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Julio Godio
ILO Consultant
Economic and trade integration
The Common Market of the Southern Cone (Mercosur) is an economic mechanism of decisive importance. Its four member States (Argentina, Brazil, Paraguay and Uruguay) together account for 45 per cent of the total population of Latin America (almost 200 million people) and 50 per cent of its product. Chile and Bolivia participate as associate members, under the 4 + 1 formula.
Join in globalization
During the six years that have elapsed since the conclusion of the Treaty of Asunción in March 1991, the Mercosur project has pro gressively extended its political and economic scope in member States and in the remaining Southern Cone countries. Mercosur will be an “imperfect customs union” with special tariff regimes until the year 2006 when it will become a Common Market. Mercosur may prove to be the principal instrument in incorporating these Southern Cone countries into the current worldwide process of globalization.
In November 1994, in Miami, a “Declaration of Principles” of the Summit of the Americas was approved by 34 of the hemisphere’s heads of State and government. The Declaration states that “free trade and closer economic integration are key factors in raising the standard of living and improving the employment conditions of the peoples of North and South America, and in protecting the environment”. The establishment of the American Free Trade Area (AFTA) involves the progressive dismantling of barriers to trade and investment and the full operation of the free trade area by 2005. On the occasion of the Miami meeting, the Inter-American Regional Organization of Workers (ORIT)/International Confederation of Free Trade Unions (ICFTU) proposed to the heads of State and government that, in addition to the seven working groups responsible for framing trade and investment measures, an additional working group and a regional forum should be created for tripartite discussion of how to incorporate the social clause in the AFTA. The majority of governments, however, continue to maintain that the International Labour Organization is the organization which is competent for labour matters.
A charter of fundamental rights
It is the view of the United States government that Mercosur should be considered to be a trade subsystem that is subordinate to the objectives and standards/rules of the American Free Trade Area. However, in September 1996, the Mercosur Council Meeting in Florianopolis (Brazil) specified that the objective of the American Free Trade Area is to create a free trade zone, while that of Mercosur is to create a Common Market, as specified in the Treaty of Asunción. In February 1997, in the meeting of American Free Trade A rea Deputy Ministers of Trade in Recife (Brazil), the governments of the four Mercosur member States confirmed that the purpose of subregional integration is to create a common market which includes more-favoured treatment to other members than to third-party countries. This position is supported by the national trade union confederations and by the Trade Unions’ Coordinating Body for the South (CCSCS) who further advocate a Mercosur supranational Charter of Fundamental Rights to protect workers’ rights. This position is being resisted by the governments of member States. In short, tension reigns between the American Free Trade Area and Mercosur which can only be settled through negotiations between the parties.
Differences in scales of their economies
Argentina and Brazil are the largest Mercosur partners. The differences in scale between their economies and markets and those of Paraguay and Uruguay, the other two members, are enormous: Brazil’s gross product is between 40 and 50 times larger than that of Paraguay and Uruguay, while that of Argentina is almost 20 times larger. The two larger countries account for 97 per cent of Mercosur’s total product and 90 per cent of its population. Mercosur is of vital importance for the two smaller countries in that reciprocal trade with Mercosur accounts for between 60 per cent and 70 per cent of their total trade.
Mercosur and the world market
Mercosur must settle the central issues of increasing unemployment and the difficulty of creating jobs. However, new jobs can be created in the integrated subregion only if the rate of growth of Mercosur’s trade with the other regions of the world can outstrip that of product. Although intraregional trade did indeed expand more rapidly than product in 1990-95, Mercosur’s share in world trade stood at a mere 2 per cent in 1994, on account of scale. The principal export products of Mercosur countries, which enjoy comparative advantages, are not dynamic, and the competitiveness of their technology-and human capital- intensive products leaves much to be desired.
The functioning of the old import substitution and protectionist system has undergone a radical transformation with the opening up of the economies since domestic markets are no longer the exclusive preserve of domestic enterprises. As globalization advances, companies must deal with increasingly open competition on both domestic and international markets.
Cope with new conditions
The governments of the Mercosur member States intend to maintain existing preferential customs policies or to introduce new preferences for members vis-à-vis third-party countries. This will only be effective if Mercosur can improve on its current small share of the world market. In addition, under the adjustment and stabilization policies implemented in these countries, state intervention in the economy is being cut back, with the immediate effect of substantial job losses in the public sector. In addition, several links in the chains of production in these countries have been replaced by imported products, which has caused local companies to close down and led to unemployment. Companies are required to deal with new, very different circumstances, in the knowledge that survival, growth and expansion of the labour market will be achieved only if they remain competitive.
