ILO 9th European Regional Meeting: statement by Luc Cortebeeck, President of the Workers’ group

Statement | Oslo | 08 April 2013
Director General,
Honourable Ministers,
Dear government and employer colleagues,

On behalf of the Workers’ Group, let me start by thanking the Government of Norway for hosting this European Regional Meeting. Let me also thank the ILO Director General for his report.

We are all gathered here in Oslo at a critical juncture in European history. The economic crisis that started more than five years ago - and which was caused by inadequate financial market regulations, excessive speculation and widening income inequalities - has had devastating economic, social and political consequences for Europe.

Yet half a decade later there is still no recovery in sight. In fact based on the latest economic indicators 2013 will be another year of recession, rising unemployment and increasing poverty across many parts of Europe. Soon after the beginning of the financial crisis, Noble prize winners like Krugman and Stiglitz warned of the risk of a double dip, their views were not taken seriously, but they were right. In the Netherlands, they even speak about a triple dip. Social cohesion and political stability in the region is under the greatest threat in 70 years.

The policies that have been implemented in the last few years in Europe, based on synchronized, accelerated programmes for fiscal consolidation and reduction of unit labour costs via a structural reform of wage formation processes, have completely failed.

Yet parts of the initial reactions to the financial crisis were correct. Economic stimulus packages that were introduced in 2008 and 2009 prevented a repeat of the Great Depression. Boosting fiscal expenditure was the right response given that the private sector was deleveraging excessive debt levels and expansionary monetary policy had no significant impact on private expenditure.

But regrettably in 2010 stimulus packages were replaced by grossly unfair fiscal austerity measures. These policies were unjust because they hit the poor the hardest with massive cuts in social expenditure, public sector jobs and wages. These policies did nothing to boost private sector confidence. They have even failed to reduce public debt ratios because they reduced economic growth and tax revenues by more than they reduced public spending. As a result unemployment has soared and poverty has become widespread.

Moreover no sufficient progress has been made in re-regulating financial markets to prevent a repeat of the 2008 crash. The origins of the crisis which can be traced to excessive greed, risky behaviour and moral hazard remain prominent features of the banking and wider financial sector.

Instead of tightening regulations in the financial sector policy makers and their advisors have found a scapegoat for their failures in labour markets.

In the last three or four years, austerity has been exacerbated by labour market reforms. The European Commission, the European Central Bank and International Monetary Fund have joined forces and either forced or encouraged many countries in Europe to dramatically reduce labour costs in a failed attempt to boost export led growth.

Reforms demanded by the Troika have included cuts in minimum wages, reductions in nominal wages in the public sector, decentralization of collective bargaining and abolition of extension mechanisms, modification of rules on representativity for trade unions and weakening of employment protection legislation. In a number of countries these measures were adopted in direct contradiction with obligations agreed upon under voluntary ratified ILO Conventions, particularly Conventions 87 and 98.

These measures went hand in hand with a rise in precarious employment. This trend which existed before the crisis was exacerbated by it. In all countries agency work increased together with involuntary temporary and part-time work. In a lot of countries, these a-typical forms of employment are characterized by low wages, inadequate social security coverage and poor working conditions including unacceptable safety and health standards. The explosion in precarious work has also seriously undermined the capacity of trade unions to organise and bargain collectively for these workers. Women, migrant workers and young people are predominantly represented in these forms of employment.

What should be a cause of concern to us all is that most of the austerity measures and labour reforms were imposed in complete disregard of social dialogue. Although in the first phase of the crisis workers’ and employers’ organisations were often associated with the design and implementation of stimulus packages, austerity measures and labour reforms were imposed unilaterally by governments and in many cases were designed to dramatically weaken trade unions. For trade unions, it was quite shocking to read in a recent official document of the European commission that labour market reforms that weaken the influence of the trade unions in wage formation were promoted as “employment friendly reforms”. Such ideological anti-union approach is in complete contradiction with the fundamental principles and rights at work, promoted by the International Labour Organisation.

Let me also say a few words on youth unemployment. Here too the situation is grim and we run the risk of a lost generation as stated in the ILO Director-Generals’ Report. The Conference last June adopted balanced conclusions and we believe priority should be given to their implementation. It is essential to go beyond supply-side measures that on their own have failed to address the youth unemployment challenge. We therefore need a much greater focus than in the past on demand-side measures and quality jobs for youth. What we currently have is a situation of severe shortage of productive and decent jobs. We therefore urgently need a greater focus on macroeconomic policies that deliver increased levels of decent employment. Related to this is the important role to be given to industrial and sectoral policies in order to generate more productive employment for youth.

