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TRADE UNION STATEMENT
TO THE 2001 OECD COUNCIL AT MINISTERIAL LEVEL
AND TO THE GENOA G8 ECONOMIC SUMMIT (1)
Summary and Main Recommendations
1. The 2001 Genoa G8 and OECD Ministerial meetings take place against
the backdrop of a dangerous slowdown of growth in the United States, faltering
growth in Europe, deteriorating conditions in Japan and low or falling
growth in most developing countries. Unless more decisive action is taken,
there is a risk that unemployment in the OECD as a whole will rise in 2001
for the first time since 1993. In developing countries and the emerging
world, unemployment or under-employment is endemic. Despite a welcome focus
on poverty reduction by some of the international institutions, the number
of people living on less than $ 1 a day increased between 1987 and 1998
to 1.2 billion (2) . The number of those living in extreme
poverty increased in four of the six developing and transition regions
- Eastern Europe and Central Asia, Latin America and the Caribbean, South
Asia and Sub-Saharan Africa (3) . Global health epidemics
further soak up resources and thus prevent many developing countries from
even beginning to address their development problems let alone tapping
into the “digital economy”. The threat to ecological balance in the world
has intensified and the latest scientific evidence (4)
suggests an alarming acceleration in the speed of global warming, at the
very same time that the new US Administration has rejected the Kyoto protocol.
2. The industrialised countries’ governments meeting at the OECD and
in Genoa must accept their responsibility for the stewardship of the global
economy and for the economic, social and environmental sustainability of
growth. They must focus on restoring and sustaining high levels of growth
in their own economies and around the world. They must initiate major improvements
in international economic governance and the democratic reform of the global
economic institutions to increase coherence, accountability and transparency.
The power of global markets needs to be counterbalanced by an effective
rule-based international system, which in turn must reflect a value-based
multilateral system. Significant improvements must be registered by the
time of the Doha WTO Ministerial Conference in November 2001. As immediate
points for action, the global union movement calls on governments to:-
- As a matter of urgency take co-ordinated stimulatory measures
to raise industrialised countries’ growth in 2001-2002 above 3% and so
put the global economy back on the path to full employment based on “decent
work” (§ 3-9);
- Embrace comprehensive development policies, debt write-off, reform
of the International Financial Institutions (IFI’s), significant increases
in bilateral aid, a new initiative on health and education to meet the
objectives of poverty reduction in developing countries while ensuring
that the rules of the global trade and investment systems give market access
and boost development prospects, do not undermine vital public services,
and reinforce the work of the ILO to guarantee core labour standards (§
15-23);
- Effectively harness Information and Communications Technology (ICT)
by taking measures to bridge the digital divide especially (but not only)
between the North and the South, invest massively in education and skills
and encourage the negotiation of technological change between management
and trade unions (§ 10-14);
- Ensure that growth is economically, socially and environmentally sustainable
(§ 24-25);
- Re-regulate international financial markets and launch a widespread
public debate on the reform of the international financial architecture
and establish a Commission on the social dimension of International Economic
Governance (§ 26-28).
Policies for Full Employment
Stimulating growth
3. G8 Labour Ministers meeting in Turin in November 2000 declared that
“full employment in a knowledge-based society is our overarching goal”.
Stimulatory measures must now be taken to put the industrialised countries
back on the path to achieving that goal given the clear evidence of sharp
deceleration in the United States coincident with recession in Japan. US
experience in the 1990’s is an important reminder that sustained demand
growth can yield higher productivity and lower unemployment. The risks
to growth and employment do not begin with inflation or with structural
problems in labour markets but through the failure of monetary and fiscal
policy to promote sustained demand growth.
4. Increased co-ordination of economic policy is urgently needed to
sustain global growth and reduce unemployment, while addressing currency
and trade imbalances.
5. In the United States the Federal Reserve should continue to
reduce interest rates. Front-loaded tax cuts are necessary to raise the
purchasing power of those with below average incomes. The slow acting and
inappropriate tax cuts that have been proposed should be rejected. Long-term
structural priorities must be supported with increased expenditure on infrastructure,
education, and research and development.
6. The European Union must aggressively focus on policies to
promote broad demand growth and a return to falling unemployment in line
with its own strategy adopted at the Lisbon European Council in June 2000.
The European Central Bank has failed to react and must cut rates aggressively
to support growth and give confidence to the Euro. This would be in accordance
with its treaty-defined objective of supporting the general economic policies
of the Union. In 2000 growth of above 3% was achieved without an acceleration
of core inflation. The oil shock was absorbed without second round effects
on wages and prices, showing the priority that trade union negotiators
gave to employment in negotiations. The easing of fiscal constraints provides
opportunities for governments to focus on infrastructure investment, as
well as on education and health care, and reducing marginal effects of
tax rates on lower incomes.
