promotethe textile industry is regressing to a level socially sustainable economic growth. Theof labour standards that were thought to final section of this paper examines thehave disappeared long ago. In the last few policies being adopted by trade unions atyears of the twentieth century, different levels to meet this challenge andmanufacturers in the textile industry also looks at the contribution the ILOwhether they are producing in the could make to these endeavours.developing world or within the OECDregion, are ignoring national laws andinternational labour standards withimpunity.

5. Governing Globalization inthe 21st Century

he trade union movement clearlyTappreciates that the forcesunleashed by globalization are

mighty and likely to magnify over time. Ithas been described by the InternationalConfederation of Free Trade Unions as the“greatest challenge” facing trade unions.34

A challenge implies that there is a contest:an opportunity to prove one's ability tomeet the test, and to channel these trendsin a positive direction, thereby building amore prosperous and equitable world. Iftrade unions and other groups concernedwith promoting social and economic

(a) Rebuilding strong trade unionsand promoting collective bargaining

he first priority for trade unions occursTat the “grass roots” level whereconcerted action is required to reverse theirdeclining numerical and industrialrelations strength. Responsibility forrecruiting and rebuilding a large, cohesiveand motivated trade union membership lieswith the national trade union centres andtheir affiliates at branch and lower levels.The restoration of a more even balance ofpower between management and labour isthe first prerequisite for relinking economicand social progress. Moreover, it is thefoundation stone on which action at higherlevels can be built. The ILO cannotintervene directly in the organisingactivities of trade unions but it should beendeavouring to ensure that the generallegislative and industrial relationsenvironment is conducive to this objective.The ILO has a Constitutional obligation tofoster collective bargaining and should not,therefore, merely be another academicobserver of industrial relations trends,producing descriptive publications of thelatest fads.

ICFTU, “The Global Market - Trade Unionism’s34

Greatest Challenge”, Background document for theSixteenth world Congress of the ICFTU, Brussels, 25-29June, 1996. Many of the international trade union centresand the international trade secretariats are devoting scareresources to research on topics related to globalization andmany have focused on the issue in recent meetings. Manyinternational and national trade union centres haveproduced publications that cover some aspect of the issue.

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Rather, the ILO has a responsibility to arrangements into the mainstream of thereiterate, in a clear and unambiguous union; establishing linkages and commonmanner, that free collective bargaining by campaign strategies with NGOs andrepresentatives of freely chosen community groups on social issues. Theorganisations of workers and employers is extent to which these internal unionnormally the best and preferred way of reforms are being implemented varies fromdetermining terms and conditions of country to country but no national centreemployment. The ILO must constantly can afford to ignore them. Nor can unionremind governments that they have an centres afford to waste scarce resources onobligation to provide a legal framework inter-union competition and politicalwhich encourages both the development of infighting.freely chosen representative organisationsand the establishment and strengthening ofcollective bargaining. The extent to whichthe ILO has adequately fulfilled thisadvocacy task, in the face of trends towardsindividual employment contracts andunilateral decisions on wages andemployment conditions by management,remains debatable.35

For their part, trade union centres aroundthe world are attempting to grapple withthe organising challenge and have beenexperimenting with innovative strategiesthat include altering the image of unionsand focusing recruitment campaignsspecifically on women and young workers;expanding the financial and humanresources devoted to recruitment; placingan increasing proportion of women inprominent leadership positions; providingadditional legal, insurance and othercommercial services to members;integrating informal sector workers andthose in non-traditional working

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(b) Multinational Agreements, Codesof Conduct and Social Labelling

he second level on which the labourTmovement is responding to theglobalization challenge is concentrating onparticular industries or sectors of theeconomy. This may often involve actionwithin an industry but across nationalboundaries. For example, the developmentof resources and a climate that isconducive to transnational collectivebargaining with multinational enterprisesis a high priority for many internationaland national trade union centres. Theestablishment of information networksabout the bargaining practices andagreements reached by multinationalcompanies in different national settings isa starting point for facilitating coordinated

The decision by the ILO to produce a major new35

publication on industrial relations (forthcoming WorldLabour Report) and to upgrade the capability of the ILO tooffer technical assistance on industrial relations issues isdesirable and long overdue. In the future the Organisationshould utilise these additional resources to promoteactively collective bargaining and train employer and trade recruitment by the AFL-CIO in the United States over theunion representatives in the skills necessary for collective last year is a particularly good example of this newnegotiations. strategic thinking among national centres.

Olney, Shauna L. Unions in a Changing World, ILO36

1996.

