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ISBN 92-9014-602-8
First published July 1998
Unions, Markets,
Democracy
by
Bill Jordan
Geneva, 14 November 1997 |
 Opening Statement
Unions, Markets and Democracy
The Debate
Padmanabha Gopinath
Assistant Director-General of the ILO
and Director of the International Institute for Labour Studies
It is a special pleasure to welcome Bill Jordan to the Institute and to the ILO today for three very specific reasons. First, as General Secretary of the ICFTU and as a worker, he represents a constituency which is a pillar of this House. Secondly, his personal commitment to the cause of workers and his courage in pursuing that cause through difficult times has given him a very special standing. And finally, he has chosen a subject which will be a central issue for trade unions; for the ILO; and for public opinion, well into the next century.
The year 1989 saw, not just the fall of communism, but also the rise of a new and formidable alliance between technology and ideology. A perceptive writer recently noted that "judged as propaganda, 1989 did for big government what 1929 did for laissez-faire". As a result, the decade of the nineties has been marked by two major trends -- individualism and the supremacy of the market.
Individualism, driven by literacy and better communications, has provided new vigour to democracy; human rights have become important, not because of the clash of civilizations, but because they reflect a new awareness of personal identity. Individualism has changed current notions of social justice, which is seen today less in terms of an equal distribution of material assets, and more in terms of equal opportunity to access knowledge, skills and public goods.
Markets have become global and hyper-competitive. While they promise unprecedented prosperity, they lead to disparities of income and wealth; provoke personal insecurity and blur national identity. The big question today is how markets can be reconciled with democracy and social stability.
The answer lies largely with civil society. In this sense, trade unions do not merely represent workers; they are a major representative of civil society and as such they have a special responsibility. Together with business, they are unique among social actors in combining size, organization, accountability and direct involvement in the production and distribution of the wealth of nations. It is this role, this great responsibility and opportunity, which trade unions will have in the next century. It is, moreover, a role which is unparalleled in trade union history. Therefore, when Bill Jordan speaks to the subject of "Unions, Markets and Democracy", he is not only speaking as an exceptionally perceptive and well-informed observer, but as an actor and, if you will forgive the pun, as a market maker.
| A Public Lecture by Bill Jordan |
Unions, Markets and Democracy
Bill Jordan
General Secretary
International Confederation of Free Trade Unions
I am happy to have the opportunity provided by this lecture to reflect on how the twin processes of globalization and democratization are affecting the role of trade unions. We in the trade union movement are thinking deeply about how to develop a new approach to labour/management relations based on the importance of the respect for democratic rights and the need to ensure the wide participation of workers in the continuous process of structural adaptation that characterizes the global market.
As the ILO's latest World Labour report demonstrates, the industrial relations system faces many challenges. Perhaps the hardest thing to change in the world economy are the institutions which we, and here I mean the governments, employers and trade unions, have established to regulate our complex tripartite relationships. They are based on hard-won compromises which many are reluctant to undo. They are also based on fundamental principles which most do not wish to undermine, and will not undermine. However change we must, and what I would like to do here is to set out what I see as some of the foundations which are necessary for the future of the world's industrial relations system. In doing so, I am highly conscious of the fact that each nation has its own system and is likely to continue to do so for many decades. Nevertheless, it is vitally important in an open world economy that different systems are compatible one with another. I firmly believe that this is not only desirable but possible. Much of this work has to be done here in the "the world parliament of labour" which is the ILO. However, it is a task that has very wide implications for trade and investment, for employment and development, for society and for what has come to be termed the practice of good governance. While I certainly do not claim that the ICFTU has all the answers, I do think that our starting-point, and that of the ILO, of looking at the world of work and the contract of employment is a prism which sheds much light on the problems of ensuring that globalization has a human face.
My presentation has four interrelated parts. First, I will consider the need to balance the workers' desire for security in employment with the constant pressure from the market on employers to adapt quickly and efficiently to changes in technology and trade. Next, I will examine the significance of freedom of association, both as a fundamental human right and as the means for social development which, in turn, is the key to economic and political stability. Thirdly, I will address the issue of the importance of ensuring a moral dimension to the functioning of markets and thus of progressing universal observance of core labour standards. Finally, I will review the need for international coordination of policies for full employment and the elimination of poverty, built on strong national institutions that are capable of forging consensus for growth with equity.
Security and flexibility
As General Secretary of the ICFTU, I am frequently asked what the role of trade unions should be in a globalized market economy. Of course there is no one simple answer. Trade unions and the institutions of the labour market reflect the different histories of different countries, but I do believe that unions everywhere are facing very similar questions at the present time. To put it very simply it is "how do we balance the workers' need for security in employment with the constant pressure from the market on employers to adapt quickly?"