7. Recovery in Japan is a prerequisite for re-establishing balanced
growth world-wide. However, there is now deflation of prices, which along
with rising unemployment, stagnating incomes and a rapidly ageing society
have heightened insecurity and the risk of a financial collapse. While
nominal interest rates are low, real long-term rates are punishingly high.
The monetary authorities must take action to lower real interest rates
and relieve the debt burden through monetary expansion. Japan must also
act decisively to remove the age-induced insecurity by developing reliable
pension systems which would improve worker and consumer confidence.
8. The inequitable stabilisation packages that the IMF has required
of Turkey and Argentina demonstrate the IMF’s failure to absorb the lessons
of the Asian financial and economic crisis. It must accept that growth
in domestic demand is the only globally sustainable policy, and that austerity-based
policies produce unacceptable adverse social effects and consequently leave
countries less stable. Developing and former crisis-hit countries in Asia,
Latin America and Africa must be given the means to expand domestic
demand, thus helping to restore global growth and reinforce political stability.
Growth rates can be raised by large-scale debt relief and increased development
assistance when combined with effective internal development strategies
based on the effective application of core labour standards, good governance,
active employment policies and social protection.
9. Russia must address its shocking level of poverty while moving
to tackle corruption, build up its tax base and initiate the desperately
needed infrastructure investment required for sustainable economic growth.
This is especially urgent as growth is forecast to slow this year. Back
wages due to Russian workers must be paid and the Government must respect
freedom of association through support and enforcement of the Labour Code
and build up, not weaken, the system of social protection.
10. Governments must maintain a sound tax base for public finances against
the background of globalisation. The growth of offshore tax havens and
international tax competition have eroded the tax base and disproportionately
shifted the burden onto labour. Systems have become more regressive through
the shift from income to consumption taxation and must be revised. Governments
must continue to implement the OECD work programme to stop unfair tax competition
between countries and outlaw tax havens.
Investing in skills and managing change
11. A key priority for governments must be to raise levels of investment
in education and training and to adapt them both to the needs of a changing
economy and society and to the objective of raising the level and quality
of employment. This means widening access to education and creating a general
entitlement to lifelong learning and expanding access to ICT to ensure
that existing social divides are not compounded by the digital divide.
Governments must now implement the recent Conclusions of the OECD Education
Ministers to ensure a partnership between business and labour to achieve
lifelong learning for all. It is essential that investment in adequate
child-care and negotiated adaptable work schedules are developed to ensure
gender equality and increase quality job opportunities for women.
12. Action is needed to establish socially acceptable management of
change at the workplace. Governments and business must step beyond the
simplistic notion of “labour market flexibility”, where workers are expected
to give up social protection, decent wages, or job security. In the knowledge-based
economy, competitive advantage will flow to those countries that have highly
developed social capital - trust and social cohesion built on investment
in education and training as well as solid industrial relations that give
workers an effective voice. Governments must support initiatives to negotiate
change at the workplace and ensure that workers’ information and consultation
rights are extended.
13. In Europe detailed policy prescriptions exist in the Employment
Guidelines and in the recently adopted social agenda. The task is more
to put them into effect so that social goals of reducing poverty and achieving
greater equity are integrated with economic strategies for sustaining faster
growth.
14. Technology transfer and policies and action to bridge the “digital
divide” must also be an integral part of both OECD countries’ own policies
and wider development strategies. The G8 Governments and the OECD must
make a major commitment to expand education, training and lifelong learning;
bridge the “gender divide”; ensure that skill shortages in industrialised
countries and the related risk of the brain drain in developing and emerging
countries do not undermine efforts to bridge the divide; ensure that the
necessary regulatory framework is in place to ensure affordable access
to ICT as well as electricity and water; encourage efforts to build local
community
content and use of ICT; integrate a workplace dimension by following
up the recommendations of the 2001 ILO World Employment Report; and support
through ODA efforts by global unions to build trade unions’ and civil society
access to and use of ICT in developing and transition countries.
A New Development Agenda
15. A new development agenda must begin with an intense focus on the
concerns of the poor, the unemployed and those who toil in the growing
informal sector, and to ensure that all of these groups participate in
the development process. This must be based upon transparency, democracy,
good governance and respect of basic rights. The G8 and OECD countries
must support this by taking clear action to implement the poverty alleviation
and qualitative development goals they have adopted, especially the aim
of halving world poverty by 2015. The fact that the number of poor has
continued to increase indicates that a much more substantial change in
policies is necessary. This must include but go beyond debt relief.