The increased emphasis and resources devoted to37

19

collective bargaining at this level. other trends within most industries, the38

The ILO can also contribute to this between employers, trade unions andendeavour. Since the early 1950s, the ILO governments in such sectoral meetingshas devoted considerable resources to should have increased. industrial committee meetings which bringtogether the tripartite constituents of a It is perhaps worth recalling that the initialparticular sector or industry from a aim of these meetings was to provide aspectrum of countries. The stated purpose framework for international collectiveof these meetings is to discuss common bargaining on an industry-by-industryconcerns that have a labour dimension in basis. While re-establishing that objectivethat particular sector and devise might be overly ambitious at the moment,consensual conclusions to these problems. these meetings could contribute to theAs might be expected, in recent years, many maintenance of open economies andof these meetings have been devoted to restraint on protectionist tendencies if bothtopics related to globalization. However, employers and trade unions arecertain of these meetings have been represented by people with a legitimatecriticised by the participants because they stake in the industry and have thedegenerated into “talk-shops”, having authority to negotiate on sensitive andminimal impact on their major concerns. substantive issues. For example, they could

The root problem seems to be that some international labour standards areparticipants have lacked the will, and the implemented in all countries where theirauthority, to tackle the most pressing industry operates. This could entailproblems in their industry.Trade union devising specific industry level campaignsrepresentatives frequently find it is more to promote core labour standards (seeprofitable to discuss international industry definition below) and mechanisms tolevel issues directly with management in monitor their implementation. forums outside the ILO. Given the inabilityof the participants to reach consensus and From a more general perspective, tradethe absence of concrete results, the unions must build upon progress madeInternational Labour Office has reduced recently at the industry level to encouragethe number of sectoral meetings as a cost employers to accept greater socialcutting measure. Indeed the complete responsibility. For example, severalabolition of these forums has been mooted. experiences with codes of conduct in theHowever it would seem that in an clothing and textile industry whereby aincreasingly interdependent global major chain of retail establishments in aneconomy, with the same multinational industrialised country ensures that itscompanies operating in all corners of the subcontractors in both industrialised andworld and a convergence of technology and developing countries adopt acceptable

benefits to be derived from dialogue

concentrate on ensuring that core

labour practices and abide by national

The development of an information network along38

these lines is a major priority for the ICFTU and theorganisations affiliated to this international trade unioncentre.

20

labour legislation, have proven successful. both an obligation to conduct both internal39

Similarly, labelling campaigns such as and external, or independent, audits. “Rugmark” have the potential, if properlymanaged and promoted, to improve Similarly, it has been argued that there isconsumer awareness about products made a need to establish mechanisms to allowwith unacceptable labour practices, such as the efficient external “auditing” of socialchild labour. The trade unions appreciate conditions and investigations of whether40

that these responses will only be effective if the suppliers and sub-contractors ofthey are accompanied by tripartite or multinational enterprises areindependent monitoring mechanisms and implementing core labour standards. Thisalso well designed consumer awareness is not a simple task. In industries likecampaigns. clothing, footwear and textiles or the toy

The ILO is already involved in research these codes are currently being developed,concerning these innovative approaches it is not uncommon for a major retail-chainand the Organisation should assist in to have a network of several thousandfuture to advertise and promote best small suppliers spread throughout severalpractice with these schemes. In addition it developing countries. The external41

may be worth exploring whether the ILO monitoring of labour conditions across suchcould, or should, become directly involved a landscape would represent a difficultin the monitoring of enterprise codes of logistical exercise. conduct. Advocates of codes of conduct havedrawn parallels between the financial At present there are several non-auditing that private enterprises are governmental organisations, and evenrequired to implement by law and the need accounting firms, preparing to undertakefor a form of “social auditing”. Regarding this task. However, the ILO has atheir finances, enterprises normally have considerable comparative advantage over

manufacturing industry, where most of

other organisations for taking on this role.For example, the ILO has an unparalleledknowledge of labour standards and workingpractices, it is a tripartite organisation andhas the independence and respect of bothemployers and workers that is required forthis external monitoring role, and it has adecentralised field structure that covers thedeveloping world where the monitoringprocess must be concentrated. Against thisit could be argued that the ILO has nomandate to become some form ofinternational labour inspection service northe labour resources to implement thistask. However both these shortcomingscould be quickly overcome if the politicalwill existed to extend ILO activities in this

Murray, J. “Corporate Codes of Conduct and Fair39

Labour Standards”(forthcoming publication of the ILOBureau for Workers Activities).

The Rugmark Foundation was created, initially in40

India (and later extended to Nepal), by the Indo-GermanExport Promotion Project (IGEP), which is financed by theGerman Society for Technical Cooperation (GTZ). TheRugmark label is based on a voluntary affidavit by theexporter not to employ child labour and to pay at leastminimum wages to their workers. The Rugmarkfoundation undertakes unannounced inspections ofpremises to monitor the exporters compliance with theaffidavit. In case of violations Rugmark will cancel thelicence.In addition to the monitoring system, RugmarkFoundation promotes the rehabilitation of child labourersand the establishment of educational and vocationalfacilities financed by 1% levy on carpet purchases.

It was proposed in March 1997 that the ILO41

Governing Body should discuss these schemes in depth inthe future.

