TRADE UNION STATEMENT

1. An uncertain economic outlook overshadows the 2002 OECD Ministerial meetings and the Kananaskis G8 Economic Summit. The world’s largest economies were experiencing slowing growth even prior to the events of 11 September, and the after-shocks have still to fully work their way through the global economy. Notwithstanding recent indicators of growth from the United States, the three major industrialised regions still face fragile growth prospects or a repeat of the jobless recovery experienced by the United States in the early 1990's. Unemployment in the OECD countries is expected to reach 35.5 million in 2002 – the highest level in five years and 4 million more than in 2000. In developing countries and the emerging world, unemployment or underemployment is endemic, and now appears to be rising again. Some 2.8 billion people live in extreme poverty. In 59 countries income is lower than it was 20 years ago. A range of social indicators point to slowing progress.

2. The world community set itself ambitious Millennium Development Goals to halve the number of people living in extreme poverty by 2015. The key to achieving these is to provide decent work for all within a framework of equity, security and human dignity. To draw people out of poverty, sustained growth, job creation and the achievement of full employment are fundamental. Yet the present reality reveals that the world community is further away today from realising the ambitious targets set out just two years ago. The commitments made by industrialised countries during the Monterrey Conference on Financing for Development to raise levels of development assistance must be used as a platform from which to launch a reinvigorated process of sustainable development bringing together common concerns of developing, industrialised and transition countries. There must be a new agenda for policy action and institutional support to spread the benefits of growth more widely and equitably. The New Economic Partnership for African Development (NEPAD) to be discussed by OECD Ministers and the G8 Heads of State at Kananaskis and the Johannesburg World Summit on Sustainable Development represent opportunities to move ahead. These opportunities must not be missed - another set of unfulfilled promises from industrialised country governments will further undermine their credibility.

3. The shift of markets to the global level has not been matched by the creation of an international framework of rules and institutions to ensure that public policy objectives are met – this is fuelling legitimate public concern on some pernicious aspects of globalisation. In addition the devastating new face of terrorism and conflict that appeared in 2001 not only challenges open societies and democracy, it challenges the capacity of governments to respond at the international level to the underlying problems of poverty and despair. Ministers meeting at the OECD, and the G8 Heads of State must move towards the establishment of a framework of governance for the global economy, to ensure that global markets are governed by rules that respect human rights. We support the call from the UN High Commissioner for Human Rights for coherence between the economic agreements that governments enter into and the human rights instruments that give legal expression to ethical imperatives.

4. As immediate points for action the global trade union movement calls on governments to: -

- Take the necessary stimulus measures to raise growth and employment in both industrialised and developing countries and establish sustainable exchange rate parities (§5-8);

- Support an action plan for raising investment in skills and socially acceptable management of change in the workplace (§9-11);

- Reinforce effective rules on tax havens, bribery, corporate governance and step up implementation of the OECD Guidelines for Multinational Enterprises (§12-17);

- Commit themselves to doubling ODA levels as a step towards attaining the UN target for ODA of 0.7 percent of GNP, provide deeper and wider debt relief, and enforce core labour rights (§18-23);

- Ensure that the NEPAD becomes a real partnership between African governments and their people in which there is shared ownership (§24-27);

- Introduce an effective social pillar to sustainable development at the World Summit on Sustainable development in Johannesburg (§28).

