TRADE UNION STATEMENT
TO THE LILLE "G7" EMPLOYMENT CONFERENCE
- In several G7 countries unemployment has started to rise again after
only slight falls from the peaks of the recession of the early 1990's.
The twin evils of unemployment and working poverty are debilitating individuals,
societies and economies. The leading industrialised countries must implement
a strategy to create more and better quality jobs, prepare workers for
those jobs and protect the worse off and most vulnerable in society. High
real interest rates, public expenditure cutbacks and labour market deregulation
have had the opposite effect. The weakening of economic stabilizers, growing
insecurity and fear of unemployment now risk triggering a new recession.
- This is not an auspicious background for harnessing the potential advantages
of technological change and the emergence of the "global information
society". The real blockages to exploiting new technologies and innovation
are restrictive economic policies; the deflationary bias that international
financial markets have given the world economy; the failure to invest in
the skills and ability of the workforce; the failure to develop partnerships
at company level between management and workforce; the failure to spread
best practice techniques beyond a minority of workplaces; and the failure
to reduce and reorganise working time.
"A G7 coalition for jobs"
- The Lille Jobs Conference must send a clear message that the G7 is
committed to practical action to back up a strategy for jobs and growth.
It must also give a clear signal that the leading economies are going to
compete in world markets on the basis of well paying, high productivity
jobs. Working men and women and not just financial markets need confidence
in the credibility of policies. Trade unions have taken the lead in several
European countries in proposing and negotiating employments pacts. Employers,
governments, and central banks must now accept their responsibilities in
partnership with labour. The governments should commit themselves to establishing
a G7 "coalition for jobs" based on four pillars of action :
|a co-ordinated economic programme to stave off a renewed recession
through achieving a bold reduction in interest rates, a comprehensive set
of reforms in the operation of financial markets, and a retargeting of
structural expenditures (§ 4-8) ;|
|a major initiative to create high quality jobs by promoting adaptability
and innovation at firm level through:- worker involvement, investment in
skills, the diffusion of good practice and a renewed initiative for the
reduction and reorganisation of working time (§ 9-22) ;|
|the safeguarding of income standards and social security systems whilst
renewing efforts to insert vulnerable groups (youth and long-term unemployed)
into employment(§ 23-25) ;|
|and the launching of a "new deal" of sustainable growth for
developing countries backed up by social rules in trade and investment
agreements so as to create a bond between economic and social development
The leading industrialised countries are far richer than they were in
the Great Depression of the 1930's and resources can and must be harnessed
to finance these priorities.
A co-ordinated economic programme
- Most industrialised economies face a serious slowdown and possible
recession as economic and employment growth is throttled by high real interest
rates, budgetary cutbacks and growing insecurity. The outlook for unemployment
remains totally unacceptable. The European Union goal of halving unemployment
by the end of the decade contrasts sharply with the renewed rise in unemployment.
Job insecurity of those in work is destroying consumer confidence. Inflation
is at its lowest level for decades yet financial markets and many central
banks are stuck in a mind set of "inflation illusion", scanning
each set of economic data for signs of inflation to reinforce their credo
of monetary policy vigilance. Real interest rates are still too high and
are damaging productive investment, innovation and employment creation.
Ill-timed fiscal consolidation and expenditure cuts will compound the risk
of an emerging recession. In Europe the over-rigid interpretation of the
Maastricht public deficit convergence criteria risks destroying the progress
towards economic and monetary union.
- To break out of this immediate dilemma governments and central banks
must undertake a bold programme of co-ordinated cuts in short-term interest
rates across the G7 countries as part of their contribution to a "coalition
for jobs". This will mean returning to rates of real interest prevalent
in much of the post-war period and can be done without reigniting inflation,
given the margins of slack in many G7 economies. Co-ordinated and concerted
action should ensure that financial markets follow this movement with lower
long-term rates. G7 governments must develop a process of policy co-ordination
with central banks and with each other to reduce significantly unemployment.
Work should start to prepare a comprehensive set of international regulations
to cover the operation of financial markets, including an international
transactions tax. This would send a clear message to financial markets
that governments will not allow exchange rate and other financial market
instability to undermine growth orientated economic policies.
- Governments, in cooperation with the private sector, should support
infrastructure programmes geared to providing the basis for environmental
improvement as well as measures to stimulate R&D and innovation. In
Europe the transborder infrastructure investment projects proposed in the
European Union White Paper need to be implemented.
- Such a programme would act as a catalyst for economic and employment
growth. Enterprises would bring forward much needed investment and plan
for innovation and employment creation, rather than retrenchment and downsizing.
On the other hand workers would give a much needed boost to economic activity
through increased consumer spending.
- Public deficits can be brought down over the medium term through reducing
the gap between growth rates and interest rates so reducing interest payments
on government debt. This would allow European Union countries to prepare
for EMU without deflating their economies, while allowing the major economies
to remove structural fiscal deficits in a period of rising prosperity.
New sources of taxation such as international transactions taxes and environmental
taxes can also be exploited.