21

direction. Moreover, this could be apotential additional source of revenue forthe ILO since the other organisationsbecoming involved in the monitoring ofcodes of conduct have a commercial baseand charge the parent company fees for thisservice. In a related development, the ILO’sDirector General has recently raised thepossibility that countries might receive an“overall social label” if all industries in thecountry comply with a set of fundamentallabour principles and rights, and if thecountry agrees to have their practicessupervised by an independent internationalinspection system. The Director General42

has suggested that it would be feasible toprovide for an inspection system under aninternational labour Convention whichwould set out the obligations andmonitoring mechanism to be applied.Because of the voluntary nature of labourConventions, countries could freely decidewhether or not to participate in thisprocess. This proposal would have asignificant advantage over existing codesof conduct and labels which focus only on aparticular product, or a particular sector ofthe economy, or only cover high profilelabour abuses like child labour whileignoring the rights contained in the othercore labour standards. The DirectorGeneral has argued that his proposal toestablish a system of social labels forcountries would avoid the risk of thembeing arbitrarily or improperly used bycompanies or industries to gain acommercial advantage over competitors.This innovative proposal deserves carefulconsideration.

(c) Influencing Macroeconomic Policyand Promoting Full Employment

ection two of this paper described howSpolicy makers from previousgenerations grappled with the problem oftrying to govern globalisation at theinternational level to ensure that theprocess proceeded in a more equitable andsocially responsible fashion.In the last few years attention has againfocused on institutional mechanisms at thislevel. Action is required to influence bothnational economic policies and theimplementation of core internationallabour standards. Naturally the tradeunions look to the ILO to play a central rolein constructing this conduciveinternational climate. However, as wasnoted previously, the influence of the ILOon international economic policy has neverreally matched the expectations of thefounders. Recently the fears generated byglobalization - and the failure of theinternational financial and tradeinstitutions to calm these anxieties - hascreated an opportunity for the ILO toreassert itself in the international economicdebate and reclaim the mandate that wasgiven to the ILO in 1919 and reaffirmed in1944.

The ILO made a promising start towardsmeeting this challenge in the lead-up to theCopenhagen World Summit for SocialDevelopment in 1995. However it might beargued that the Organisation has, so far,failed to capitalise on this impressive new

ILO, Report of the Director General to the 199742

International Labour Conference “The ILO, StandardSetting and Globalisation” p. 13-15.

22

beginning. Follow-up by the United economic and social policies and to enable43

Nations system generally on the all men and women to attain secure andcommitments made by governments at sustainable livelihoods through freelyCopenhagen has been slow and lacked real chosen productive employment and work".impact. This stemmed, in part, from At national level they promised to put thedivisions among the United Nations creation of employment, and the reductionSpecialist Agencies about competiting of unemployment, at the centre of theirpriorities and mandates. In addition, strategies and policies.certain of the progressive economic policyprescriptions advocated by the ILO as a Governments also committed themselves toresponse to globalization, in the lead-up to promoting jobs that were adequatelythe Summit, are in danger of being diluted remunerated with decent and humaneor forgotten altogether. conditions of work. They committed

The international trade union centres and and interests of workers, and tomany individual trade union leaders formulating their policies throughactively participated in the debates leading tripartite consultation. In other words theup to the Summit, and at the Summit itself. trade union movement achieved aThe ILO, although initially hesitant, was commitment at Copenhagen to promoteencouraged to take this event seriously and quality jobs. Furthermore, they successfullydevoted considerable time and resources to pushed for the ILO to be given a specialthe preparation of the event and to the mandate, at the international level, tonegotiations over the wording of the promote these objectives.Summit Declaration and ActionProgramme. The ILO put primary While at the time the ILO and the tradeimportance on measures to reduce poverty union movement celebrated theseand moving the objective of full successes, a more sober evaluation of theiremployment back to the top of the political impact and subsequent development is nowagenda. On paper, at least, this was needed. For the purpose of this paper, it isachieved as the Copenhagen Declaration important to note that the ILO backgroundcommitted participating governments to documentation for the Summit, and the“the goal of eradicating poverty in the Summit conclusions, were very positiveworld, through decisive national action and about the labour market implications ofinternational cooperation, as an ethical, globalization. Although the documentssocial, political and economic imperative.” acknowledged that there were risks andMoreover, the world’s leaders made it clear transitional problems associated with thesethat the most efficient way to reduce developments, the bottom line of ILOpoverty was through “promoting the goal of reports prepared in 1995 and 1996 was thatfull employment as a basic priority of our globalization would generate more rapid

44

themselves to safeguarding the basic rights

United Nations, World Summit for Social43

Development, 6-12 March 1995, Copenhagen. The Summitwas attended by leaders of 114 countries and they focusedupon how to put social concerns at the centre of economicand political developments. Copenhagen, March 1995, Commitment 3.