5. The global economy remains fragile with the balance of risk clearly on the downside. In the United States decisive action to bring interest rates down and sharply higher federal spending have been effective in making the recession milder than expected. However questions remain on the sustainability of the recovery and the ability of consumers to support ever-increasing debt burdens to sustain growth. Employer freedom to fire workers has led to savage downsizing in the United States, with over eight million people unemployed. Business investment spending remains depressed. The European Union has yet to fulfil its growth potential: despite monetary union having been completed, the instruments of economic governance remain weak. Governments still seem content to depend passively on the efforts of other countries to pull the EU to recovery and the European Central Bank still seems focused on fighting the mirage of emerging inflation rather than on the reality of lagging growth. Continued low growth in the European Union is resulting in renewed rises in unemployment with the risk of the drift of increasing numbers into long-term unemployment. This rather than real or imagined labour market rigidity is the immediate priority to be confronted. The severe and persistent recession continues unabated in Japan, with unemployment at record levels this year and expected to continue to rise through 2003. Even the more optimistic forecasts predict a decline in growth in the developing world as a whole this year. Latin America, Africa, the Caribbean, the Middle East, and Central and Eastern Europe face higher unemployment and depressed living standards. In Argentina, which carried out a radical programme of structural adjustment in the 1990s and was proclaimed to be a development success, the IMF expects the GDP to contract by as much as 15 percent in 2002.

6. Given these dangers facing the global economy, there is no room for complacency. OECD governments and Central Banks must stand ready to stimulate economic and employment growth. Industrialised countries have a dual responsibility: both domestically and to developing countries to act as a catalyst for global growth when further concerted monetary and fiscal expansion is required.

7. In the United States the Federal Reserve should stand ready to ease monetary policy. The welfare system needs an urgent injection of government support to raise the living standards of the unemployed, while further action is required to raise low incomes. Growing budget pressures among state and local governments raises the risk of contractionary fiscal policy. The European Union requires a budgetary and monetary policy-mix focussed on the Lisbon growth, competitiveness and employment targets to raise by its own efforts growth above its long-term potential, to remove output gaps and to help get the unemployed back into jobs. Governments can and must do more than letting the automatic stabilisers work and should bring forward spending on much needed infrastructure investment, as well as on education, training and health care, while boosting the spending power of those on low incomes. With stability not under threat, the European Central Bank can and must contribute to the success of the Union’s overall economic policies. The re-establishment of sustainable global growth requires an accelerated recovery in Japan. Continuing deflation, rapidly rising unemployment - to record levels, along with an underdeveloped welfare system and increased labour market insecurity, stagnating or falling incomes, a rapidly ageing population, and a banking sector faced with collapse, are compounding the sense of crisis within the population. Real interest rates remain high. Rapid reflation of the economy is the only credible policy lever available, and must be used. Emergency measures are also required to put a floor of security under the labour market, and to develop a reliable pension system, which would add further to worker and consumer confidence.

8. The current set of exchange rates reflects unsustainable parities, which do not reflect economic fundamentals. The overvalued US Dollar poses dangers to the global economy and is contributing to trade tensions. Ministers should attend urgently to the imbalances between the major currencies including the Chinese Yuan. Beyond these immediate interactions the global economy needs a system of exchange rate governance that prevents such imbalances from reappearing.

9. There was broad consensus among governments, trade unions and employers at the G8 Employment and Labour Ministers’ Conference in Montreal, that investment in human capital is a key to the future. However, there is a gap between the rhetoric of the public debate and reality. Part-time employees, workers on low incomes, those in precarious or contingent work, older workers, migrant workers and all too often women, are in practice denied access to further training and lifelong learning. Moreover, in contrast to the public debate about the necessary involvement of employees in programmes to raise productivity growth and improve the quality of production, in reality too often corporate culture and employment strategies view employees as costs to be cut rather than assets to be developed.

10. Policies aiming to build human capital through joint action by governments, firms and trade unions must be based on a broader agenda for the socially acceptable management of change at the workplace. Trade unions have a role as negotiators, campaigners and providers of training. In the knowledge-based economy, competitive advantage will flow to those countries that have built and are maintaining social capital based on trust, social cohesion and solid industrial relations that give workers an effective voice. Yet in a number of sectors in OECD economies there is evidence of a weakening of the attachment between firms and their employees and an increase of both contingent employment and precarious work.