The labour market
Mercosur will generate an immense labour market. In 1992, the total population of the Mercosur countries totalled 194 million people, and this figure is expected to rise to 217 million by the year 2000. Almost 90 per cent of that population lives in Brazil (154 million in 1992) and A rgentina (33 million). The population of Paraguay in 1992 stood at 4. 5 million, and 3.1 million in Uruguay. Chile and Bolivia accounted for a further 24 million. The population of the Mercosur countries is predominantly urban: Argentina 87 per cent, Brazil 77 per cent, Paraguay (rural country) 54 per cent and Uruguay 91 per cent. In turn, half the urban population in these countries live for the most part in cities of over 1 million inhabitants. The labour market of the Mercosur countries is composed of approximately 90 million people, of which the working population totals 85 million. While open unemployment stands in 1997 at 5.5 million, underemployment has topped the 30 million mark; that is, 35.5 million workers are workers in a situation of unemployment or underemployment. It should be noted that an overall average of 50 per cent of workers are employed in the urban informal sector in Me rcosur countries, which represents a preponderant share of low-skilled, that is, low quality jobs which offer no social security or welfare and low levels of pay. It is calculated that 4 million children work in Mercosur countries for a weekly average of 46 hours, for which they are paid below the minimum wage.
Refuge jobs
Job creation rates between 1990 and 1995 vary widely. The highest annual rate of job creation (5.8 per cent) is recorded by Paraguay, revealing a marked dynamism in its labour market. However, this rate includes low quality “refuge jobs” which are not included in the statistics submitted by other countries; consequently, the figure is not comparable. During the period under analysis, the remaining member States’ rates of annual job creation were, in declining order, Brazil (2.6 per cent), Paraguay (1.5 per cent), while Argentina recorded the lowest (1 per cent) rate of job creation.
Less jobs in public sector, more in private sector
Although new jobs were created in all the economies of the Mercosur countries, the volume was not sufficient to satisfy the demand generated by the total number of workers entering the labour market. Hence, the levels of urban unemployment between 1990 and 1996 were high in Argentina (17.3 per cent), relatively high in Uruguay and Paraguay (9.2 per cent and 6.6 per cent respectively) and lower in Brazil (4.3 per cent). Meanwhile, formal private employment grew slowly over this period in Argentina and Brazil (0.8 per cent and 0.2 per cent respectively) and at moderate rates in Paraguay and Uruguay (2.6 per cent and 2 per cent). Finally, employment in the public sector declined in all member States between 1990 and 1996, with the exception of Paraguay where it grew by 5.3 per cent. In short, private formal employment has risen, to varying degrees, in all member States, while employment in the public sector has declined, representing a drop in the share of total formal employment (public and private combined) in total employment, with a concomitant growth in informal employment.
Women and youth
The informal sector (which includes domestic service, self-employment and microenterprises) has experienced considerable growth in Argentina, Brazil and Paraguay, accounting for 50 per cent of total employment in 1996. Hence, for the region as a whole, the informal sector predominated in the growth and structure of employment with a simultaneous rise in unemployment. As in most Latin American countries, women and young people are those who are most affected by unemployment in Mercosur.
Changing in two ways
The member States of Mercosur are no exception to the process of structural change currently being experienced by most Latin American countries, whereby the economic development model of import substitution (pursued since the 1930s) is being replaced by market economies of scale. The fact that Mercosur is participating in the process of globalization and creation of regional spaces means that it is increasingly open to foreign markets, with the result that it is undergoing a dual transformation.
Competitiveness, productivity, employment and wages
Within Mercosur, a discussion is currently ongoing-within governments, and employers’ and workers’ organizations as in other social sectors-regarding the most effective economic model and policies for boosting economic activity and competitiveness and increasing jobs and levels of pay. It is generally agreed that the difficulty of choosing between models is worldwide, but that particular features prevail in Mercosur where any solution calls for a concerted social commitment between the social partners and the States.
In favour of the giants
The establishment of Mercosur has created national economies of scale, leading to a restructuring both of capital and labour and of the relationship between them. The opening up of the economy is galvanizing economic activity, although not all companies can gain access to the integrated space composed of national market economies. The combined expansion of the regional market and heightened competition have served to strengthen the major economic groups and multinational enterprises, triggering a crisis in the Small and Medium Enterprise (SME) sectors. As for the workers, a “regional working class” is being created, although diverging levels of productivity increases may spark off competition between workers.
