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TRADE UNION STATEMENT
TO THE 2000 OECD COUNCIL AT MINISTERIAL LEVEL
AND TO THE OKINAWA G8 ECONOMIC SUMMIT (1)
Introduction and Summary
1. At the start of the 21st century the global economy appears set for
a period of faster growth after the slowdown triggered by the Asian crisis
in 1997. The potential growth of productivity brought about by technological
change opens the possibility of a new economy with higher living standards.
This possibility must be used to devote political will and resources to
addressing the problems of those in the global economy who have not benefited
and, in fact, have seen their relative positions decline. The reality for
the vast majority of the worlds population is continuing poverty. Global
inequality continues to rise both within and between nations, with the
risk of a digital divide contributing to the social divide. Many working
people see themselves and their families as losers in the globalisation
process and excluded from any benefits of change. Workers in developing
countries such as in Asia, who built the economic miracle continue to see
themselves and their families sacrificed to a financial crisis for which
they had no responsibility. Against this background and the failure of
the WTO Ministerial Council in Seattle there is a wide questioning of the
legitimacy of multilateral institutions and, indeed, the process of global
2. Governments must respond to this challenge and abandon the market
deregulation approach to globalisation that has dominated the international
institutions over the last decade. Economies must be shaped and governed
by public policy if they are to function effectively in meeting the expectations
of societies. This is as true in a global environment as in national ones.
OECD countries have learned governments must act effectively to see to
it that economies achieve sustainable growth, full employment and social
inclusion. Today there is also a need to develop economic governance for
the global economy based on similar rules to manage global markets and
create effective international economic institutions which are transparent
and accountable. The objective must be to establish a form of development,
which is supportive of democracy and socially and environmentally sustainable.
3. The OECD Ministerial Council and Okinawa Summit provide governments
with the opportunity to demonstrate their commitment to meeting these goals.
By simultaneously increasing the transparency and accountability of the
international organisations they can rebuild the public legitimacy of the
multilateral system. As a priority governments must:-
- Take co-ordinated measures to sustain and balance demand
growth in the world economy with the objective of reducing global poverty
and restoring full employment (§ 4-9);
- Re-regulate international financial markets and launch a wide-spread
public debate to establish legitimacy for the reform of the financial institutions
- Act comprehensively through development assistance policies, debt
write-off and the development of broad-based social safety nets and policies
of the International Financial Institutions (IFIs) to meet the objectives
of poverty reduction in developing countries (§ 13);
- Move decisively to ensure that the global trade and investment systems
reinforce the work of the ILO to guarantee core labour standards (§
- Set up transparent and effective implementation mechanisms for the
OECD Guidelines for Multinational Enterprises (§ 18);
- Use the benefits of the new economy by encouraging a high road to
the management of structural change through the improvement of education,
skill and productivity levels (§ 19-20);
- Ensure that growth is socially and environmentally sustainable (§
Growth and social cohesion
4. Recent US experience has shown that sustained demand growth can yield
improved productivity and welcome, though long delayed, reductions in inequality.
But additional action is necessary to ensure that this growth and its benefits
are shared more widely. Increased co-ordination of economic policy is necessary
to balance growth globally. Now is the time to sustain higher levels of
growth and employment without which there will be long-term damage through
widening social division, social alienation and lost government legitimacy.
5. The US trade deficit remains a potentially serious source of financial
instability, as does the volatility in asset prices. In tackling these
issues the US authorities must continue to support growth in the real economy
and not resort to broad interest rate increases to deal with narrow and
specific problems. Fiscal policy must be geared to supporting long-term
structural priorities such as infrastructure, education, and research and
development expenditure, and in particular to achieving a fairer distribution
of post-tax income as opposed to making misguided tax cuts for the rich.
6. Faster growth is now emerging in Europe while core inflation remains
subdued and the effects of energy price increases are receding. Sustained
growth rates of 3 per cent and above are attainable and should both bring
down unemployment and raise employment rates. Abundant labour supply and
co-ordinated wage settlements will prevent inflationary bottlenecks appearing.
Full employment is the goal, which macroeconomic policy must accommodate.