16. We welcome the international community’s initial, though long-delayed,
response to the call for debt relief. However, the Highly Indebted
Poor Countries (HIPC) initiative is designed to provide only partial debt
relief to 41 countries, and of these only 22 countries (eighteen in Africa
and four in Latin America) actually reached the “decision point” for obtaining
debt relief before the end of 2000. Much more needs to be done to increase
the number of countries eligible for HIPC assistance and to augment the
level of debt write-off provided to such countries.
17. Debt relief must not be at the expense of Official Development
Assistance which needs to be expanded and the OECD countries, pitifully
few of which have reached the UN recommendation of allotting 0.7% of their
GDP to ODA, must work towards attaining or surpassing this goal. It is
important that the OECD’s Poverty Reduction Guidelines now include the
need to enforce core workers’ rights included in the ILO Declaration on
Fundamental Rights at Work and make clear commitments to the ILO’s objective
of “decent work”.
18. Trade unions and other representatives of civil society should
be involved in the monitoring of the use of these resources and their implementation.
The Poverty Reduction Strategy Papers insisted on by the IMF and World
Bank are supposed to be conceived and implemented with the involvement
of civil society organisations, including trade unions. However in practice
virtually all the first PRSPs that have come before the IMF and World Bank
Boards have not involved trade unions in their formulation. The IFI’s should
now take seriously their institutions’ policies concerning civil society
involvement and not endorse PRSPs where trade unions have not been consulted.
There should also be consultations with unions as part of the annual “Article
IV” reviews of the IMF and wider consultation on structural adjustment
policies. Such consultation can only succeed under conditions of respect
for freedom of association and other core labour rights, which must be
incorporated into IFI programmes.
19. Developing countries need significant improvements in the multilateral
trading system to ensure they benefit from growing world trade. This
must include:
- Ensuring that trade is an integrated part of a development
strategy which allows developing countries to grow their domestic demand
and production;
- 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)
and particularly for least developed countries, linked to the respect of
human rights at work;
- Assisting developing countries to withstand business pressures to
enact patent laws that preclude socially responsible actions under the
TRIPS intellectual property agreement and review the agreement to incorporate
developing country concerns, particularly in the area of access to life-saving
drugs (as emphasised by the recent legal case by pharmaceutical companies
against South Africa);
- Multilateral agreement to extend the Uruguay Round implementation
deadlines for developing countries, at the same time as the industrialised
countries provide detailed and binding timetables for their own implementation
requirements under the Uruguay Round;
- 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 regulate or implement socially beneficial
service sector activities;
- And improvements in incentives measures for respect of core labour
standards under preferential (GSP) systems.
20. The WTO must have a formal structure to address trade and core
labour rights in close co-operation with the ILO. In a world trading system
where the number of export processing zones has all but doubled in just
five years - and where the world’s most large-scale violator of fundamental
workers’ rights, China, is generally expected to become a member of the
WTO in the near future - action to protect the fundamental rights of workers
world-wide from the consequences of governments and employers that violate
core labour standards is an urgent priority. Regardless of its exact format,
such a body must be set up with some official endorsement from the WTO
and include a requirement to report back to the WTO’s decision-making bodies.
The reports and recommendations should be tabled for consideration by the
fifth WTO Ministerial Conference in 2003. Social and environmental issues
should be integrated into Trade Policy Review Mechanisms.
21. A central part of the new development agenda must be the effective
regulation of the global activities of multinational enterprises
to ensure that they observe both core labour rights of their employees
and also contribute to the “high route” to economic development. The revised
OECD Guidelines for Multinational Enterprises can contribute to the realisation
of this goal, but only if governments work with trade unions and employers
to put in place transparent and effective national level implementation
and enforcement procedures, with vigorous follow-up at the OECD level.
The effective global applicability of the Guidelines is a prerequisite
for creating a level playing field between workers and multinationals in
the North and South, and down through the supply chain. An adequately resourced
outreach programme must therefore be put in place by the OECD with targeted
special efforts to the emerging regional trade and investment areas. Multinational
companies should negotiate agreements with global union organisations,
using the Guidelines as a benchmark.
22. The Guidelines should form a reference point for expected corporate
behaviour in all relevant inter-government instruments. A commitment to
respect the Guidelines and the ILO Declaration of Fundamental Rights at
Work must be included in the Supplementary Charter to the European Energy
Charter Treaty. G8 Environment Ministers’ meeting in Trieste called for
environmental guidelines to be applied as binding conditions for the granting
of export credits. The OECD Export Credit Working Party initiative must
now be revised accordingly to incorporate a binding social and environmental
commitment, which includes adherence to the Guidelines for Multinationals
as called for by trade unions and civil society. Multinational companies’
dominance of markets for primary commodities must also be addressed.