My own experience has often shown me that some politicians and employers do not see the need for balance at all. Yet I think that employers should be concerned about workers' fears of insecurity; just as unions have to come to terms with the need for structural change and adaptation; and governments should aim to establish a sound framework of labour law to promote dialogue and agreement.
If workers are suspicious that their employer will lay them off or cut their wages or intensify the work processes from one day to the next, they are unlikely to feel loyal toward the company or its success, again I speak from direct experience. Perhaps a company can survive by creating an atmosphere of intimidation and threat, but in the modern world of constant innovation I doubt whether such companies can become leaders. In my experience, the most successful companies and countries are those based on teamwork and partnership; and the key to both is trust. I had an opportunity to challenge Mrs. Thatcher on just this point at a national meeting in the days when her Government still talked to trade unions. I said to her, "You bring into this room fifty of the most efficient, profitable companies in Britain and I would not have to leave the room to fetch fifty of the companies that are the most adept, the most practised at participation and trade union involvement". This is borne out by the evidence and it illustrates my point on partnership and trust.
Employers need workers they can trust to exercise initiative on the job. Responsibility at work is moving closer to the point where the job is done and if initiative is there, then trust must also be there. Workers also need to trust management if they are to believe that change will be for the better rather than the worse. Likewise governments that respect the basic democratic rights of citizens, especially at the workplace, are creating mechanisms that will build up trust and enable workers to welcome and encourage change rather than see it as a threat to their livelihoods. I have often been confronted by managers who have contended that change was inevitable, and that unions and workers should recognize its inevitability. My response has been that workers' reluctance to accept change has been grounded in the fact that they have not had the knowledge that management has had about the change that it wants to see take place and that they did not have the self-confidence that characterizes a manager. If management were to help build both on the shop-floor they would have all the change that they wanted.
Employers should recognize that the cooperation and engagement of working people is built on a sense of security that contracts of employment will not be arbitrarily changed. In too many companies that seemingly innocuous word "flexibility" has come to mean for workers lay-offs, unemployment, pay cuts, longer hours, increased stress and a higher risk of accidents and occupational disease -- all in the name of the desired flexibility. The absence of security in employment weakens the ability of companies and unions to work for change by agreement.
Just as companies need to understand workers' fears about insecurity and look for ways to meet their aspiration for predictability in their employment contract, I have often had to tell audiences of workers at their places of work and in their union halls, that they too must come to terms with the fact that companies that do not change will get left behind and die. Continuous product and process innovation is part of the reality of the global market, and comparative advantage lies with those companies that are best able to manage innovation. The most difficult change for management, however, is not in generating the new ideas but in translating them into the organization of work.
For unions to embrace a strategy of continuous adaptation, the key ingredient is information and consultation. If we are to be able to represent workers as they accommodate to change, we must be able to contribute to management plans, point out problems, search for acceptable solutions, and above all allay workers' fears that they might become the losers.
It is a practical impossibility to anticipate all the employment implications of technological and market change for employment. What governments, employers and unions need therefore is a framework for continuous discussion and bargaining at several levels of the economy. Tripartite institutions are vital for dealing with the national dimensions of change, including training and education. Company and plant level bargaining is the key to the smooth adaptation of employment within the enterprise. Local and regional cooperation initiatives are essential in avoiding the widening of gaps between job opportunities in different parts of the country.
The balancing mechanisms for security and flexibility in employment need constant adjustment to keep pace with constant structural change. In my view, governments, employers and trade unions need to focus on creating mechanisms for discussion and agreement about what should be the legal framework for contracts of employment and for bargaining at company and enterprise level. Strong unions and strong employers can and should be free to bargain over agreements that reflect the conditions faced in particular industries and companies. In many cases these collective agreements can be superior to the minimum provisions contained in labour law, and almost invariably are. Governments and parliaments cannot legislate for all the different situations workers and employers have to address although they can set good basic standards which are consistent with international obligations, especially the fundamental rights set out in ILO Conventions.
Freedom of Association and Social Development
The ILO Conventions on freedom of association remain as an essential foundation for a new industrial relations system and for social development. With their emphasis on the essential elements of law needed to ensure the free functioning of trade unions, these are vital to proper dialogue and negotiation. Their observance also sends a clear message to trading partners that a given country accepts what I believe is an emerging common global culture built on the democratic rights of citizens, a market economy and a social responsibility to promote equity through participation.