Report of the World Summit for Social Development,44

23

economic growth and social benefits. ILO of globalization remain unclear. As the ILO45

reports - like those of the OECD, IMF, and points out in the same report, there is athe World Bank - argued that free trade significant hurdle involved in promotingand greater reliance on market forces, the adoption of this positive view aboutwould lead to more efficient allocation of globalization. This is because in the periodresources in the world economy, and thus since 1979, when the process towardsto higher rates of growth and employment globalization has accelerated, the rates ofcreation. The ILO clearly identified itself global economic growth have decreasedwith the optimists rather than the significantly and unemployment haspessimists on this issue. increased dramatically. There would thus

The World Employment Report for 1996/97 which claims that free trade andexpands on many of the issues raised in globalization lead to faster growth, and theprevious ILO papers. With regard to the realities that we have observed over thecentral topic of globalization, the Report last two decades.appears even more optimistic than previouspublications. It argues that: Both the ILO and the conclusions of the

Social Summit based their optimism on“There should thus be a stronger assumptions about the management orstake in international cooperation to governance of globalization, arguing thatensure a stable, open and expanding the sustain ability of trade liberalisationworld economy. Continued growth in and global economic integration wouldworld trade will mean mutually depend on whether it could be managed inbeneficial expansion of markets, a socially just manner. It is difficult to findwhich in turn will lead to higher fault with this logic. However, the keygrowth of output and employment. questions concern the precise mechanismsSimilarly, freer flows of foreign direct that should be used for this purpose andinvestment and other forms of direct the plausibility of ensuring internationalinvestment will mean a more efficient economic and financial policies are madeallocation of resources and also higher compatible with social objectives.growth.” 46

Many trade unions would probably a partial response to these questions. Thequestion whether such conclusions are ILO has argued that the responsibility forwarranted given that the full ramifications successful management lies first and

seem to be a gulf between the theory,

To date, the ILO has provided, at best, only

foremost with national governments.While acknowledging that the process ofglobalization and trade liberalization limitsroom for manoeuvre - individual states nowhave less control over all the factors thatLabour Conference. See also “Combatting Unemployment

affect the level and the quality ofemployment - at the same time, the ILOasserted that the perception thatgovernments were helpless bystanders in

ILO World Employment Report, 1995 which was45

released immediately prior to the World Summit for SocialDevelopment and ILO “Employment Policies in a GlobalContext”, report prepared for the 1995 International

and Exclusion: Issues and Policy Options”, a contributionto the G7 Employment Conference submitted by theDirector General of the ILO, Lille, 1-2 April 1996.

International Labour Office, World Employment46

1996/97, page 6.

26

suggested by the ILO, industrialized increased trade and foreign capital flowsgovernments would have to modify some of are very unevenly spread between nations.their most precious and politically At best, therefore, faster economic growthimportant objectives. among industrialised countries is a

For these reasons, the adoption of managing globalization and maintainingexpansionary macroeconomic policies was popular support for open economies. never going to be popular with financeministries, the powerful money market There is probably no simple or perfectmanagers or the international financial solution, to the problems of regionalinstitutions in the short term. This does economic inequalities and the unevennot mean that the advice is flawed. patterns of trade and investment. There isHowever, it does require courage and no doubt that many of the countriesperseverance to get the message across to currently by-passed by the globalizationpolicy makers. Consequently, the ILO must process need to implement structuralbe prepared to adopt a long term reforms in capital and product markets.perspective. The Organisation has an Many of the same countries would benefitobligation, set out in the Philadelphia from greater transparency in governmentDeclaration, to construct a plausible decision making and more robustalternative economic paradigm to that resistance to corruption. Domesticcurrently dominating policy and to economic and political reforms of thisgradually win converts to this alternative nature are normally part of the standardfaith. This will not be achieved in one or prescription advocated by the Brettontwo years. Rather it is a policy that must be Woods institutions and other organisationspursued with determination over a decade, interested in promoting development. Theor more, if it is expected to produce results. ILO has traditionally recognised the merits

(d) International Coordination ofEconomic and Social Policies

nfortunately, faster economic growthUin industrialized countries will not bea panacea for the problems of globalization.It would help reduce unemployment andrelated social problems in the OECDcountries. Any subsequent increase inimports by industrialised countries mayalso help stimulate expansion in otherregions, however, this will not mitigate themounting inequalities and disparitiesbetween regions and countries. As noted insection 3 of this paper, the benefits of

necessary, but not sufficient, condition for

of these reforms and supported theirimplementation. In addition, however, theILO has argued that market enhancingreforms should be complemented byimprovements in infrastructure to supportagriculture and industry, plus the provisionof effective and appropriate socialprotection and labour market programmesto assist those adversely affected bystructural changes.

