Asia - The Globalisation Crisis
1. The Asian crisis is a global crisis, going beyond financial markets.
Plant closures, and mass lay-offs have begun. Migrant workers are being
repatriated. It risks leading to a political backlash with worsening human
rights and the growth of political instability. Working people and their
families are paying the price for the failure of corrupt political systems,
the inadequacy of international economic governance and crony capitalism.
The crisis also risks spreading with its contagion effect on the world economy, particularly if the region is left with no option but to export
its way out of the crisis. Over the last decade, Asia has been the motor
of the world economy. The current crisis, at a conservative estimate, risks
wiping off one third of anticipated growth in the OECD for 1998 - the difference
between rising and falling unemployment in many countries.
2. The London Jobs Conference provides the first opportunity for an
intergovernmental ministerial forum to launch a response. Ministers cannot
walk away from this crisis. They must launch a policy initiative and:-
- implement a coordinated global growth strategy which supports balanced
growth and sustained domestic demand particularly in Asia (§ 4);
- establish an International Commission to make rapid recommendations
on the regulation of international financial markets through the Bank of
International Settlements, the IMF and the OECD (§ 5-6);
- reform the structures and policies of the IMF and World Bank to ensure
the observance of core labour standards and human rights and the development
of a social dimension to recovery programmes (§ 7-8);
- ensure that the global trade and investment system guarantees core
labour standards - the first test of which is the inclusion of binding
labour and environmental standards in the Multilateral Agreement on Investment,
being negotiated in the OECD (§ 9);
- implement a strategy for employability and social inclusion through
quality job creation, lifelong learning, a partnership for workplace change,
active labour market policies, combating low pay, and the removal of unemployment
and poverty "traps" in social benefit systems (§ 10).
3. Trade unions are a key element of functioning civil society and are
essential for making these initiatives work. Guaranteeing basic workers'
rights on a global basis and developing well functioning labour market
and social security systems are the starting point for managing structural
change in a socially acceptable way. Unions are needed to give protection
to workers faced with growing insecurity, to regulate the spread of contingent
employment, help fight low pay and to integrate minority groups into society.
In their collective bargaining strategies unions have taken the lead in
negotiations to give priority to employment. In much of the OECD there
has been a decade of wage moderation. In many countries trade unions are
the active partners in implementing systems to provide life-long learning,
and in the operation of active labour market policies. At workplace level
they play a key role in ensuring that the employee voice is heard in organisational
and technological change. Governments and employers must accept and encourage
the active partnership of unions in managing workplace change.
A Coordinated Global Growth Strategy
4. The risk facing the global economy in the wake of the Asian crisis
is deflation. Genuine economic coordination is needed to sustain domestic
demand and raise growth. The recessionary impact of the current crisis
must be contained:-
- action should be taken by the Central Banks of countries with appreciating
currencies to restore currency parities which reflect economic fundamentals;
- in Japan domestic consumption and public investment must be expanded;
- in the United States an accommodating monetary policy must be maintained;
- there is room for Europe to grow much faster without inflation. Concerted
action is needed to establish and maintain low real interest rates in Europe
and an effective post-EMU framework for growth and employment has to be
put in place to meet the employment targets agreed at the Luxembourg European
Union Summit on Employment;
- trans-European infrastructure programmes must be brought forward;
- in Russia the government has to break out of the vicious circle of
financial crisis leading to the non-payment of wages, which leads to lost
tax revenue and further financial crisis;
- the G8 must work together to stimulate demand in developing countries.
A Framework for Global Financial Markets
5. The Asian financial crisis has shown that the system for containing
instability following the Mexico crisis has failed. A new architecture
for the international financial system is needed, before more damage is
done to long-term employment growth and the real economy.
6. The G8 should establish an International Commission to report rapidly
on the institutional and policy changes needed to establish an effective
international regulatory framework. This should cover:-
- the role of the Bank of International Settlements (BIS), the IMF and
- the certification of financial markets with acceptable risks and prudential
- the extension of transparency, disclosure and satisfactory reserve
requirements for banks;
- an international tax on foreign exchange transactions;
- minimum deposit requirements to brake short-term monetary inflows.
Reforming the International Financial Institutions
7. There is an urgent need to review the role of the IMF and World Bank,
as called for by the UN's Copenhagen Summit for Social Development, so
that programmes of lending to countries in balance of payments difficulty
are based on good governance and respect for human rights, increased employment
and the reduction of poverty, and not austerity and deregulation. The misjudged
policies of the IMF of high interest rates in some Asian countries have
compounded crises of adjustment with major depressions. Programmes in cooperation
with the ILO must promote the respect of core labour standards and human rights.
8. The South-East Asian miracle years masked the failure to build strong
democratic and participative labour market institutions, including trade
unions. The correct response to the crisis hinges on the use of all available
means to correct this democratic deficit, or else risk of a backlash against
imposed structural adjustment programmes and the institutions themselves.
Labour Standards - The Bedrock of Political Stability and Democracy
9. Governments face an immediate test of their seriousness with regard
to labour standards in negotiations on the Multilateral Agreement on Investment
(MAI) in the OECD. The MAI must include a binding clause committing governments
not to attract investment by the suppression or non-enforcement of domestic
labour standards, and internationally agreed core workers' rights. A working
party also has to be established at the WTO as a step to ensuring that
the international trading system guarantees core worker rights.