Sometimes if you say to a stranger "who are you?", they will often answer by telling you their occupation as well their name. This is not unusual -- people's sense of identity and personal esteem is intimately bound up with what they do for a living. If you become unemployed or if you are trapped in a job that is degrading and debilitating, it is that vital sense of self respect that is destroyed. One's work experience is clearly more than just a means of earning a livelihood and escaping from poverty. It is also the main way that people participate in, for want of a better phrase, civil society.
Where individuals enjoy the right to set up organizations of their own choosing, the State is recognizing that people can get together to change the way in which society functions; they are citizens. Where freedom of association does not exist, the State is in a position to command its subjects to obey and not question or challenge authority, and that is a dangerous road to take. Of course, other freedoms are tremendously important -- freedom of expression, of religion, the right to a fair trial and so on, but it is the freedom of association which creates the possibility for citizens to win other freedoms.
The market can achieve many things but one thing it cannot do is build social cohesion. That is a product of the institutions and the relationships, both public and private, that constitute civil society. It seems to me that the institutions and relationships that are developed around the workplace are an essential determinant of both economic progress and social justice. They have to be constantly adapted and naturally reflect the particular experience of different countries, regions and industries. In addition, because liberalization of trade and capital markets is moving ahead so fast, they must also adapt to the global pressure that is penetrating into areas of policy that had previously largely been thought of as only of national concern, especially to the process of job creation and work relations.
Creating an enabling environment for employment and sustainable livelihoods is directly related to all other aspects of international cooperation. Without social justice we cannot expect to achieve economic or political stability. Without the underpinning of international policies and programmes to promote social justice, social conflict bursts out in all sorts of unpredictable and dangerous ways. As well as being the moral course of action, social development is productive.
The Morality of the Market and Core Labour Standards
I turn now to the need for morality in the market. We often forget that markets are made by an infinite number of individuals constantly making decisions and contracts that affect others, and that when they do so each of them has a choice. Again, my experience as a trade union official is that the vast majority of workers, employers and politicians, when given the chance, will do the right thing, the moral thing -- and will prefer to do so. Their problem is identifying the consequences of their decisions and thus determining what the right choice is. The challenge is to try and design a market system which makes it easier for people to behave in ways consistent with their own and society's values, and which engenders sufficient trust that others will do likewise. Markets are run by people and people are moral beings.
For trade unions, the question is whether we can help to construct rules for the market that are simple, easily understood and accepted, so that when decisions are taken, citizens, including corporate citizens, face incentives and disincentives to encourage them to behave in ways that society as a whole regards as right.
Of course, this begs the question as to whether there is some sort of general consensus about moral standards. This was a tough question even when the geographical boundaries of the State and the market were more or less the same. This question is even more difficult to answer now that we are moving towards a global market which transcends the national and cultural boundaries within which we have traditionally debated moral standards and how they should be applied, but is still very relevant to the day-to-day work of business and trade unions.
I have spent a lot of time recently talking to trade unionists, politicians, business people and journalists all over the world about core labour standards. It seems to me that there is an emerging consensus that there are a limited number of universal principles regarding human rights at work which are very widely accepted. Furthermore, I have not found any great cultural barriers in the discussions I have held. There are very practical questions about resources, responsibilities and the way various institutions function, but on the basic issue of right and wrong we see few major difficulties on what has come to be known as "core labour standards". Many will argue about whether they should be implemented today, tomorrow, or the next day, but they will not argue about the value and the rightness of those core standards.
We have focused on three areas. The first of these is that people should be able to choose what work they accept or, to turn that argument around (because I am not so free a thinker that I believe that everybody can choose what they want to do, or that they need not work at all), that they should not be forced to work, even as a punishment for a crime. In a sense, we are all obliged to work in order to make a living, but what I am talking about is slavery. I should also say that work in prison as part of programmes to help reintegrate offenders into society is not forced labour, but such work does have to be very carefully designed to make sure that reintegration is its objective and not the exploitation, for private profit, of people who have had to be deprived of their liberty, as often happens. In my experience nobody these days defends the practice of slavery as moral behaviour. Where it survives the authorities either deny its existence or claim that they do not have the resources to eliminate it. Even those few totalitarian regimes that continue to practice it as part of a system of repression and control are increasingly defensive in their own perverse attempts at moral justification.