11. We support the G8 Labour Ministers Montreal Conclusions which set as an objective a socially inclusive, high-skill, high-value-added economy and society. To achieve this governments must adopt an action plan to:-

- Implement active labour market policies in order to allow restructuring in a socially acceptable way and support the implementation of company based paid educational leave schemes;

-Encourage agreements between employers and trade unions that make participation in lifelong learning feasible in practice and support the union role to deliver such training;

- Pursue policies to strengthen equal opportunities and close gender gaps in education, training and employment. It is essential that adequate child-care, pre-school education, and adaptable work schedules are developed to increase quality job opportunities and training for women;

- Pursue policies to combat age discrimination against older workers, facilitate their employment and retention by promoting the adaptation of work organisation to suit older workers and implement measures to provide training options;

12. Over and above the immediate economic measures that are required to re-establish employment growth, it is essential that governments confront issues of effective regulation of the global economy. Establishing rules to ensure broad adherence to human rights including core labour rights must be a priority for industrialised, developing and transition economies alike. So too must be system wide standards for corporate governance, financial transparency and environmental practices.

13. The Enron collapse has demonstrated systematic failures of financial and corporate governance and social protection systems. Business leaders will only be accountable to all stakeholders within a framework of rules which ensure transparency and scrutiny in particular from their employees – whose lives are bound up with the companies in which they work. Stock options need to be regulated and made transparent to avoid them turning into incentives for fraud. They should be included in company statements along with directors’ remuneration. The regulation of pension funds must be extended to ensure the spreading of risk and the protection of employees from the volatility of financial markets. The accountancy firms need to be carefully regulated to end the conflict of interest between consultancy and auditing. Workers need a social system that protects them in cases of bankruptcy.

14. The OECD Principles of Corporate Governance, which include a positive chapter on the role of stakeholders, and the follow-up work with the World Bank have provided fora within which to conduct a constructive policy debate. Work to revise the Principles is set to begin. A work programme to extend and deepen the stakeholder chapter, with the full involvement of the trade unions is essential. Work is scheduled to begin on the development of a set of corporate governance principles for state-owned assets. This work must take account of the concerns of employees and their trade unions.

15. Adhering governments must strengthen their efforts to promote and implement the revised OECD Guidelines for Multinational Enterprises adopted by Ministers in 2000. The global applicability of the Guidelines makes them also relevant beyond the adhering countries. Governments, therefore have a responsibility to make sure that the Guidelines are observed in all the activities of multinational enterprises operating in or from the adhering countries. It is especially important that the Guidelines are respected in conflict zones. If the Guidelines were implemented forcefully, they could make a key contribution to development and to improve corporate accountability. Governments should ensure coherence in their own activities. A minimum requirement is that public funds used for export credits and public procurement should be conditional on respect for the Guidelines.

16. Governments must maintain a sound tax base that ensures the necessary resources for social protection and infrastructure development. The growth of offshore tax havens and international tax competition have eroded the tax base and disproportionately shifted the burden onto labour. They also represent safe havens for the financing of terrorism and other international criminal activities. Governments must continue to strongly implement the OECD work programme to stop unfair tax competition between countries and outlaw tax havens. For this work to be credible all OECD countries must be brought within the initiative.

17. OECD work on bribery and corruption concerns corporate accountability and the role of law as well as the intergovernmental framework of governance. Where basic rights are denied and legal structures are weak, bribery and corruption can easily flourish. Trade unions are keen to ensure that the OECD Anti-Bribery Convention is applied in practice. We have created an international trade union network to fight corruption. This network is working on a set of initiatives, including the protection of "whistleblowers" who expose corporate and public sector corruption. The OECD Convention should be revised to incorporate a clause to protect "whistleblowers" and to cover private sector bribery including overseas subsidiaries and supply chains. There should be increased interjudicial co-operation by governments on a common regulatory framework to fight bribery, tax evasion and corruption.