Special favours for capital
Should the productivity of labour increase more rapidly than production, and should the mobility of labour increase in the form of migratory flows in quest of jobs under working conditions that may be below those stipulated in national legislations and collective agreements, competition among workers would be liable to increase, with a consequent drop in wages and living conditions so that capital would end up making competitiveness depend on reduced labour and wage bills. Within this logic, member States will seek to offer prime conditions which permit large investors and multinational enterprises to achieve competitiveness through low wages, for which purpose they will impose restrictions of trade union activity. The awareness of the danger of competition between the workers of member States and of “downward levelling” of pay and working conditions have prompted closer trade union cooperation in Southern Cone countries with a view to countering competition between workers, particularly through the creation of the Trade Unions’ Coordinating Body of the South and the trade unions’ proposed “Charter of Fundamental Rights”.
No downward levelling
Mercosur was the outcome of the need for larger markets in order to achieve producers’ surplus, that is, to sanction the termination of industrial growth processes based on import substitution, and to adapt to the new rules of globalization and the opening up of economies. To achieve this, the CCSCS maintains that member States should pursue similar levels in terms of wages, taxes, tariffs, general infrastructure costs, etc., with a view to creating a new economy of scale in the Southern Market space. Non-competitive enterprises within member States will be displaced by the enterprise concentration process, for which reason the CCSCS maintains that a “downward levelling” of wages should not be necessary to a achieve a reduction in labour costs. The establishment of Mercosur has caused the trade unions of the member States to become involved in a complex process of interdependence and competition among enterprises. Thus, on the one hand, large local economic groups and the US and European multinationals endeavour to occupy all possible accumulation niches and use Mercosur as a new platform to achieve competitiveness at world level. However, this of course does not exclude conflicts among large local economic groups and the multinationals. In order to compete on the new market, swift mergers occur between local enterprises (at the local level and between countries) for the purpose of achieving the necessary levels of capitalization. In some cases, these mergers include foreign capital. In other instances, the alternative is to sell off companies in unpromising sectors in order to invest in new activities. Consequently, if workers’ organizations are to be effective in defending their members, they must be familiar with the complex fabric of commitments and tensions in relationships of association and competition between the local economic groups and multinational enterprises.
Change the rules of the game worldwide
The CCSCS has warned that the workers of member States may be the victims of an unequal capital structure in Mercosur. However, trade union organizations cannot preserve jobs and incomes through nationalistic stances that hamper the mobility of capital and of labour. Hence, trade union strategy should be based on a global approach, at the regional level, in the quest to change the ground rules and ensure that competitiveness is achieved on the basis of a diversification of supply and quality and not through an erosion of direct and indirect wages (contributions to social welfare, health, etc.), within a context of the integrated and comprehensive growth of the national economies.
A common labour platform
Supranational legislation should be framed to facilitate the automatic assimilation of immigrant workers into national labour regulations in order to avoid overexploitation (for instance, in the Argentinian textile industry which illegally uses foreign labour) and prevent any escalation of racism and xenophobia on the part of local workers who consider that foreigners are “taking” their jobs. The subregional trade union strategy should be to draw up a joint labour platform of homogeneous labour and working conditions (for example, 6-8 hour working days, minimum wages, salary scales negotiated by branch of activity, joint pension schemes, vocational training curricula, etc.). Trade unions should endeavour to introduce framework agreements between companies and trade unions in economic sectors with a view to facilitating the homogenization of wages and working conditions (for example, in the automobile, energy and transport sectors). However, this will only be possible if the respective national workers’ organizations resist the temptation to make working conditions flexible in the interests of encouraging foreign investors to choose one country at the expense of the other.
Risk of segments
Therefore, when discussing the labour market in Mercosur, we should bear in mind that sustained and balanced growth among the countries must necessarily strive for higher levels of pay if the markets for goods are to expand. Otherwise, the predominance of low wages and the widespread casualization of jobs, combined with unemployment and informal employment, will lead the labour market to split into high productivity/income versus low productivity/income segments which experience has shown to lead to economies with low average productivity/incomes. Such sectors produce tradeable goods with comparative advantages and achieve a higher rate of productivity by introducing hard and soft technological innovations.