Achieving Adaptable Labour Markets
- Over the last decade in most of the G7 countries wage bargaining institutions
and minimum wage protection have been weakened, wage and income inequality
have increased, employment protection has been reduced, unemployment benefit
eligibility has been tightened and the relative levels reduced. Employers
now claim that "... flexible labour markets have become the rule rather
than the exception in virtually all OECD Member states ..."(1).
Yet these measures have not reduced unemployment. On the contrary, in the
face of economic uncertainty many companies have taken advantage of their
new freedoms to "downsize" their operations whilst reducing investment
in physical and human capital. Chronic overtime and work pressure now coexist
with mass unemployment. Insecurity of workers and consumers is not only
contributing to a social malaise it is also worsening the economic crisis.
- The Lille Conference must open the way for a new approach for managing
change and stimulating innovation at the workplace level. The G7 countries
must use technology and innovation to compete on the basis of high quality
products, with highly productive and knowledge intensive workplaces. The
trade union movement has proposed an agenda of positive adaptability to
move economies forward and maintain social cohesion. This includes :
The January 1996 OECD meeting of Education Ministers called for a "social
partnership" to deliver lifelong learning involving trade unions,
employers, parents and teachers. This must now be acted upon. In particular,
there needs to be :
|Lifelong learning for all workers|
|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 ;|
|the involvement of the social partners in the design, monitoring, assessment
and promotion of systems to recognise qualifications and skills to enabling
individuals to have portable skills over a lifetime ;|
|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
- To maintain competitiveness in a highly unstable world enterprises
have to become "high performance workplaces" through technological
innovation and new forms of work organisation based on higher and more
diversified skills, high trust relations within firms and less hierarchy.
The active involvement of employees and trade unions delivers productivity
and employment gains.
- Only a minority of firms have followed such a path, many others remain
obsessed with short-term flexibility. Here the end result is "downsizing",
"delayering" and "outsourcing". Exploitation, fear
and insecurity exist in the workplace; training is neglected and workers
oppose change, rather than embrace it. OECD work has shown that managerial
failure is a major barrier to "high performance" workplaces.
- Governments should set a target such that all firms are on the way
to become "high performance workplaces" by the year 2000. Such
a target is ambitious, but necessary to help reduce unemployment and make
competitiveness synonymous with good employment. To meet this target, governments
must promote firm level reorganisation through worker involvement, using
a twin track strategy. On the one hand, they should abandon the failed
strategy of pushing for ever more external flexibility and insecurity.
Rather, governments should create a climate of security through a guaranteed
floor of employment rights. On the other hand, through a combination of
innovation policy, tax incentives and grant/levy schemes governments can
encourage good practice. Employers should endorse this approach to creating
The reduction and reorganisation of working time and extension of
- Average working time per employee in several G7 countries has increased
over the last 15 years. Elsewhere, the historical rate of decline has slowed.
These trends worsen the employment situation. Productivity gains in firms
should be more widely distributed as a general reduction in working hours
and job creation. This can be achieved when there is joint decision-making
over work reorganisation and working time. As part of wider negotiations,
trade unions have agreed to flexible working time arrangements in exchange
for working time reductions.
- Systematic and excessive overtime working should be eliminated. If
firms had to hire new workers instead of resorting to overtime a significant
part of overtime hours could be translated into new jobs. Where exceptionally
overtime is worked it should as a principle be compensated by time off
- The "knowledge-based" economy and the move towards the information
society requires more learning time for workers to adapt to structural
change and innovations 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.
- 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. There should also be a phased approach to retirement as part of a
"life-long working time" strategy.
The expansion of service sector employment on the basis on decent
wages and labour standards :
- There is almost limitless job creation potential in areas of unmet
social needs. Demographic change is increasing the demand for improved
community care for the elderly. Increased women's participation in the
labour force is increasing the demand for care for pre-school-age children.
Education, health care and environmental services can also each provide
sources of new jobs. Much of this demand falls within public sector activity.
In the future the public sector will have to continue to generate employment
both as direct employer and as a regulator and facilitator of private sector
employment. There are areas where new and innovative systems of government
intervention, user charges and public procurement can allow the public
sector to identify needs to be met by a mixture of public and private provision.
In some countries innovative approaches have been adopted in the social
and cooperative sectors, and through local employment initiatives. Whether
or not services are public or private, the public sector will need to guarantee
standards. The skills and ability of workers in these sectors is often
high as is productivity. Measurement systems, therefore, need adjusting
to reflect the true skill content and higher productivity of these jobs.
In the future, "feminised" professions will no longer accept
low pay. Society must put a fair price on the provision of services.
The "double dividend" of environment improvement and sustainable
- Policies for sustainable development must go hand in hand with policies
for sustainable employment. Those countries and firms who will benefit
most are those who have strengthened the linkages between environmental
policies and employment and that have invested in pollution control, environmental
technology, and environmental skills training. Much more can be done to
stimulate "green" job growth. Greater government support should
be given to the growth of the environmental technologies and services industries
- including green consumer products, renewable energies and environmental
- A number of industrialised countries have launched successful local
and regionally based environmental clean-up and conservation schemes targeted
to provide opportunities for the young and long-term unemployed. There
are also precedents in the form of regional and structural funds that,
if directed towards environmental improvement, could create jobs and improve
- G7 governments should seek a "double dividend" by substituting
taxes on labour with taxes on environmental resources and consumption.