While there is potential for Europe to enter a period of higher non-inflationary
growth, it is also significantly lagging behind the US economy. It is essential
that the European Central Bank adopts a monetary policy stance that allows
faster growth to continue so as to exploit fully the potential of the new
economy. Sustained domestic demand and private consumption are the main
pillars of this, confidence must not be weakened. Any strategy that relies
on slow growth and export orientation will fail. Faster growth will also
restore the value of the Euro and contribute to rebalance the current account
disparities between the major economic regions. The easing of fiscal constraints
through increasing government revenues provides a number of opportunities
for governments to focus on infrastructure investment, investment in education
and health care, and making provision for future demographic changes while
easing the tax burden for lower incomes.
7. Recovery in Japan is a prerequisite for lasting growth in Asian economies
and for balanced growth worldwide. However, rising unemployment, stagnating
incomes and the risks of ageing society have heightened insecurity and
dampened consumption. Japan must act decisively to remove this insecurity
by developing reliable pension systems, improving training and retraining
and investing in new areas of activity such as information technologies,
environmental protection and health care. Authorities should continue to
make effort to ensure the recovery and stable growth, and to create employment
through active and effective budgetary measures for these areas above and
through accommodating monetary policy.
8. Developing and 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. Large-scale debt relief
can contribute to growth. IMF stabilisation programmes must shift from
austerity to the support of growth in domestic demand. Back wages due to
Russian workers must be paid, allowing some relief from the vicious circle
which has led to lost tax revenue and prolonged the financial crisis.
9. 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 act immediately to complete the OECD work programme to stop unfair
tax competition between countries.
International rules for financial markets
10. The Asian financial breakdown and the recurring financial crises
of recent years are not inevitable events. They are the result of failed
policy. Excessive deregulation of the international financial system has
left many developing countries vulnerable and unprepared in the face of
unpredictable flows of speculative capital. In Asia, reckless lending by
international financial institutions and reckless borrowing by domestic
firms and institutions, combined with fickle investor expectations to precipitate
the crisis. The cost in terms of lost livelihoods, unemployment and poverty
has been borne by working people.
11. Despite this, workers have been denied a seat at the table in the
discussions between Finance Ministries and Central Bankers over the financial
architecture. These discussions therefore lack legitimacy and credibility.
The new focus on flexible exchange rates, better information, transparency
and surveillance, together with some limited bail in of private creditors
does not amount to a credible response. Governments and international financial
institutions must establish a consultative mechanism with the international
labour movement, open a broader public consultation on the financial architecture,
and introduce policies to:-
- Reduce the instability of the G3 currencies, which are out
of line with underlying fundamentals, through effective policy co-ordination
between Europe, North America and Japan;
- Recognise the right of governments to control short-term foreign capital
flows in the interest of domestic macro-economic and social stability;
- Tax foreign exchange transactions to reduce speculative currency flows
and to raise resources for the support of poverty alleviation;
- Establish 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;
- Develop an effective early warning system based on improved information
systems concerning currency flows, private debts and reserves.
12. In the light of the Asian crisis, concrete action should be
taken at the regional level, parallel to international action, to avoid
any recurrence of the crisis. This action should include the information
exchange and monitoring of short-term capital flows in the region, the
creation of a fund or an agreement with a view to stabilising currencies,
the expansion of reciprocal trade and investment and the establishment
of social safety nets. The government of Japan should take the responsibility
to realise these measures in co-operation with the other Asian countries,
for example through its ODA programmes.
The social agenda of globalisation and development
13. The G8 and OECD countries must reaffirm their commitment to the
poverty alleviation and qualitative development goals they set out in 1996,
especially the aim of halving world poverty by 2015. The recent upturn
in ODA must be further expanded. The welcome commitment by some countries
to cancel official debt for the poorest countries must now be followed
by all OECD countries and the process must be accelerated to provide far-reaching
debt relief in the shortest possible time. The international financial
institutions should likewise write off debts to the poorest, and be allowed
to raise adequate finance to do so. As host of the G8 summit, the government
of Japan should play a leading role in this area. The resources freed up
by debt relief must be used to promote poverty eradication specifically
through investment in basic health and education. Beneficiaries must be
obliged to observe labour and other human rights as a condition for debt
relief. Trade unions and other representatives of civil society should
be involved in the monitoring of the use of these resources. The best way
to achieve this is to create an independent fund in local currency to be
financed by the payment from the indebted government of the amount that
corresponds to the regular debt repayment.