The benefits of integration for workers
Mercosur is structured as a set of intergovernmental institutions intent on promoting free trade and integration. The workers’ organizations belonging to the CCSCS advocate a supranational structure in the nature of the European Union’s, for reasons connected not only with political and trade union questions but also for motives that are closely linked to the labour market. Indeed, properly resolving issues related to wages, working conditions, security, migration, etc., which are all components of the structure of the labour market, call for supranational labour and social policies.
Humanizing work
Such policies will commit Mercosur to operate and develop supranational institutions which guarantee the humanization of employment and labour market regulations in line with the social security concerns of the welfare State. The unions consider that this goal is not negotiable in structuring a labour market that is in a position to deal with the challenges of greater competitiveness and productivity within Mercosur and between Mercosur and the world economy. For the past ten years, the trade unions of the countries in the region have been acting in a coordinated manner in the context of endeavours to create a progressive Mercosur that promotes equality. The CCSCS further considers that this trade union aspiration should provide a semblance of response to its proposals relating to the social dimension of Mercosur by matching it with the scenario that will emerge with the ultimate construction of the AFTA, with its accompanying requirement of a continentwide social dimension.
The political presence of trade unions in Mercosur
Origin and objectives of the CCSCS
1997 marks the eleventh anniversary of the founding in Buenos A i res of the CCSCS, with the support of the International Confederation of Free Trade Unions (ICFTU) and of the Inter-American Regional Organization of Workers (ORIT), the former’s representation for the American hemisphere. The CCSCS’s sphere of activity focuses on the Southern Cone countries of Latin America (Argentina, Bolivia, Brazil, Chile, Paraguay and Uruguay). Since its creation, the CCSCS, which is an autonomous trade union organization with strong links with the ORIT/ICFTU, has adopted numerous coordinated measures for the purpose of: (a) promoting the restoration of political democracy in the Southern Cone countries (it should be remembered that, in 1986, A rgentina was the only democratic country); (b) debating and framing economic and political programmes o ffering an alternative to neoliberalism; (c) guaranteeing the participation of workers in Mercosur; (d) promoting trade union training; (e) furthering the cooperation of the CCSCS and its members with the International Trade Secretariats (ITSs); and (f) strengthening links between workers’ organizations and the ILO. Over the last ten years, the CCSCS has succeeded in overcoming the difficulties caused by the fact that national trade union confederations in the Southern Cone had previously been isolated, and has now successfully gathered strength to the extent that it has become a focus of political and trade union solidarity and cooperation between national trade union movements of the Southern Cone countries and between these movements and the ORIT/ICFTU.
Take into account the impact of the process
In the light of Mercosur’s strong impact on the labour markets of its member States and, by extension, on the living and working conditions of millions of workers, the CCSCS has opted to give priority during these years to its activities in Mercosur, given that the objectives of economic and social advancement in each country cannot be viewed in isolation from the impact of the integration process on national economies and on national labour markets. The CCSCS is composed of the following trade union confederations: Confederación General del Trabajo (CGT), in Argentina; Central Obrera Boliviana (COB); Central General de Trabajadores (CGT), Central Unica de Trabajadores (CUT) and Força Sindical (FS), in Brazil; Central Unitária de Trabajadores (CUT), in Chile; Central Unica de Trabajadores (CUT) in Paraguay; and the Plenario Intersindical de Trabajadores - Convención Nacional de Trabajadores (PIT- CNT), in Uruguay. The location of the headquarters of the CCSCS rotates regularly and is currently in São Paulo, Brazil (1996- 98).
Not all workers’ organizations in CCSCS
It should be noted that several national workers’ organizations do not participate in the CCSCS, including the Central de Trabajadores Argentinos (CTA) (not to be confused with the Movimiento de Trabajadores de Argentinos (MEA) of Argentina which participates through the CGT); three confederations affiliated to the World Confederat ion of Labour, and its branch in the region, the Central Latinoamericano de Trabajadores (WCL/CLAT); the recently-formed Centrales Autónomas de Trabajadores (CAT) of Brazil and Chile; and the Central Nacional de Trabajadores (CNT) of Paraguay. Some of these workers’ organizations participate in the Economic and Social Advisory Forum. Approximately 85 per cent of unionized workers in the Southern Cone countries are affiliated to the CCSCS, and 90 per cent of workers in Mercosur countries, with the result that it is by far the largest trade union organization.