Unfortunately many of the developingcountries that have experimented withprofound economic reforms have failed tostrike a balance between promotingeconomic efficiency and protecting socialvalues. As the pressures of increasedcompetition intensify in the global

27

economy, the probability that developing this view, increased emphasis oncountries can secure an economic and social coordination will simply entail considerableequilibrium diminishes further. In bureaucratic effort, and a redirection ofresponse to these developments the ILO scare resources within the ILO away fromhas suggested that the international practical and independent activities thateconomy, just like national economies, service the needs of ILO constituents, withrequires certain instruments and more time and resources being devoted toinstitutions to control and regulate market meetings between the staff of the respectiveforces and steer them towards the goals set international organisations and theat the Social Summit. preparation of comments on each others

The ILO argued in the lead-up to the political infighting for little practicalSocial Summit and again more recently for change in policies. A more pessimisticgreater coordination between financial perspective, from the point of view of theorganizations like the IMF, development trade union movement, would be to expectorganizations like the World Bank, trade closer coordination to result in increasedorganizations like the World Trade influence by the Bretton Woods institutionsOrganization and the ILO itself - which is over the ILO and the erosion of anresponsible for the social and labour independent perspective on macroeconomicsphere. In 1995 the Director General of the issues. ILO set the objective of “establishing theILO as an institutional partner in Since the ILO and the Bretton Woodsinternational discussions on the organisations have been in progressivelyimprovement of the world social and closer contact over recent years, these areeconomic situation” and he pledged to not merely theoretical issues. From a trademake it a leading player in a new union perspective the impact of closer“coordinated international employment coordination is at best problematical. Therestrategy”. has been a great deal of rhetoric about the

This represented a return to similar the public statements of the IMF Managingobjectives expressed in the Philadelphia Director and various World BankDeclaration some fifty years earlier and it is Presidents have suggested increasedan objective that the trade union movement concern for social issues and theshould fully endorse. However, this raises employment impact of the policiesseveral questions that require careful advocated by their institutions. There haveconsideration. First and foremost: is this also been various publications and speechesobjective realistic? There are several by members of the international financialobservers who would suggest that both the institutions that have acknowledged theBretton Woods organisations and the ILO positive contribution of trade unions andare essentially ideologically driven the benefits that can be derived from ainstitutions and the notion that they canreally work together while remaininghonest to their respective mandates andpolitical masters is unrealistic. According to

activities. In short, more bureaucracy and

merits of working together and certainly

28

degree of collective bargaining.50

On the other hand these have all been mentioned the need for a politicalstatements of principle with little or no mechanism to guide this partnership. Heimplications for the day-to-day policies of raised the possibility of using the Interimthe institutions concerned. There are also Committee as the basis of this mechanism.many cases where the Bretton Woods He also asked whether it might be possibleinstitutions have asked the ILO for to invite Employment Ministers to thecomments on their papers but have decided Interim Committee from time to time. Thisnot to implement suggestions subsequently concept might be further developed becausesupplied. It is also notable that some it is the non-governmental constituents of51

senior level contacts between the various the ILO, and in particular the trade unions,institutions have produced outcomes that who exercise considerable political andmay not necessarily advance the objective industrial relations power, and canof promoting full employment or concern therefore influence the implementation offor the social impact of economic reforms. economic reforms. By comparison, for thePerhaps the most significant single event most part, Employment Ministers arein the recent dialogue between the ILO and subordinate to Finance Ministers. WhatBretton Woods institutions occurred when would be novel and important for thethe ILO Director General addressed the international coordination of economic andInterim Committee of the IMF in 1995. The social policy would be to open meaningfulILO Director-General concentrated on one channels of communication betweenissue in his speech to the Committee: the Finance Ministers and the social partners.need for greater coordination of economicand social policy at the international level. The press statement released by the IMFHe reiterated the suggestion contained in after this meeting did not contain anythe 1995 World Employment Report that specific comment on the Director General’sthe ILO could fill the vacuum on proposal. It merely noted that theemployment issues and become a partner - Committee had a fruitful discussion withthe social pillar - working with the IMF, Mr. Hansenne and agreed that cooperationWorld Bank and World Trade Organisation. should be strengthened in light of theImplicit in his speech was the notion that Social Summit conclusions. According tothis would work through regular meetings the press release, cooperation should helpof the Executive Heads of these four IMF missions “to acquire a betterorganizations. understanding on labour markets and

In his speech, the Director-General also

social protection issues, and ILO staff tofurther integrate in their own policy advicethe view of the Fund on macroeconomicpolicies and targets for the countryconcerned". There are grounds for concernwith this statement. The reason tradeunions are interested in promotingcooperation between the ILO and the IMFis to influence the conditionality attached

World Bank, World Development Report 1995,50

“Workers in an Integrating World”, and the Speech by theManaging Director of the International Monetary Fund tothe World Congress of the ICFTU, Brussels, 1996.

For example the ILO was critical of statements by the51

IMF in recent draft editions of the World EconomicOutlook praising industrial relations reforms in the UnitedKingdom and New Zealand, but the IMF made noalterations to their text in light of these comments.