18. A new partnership for development must guarantee sufficient funding as well as the participation of citizens in programmes and policies that are developed so as to guarantee that resources are spent productively. In 1969 the United Nations set the target that donor countries should devote 0.7 per cent of GDP to Overseas Development Assistance. In reality the share declined to stand at 0.22 per cent after substantial falls for most of the 1990’s. Against this background the commitments made by the EU and the United States to increase aid by 9 and 5 billion dollars annually by 2006 at the Monterrey Conference are small but significant steps which must now, though, be enacted. Beyond this there should be an early doubling of aid levels (which would provide an extra 46 billion dollars in aid annually) as part of a clear timetable for attaining the 0.7 per cent UN target. Above and beyond increases in national ODA, the introduction of a currency tax to finance global public goods must now be seriously studied.

19. This must be backed up by measures to ensure that new resources are not simply used to pay interest on old debt. The IMF and World Bank along with the donor countries must ensure that commitments made through the enhanced Heavily Indebted Poor Countries (HIPC) Initiative are fully implemented. An April 2002 HIPC status report notes that only five of the original 42 countries deemed eligible for debt relief have reached their "completion point" when significant debt relief actually arrives. Implementation of the HIPC initiative continues to be hampered by overly strict "performance requirements" imposed by the IMF, and pledges from donor countries to the HIPC trust fund may not be sufficient to fully fund the initiative. The IMF and World Bank should take further steps to ensure that the Poverty Reduction Strategy Papers (PRSPs) required of the HIPCs and other countries in order to receive concessional loans, be based on genuine involvement of civil society organisations, particularly of trade unions. The IMF and Bank must also respect PRSPs that put forward development alternatives to structural adjustment programmes by providing funding of such alternatives.

20. The gradual unravelling of the Argentine economy, leading to involuntary debt default on the part of the government in December 2001, demonstrates the necessity for highly indebted developing countries to be able to effect a temporary standstill while negotiations for orderly debt restructuring take place. The IMF's launching of a proposal for a sovereign debt restructuring mechanism is a welcome step, though many details of the proposal remain to be worked out. The IMF should be encouraged to consult broadly as it proceeds with work on this proposal, paying particular attention to concerns about the Fund's own role in the administration of the mechanism, the question of which party can initiate a standstill, and issues of transparency and the participation of stakeholders.

21. The Doha development agenda of trade liberalisation is not an end in itself but must be seen as an element of a wider development agenda. The trade union movement has called for improvements in the multilateral system to benefit developing countries including:

- Ensuring that trade is an integrated part of a development strategy which allows developing countries to increase their domestic demand and production;

- Achieving coherence between economic agreements that governments enter into and the human rights instruments that give legal expression to ethical imperatives;

- Addressing the WTO’s internal and external democratic deficit by introducing transparency, democracy and accountability into its procedures and the establishment of an effective structure for consultation with trade unions;

- Further moves to provide improved access for developing countries to industrialised countries’ markets (including most importantly agriculture) linked to the respect of human rights at work;

- Implement the Doha statement on access to life-saving drugs for developing countries;

- In the GATS services negotiations at the WTO, explicit reference to respect for social and environmental concerns must be made to safeguard the ability of governments to maintain their public services and to regulate socially beneficial service sector activities;

22. However the social dimension of trade and investment was entirely ignored in the Doha meeting. If the multilateral system is to have legitimacy then trade and investment rules must be made coherent with wider concerns of public policy concerning the observance of fundamental labour rights. The foundation of the social dimension to globalisation must be the implementation and effective enforcement of the ILO Declaration on Fundamental Principles and Rights at Work as a system wide standard applied through all multilateral institutions: - the IMF and World Bank, OECD and WTO. Effective co-operation needs to be developed between the WTO and ILO to ensure that the rules of the multilateral trading system are made consistent with observing core labour rights and environmental protection. This applies particularly to the current human rights abuses in Burma where governments should respond far more seriously to the ILO’s call for measures to be taken.

23. The ILO Director-General’s initiative in establishing the World Commission on the Social Dimension of Globalisation is welcome, it should be used as a forum to develop coherence between all organisations concerned notably the WTO, the IMF, World Bank and OECD.