The CCSCS reacts promptly to the establishment of Mercosur
The CCSCS, in conjunction with national member trade union confederations, embarked on the formulation of a strategy of trade union participation in Mercosur founded on four basic premises:
(a) to require that Mercosur should incorporate the social and labour dimension;
(b) to demonstrate that Mercosur should provide for an institution to engage in tripartite negotiations between governments and employers’ and workers’ organizations in connection with labour matters;
(c) to demonstrate that trade union participation should be conducted at the global and sectoral levels (by economic sectors and branches of activity). As a result of the latter policy, increasing cooperation has been achieved between the CCSCS, national trade union confederations and ITSs;
(d) to establish within the CCSCS a Mercosur Trade Union Commission with responsibility for framing specific policies and coordinating activities.
So many ideologies
It has not proved easy to consolidate the strategies and policies of the CCSCS and its members in Mercosur, and the process is still ongoing. For example, from the first days of the CCSCS’s foundation, the national trade union movements around the table held diverging ideologies, and few had previously had any direct contact.
General climate favourable
Nonetheless, the movement is now “up and running”. Mercosur shot ahead at a vertiginous pace after 1991, when the prevailing climate in the hemisphere was conducive to the establishment of free trade zones and to a reactivation of integration institutions in other subregions. The North American Free Trade Agreement was concluded soon afterwards. Since 1991, the economic identity of the hemisphere has changed, and the implementation of economic policies that are conducive to greater openness, combined with economic structural reforms have opened the way to the creation of national economies of scale, to closer integration and to smoother trade flows. Finally, the EEC became the European Union. Japan and the emerging economies of South East Asia have intensified their economic relations with the economies of Latin America and the Caribbean. The so-called “globalization of the world economy” has become the main point of reference in framing economic policy in the countries of the region.
ORIT/ICFTU take the lead
Although the trade union movement of the Southern Cone countries has encountered certain difficulties in reacting to globalization and integration, it has nonetheless acted promptly in the interests of participating in Mercosur. The promptness of their response may be attributed to the fact that the national trade union confederations were already engaged in discussions on how to adapt trade union strategies to the changes that were occurring not only in the region but throughout the world. Such discussions were promoted principally by the ORIT/ICFTU, which took the lead in formulating a trade union platform (XII Congress 1989 and XIII Congress 1993) to meet the new challenges, and in devising an original ideological concept known as “sociopolitical trade unionism” for framing and formulating the corresponding trade union policies.
Trade union participation in the social and labour institutions of Mercosur
Working Subgroup No. 10 (WSG No. 10)
The CCSCS devotes particular attention to Working Subgroup No. 10 (prior to 1994, known as Working Subgroup No. 11) of the Common Market Group, assigned to deal with “Labour matters, employment and social security”. The subgroup is composed of the Labour Ministries of the Mercosur countries who submit their proposals to the Common Market Group for the adoption of social and labourrelated positions. The structure of WSG No. 10 provides for tripartite consultation meetings on these topics, for which reason it is an important forum for trade union concerns. At its first meeting in 1995, in Montevideo, the WSG No. 10 established three committees: (a) labour relations; (b) employment, migration and skills development; and (c) occupational safety and health, labour inspection and social security.
While the CCSCS has not contested the choice of topics, it has objected to the decision not to create standing tripartite committees to carry out analysis and submit proposals. This position by the CCSCS is relevant in that it has a bearing in promoting the role of the WSG in the key areas that have previously been analysed or included in the agenda.
Priority issues
The programme of the national trade union organizations, the CCSCS and the ITSs identifies the social and labour objectives to be discussed by the three Subgroup No. 10’s committees. Such objectives could well culminate in concrete achievements if democratic participation institutions and tripartite and bipartite negotiations at the global and sectoral levels are consolidated, provided that an agenda of priority topics exists. The CCSCS considers these priorities to be:
(a) Reconversion, technology and vocational training. Mercosur will bring about major changes in the demand for labour. New problems arise in connection with the acquisition of skills, which should be linked to the comparative advantage of each Common Market member State in order to guarantee the integration-reintegration of the different groups of workers in the labour market.
(b) Labour relations and tripartite negotiations. With more open national economies, changes will occur in institutions and in labour standards, but ideally they should occur in such a way as to promote collective bargaining and other institutions which protect workers’ interests.
(c) Migration. The establishment of an integrated labour market will re flect international flows of labour in response to levels of economic activity and of wages. The issue here is to protect workers by obliging entrepreneurs to comply with the labour legislation in force in connection with minimum wages, contracts, health and safety coverage, in order to prevent overexploitation of migrant workers and “social dumping” in the form of cheap migrant labour. Supranational migration regulations should be introduced.