In terms of the moral argument, child labour is closely related to forced labour. Nearly everywhere I go it is accepted that it is not right for children to have to go to work when they should be at school. The international norm for the minimum age for employment is fifteen, or in exceptionally poor countries, thirteen. Children are vulnerable because they are not able to exercise free choice and their physical and mental health can be severely impaired, especially if they are exposed to hazardous and arduous conditions and long hours of work, and that happens all too often in the modern world. I find very few people who defend child labour. Some contend that it is a lesser evil than other means of survival for very poor families or that in certain conditions it has some educational value, but this poses a different set of problems. As I see it the debate is not about the morality of child labour but rather about how to eliminate it by organizing ourselves and applying resources to address its root causes. There is widespread agreement that alongside labour laws which reflect societies' wish to stop the practice, there needs to be increased investment in education as well as a major effort to ensure that the parents of child labourers - who were themselves often forced to work as children and are now extremely disadvantaged on the labour market - are given the chance to earn a decent living and support their offspring through to adulthood. The ICFTU does not argue that children should be thrown out of work and left to starve. It argues that, in the overwhelming number of cases, if parents were to do the jobs currently being done by their children, the difference in the profit level would not be significant enough to make the job disappear. As a recent ICFTU campaign on the diamond and gemstone industry - one of the richest, most profitable industries in the whole world, where vast fortunes are made - showed, some establishments still choose to employ a child when the parent is standing at its door, starving. Our argument is: let us find the means to transfer children out of the workplace and into schools.
A second basic universal right is that working people should be able to form and join organizations of their own choice to voice their common concerns. This is a fundamental prerequisite for the functioning of a democracy and applies in the workplace as well as in society at large. It enables the individual worker to redress the inherent imbalance in the power relations that determine contracts of employment. Furthermore by creating the possibility of collective bargaining it gives trade unions and employers the opportunity to solve many problems that otherwise might require resort to extensive labour legislation and expensive litigation.
The counterpoint of freedom of association is the right not to be forced into an organization that workers do not want to join or that they cannot control democratically. The ICFTU has spent a good deal of its nearly fifty years of existence fighting regimes which tried to subvert the concept of trade unionism for their own purposes. Unfortunately, we still find ourselves having to help workers in many countries to win the struggle to have their own independent unions recognized in law and freed from restrictive controls. In such countries, I find many in government and business who are essentially saying that they accept the principle of freedom of association but want a few more years of the old dictatorship's laws limiting union rights while they push through a major restructuring of industry. I have argued that this outdated reflex of authoritarianism is actually going to make it harder to adapt and will not work. However, to return to my theme, the wider point is that few governments and employers directly challenge the principle that where workers want to form and join their own unions they should not be denied that freedom.
The third component of the core labour standards is that it is wrong to discriminate in employment on grounds of sex, religion, race, ethnic origin, political opinion, or membership of a trade union. Discrimination is a pervasive problem in most societies, is difficult to eradicate and has a tendency to reappear just when you thought you had got to the bottom of the problem. Yet I find few responsible leaders who will defend it. Equality of opportunity on the labour market is widely supported because it is morally right, and because it has the added value of being economically efficient.
Core labour standards are not simply a moral issue or a so-called social question divorced from the functioning of markets. The workplace is where the commercial world interacts most directly with the people's sense of what is right and wrong in the way they and their fellow workers even in the farthest parts of our globalized economy are treated. The contract of employment is the first in a chain of contracts that constitute the world trading system. If the process for making such contracts is not founded on some minimum universal precepts of morality, the legitimacy of the whole system is seriously weakened. As I have argued, my experience tells me that we have a broad agreement on the essential principles because they correspond to universal cross-cultural ideas of justice, fairness and human dignity. Furthermore, I think the Singapore Ministerial Meeting of the WTO showed that governments recognize that the way people are treated at work is relevant to the efficiency of, and political support for, a rules-based international trading system. This is a significant development for business but perhaps it has not yet been fully appreciated.
It is also a very positive development and not, as is sometimes naively thought, simply an added cost or complication to doing business in a rapidly changing world. There are four main reasons why I believe business can, and should, think deeply about this issue. First, consumers all over the world are concerned that when they buy a product they are not only getting value for money but they are also not inadvertently contributing to the ill-treatment of the workers who produced it. Recently, I congratulated the Director-General of the World Toy Industry on a brilliant interview that he had given on what turned out to be world television. However, I took the opportunity to point out that it was a great pity that his discourse was interspersed with pictures of child labourers working on the toys that his industry produced. These images destroyed the impact of every syllable he uttered. I feel that this is something that companies are increasingly coming to recognize. Indeed, the rising trend of companies and business associations talking to unions and non-governmental organizations about codes of conduct is clear evidence that not being tarnished with stories of exploitation is important and that a credible commitment to treating workers decently is a good selling point and a constructive component of an overall corporate image. Some of the first wave of such codes look to me to be mainly a public relations exercise, and a readiness to be audited on performance by independent assessors is necessary if the codes are not to backfire on companies. Nevertheless, I can live with this because I see a deeper commitment throughout the business world and am encouraged by the response so far. I am ready to go further in this sort of partnership.