14. If trade liberalisation is to have legitimacy then it must be made
coherent with wider concerns of public policy such as environmental protection
and sustainable development, food and product safety and the observance
of fundamental labour rights. Developing countries must be better integrated
into the WTO decision-making process and given increased access to industrialised
country markets within a framework of adherence to core labour standards.
15. The June 1998 ILO Declaration on Fundamental Principles and Rights
at Work was strongly supported by trade unions, employers and governments
in developing and industrialised countries alike. It is unambiguous that
all ILO member states have an obligation to respect core workers' rights.
The Declaration needs a strong and effective implementation mechanism in
the ILO. Moreover, it represents a standard, which must become system-wide
and given effect in the programmes of the international institutions. This
must be one of the goals of the 2000 UN Social Summit in Geneva. Core labour
standards should be embodied in IMF criteria and World Bank development
policies. To gain legitimacy the WTO needs to incorporate rules requiring
its members to observe the fundamental standards of the ILO. The WTO already
has rules to protect intellectual property and it can no longer ignore
abuse of workers rights.
16. Observing core labour rights would not remove the comparative advantage
of developing countries. They extend to all workers in the global economy
the right to form unions to negotiate wages and conditions of employment.
They give children the right to a childhood, they outlaw forced labour,
prison labour and discrimination. The OECD Report on Trade, Employment
and Labour Standards, and subsequent work has found that observance of
such rights is consistent with good trade performance and economic development.
Observing core rights allows countries to follow the high route to development
whereby the benefits are spread more fairly, accountability increased,
and corruption reduced. G8 countries can support this process directly
by revising the OECD's mandate covering Export Credit Guarantees and the
environment, to incorporate social indicators based on ILO core labour
17. A further lesson of Seattle is that WTO trade negotiators must incorporate
broader concerns in all trade policy discussions. The WTO must become democratic
and transparent. Multilateral Environmental Agreements must be respected.
In the services sector, in particular, the GATS negotiations which began
this year must take into account the need for public provision of basic
services like education and health, and ensure that WTO members retain
the right to declare such sectors as non-tradable public services.
18. A central part of the social dimension of globalisation 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 OECD
Guidelines for Multinational Enterprises have the potential to contribute
to the realisation of this goal. To achieve this, following the current
Review of the Guidelines, governments and the OECD must rapidly set up
transparent and effective implementation mechanisms, in co-operation with
trade unions. An adequately resourced outreach programme must also be put
in place to develop the Guidelines implementation beyond the OECD area.
Workers and the New Economy
19. Economies and societies around the globe are experiencing an unprecedented
period of technological change, brought about by the growing application
of information and communication technology. These technologies now affect
firm-to-firm transactions generating new forms of production and exchange
as well as new forms of work. The new knowledge-based economy has the
potential to facilitate greater prosperity and non-inflationary growth.
However, these developments call for new and updated regulatory mechanisms
if they are to provide for a better and more prosperous future. Special
attention must be given to redressing a growing digital divide that reinforces
and deepens social inequality.
20. Investment in people is essential to ensure that the transition
towards a knowledge-based economy does not worsen existing social problems
of unemployment, exclusion and poverty. Government policies must accord
a high priority to investment in human and social capital. In particular,
- Invest in education and training systems appropriate to the
needs of a knowledge-based economy and to the need for quality of employment.
This must include better access to new learning and training opportunities
tailored in accordance with the needs of different target groups;
- Ensure that lifelong learning is made a reality and an entitlement
for all, not only to help workers gain from economic and technological
change but also to contribute to personal fulfilment and social cohesion.
This requires joint action in partnership by governments, business and
- Promote agreements between trade unions and employers focusing on
the management of change. They contribute to the improvement of lifelong
learning by establishing links between new patterns of working time, job
rotation and training. In addition, they contribute to efforts to overcome
- Encourage constructive industrial relations and social dialogue in
the knowledge-based economy. It is of particular importance that workers
and their unions should have access by right to online information and
communication networks at the workplace;
- Reconcile the need for security with adaptability of the workforce
by supporting not weakening of social protection;
- Encourage forms of work organisation providing for enlarged job content
and enhanced skills, in order to contribute simultaneously to productivity
growth and job quality;
- Ensure, in partnership with unions and firms, affordable access by
individuals to modern means of communication and information networks,
in particular to the Internet. Moreover, policies must guarantee appropriate
privacy and protection of personal data;
- Ensure equity in employment and access to education. In particular
women must be given increased access if society is to utilise one of its
greatest sources of human potential.