(d) Job creation and competitiveness. The increasing pressures to boost competitiveness are reflected in government policies intended to enhance productivity. While this will increase the demand for some jobs and skills, the general effect on the level of employment will probably be negative unless policies to promote growth, create new job opportunities and associate productivity with collective labour contracts are adopted simultaneously.
(e) Harmonization of labour legislation and social protection. In the interests of fair competition between countries, the CCSCS has framed proposals which would make it possible for the member States to match their national labour relations systems during the course of the regional integration process. ILO standards have served as a framework of reference for addressing this matter in Mercosur. However, given the force of pressures towards deregulation and casualization of jobs, trade unions should carefully consider the scope of such harmonization, as well as the means of achieving it.
(f) Labour costs. This is a crucial aspect in terms of the strategy to be employed by enterprises and trade unions, which lies at the very heart of the contradictions in the kind of economic impact integration is likely to produce. Analyses of labour costs are complex and involve studies of pay, of the costs of protection and social security, of the relationship between labour costs and productivity and other production costs, and of the indirect social effects. Trade unions have demonstrated that a reduction in labour costs has little impact on the general costs of goods and services.
(g) Passive labour market policies. Regional integration should develop joint systems for combating unemployment. Such systems might include the linking of unemployment insurance and policies relating to vocational training and integration to the labour market, the development of new forms of employment contract, and explicit protection of particular groups of workers.
(h) Equality of opportunity, discrimination and social exclusion. It is clear that sizeable groups of the population may be excluded from the benefits accruing from regional integration, at least in the short term, by reason of the fact that they are not strongly represented at the institutional level, and on account of endemic social discrimination, either because their interests are adversely affected, or because their earnings are generated in sectors that cannot gain access to the benefits of a broader market. Mechanisms should be developed to ensure that those groups that do not benefit are compensated, without, however, obstructing the integration process. Innovations should also be introduced in the strategy and the institutions devised to counter the trend towards increasing inequality and social exclusion. It should be noted, on the subject of discrimination, that the principle of equality of opportunity and treatment is enshrined in the Constitutions and labour legislation of the four member States of Mercosur, and of Bolivia and Chile. However, in practice, women continue to be subject to discrimination, in the form of low representation in decision-making positions, in the better paid jobs or in those where labour expectations are highest, with consequent disparities in earnings.
(i) Approval of the Charter of Fundamental Rights. The Charter, with the earlier European Social Charter, featured as an item on the agenda of Mercosur in 1992. The CCSCS submitted the sole concrete proposal in this connection in January 1994.
(j) Information on the labour market. A shared data base containing the principal labour and social parameters on each of the Mercosur member States is required for purposes of identifying priorities and problems. Creation of the Permanent Observatory of the Labour Market in Mercosur, with tripartite administration, centralizing information and for the use of the administrative bodies of Mercosur, employers’ and workers’ organizations, universities, NGOs and the general public.
It should be noted that these topics (and others that emerge over time) call for global and sectoral approaches (by branch of activity, by economic and service sector, etc.) and should be adopted by other spheres of Mercosur besides WSG No. 10, particularly other WSGs and the Economic and Social Advisory Forum (FCES).
The Subgroup No. 10 meetings have already scored some major victories: (a) it was agreed that 34 ILO Conventions should be ratified by the Mercosur member States, there by providing a legal foundation for labour standards; (b) the “Mercosur Multilateral Social Security Agreement” was framed and submitted to the GMC for its approval; (c) the decision was taken to create the Permanent Observatory, organized in the form of a network among countries, with headquarters in the Argentinian Ministry of Labour and Social Security; and (d) discussion has been initiated within Subgroup No. 10 on the Charter of Fundamental Rights.
The CCSCS has openly voiced its opinion that the role of WSG No. 10 within the GMC should be enhanced. Hence, the CCSCS rejected the Labour Ministers’ decision that the WSG No. 10 should meet only twice a year, and proposed the alternative of three annual meetings, together with committee meetings every two months. Finally, the CCSCS emphasized that priority should be given to the functioning of the tripartite plenaries within each WSG No. 10 meeting. The CCSCS seeks in this way to enhance the WSG No. 10’s status in the hierarchy of the GMC structure in order to prevent it from becoming a sort of “advisory committee” to the GMC.