My second reason is that, where contracts of employment are based on good minimum standards, a foundation is put in place for trust and cooperation in the management of change and in the improvement of productivity. This yields better wages and working conditions, increased profits and investment and, ultimately, wider and deeper markets. Abuse of basic standards is not productive; it locks enterprises and whole nations into a low value-added, insecure and unstable production system. Look around and you will see this in many parts of the world. By treating workers decently, companies start down a road which releases the creativity of the workforce rather than engendering bitterness and conflict. Look at the best companies in the world. They are vastly superior in productivity, conditions, profits and wages.
Third, as education levels rise and employers look for workers who use their brains as well as their hands, as democracy spreads, as people gain access to a media which shows them what is happening in the rest of the world, the workplace cannot remain an island of authoritarian attitudes. This is not just an issue for a few highly trained core workers in industrial countries. Genuine teamwork and partnership is only possible where relations between employers and workers are on a more equal, and yes, more moral, basis. Unions that are freely chosen by workers are not some extraneous outside element in this relationship but rather a vital means of organizing dialogue and discussion as well as more formal negotiations.
Fourth, we have to recognize that there is a problem of the short and the long term. Abuse of core standards is, in my view, a bad strategy for all governments and employers and good practice does pay off. However it is always possible for the unscrupulous to break the rules, the moral contract, make a quick profit and run away from the consequences. And the more the unscrupulous get away with it, the bigger the problem becomes. We have to recognize this issue and deal with it, otherwise moral behaviour is penalized and the rules-based system weakened to the cost of all. My job - the trade unions' job - is to expose such cases and to try to protect workers who cannot protect themselves, and I am not short of employment! However, it is not just the responsibility of unions; business too needs to strengthen its self-discipline and so do governments.
I believe that underlying the construction of the global market there is already an implicit moral contract which is becoming more and more explicit in different ways. I have focused on labour standards because it directly affects workers in a very tangible way, but there is also a very lively debate about international standards concerning bribery and corruption. We should not allow ignorance, misunderstanding or manipulation to lead us into shirking the challenge of identifying and applying universal principles. We are making progress even if, from the trade union perspective, it is agonisingly slow at times. For business and governments the bottom line is that if a stronger commitment to values such as those I have outlined as core labour standards can be spread, that intangible but essential element of trust in the parties to contracts will increase and the costs of working in a global market will fall.
International Coordination of Policies for Growth with Equity
The need for international coordination of policies for full employment and the elimination of poverty is the fourth issue I would like to address. I do not believe that social development and the eradication of poverty is possible without full employment. And I do believe that full employment is still possible. We are being told it is not -- but it is! People make work. Work does not make itself. However, defining the concept of full employment is not always easy, especially in developing countries. Full employment is important as a goal because unemployment is a waste and a burden that we cannot afford. The 1996 ILO Conference made considerable progress on the implications of increased international interdependence for employment policies. With globalization the pursuit of full employment requires a combination of national and international policies.
National policies must aim to increase the speed of adaptation to change. Resistance to change stems from fear and insecurity. Flexibility and security in employment need not be in contradiction to each other, but public policy must aim at getting the balance right, because the market alone will not. Education and training, together with active labour market policies to help match workers to job opportunities, are the main focal points for employment policy. Market mechanisms cannot create the broad base of skills and the ability to learn new skills throughout working life that workers and society need. I speak from experience. Mrs. Thatcher, the "mother of the free market", once said "leave the skill market alone, it will find its own level". It did, and Britain has had skill shortages for almost the past twenty years. The first challenge the present Labour Government is meeting in its pursuit of sustained growth is the absolute, rock-bottom, lack of the necessary skills to build the economy that they desire.
The liberalization of trade and of capital markets imposes a high price on countries that fail to achieve price stability. Let us be frank, inflation and devaluation were the escape routes for governments and countries that failed to resolve social conflicts. That escape route is no longer available, partly because of IMF disciplines, but also because governments of all colours know that a persistent, high public deficit is very costly to finance now that there are no captive savings markets. For workers this is not such a bad thing because inflation always hits the weakest hardest and price instability holds back investment both in the private and public sectors.