21. The implementation of sustainable development as set out in Agenda
21 of the UN Rio Conference on Environment and Development is progressing
too slowly. The G8 and OECD governments have the responsibility to lead
the process and must implement a new initiative on sustainable development
in advance of the Rio + 10 meeting of the UN, scheduled for 2002. Central
to this must be integrating the three pillars of environmental, economic
and socially sustainable development.
22. The social sustainability of development has been largely absent
from governments priorities. This must be changed, and the social dimension
of sustainable development must become a priority. Poverty alleviation,
employment impacts of transition, equitable access to resources and action
at the grass roots and workplace level must now be made part of the real
policy agenda. Climate change illustrates the point. To date, there is
little understanding of the employment implications of environmental degradation,
compared to the implications of implementing the Kyoto protocol.
23. Public reaction to biotechnology and GMOs shows that ignoring the
social dimension of sustainable development can have a high cost. Biotechnology
is expanding rapidly in many industrial sectors and there is a need to
give higher priority to protecting the health and safety of consumers through
trustworthy labelling and information, especially on the allergenicity
of genetically modified foods. The repercussions on workers involved in
biotech production processes and in the distribution of products are largely
neglected and must be addressed urgently. It is imperative that higher
levels of core funding be made available for independent scientific research,
which must be matched by a more consistent and rigorous approach to the
use of scientific advice in policy-making by governments. The expected
growth in biotechnology calls for more industry accountability and transparency.
Promoting the involvement of workers and their unions in biotechnology
decision-making is a necessary prerequisite and unions must be represented
in the OECD proposed International Forum on biotechnology and food safety.
Food and public safety can be enhanced by this involvement and it can become
the basis of support for programmes aimed at addressing the social implications
of biotechnology. This new technology must be harnessed to creating jobs
and reducing poverty.
24. Biotechnology must not be allowed to aggravate problems of development
by narrowing access to intellectual property or technology transfer. In
particular, the further growth of concentrated control over the genetic
pool of plants and foods must be curtailed. The granting of licences for
the use of intellectual property rights must take place in a manner that
contributes to the long term development prospects of the host countries.
The UN Convention on Biological Diversity should be strengthened to more
clearly incorporate the precautionary principle and its ratification
must be vigorously promoted.
The G8's Responsibility for Promoting Peace and Social Justice
25. The history of the last ten years has shattered the hopes that the
end of the Cold War would bring with it a more peaceful and just world.
Territorial tensions, ethnic and religious conflicts have intensified;
the use of arms and armament sales are on the increase; and there are repeated
recorded nuclear tests and development of nuclear weapons. Such circumstances,
as well as the crisis affecting international organisations, the deterioration
of the environment and recurring financial crises, indicate that G8 co-operation
alone cannot solve todays problems. Therefore, all countries, both developed
and developing, should co-operate together to tackle the challenges, in
particular by strengthening the functioning of the international organisations.
The G8 governments should develop the leadership to ensure this is achieved.
26. It is the UNs mission to settle international conflicts and to
keep the peace. It must be given sufficient means and the appropriate competence
to fulfil its commitments. Though precise and impartial information is
important in settling armed conflicts, the UN is not equipped with the
power and mechanisms to obtain such information. And its actions are also
limited even in emergencies. It is now necessary first to examine in depth
the procedures so that UN decisions receive global public support and secondly
to give stronger power to the UN to enable it to respond more promptly.
The International Court of Justice should also be fully utilised.
27. We are concerned that there are still serious examples of suppressed
democracy in the world. In particular, we reconfirm our protest against
the military regime of Myanmar. The G8 governments should support the resolution
on the widespread use of forced labour in Myanmar adopted at the International
Labour Conference in 1999 and take adequate measures to ensure that the
government abolish forced labour and resume the dialogue with the NLD with
a view to restoring democracy.
(1) This statement has been prepared by the Trade
Union Advisory Committee to the OECD (TUAC) in co-operation with our partner
organisations, notably the International Confederation of Free Trade Unions
(ICFTU), the World Confederation of Labour (WCL) and the European Trade
Union Confederation (ETUC).
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