Working Subgroups provide ground for a broad network of trade union cooperation
Such steps give WSG No. 10 a more prominent institutional status and serve to bolster efforts to ensure that the Mercosur construction process achieves a type of subregional integration that enhances not only trade interests but also the values of economic and social democracy. If this is not achieved, the global labour and social concerns espoused by WSG No. 10 will be altogether neglected, since they will not be addressed by any of the remaining GMC Subgroups. These are: WSG No. 1, Communications; WSG No. 2, Mining; WSG No. 3, Technical Regulations; WSG No. 4, Financial Affairs; WSG No. 5, Transport and Infrastructure; WSG No. 6, Environment; WSG No. 7, Industry; WSG No. 8, Agriculture; WSG No. 9, Energy. Tripartite structures are also present in these subgroups within which the national trade unions operate by branch of activity and through the ITSs. In this manner, the trade union activities of the diff e rent subgroups allow a broad network of trade union cooperation to be built up between the CCSCS, the national trade union bodies and their federations/confederations by branch of activity and the ITSs. Therefore the trade union strategy objective in all WSGs of the GMC is to boost trade union participation and tripartism and to proceed in such a way as to make WSG No. 10 the forum for drawing up global legal-labour standards which will furnish Mercosur with a progressive supranational social dimension.
The Economic and Social Advisory Forum (FCES)
Free trade but at the expense of identity and autonomy
The FCES, which was established under the Ouro Preto Protocol, is a body which represents economic and social sectors (art. 28), composed of an equal number of representatives from each member State (art. 28). It has an advisory function and may make recommendations to the GMC (art. 29). On 25 June 1996, the GMC approved the statutes of the FCES which is to be composed of the respective national sections of each State Party of Mercosur in conformity with article 28. Since its inception, the FCES has held two meetings (Brazil 1996 and Paraguay 1997), and a programme of work has been drawn up. In the Paraguay meeting (Asunción, 22 April 1997), the FCES agreed on an important document regarding the American Free Trade Area which accepts the development of free trade in the hemisphere while preserving the identity and autonomy of Mercosur. The FCES will meet once more in late 1997 in order to frame labour policies for Mercosur.
Social and political institutions for participation and bargaining
The institutional structure of the FCES consists of the Forum Plenary which is the supreme body, composed of nine representatives and their respective substitutes members for each member State. The FCES is composed of employers’ organizations, workers’ organizations and a host of others; each national delegation must observe parity in the designation of representatives of workers’ and employers’ organizations. The creation of the FCES should be viewed as a major step towards the construction of Mercosur as a common market with political and social institutions for participation and negotiation between the social interests involved. In this regard, Mercosur is similar to the integration model pursued for three decades by the European Economic Community, now the European Union.
Other social categories and groups
The “core” of the FCES is composed of employers’ and workers’ organizations. However, other categories and social groups are likewise represented, including consumers, environmentalists, liberal professions, media, culture and science, and education.
As stated, the WSG are bodies within the GMC structure (as are other institutions such as the Specialized Meetings, the ad hoc Groups, and the Technical Cooperation Committee). In contrast, the FCES is one of the six bodies belonging to the Mercosur structure.
The forum enjoys more freedom
Unlike the WSGs, which are composed of government officials and which advise the “private” sectors, the FCES is composed directly of representatives of the private sector, requires no authorization, and may issue recommendations without the participation of the government sector. Thus, the FCES enjoys greater freedom than the WSGs.
Unions can bring pressure to bear on governments
The vitality of the FCES is therefore related to: (a) the political desire of its members to forge an institution of prestige and political weight; and (b) the political will of governments regularly to consult the FCES and, thus, to consolidate it. But the FCES will only achieve political prestige if it becomes the forum for formulating proposals of a global nature (for instance, regarding macro economic goals, policies for compensating the disadvantaged regions of each country, and regarding environment, labour market, social and health and security funds, migration). The FCES should concentrate on labour matters, but in a manner intended to strengthen, but not replace, the role of tripartism in the WSG No. 10. Logically, should the GMCs seek to restrict the WSG No. 10 to government participation, the FCES would serve as an ideal channel through which trade unions could bring pressure to bear on governments. In turn, in the FCES, trade unions are confronted by the major challenge of equipping themselves to formulate, propose and achieve consensus on global economic and social policies designed to make Mercosur an institution that promotes economic development with social equity. The priorities of the trade unions in the FCES include that of discussing the Charter of Fundamental Rights. Ways should be considered for incorporating the employer-worker organizations of Chile and Bolivia in the FCES, under the formula of 4+2 participation. Finally, the Permanent Observatory supplies the FCES with information.