However, simply achieving and maintaining low inflation does not miraculously end conflicts about the distribution of income and wealth. The new, stronger international pressures mean that the national institutions for identifying and resolving conflicts have to become stronger and more effective. Otherwise, rather than being seen as a potential source of growth and prosperity, globalization will appear to many as a restraint on their aspirations for justice and a decent life. There is a very real danger that this could, in turn, lead to protectionism and ultimately to violence which could spill over national boundaries into international conflicts. We thought we had finally achieved world peace but we are sowing some of the seeds of the undoing of that peace.
Thus the trade unions' basic role is even more important in this new age. Our job is to articulate grievances and negotiate with employers and governments to find solutions; in short, to tell them what they do not want to hear so that they will start to tackle the problem. We are problem-solvers, although some governments and employers perceive us as problem creators. When we get it wrong, it is our members who suffer, so we have every reason to find the solutions. The Copenhagen Summit's commitment on basic workers' rights is, therefore, very important because it enables us to rebuild our role at the workplace and more broadly, and thus to contribute to the forging of national and international consensus about how to achieve growth with equity.
The two main mechanisms available for resolving distributional conflicts are collective bargaining and the budget. For most of us, our pay is our main source of income and thus agreement about pay structures within the firm and more widely, have a profound effect on the distribution of income. Many, but not all, problems can be worked out directly through collective bargaining between unions and employers. In a increasingly competitive world, few employers have the market power to pass on increased labour costs to consumers through price rises. Therefore, collective bargaining is focusing more and more on how unions and employers can cooperate to improve productivity and thus both profits and pay. This is a positive development but it means, in turn, that the mechanisms for information exchange, consultation and bargaining have to be improved so that all concerned see the costs and benefits of the various options available. Especially when decisions are tough we need a very high quality process. Technocratic solutions which look fine on a computer model or in a corporate headquarters will fail if they are imposed from above. Sometimes less elegant compromises, built up through a more participative process, will work better because they engage and commit the parties to making them work. Again, it is a long-winded way of saying wisdom cries out in the street and if you listen to it you can get where you want to be a lot faster.
Similar arguments apply to the making of the national budget, which must ensure that the weakest in society are helped out of poverty and that the wealthiest shoulder a fair share of the burden. The broader the degree of political and social support for the tax and expenditure policies voted by parliaments, the more likely it is that governments will be able to keep to fiscal and monetary targets and thus avoid the penalties of financial instability. Tripartite economic and social councils are a reinforcement to the democratic process and help governments, employers and unions to follow polices that are convergent and consistent. It always astounds me that governments tend to resort to the tripartite approach when they are up to their necks in trouble and then, when employers and unions have cooperated to help them out of the mess, a disenchantment with the tripartite arrangement suddenly sets in. Social development is to a large extent about using the budget to redistribute resources to activities and to people who need them and cannot get them through the market. Social development programmes aim to give as many people as possible who are excluded from the market a chance to earn a sustainable livelihood and to support those who are especially vulnerable. Budget-making is thus about persuading the "haves" that it is in their interest to support the "have nots".
There is also an international dimension to this process. We need more resource transfers across national boundaries but if this is to happen, voters in the wealthier countries must have confidence in the process. Good governance principles are a vital component of a renewed drive to raise and make more effective official development assistance. Foreign direct investment in developing countries is important but it cannot replace international support to the role of governments in building up the infrastructure of social cohesion and the market.
The Copenhagen Summit and the mandate it gave the ILO are important signs that governments are aware that market liberalization does not produce social cohesion and that, in a global market, governments and the international institutions need to increase their cooperation on social policy and review the way international trade and financial policies impact on society. The ICFTU is looking forward to how it needs to adapt institutions at the national and international level to realize the potential of increased trade and investment for the reduction of unemployment and poverty. We do not want to stop international economic integration but rather to seek to ensure that the instruments of social policy are modernized and internationalized to meet the challenge.
Conclusions
The workplace, around which trade unions seek to organize, is where people's values meet the market. The employment contract is not just an exchange of work for pay but a human relationship which should incorporate basic principles of respect and dignity. Treating people decently is not a cost for business but an investment. Mutual respect by both parties to the employment contract helps to create an environment of trust which is infinitely more productive than one of conflict and suspicion. This applies to both formal employment relationships and the way work is organized in the informal sector, although by definition the latter is more difficult to deal with because contracts are not always recognized and respected.