However, eco-taxes are not a panacea and scepticism remains as to the feasibility
of complete tax switching. There can be negative employment and income
effects of new taxes, they affect national competitiveness unless part
of multilateral agreements, and doubts exist as to whether environmental
resources provide a long-term stable tax base. Despite these reservations
it is recognised that the present fiscal and regulatory systems often give
perverse price signals which restrict innovation and deter long-term environmental
investments. The overemphasis in financial decision-making on labour costs
as opposed to resource use is also an obstacle to sustainable production.
It is important therefore for the G7 to examine more the effectiveness
of tax programmes that have been developed in certain OECD countries, and
to explore the employment aspects of eco-tax reform.
Rebuilding Social Solidarity
- "We cannot build an efficient economy on the ruins of social
solidarity"(2). Functioning social security systems
are not a luxury or an economic burden. They make economic sense. They
contribute to private sector productivity growth and can give security
in a period of rapid change. As built in stabilizers to the economy, these
systems have avoided some of the worst excesses of unemployment being transferred
into a collapse of consumption. But the growing weight of unemployment
has increased social security costs, and systems have come under ideological
attack. Where social security is weak or absent, the costs of unemployment
or working poverty are pushed onto society in other ways:- worsening public
health, crime and rising prison populations.
- In some G7 countries reforms are needed to tax and benefit systems
to create a spring-board into employment. Marginal and average tax rates
paid by low income workers should be reduced. However, this should not
include the dismantlement of minimum wage systems and their replacement
by in-work benefit payments or measures to coerce the unemployed into taking
any job however low paid. This would lead to a downward spiral of low paid,
low skilled employment. Rather, tax and benefit systems should be harmonised
with minimum wage systems to provide an entry point into decent employment.
- Social security systems have to be part of wider strategies to reintegrate
the most vulnerable and worse off groups in society. A coalition for jobs
must include in each G7 country an equivalent of a "Marshall Plan
for youth" to bring young people into decent jobs, training places
or worthwhile government schemes. The long term unemployed must be offered
job places to give them contact with the labour market. The experience
with the Danish "job swap" scheme should be examined in the G7
countries and adopted accordingly.
A Social Dimension to Globalisation
- The G7 should take the lead in developing a "Global New Deal"
for the world economy. There should be an expansion of development assistance,
programmes to fight poverty and a reduction of debt so as to ensure sustainable
development of growing markets worldwide. Needs are endless - primary education
and health care, infrastructure development, poverty alleviation. The increasing
integration of the world's economies also demands trade and investment
policies that recognise the basic link with worker rights, environmental
standards and the need to stop corruption. The members of the World Trade
Organisation should commit themselves to observe core labour rights. The
final declaration of the 1995 Copenhagen Social Summit shows that there
is now a significant consensus on the core labour rights as reflected in
ILO Conventions that are particularly relevant:- freedom of association
and protection of the right to organise, the right to organise and bargain
collectively, freedom from forced or compulsory labour and the abolition
of forced labour, freedom from child labour, and equal remuneration for
men and women and freedom from discrimination in respect of employment
- These core standards "should be recognised and applied by all
countries regardless of their level of development or social priorities"(3).
Developing countries have nothing to fear from these standards, on the
contrary their observance can encourage sustained and balanced development
by ensuring wider participation in economic and political life, so reducing
polarisation, exclusion and corruption. Yet in the short term there are
plenty of examples of cut-throat competition suppressing rights and undermining
those developing countries that have sought to follow the "high route"
to development. Organising trade unions in many parts of the world remains
a difficult and hazardous process. The establishment and increased use
of "free trade" or "export processing zones" in which
labour protection is minimal or simply outlawed is undermining even further
the limited labour rights which exist.
- The Lille Jobs Conference should take a strong stand in support of
the implementation of these basic rights through supporting the creation
of a joint committee between the WTO and ILO at the December 1996 Singapore
WTO Conference. Trade measures could be seen as part of a range of measures
including positive assistance to ensure basic rights are observed.
- The moves to negotiate a Multilateral Investment Agreement (MIA) in
the OECD will be one more and very important element in the world multilateral
investment system covering a large part of foreign direct investment (FDI).
Furthermore, coverage will be greatly expanded if as expected the agreement
is opened to non OECD Members, some of whose labour standards do not conform
to those in the OECD. This factor when combined with moves in some OECD
countries to dilute labour standards or to disregard the provisions of
the OECD Guidelines for Multinational Enterprises as a means to attract
foreign direct investment makes it essential that the Guidelines be incorporated
into the MIA. Trade union support for an investment agreement is conditional
on the satisfactory incorporation of the Guidelines. This should be supported
by the Ministers at Lille.
(1) Business and Industry Advisory Committee
to the OECD (BIAC) Statement to the January 1996 OECD Education Ministers
(2) Jean-Claude Paye, OECD Secretary-General.
(3) Michel Hansenne, Director-General, ILO,