29

by the latter to their loans and to promote interrupting the reform process would intripartite discussions at the country level most cases be dramatically reduced if thereprior to implementation of economic was a popular mandate for the changes. Yetreforms. The above quoted statement says in virtually all countries structuralthe IMF is ready to receive information adjustment programmes and otherfrom the ILO about labour market and economic reforms continue to besocial protection issues but there is no determined through confidentialsuggestion that their macroeconomic negotiations between officials of thepolicies will be altered in light of the international financial institutions and aconsiderations brought to bear. On the very few key domestic officials, normallyother hand, the ILO seems to be limited to the political leader, the Ministerundertaking to accept IMF views on for Finance and perhaps a few technocrats.macroeconomic policies and to promote Naturally, when economic policy that isthese concepts with its constituents. going to have draconian effects on living

There would appear to be strong grounds political heritage is considered less thanfor revisiting these issues and legitimate. In many cases the few domesticrenegotiating the terms of this voluntary actors involved in the negotiations succumbagreement between the ILO and the IMF. to negotiation fatigue and readily acceptIn so doing the ILO should be prepared to conditions that have adverse socialpush for the establishment of precise implications. employment targets in the conditionalityattached to structural adjustment loans, as If the domestic negotiating team was drawnwas suggested above. To date, the Bretton from a wider circle of governmentWoods institutions have rejected this representatives, and included ministerssuggestion on the ground that employment responsible for Health, Education, Socialtargets would be too difficult to monitor Security and Labour - who are obliged toaccurately. If this is the case, the relevant handle the consequences of budget cuts andnational statistical offices merely need to reductions in living standards - theupgrade the resources they devote to the resistance to pressure exerted bycollection of labour market information. It international bankers would perhaps bewould seem that the real problem more rational and rigid. To stiffen thepreventing the Bretton Woods institutions backbone of government negotiators andfrom making this policy change is ensure that structural adjustmentideological, or political, rather than a programmes get the widest politicaltechnical deficiency. support and thus increase their chances of

It has also been an objective of the trade consultation and even negotiation. Ideally,union movement to broaden the range of not only the ministers responsible forparties involved in discussions about labour and social policies but alsostructural adjustment programmes and representatives of national trade unionseconomic reforms. Both the ILO and the and employer organizations should betrade unions have argued for more than a involved.decade that the probability of prematurely

standards emerges from such a process, its

longevity, they should be subject to wider

30

Institutions like the IMF and World Bank advocated two years ago.have traditionally claimed that this wouldretard an already inefficient and slowdecision making process. More recently,however, their tune has begun to changeand their rhetoric mentions participationand dialogue, but the reality at the countrylevel has not changed significantly. TheIMF and World Bank often argue thatadjustment policies are the sovereignproperty of the domestic government andthey, as outsiders, do not have theauthority to invite the social partners tothe negotiating table. This privilege andresponsibility rests with the government.However in many developing countries theonly true political opposition is the tradeunion movement. In these circumstancesthe government is unprepared to providethe additional public exposure andcredibility to its political opponents thatinvolvement in negotiations would ensure.Unfortunately narrow sectional andpolitical interests prevail over what iseconomically and socially efficient andreasonable. If the Bretton Woodsinstitutions were prepared to utilise theirinfluence to broaden the dialogue overstructural adjustment programmes thiswould be another major step towardseffective cooperation with the ILO.

If the Bretton Woods institutions were tofulfill these two conditions: theintroduction of employment targets andgenuine tripartite dialogue about economicreform measures at the country level, itwould be possible to envisage a significantimprovement in coordination ofinternational economic and social policies.This would be a major step towards thequadripartite institutional arrangementfor the international governance ofglobalization that the ILO Director General

(e) International labour standardsand globalization

he final component in this discussionTabout the governance of globalizationconcerns the implementation offundamental labour standards. For thetrade unions this issue is central to thesound management of the globalizationprocess and the continued expansion ofinternational trade. The internationaltrade union movement has consistentlyargued that measures are required tobetter promote the implementation offundamental labour standards and, as alast resort, penalise those states thatcontinue to pursue competitive advantagethrough the violation of fundamentallabour rights.

In response to this trade union stance therehas emerged a broad ranging consensusabout the desirability of promotingfundamental labour standards and there iseven a tentative tripartite agreement thatthe mechanisms available within the ILOfor supervising the implementation of thefundamental standards need to beupgraded. However the concept of penaltiesfor non-observance, and the possibility of alink between implementation of core labourstandards and trade sanctions, remainsfirmly contested by many developingcountry governments and employer’sorganisations.

Despite the absence of a completeconsensus, the terms of this debateconcerning labour standards andglobalization have narrowed considerably

31

over the past few years. For the most part, labour in 1998-99.discussions now focus on differentinterpretations of analytical studies aboutthe economic impact of imposing labour This set of fundamental human rightsstandards. There is also a relatively standards was first established in therational discourse concerning alternative conclusions reached at the Social Summitprocesses, or mechanisms, for securing and subsequently confirmed in discussionscompliance with the core Conventions. The within the ILO, the OECD and otherdegree of pure political posturing in the forums. The tripartite constituents in thedebate has dimished. ILO have also acknowledged that the seven