24. It is significant that the question of African development has been introduced into the G8 and OECD agendas. The economic and social situation in sub-Saharan Africa remains dramatic. Forty-six per cent of the population is in extreme poverty with less than one Dollar a day to live on. After the "lost decade" of the 1980’s, it was the only region in the world that saw extreme poverty rise during the 1990’s. In many parts of the continent, there is now a tragic collapse in life expectancy as the Aids pandemic takes hold.

25. Past attempts to spur African development have failed:- the structural adjustment policies of the IFI’s have produced cutbacks in education and health spending and little or no private sector development. The continent remains fragmented politically and economically. Africa has become detached and isolated from the global process of economic integration. Meanwhile past commitments from the OECD countries to raise development assistance have been broken - aid flows fell over the 1990’s while there is a continuing haemorrhage of vital resources paid in ever-increasing debt service.

26. The New Economic Partnership for African Development, therefore, represents an initiative that must be seized and made to succeed. It is the most ambitious and self-driven African Development Plan for a generation. However, it cannot be seen as a partnership between African governments and the industrialised country governments. It must become a partnership between African governments and their people in which there is shared ownership - reflected through the active engagement of African trade unions and civil society organisations. If a serious commitment is made to engage in participatory development, respect for human rights including labour rights and to ensure good governance, then the partnership must be backed by major new development funding provided by the OECD countries and notably the G8.

27. The international trade union movement and African unions call on the NEPAD and G8 leaders to:-

- Respect core labour rights in the NEPAD process;

- Engage trade unions in a partnership to monitor and implement NEPAD’s targets;

Eliminate corruption and waste through the efficient management of public resources;

Ensure that good governance is truly practiced by all African governments through popular participation in decision making, transparency and accountability;

- Ensure trade union involvement in the peer group reviews;

- Ensure that the Poverty Reduction Strategy Papers of the World Bank are drawn up with trade union involvement and participation at the local level;

- Halt the drive by the World Bank to transfer public services into private monopolies;

- Undertake a social impact analysis of the loan instruments operated by the International Financial Institutions;

- Implement aid programmes in line with the Poverty Reduction Guidelines of the OECD Development Assistance Committee;

- Ensure that foreign investors respect the OECD Guidelines for Multinational Enterprises through an enhanced implementation process for Africa;

- Ensure market access for African countries’ products on the basis of respect for core labour rights;

- Ensure that OECD governments commit themselves to increase substantially contributions to the Global Fund to Fight AIDS, Tuberculosis and Malaria to ensure it has sufficient resources to fight these diseases which are claiming the lives of millions.

28. The Earth summit must be the occasion to put in place an effective social pillar for sustainable development which includes:-

Promoting worker and trade union participation by supporting the ILO programmes on decent work and the Declaration on Fundamental Principles of Rights at Work. Capitalise on workplace activities and partnerships by promoting good industrial relations practices;

Promoting linkages between consumption and production through trustworthy eco-labels that reflect joint workplace level programmes with employers, workers and their trade unions;

Building of occupational health and safety to protect public health through supporting ILO’s work aimed at reducing and eliminating death, injury and illness that originate from unsustainable work practices and conditions. Support for the ILO Code of Practice for HIV/AIDS;

Promote co-operation among international agencies for research to provide the basis for social and employment transition. Expand institutional provision for multi-stakeholder involvement at all levels and promote public/public partnerships to ensure that governments fulfil their responsibilities in such key areas as water and natural resources management;

Promoting corporate accountability and ethical investment by integrating sustainable development objectives into trade, investment and financial decision-making, as well as corporate accountability. Promote greater emphasis on global governance, based on such international standards and instruments as ILO Conventions, OECD Guidelines for Multinational Enterprises, the Global Reporting Initiative, and the principles underlying the United Nations’ Global Compact, Ensure that Export Credits are made to serve sustainable development objectives.

Conclusions

29. Governments must draw the correct conclusions from the public concerns at the negative aspects of globalisation as manifested on the streets of so many cities. They must engage in more effective consultations with trade unions that on economic and social issues represent a key stakeholder of civil society, working people and their families. The results of this dialogue must also be translated into action in developing a socially acceptable vision of globalisation.