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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).
 

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.
 

2)World Employment Report 2001, International Labour Organisation (ILO)

3)World Development Report 2000/2001, World Bank.

4)Third Assessment Report, Intergovernmental Panel on Climate Change, March 2001.