One factor facilitating a more rational can be looked upon as a precondition fordebate was the establishment of a tripartite the exercise of all other worker rights. agreement about the definition, or limits,of fundamental labour rights and a decision The promotion of these core Conventionsto reaffirm their universal validity. This has been a principal priority for the ILOwas important because there are now 180 during the last two years, and the rate ofInternational Labour Conventions and a ratifications has increased somewhat. Forsimilar number of Recommendations both the trade union movement and thecovering a broad spectrum of issues. From ILO, ratification of Labour Standards isthis considerable list all sides now agree obviously important but all partiesthat the core ILO Conventions are those recognize that this is no guarantee that theconcerning prohibition of forced labour and principles contained in the Conventionschild labour, freedom of association and the will be implemented. That is why theright to organize and bargain collectively, debate concerning review and revision ofequal remuneration for men and women for the supervisory mechanisms within thework of equal value, and non- ILO assumes importance. Duringdiscrimination in employment. More discussions within the ILO Governing Bodyprecisely in March 1997 it was possible to observe

- Conventions Nos. 29 and 105 on the agreement on the desirability ofabolition of forced labour; strengthening the ILO supervisory

- Conventions Nos. 87 and 98 on the mechanisms. The precise measures to berights to freedom of association and implemented will be the subject of furtherto bargain collectively; discussion and refinement during 1997-98.

- Conventions Nos. 111 and 100 on There is a general expectation that the prevention of discrimination in this process will culminate in mid-1998employment and equal pay for work with mechanisms to allow closerof equal value; and supervision of ILO core standards even in

- Convention No. 138 on the countries where they have not yet beenminimum age for employment (childlabour). This is expected to besupplemented by a new conventionon the most exploitive forms of child

core Conventions that cover these issues

52

the emergence of a tentative tripartite

By May 1997 the ILO’s campaign has secured 29 new52

ratifications to these seven Conventions since March 1995.This brings the total number of ratifications among theILO’s 174 members states to 815 out of a possible 1,218.

32

ratified. At present, complaints murdered. Similarly the reforms now being53

concerning freedom of association can be contemplated will not lead to the completemade by the social partners or governments abolition of bonded labour, the end of childagainst any member state regardless of exploitation or the disappearance ofwhether it has ratified the relevant discrimination in the workplace. The shortconvention. No equivalent procedure exists term profit margins that unscrupulousfor the other core Conventions. The various entrepreneurs can accrue through theseoptions now being considered for practices increases exponentially as globalstrengthening the supervisory mechanisms economic interdependence expands.would apply to the core Conventions other Unfortunately moral suasion, which willthan freedom of association, where the remain the only weapon in the ILOexisting procedures would be retained. armoury against labour exploitation, will

The promotion of core labour standards gain financially from employing children inand improvements in the ILO supervisory dangerous jobs or maintaining slave labour.mechanisms could, in a small way, contribute to the governance of This naturally brings us to the vexed issueglobalization. If these measures are of the linkage between trade measures andcombined with increased media attention international labour standards, which isand public awareness when the core sometimes referred to as the “socialConventions are violated, there is a chance clause”. This relationship has been debatedthat governments and employers will for more than a century and is currentlyhesitate before infringing fundamental back in the spotlight because of thelabour standards. However no one should dramatic expansion in trade and economic54

be under the illusion that these steps alone interdependence. In the last year this issue,will be sufficient to prevent increased dominated discussions at the first Worldeconomic interdependence between nations Trade Ministerial (WTO) Meeting infrom leading to a vicious downward spiral Singapore; has been the subject of detailedof labour standards. The existing ILO analytical research and forthright debatemachinery on freedom of association has within the OECD; has consumed thecertainly contributed to the protection of European Commission at various times andworker rights but it has never been a received general support from a broadsufficient deterent to prevent thousands of cross-section of European Governments;trade union representatives from being has received forceful support from the USdiscriminated against, imprisoned or even Administration in various domestic and

not wound, or ward-off, those that stand to

international forums; and has been firmlyresisted by many developing countrygovernments and employers’ associations.

Of all these recent events concerning therelationship between trade and labourstandards the WTO Ministerial Meetingreceived the most publicity throughout theworld. In the Declaration issued at the

Some of the options for strengthening the supervisory53

mechanisms are discussed in the ILO Governing Bodypaper (GB.268/LILS/6) “Standard-setting policy: Thestrengthening of ILO supervisory procedures”, March1997.

Drawing public attention to countries that fully54

implement the fundamental standards would also bedesirable. The recent proposal from the ILO DirectorGeneral (referred to above) concerning “a global sociallabel” would assist in this process.

33

conclusion of this meeting Trade Ministers of ILO supervisory mechanisms, it isstated their “commitment to the imperative that momentum is maintainedobservance of internationally recognised on the trade and labour standards issuescore labour standards”. This was a within the ILO. Moreover as reported above55

significant breakthrough for the trade Trade Ministers certainly expectunion movement because it was the first collaboration between the WTO and thetime that Ministers of Trade from a broad ILO, on this issue, to be maintained. range of industrialised and developingcountries had unambiguously committed The prospects for further constructivethemselves to the implementation of core advancement on this sensitive social clauseinternational labour standards. They also debate are bright. As indicated previouslyindicated that they thought the ILO was the debate was distorted for some time bythe competent body to determine and those opposed to any linkage between tradepromote these standards. Trade Ministers and labour standards. However over thealso agreed that labour standards should last year the trade union movement hasnot be used for protectionist purposes and had considerable success in conveying athat the comparative advantage of low clearer message about the social clause. Itwage developing countries should not be is now understood that any future socialput into question. As indicated below this clause would only cover the set of core ILOfully accords with the trade union position. Conventions outlined above. These sevenFinally they encouraged the secretariats of Conventions constitute basic human rightsthe WTO and the ILO to continue their for workers. It is equally clear that theexisting collaboration on this issue. trade union movement is not advocating a