23. Despite vast improvements in health globally over the past
several decades, the impact of unsustainable workplace and community environments
continues to hinder progress over world rates for sicknesses and disabilities,
especially in developing countries. Access to clean water and sanitation,
as well as to environmental and occupational health services are fundamental
prerequisites to a reversal of trends. Synergy between poverty reduction
and better environmental and occupational health protection must be sought,
and combined within a context of reforming health systems, with an accent
on illness prevention and health promotion. The development of new technologies,
such as biotechnology, must guard against their social, environmental and
occupational impacts and transitional measures must be instituted over
employment displacements brought about by change. Trade unions and civil
society must be more closely involved in the decision-making processes
on these matters which are of vital importance to working men and women
and their families, as well as to the population as a whole.
Building a Coalition for Sustainable Development
24. Measures to address these issues, economic growth and environmental
protection must interact in a mutually supportive fashion, through the
full integration of the three pillars of sustainable development. This
must be a central challenge in the run-up to the UN Rio+10 Conference in
South Africa in 2002. Social impact assessments and mechanisms to measure
employment impacts of change and action to promote “just transition” must
become a hallmark of sustainable development plans. In particular, these
must be applied to climate change mitigation, natural resource management,
agricultural improvements, as well as in the restructuring of transport
and energy sectors. The development of comprehensive social and employment
transition programmes can be supported by recycling the proceeds of green
taxes, subsidies and financial mechanisms. The precautionary principle
needs to be strengthened in cases of trade disputes concerning consumers’
and workers’ health and safety and Multilateral Environment Agreements
must be seen as taking precedence over WTO rules.
25. Governments must seek to promote a climate of commitment and trust
among all stakeholders of society to bring about the most broadly based
consensus possible over sustainable development targets and measures, which
seek to mitigate against environmental effects, including climate change.
Since production and consumption patterns rotate around decisions and actions
taken in workplaces, co-operation between workers, trade unions and employers
must be fostered so as to engender joint programmes of change, supplemented
by concrete monitoring and implementation programs. Such co-operation should
take place within the context of promoting participation in decision making
by Civil Society, including employees at the workplace.
Reforming International Economic Governance
26. A major initiative is required to achieve effective democratic and
co-ordinated economic governance. Global markets need new rules. Global
unions have put forward over the last five years a range of measures designed
to establish better regulation of international financial markets. These
could be summarised as:
- Improved fiscal and monetary policy co-ordination between
the emerging reserve currency blocks of the Dollar, Yen and Euro in order
to generate more stable parities, along with the progressive removal of
large long-term current account deficits and surpluses;
- Recognition of the right of states to control short-term foreign capital
inflows and outflows in the interest of domestic macro-economic stability;
- Binding international standards for the prudential regulation of financial
markets covering capital reserve standards, limits to short-term foreign
currency exposure, controls and certification on derivatives trading and
other forms of leveraged investment built in credit;
- Ensuring that banking systems are transparent and bound by effective
disclosure criteria;
- Improved information on currency flows, private debts and reserves;
- Serious examination of the implementation of an international tax
on foreign exchange transactions, as recommended by the UN “Copenhagen
+ 5” Conference (June 2000) on the implementation of the Social Summit.
The G8 should support the call for “analysing proposals for new and innovative
sources of funding” including the Tobin tax.
27. Up to now the debate over financial market reform has been held
behind closed doors by bankers and finance ministry officials. This has
restricted the opportunity for the voices of trade unions and the public
in general to be heard. The response of governments to the crisis has been
to establish more diffused lines of responsibility for work on the international
financial architecture, with the IMF handling the macro policy implications,
the Financial Stability Forum the regulatory issues, and the G20 the dialogue
with developing countries. Each of these institutions is effectively closed
to discussion with the labour movement or civil society, despite some more
tentatively positive signs from the new managing director of the IMF. In
sum, labour needs its “voice at the Table” in these debates.
28. The negotiation of the social dimension of globalisation now goes
wider than any single international institution. The G8 should call for
the establishment of an international commission on the social dimension
of global economic governance to which the IMF, World Bank, UNCTAD, OECD
as well as the WTO and ILO should formally take part with effective reporting
back responsibilities. The global union movement is ready to work directly
with governments and institutions to establish an effective mandate for
such a Commission, and must be directly represented in it.