Se we need more jobs for youth, but we need also a much greater focus on the quality of the jobs for youth and the rights of young workers in order to fight against precarious and informal work amongst youth. The June conclusions called upon the ILO and governments to identify mechanisms that facilitate the transition from casual and temporary work to stable and permanent jobs. In responding to this demand the Workers’ group would strongly support a substantial increase in resources and support for apprenticeship schemes. The recent recommendation of the European Union for a generalized youth guarantee is a good starting point, but it needs now implementation in all European countries, which means also sufficient financial resources, both at the European as on the national level.

The conclusions to the 2012 ILC also include an appendix listing all relevant ILO standards recognizing their value in the struggle to provide young people with decent jobs. The promotion of these standards should be part of any strategy at country level to fight youth unemployment. The conclusions also acknowledge the key role of minimum wages to avoid discrimination in pay and to improve the purchasing power of young workers.

So dear colleagues,

As we gather here in Oslo a sentiment of injustice is overflowing among workers as we are made to pay for a crisis which was not of our making while its root causes have yet to be addressed. The news facts and figures which came out this week, about the billions of dollars that banks and corporations have stashed away in offshore tax havens, can only feed this profound sentiment of injustice.

The European Social Model which for decades was seen by many as an example to follow is now more than ever under attack without any evidence that its destruction will result in better employment prospects for the region.

The crisis is serious and what we need are bold policies and guidance commensurate to the challenge in front of us. The ILO response must be guided by its constitutional mandate and its international labour standards. The ILO constitution formulated the core response to the challenge of globalization as early as in 1919 when it stated and I quote: “The failure of any nation to adopt humane conditions of labour is an obstacle in the way of other nations which desire to improve conditions in their own countries” (end of quote).

More recently the ILO Social Justice Declaration, the Global Jobs Pact and the conclusions of the recurrent discussion on fundamental principles and rights at work recalled that economic development and recovery had to go hand in hand with respect for core and international standards and social justice.

The question at this point is what can we do to promote a stable, sustainable and job-rich growth recovery with decent jobs at its core? What role should the ILO play in this regard? And what should constituents do?

We will be discussing all these issues in details in the days to come but let me briefly outline priority areas for our Group.

First, we believe that the ILO has a key role to play in arguing against fiscal austerity and in stating that when some fiscal consolidation is needed it has to be implemented smartly, at a tempo which doesn’t hamper recovery, and fairly so that the burden is not mainly on workers and poor people and is not in violation of ratified international labour standards.

Second, in order to address unemployment Europe needs to replace austerity by investments in the real economy and in the implementation of macro-economic policies that put the creation of decent jobs as a core objective of economic and social policies. What is urgently needed are income-led recovery measures that stimulate aggregate demand, promote decent jobs and respect for international labour standards. We believe that the ILO should step up its advocacy in this regard both at country and European levels.

Thirdly, it is important to stop the attack on collective bargaining, wages and other workers’ rights. Countries need to recognize that respect for international labour standards is the pre-condition to ensure that economic growth goes hand in hand with social progress. An economic model that ignores workers’ rights and social justice is unsustainable because it will not benefit from the confidence of the people and will lead to social unrest.

Collective bargaining is a powerful tool to re-distribute wealth and governments should be promoting it, instead of dismantle it. Employers and workers need to be encouraged to participate in good faith in collective bargaining on wages. To avoid devastating wage competition and potentially deflationary wage development the increase in wages need to be determined at industry or national level or be coordinated in other appropriate ways. Governments should support such processes in several ways: through minimum wage legislation, through legal extension of collective agreement or by promoting collective agreement between social partners that have a wide coverage. These measures will contribute to increase the disposable income of worker and thus contribute to stimulate demand that is currently lacking in the region. The ILO has a key role to play to promote these policies at country level.

Fourthly we need to come back to genuine tripartite social dialogue in the region. Measures should not be imposed but should be discussed and negotiated with the social partners, the actors of the real economy.

And fifthly, economic governance can’t be the prerogative of the international financial institutions. This was also one of the key messages of the joint conference of IMF and ILO in 2010, hosted by this beautiful country, here in Oslo, at which the two institutions agreed to continue and deepen their cooperation. But where are we now, nearly three years after that historic and promising conference, especially if we look at the involvement of the ILO in the European economic governance? We need to take up again the conclusions of the Oslo Conference, for a better involvement of ILO.

In conclusion,

Workers stand ready to engage with governments and employers in the days to come in order to enhance the role of the ILO in assisting constituents to adopt recovery measures that place decent work and social justice at the core of economic policies and in promoting policy coherence between economic, employment and social goals in respect of international labour standards.