Despite prolonged discussions within the the social clause to other issues. This isILO about labour standards and trade why the trade union movement fullyrelated matters the Organization, as a supports the statement in the Singaporewhole, has not yet reached a definitive Declaration about preserving theposition on a linkage between these two comparative advantage that developingconcepts. The diverse and complex countries derive from lower productioncomposition of the ILO constituency can costs. cause stalemates to occur on highlysensitive issues. However, this same It should also be evident that thestructure is a major source of strength. international trade union movement, whichAfter all, the world we live in is equally represents workers in countries at all levelsdiverse. We must ultimately reach a of development, would be opposed to aconsensus that reflects this complexity. process that is open to abuse by those thatThat is why the ILO is the right place for a may have a vested interest in preserving, ortruly global debate on a global issue. Thus promoting, trade protection. On theregardless of what happens in other forums contrary the trade unions desire a socialand what happens regarding the revision clause that will open markets, increase

global minimum wage or the extension of

economic growth, create jobs, and share outthe benefits of trade more fairly. For thisreason they have proposed linking workers'

Declaration of the WTO Ministerial Meeting,55

Singapore, 9-13 December 1996.

34

rights to trade through a social clause in a it had one year to cooperate. If there wasstep-by-step procedure which must be open, still no movement, the matter would befair and multilateral. The procedures being referred to the WTO council foradvanced by the trade unions will allow consideration of measures designed todisputes over the implementation of core ensure a constructive response from thestandards to be resolved through government concerned.negotiations. Under the proposals advancedby the trade union movement any form of Such a step-by-step procedure provides allsanction, or penalty, would be reserved for the elements of transparency, predictabilitythose countries that continually reject or and objectivity that an effectiverefuse to implement the fundamental multilateral system requires. It also buildshuman rights standards. on the established competence of the ILO.

The mechanism being proposed by the to be solved by dialogue. It avoids theinternational trade union movement to danger of heavyweight trading powersmanage this process is as follows. A joint trying to dictate terms for market access to56

WTO/ILO Advisory Body would oversee the small countries. And it is even-handedimplementation of the social clause. Where since all countries would be subject tothere is a complaint, the joint body would equally close scrutiny by reference toreview how the seven core ILO standards universal standards. In all cases, fullywere being applied. The report would show transparent procedures would be usedthat either the standards were being which would leave no opening for misusefollowed or that certain changes in labour for protectionist purposes. Anlaw and practice were needed. In the latter internationally-recognized set of standardscase, the report would make enforced through the social clause would berecommendations to the country concerned a much more certain way of avoidingon the changes required and, if necessary, protectionism than the growing use ofthe ILO would offer to help countries reach bilateral arrangements. these objectives. There would then be afurther report after the government hadenough time to take the necessary action.This second report could show that thecountry was now in conformity with thespecified standards; that the problem hadnot yet been solved but progress was beingmade; or that the government had failed tocooperate. If progress was being madeanother report would be prepared after ayear or two. If the government concernedwas clearly ignoring the ILO'srecommendations, it would be warned that

It also provides adequate time for problems

6. Conclusions

his paper has examined pastTexperience with economicinterdependence, the impact on

workers and trade unions of the currentwave of globalization and various proposalsto mitigate the adverse labour marketconsequences of increased economiccompetition between nations. In conclusionit should be evident that the trade unionmovement is prepared to embrace andpromote a truly globalized world economy.

For a more detailed account of this procedure see56

ICFTU, op.cit.

35

That is globalization in which allcountries, and all people, participate andbenefit. The trade union movementsupports the sentiments expressed in avariety of ILO documents and in theconclusions of the Social Summit thatmanagement of the process is central toachieving this objective. However, themanagement tools currently available, andthe additional process currently beingcontemplated, are inadequate. They mustbe supplemented by sterner measures if weare to integrate all economies into theglobal market, more equitably distributethe benefits of increased trade andinvestment within nations, and preventworker exploitation being used as means toenhance the competitive position of anenterprise or economy. This paper hasattempted to elaborate on variousinstitutional arrangements that wouldmore adequately arm policy makers inmaking market forces both efficient andequitable. Unless such measures aredeveloped and utilised the advancingpublic appeal of protectionist policies willaccelerate and potential profits, jobs andprosperity will be lost. Without the wideranging combination of control measuresoutlined in this paper we risk repeating themistakes made in the last century whenmarket forces ran riot, economies were leftmoribund, and mankind was at war.