A focus on workplace issues is thus highly relevant to making globalization work by giving it a human face. It is also an important means of demonstrating that the work of the ILO is relevant to the problems that people are facing in their daily lives. The ICFTU for its part is ready and willing to work more closely with the ILO and other international agencies charged with implementing the Copenhagen agenda. One of the most valuable features of the Social Summit was the recognition that the reality of interdependence must be reflected in the way international institutions work together. We ourselves have organized over thirty national and regional conferences on the social dimension of adjustment with our affiliates which have brought unions together with government, employers, international agencies, NGOs, academics and the media. These have proved to be important means of broadening agreement on how to ensure social progress while making significant adjustments to meet new international pressures. What we are trying to do, as the ICFTU, is to work out how to build the institutions for both cooperation and competition so that the innovation and the dynamism of the market is balanced by the respect for people and a stronger impulse for social cohesion. In this respect, I look forward to working closely with the Institute over the next few years. There is a proposal in its Programme and Budget for the next biennium for an innovative study on Labour and Society to look at the changing world of work and the role of trade unions. It is designed to gather information from all over the world about how unions are adapting to the new environment and what their future strategies could be. More than ever before unions are looking to learn from each other and compare strategies and I hope that I myself, and the ICFTU at large, will make a major contribution to meeting the sort of challenges for unions and the ILO that I have discussed in this presentation. I would like, therefore, to thank the Institute and Mr. Gopinath in particular for giving me this opportunity to speak to you today and also for the suggestion that we work closely with them on this exciting venture.
To sum up, the world is going through a period of enormous change. We have the opportunity to establish a strong platform for future prosperity. Consensus over the relationship between the ILO's core labour standards and the liberalization of trade and capital markets is the key because it will give governments, employers and trade unions the tools to build new institutions to manage labour market change in ways that reflect the need for balance between security and flexibility at the workplace, in society, and globally. I hope that the debates during the Governing Body and at the 1998 International Labour Conference will contribute to the building of this consensus. I certainly want to play a part in it and I want you to recognize that it is probably the biggest challenge that you who work here at the ILO will ever face. We are at a critical point in globalization -- unless we establish that the dynamism of the market must understand, reflect and work for the needs of the people who service it, then I am afraid we are in for a very long and bitter future. However, I think the moment is now ours to grasp. The people here in this room will be a major force for making the message heard and I wish you well in the prospect of achieving what we desire -- i. e. a social dimension to the globalization of trade.
Padmanabha Gopinath -- Thank you. I opened this lecture by inquiring how markets and democracy can be reconciled and how growth can be made consistent with stability. You have answered with force and clarity. I have understood you to reject the notion that globalization is on auto-pilot. I have understood you to reaffirm that policies, social institutions and normative commitments and human decency matter. And you have spoken, if I may say so, as much as a global citizen as a trade unionist. You have emphasized the importance of trust, participation and dialogue in the world of work, and stressed the need for frameworks which bring business and labour together in new partnerships for productivity and equity. You have pointed to the need to underpin those partnerships by a framework of shared values and international cooperation, as an essential part of global governance. Most important, I think you have left us with an intriguing thought: as global markets increasingly deprive the State of the traditional levers of economic control, social policies and institutional structures are going to become more important than ever before, both because, as you point out, they are essential to competitiveness and investment, and perhaps because they are the only ones left. I find your message, therefore, a call for action. The moment is propitious. The fires in Sumatra, and the Asian financial crisis have made us aware of our common vulnerability, and of the fact that expanding markets go hand in hand with shrinking social space.
The floor is now open for questions or comments.
Question - My intervention is by way of a comment. As a fellow trade unionist I would like to congratulate Bill Jordan on his Lecture. He has very ably presented the concern of the trade union movement, in both developed and developing countries, that there should be cooperation in industrial relations, and respect for international labour standards. He has also called our attention to many of the new challenges facing the trade unions in the context of the global economy. As a trade unionist in a developing country, three challenges are of particular concern to me. In recent years the public sector, formerly the largest employer in most developing countries, has undergone down-sizing in the context of structural adjustment programmes and privatization, thereby undermining an important source of trade union membership and numerical strength. Furthermore, structural adjustment programmes have often been implemented without due consideration for their consequences for working populations, which is a matter of considerable concern for the trade unions. In addition, competition between countries for foreign direct investment poses a serious impediment to ensuring respect for international labour standards and so threatens the interests of workers, and their unions. These developments deserve our careful consideration.