"Employability" and Social Inclusion: An Integrated Policy Approach
10. Translating growth into jobs requires adaptable labour markets,
which encourage innovation, facilitate investment in human capital throughout
the workforce and working life, work against social exclusion and produce
results which are both efficient and fair. This is very different from
the crude deregulation of labour markets with higher inequality, less job
protection and more insecurity. Workers need to be given confidence and
security in the change process. Trade unions are a key element in achieving
this and are ready to work with governments and employers if there is a
positive agenda for change Workers also have to have confidence in social
security and labour market policy systems if they are to invest in training,
retraining and to accept change. This requires integrated policies:-
- Job creation. There is almost limitless job creation potential in
areas of unmet social needs. There is increasing demand for improved community
care for the elderly and for pre-school-age children. Meeting the challenges
of education, health care and sustainable development can also provide
sources of new jobs. Where the market cannot meet these needs, public policy
and active employment programmes must fill the gap. There are areas where
new and innovative systems of government intervention (job subsidies, user
charges and public procurement) can allow the public sector to identify
needs to be met by a mixture of public and private provision. Innovative
approaches can also be adopted in the social and cooperative sectors.
- Active labour market policies. Their main goal must be to get the
unemployed back into work as fast as possible and are a far better alternative
to passive income support when successful. However, they work best when
there is high labour demand. They need to be proactive - targeting retraining
and job placement measures before change takes place and certainly before
unemployment becomes long-term. Experience has shown that linking employment
services and training agencies and decentralised services works best. Trade
union involvement in the design and implementation of policies is essential.
- Implementing lifelong learning. A "social partnership" involving trade
unions, employers, parents and teachers is necessary to implement lifelong
learning if it is not just to remain an empty slogan. In particular, there
needs to be:-
. increased public investment in basic education targeted to raising
educational quality particularly for the potential drop-outs and underprivileged
in the system;
. a partnership for continuous change and improvement in educational
. the widening of access to further and higher education and the integration
of adult education;
. the introduction of company benchmarks for training and retraining;
. the involvement of trade unions in the design, monitoring, assessment
and promotion of systems to recognise qualifications and skills;
. the expansion of job rotation schemes between long-term unemployed
and workers wishing to take training leave;
. the setting up of training banks for small and medium sized enterprises
with the involvement of the social partners.
- A partnership for change at the workplace. Companies must base their
strategies for competitiveness on establishing "high performance and knowledge
intensive workplaces" through technological innovation and new forms of
work organisation based on higher and more diversified skills of workers,
high trust relations within firms and less hierarchy. Too few firms have
followed such a path, too many remain obsessed with short-term flexibility,
characterised by "downsizing", "delayering" and "outsourcing". Fear and
insecurity are created in the workplace; training is neglected and workers
oppose change, rather than embrace it. Worker involvement and the recognition
and active involvement of trade unions is necessary to bring about this
"high route" to workplace change. Governments can facilitate this. They
should create a climate of security through a guaranteed floor of employment
rights. Through a combination of innovation policy and incentives, they
can encourage good practice in workplace change.
- Managing the organisation of working time and extension of learning
time. Productivity gains in firms should be more widely distributed as
a general reduction in working hours and job creation.
. This can be achieved where workers have a joint say over work reorganisation
and working time. Across a range of countries and sectors, as part of wider
negotiations, trade unions have agreed to flexible working time arrangements
in exchange for working time reductions.
. There should be equal employment rights for part-time workers so as
to put part-time work on the same footing as full time work and eliminate
involuntary part-time and temporary work. This would facilitate socially
acceptable job-sharing and opportunities for voluntary chosen part-time work.
. Forms of crude exploitation such as "zero-hour contracts" and casual
work must be regulated.
. The "knowledge-based" economy and the move towards the information
society requires more learning time for workers to adapt to structural
change and innovation in workplace organisation. A reduction and reorganisation
of working time should therefore also be used for an extension of learning
time and training by and in firms. It can be an active part of a strategy
for lifelong learning.
- Eradicating low pay. The growth of low paid jobs is not an acceptable
solution to unemployment. Unemployed poverty is shifted to working poverty
and countries and firms develop strategies of competition based on low
wages and outmoded work organisation. Low paid workers often remain trapped
in these jobs, family poverty increases and there is a threat to social cohesion. A strategy is needed for creating jobs and combatting low pay
and social exclusion. This must recognise the role for legally set and
collectively bargained minimum wages to set wage floors which eliminate
the exploitation of low paid workers. A fairly set wage floor can stimulate
joint action to raise worker productivity, particularly in low paid sectors.
Experience from a range of countries has shown that minimum wages can be
an effective instrument against poverty without damaging employment prospects.
The tax and benefit system has an important complementary role to play.
In some countries tax credit systems have worked effectively to reduce
poverty amongst low income working families. They are a central form of
solidarity, but not a panacea for dealing alone with any problem of inequality
created by the labour market.
11. The G8 Finance and Labour Ministers meeting in London have the responsibility
of the good stewardship of the new global economy. Looking forward to the
Birmingham Summit they must put in place initiatives to use economic governance
to rebuild the links between the international financial system and the
real economy and between economic development and social cohesion.