Q. - I was particularly struck by your reference to the existence of a moral issue between employers and workers, and even governments because I feel that this is of paramount importance. The moral aspects of the social inequity being brought about by globalization must not be overlooked. To do so would be to perpetuate inequality. While there are those who believe that markets decide everything, I contend that markets cannot bring peace and stability. Only equity, brought about by moral imperatives, can guarantee stability. Therefore there is a need to create harmony through democratic participation, particularly at the workplace where employers and workers see each other as the constituent parts of a single "orchestra". I would like to thank you for having pointed up this moral dimension, because without it, there would be no equity, no justice, and no stability, and markets would not be viable in the long term.
Q. - There is one aspect of the Lecture on which I would like you to elaborate. It concerns what might be termed international industrial relations. You referred to codes of conducts at global level, but I feel that the globalization of the economy should have its corollary in a similar internationalization of industrial relations which goes far beyond mere codes of conduct. What, in your view, is the potential for this internationalization of industrial relations to take place, and what shape would it take?
Mr. Jordan -- Let me begin with this last point. I feel that we are at a very early stage in the area of the internationalization of industrial relations. My own feeling is that such an internationalization is going to lie entirely within the purview of the multinationals for the foreseeable future. Given that certain major multinationals have made their international reputation not just on the quality of their goods and their competitive prices but also on their ability to compete successfully while maintaining good working conditions, the best strategy currently available to the international trade union movement is to build up a collection of codes of practice that are agreed upon between themselves and the multinationals. This collection of codes of conduct would then constitute the benchmarks for best practice for companies, in much the same way that the ILO's core labour standards constitute the ideal safety net. In addition, since the leaders in this field are often the most richest and most powerful companies in the world, they will want to have high standards, and will want to have them in every country to which they go. They will want to boast that theirs is the best company in China, or in some other country, for wages and conditions is theirs. As competition increases, and as consumers become more and more concerned about the products they buy and how they are made, I believe that the pressure on other companies to conform to this ideal will grow. It is a long road but one worth pursuing.
On predictions for the future, let me pick up Mr. Gopinath's comment that people assume that globalization is on auto pilot. I wish this were true. Unfortunately, the evidence suggests that there are thousands of pilots each taking a turn at steering the process in their own preferred direction. The consequence is that no one can really forecast what will happen next. Even on-going developments show this lack of organized direction and are a cause for concern. Big business is running the world and while, as a trade unionist, I often attack big business, I have never attacked good big business. Rather, I have always argued trade unions should cooperate and work together with it. However, what is taking place today is that the most important decisions in the world are being shaped by the hundreds of individual decisions of big business and of those who own capital. Take, for example, the run on financial markets. This was not a decision made by some secret meeting behind closed doors, which decided to target a given country, but rather the outcome of the individual decisions of thousands of players. Indeed, the activity on the financial markets reminds me of the hunting behaviour of a pride of lions which surround a herd and move in on it until it scatters in panic allowing the hunters to identify, cut out and kill the weakest individuals. This is exactly what happens on financial markets today. The big players are looking for a kill, this being the job they are paid to do. Frighteningly, they are also paid not to suffer the consequences or face up to the responsibility for the outcome of their behaviour. Recent events in Mexico are a case in point. They resulted in the loss of a million jobs in six months and caused the average wage or salary to be almost halved. However, the players in the financial markets were answerable to no one. This is a matter of fact and I am not making a moral judgment, but I feel that the consequences can only be described as immoral. Where does the responsibility for these developments lie? This is a difficult question to answer. If globalization is being driven by anonymous and irresponsible players, by implication governments are not the driving force. Indeed, there is evidence in today's world, that no government, no matter how large, can either challenge the might of the financial markets or risk offending a group (possibly a very big group) which holds in its collective hands £300 billion worth of investment. I have had governments say as much to me.
As I see it, we are looking at a future where the non-auto pilot will steer more dangerously off course, until collectively, the governments of the world decide there has to be some sort of regulation to prevent its excesses, without destroying its dynamics. Unfortunately, this will take some time and I see little concrete evidence of a move in this direction except on the part of a few government voices in Asia saying "it's time we did something about these markets". However, they are voices in the wilderness and matters will have to become far more serious before something is done.
What can be done in the interim? The trade unions continue to play the role they have always played, that of trying to bring about change. However, as the latest ILO report contends, (and this has also been my own experience), globalization has weakened the numerical strength of the trade unions themselves. At the same time governments are not summoning up the courage to deal with problems collectively. Who then who should speak for the trade unions and the workers? Who else is left in the pattern? I feel that the answer lies with institutions like the ILO, which is the voice of labour. It should seize the initiative in order to strengthen the mechanisms which would ensure that minimum standards are applied. Given the vacuum of action at the level of the state, I appeal to the Organization to gather strength and speak out for workers in the new global context.
Geneva, November 1997
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