Toward the Mercosur Parliament
With the establishment of the Joint Parliamentary Commission (JPC), a first important step has been taken towards recognizing that Mercosur will, in the near future, require a decision-making parliamentary body. Mercosur's agenda should also include the creation of supranational courts of justice.
The Mercosur flow chart features the JPC as an advisory body to the GCM, but the objective of trade unions should be to channel initiatives by the parliamentary sectors with a view to turning the JPC into a real supranational parliament which features on the Mercosur’s organizational plan as the prime administrative institution. Such a trade union strategy is based on the socio-political nature of trade unions, who claim their right to “engage in politics” while maintaining their autonomy, to forge links with political parties sympathetic to workers, and to introduce debate on supranational socio-labour topics in national parliaments. The CDC has demonstrated its interest in social and labour topics by: (a) placing the discussion of the Charter of Fundamental Rights on its agenda. It is probable that the Charter will also be discussed in some of the National Legislative Assemblies of the member States; (b) signing the Buenos Aires Declaration with the ILO in September 1997, thereby instituting a campaign to bring an end to child labour; and (c) drawing up an agenda with the ILO to agree on policies and p rogrammes to combat discrimination and social exclusion.
The social and labour institutions of Mercosur at the national level
When Mercosur was being set up, many people proclaimed its failure. There is no doubt that difficulties were to be anticipated on account of the existing imbalances in production and services structures, territorial and population density, education and vocational training, diff e rent channels of access to world markets, combined with long-standing protectionist economic policies. Powerful contributing factors to the construction of Mercosur included globalization and world interdependence, the formation of economic regions, and strong international pressure toward free trade, openness and deregulation.
No choice but to change course
However, the creation of Mercosur was not motivated solely by external factors: internal factors likewise promoted the formation of national economies of scale, with a view to achieving a dynamic integration of the economies of the subregion in world markets. Chile had successfully applied such a strategy throughout the previous decade. It is for this reason that the Treaty of Asunción, under which Mercosur was founded in 1991, received the support of the political, business and trade union entities of the countries involved, and that the respective national societies offered their support. It is impossible to understand Mercosur unless we accept that, prior to its creation, an awareness existed in national societies that a change of course was inevitable and that closed economic models had to make way for openness and integration.
Roots in national societies
It was claimed that Mercosur had no future because it would inevitably become “a bureaucratic superstructure” that was not rooted in national societies. Experience in individual countries has, however, demonstrated the success of institutions which bring together the business community, technical specialists, research and information centres, cultural exchange centres, publications, etc., which are all devoted to promoting a series of activities within Mercosur. Mercosur is now considered to be just “common sense” in the view of the majority of the population of member States.
Between 1991 and 1995, the growing number of committees and working groups formed by the specialized agencies of governments (particularly in the Ministries for Foreign Affairs and of the Economy) and representations of employers’ and workers’ organizations, offered a clear example of how the political-institutional fabric of Mercosur grew in member countries. The GMC Subgroups and the Trade Commission instituted by Ouro Preto have proved to be the focus of an unprecedented participation of national private sectors in the development of Mercosur.
In that connection, attention should be drawn to: (a) the existence of national tripartite working groups and subgroups; (b) the formation of the national sections of the FCES in the four countries. It is to be anticipated that these national forums of the FCES - which discuss economic, social and labour policies in terms of integration - may well come to serve as bargaining tables for social agreements and covenants to facilitate participation in Mercosur. The national sections of the FCES could function as the forum for negotiations between private sectors, with impact on governments.
The proposed Charter of Fundamental Rights
In December 1993, the CCSCS approved its draft Charter of Fundamental Rights, thereby fulfilling a resolution adopted by the then WSG No. 11. As mentioned previously, the charter features on the agenda of WSG No. 10 and will also be discussed by the FCES and the JPC.
Its legal texts are drawn from ILO Conventions and Recommendations and from the basic principles of the Declarations, Covenants and Protocols constituting the legal heritage of mankind, in particular the Protocol of San Salvador.
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The objectives of the charter are:
(a) to achieve the institutional incorporation of the social dimension in Mercosur;
(b) to adopt instruments for securing a social space in the integrated market, so as to guarantee basic social rights;
(c) to oblige member States to ratify, implement and comply with the core ILO Conventions;
(d) to ensure that fundamental rights are progressively acquired.
The charter is divided into two parts and seven sections:
The sections of part 1 are as follows:
- the scope and social dimension of integration;
- the right to free movement of workers;
- fundamental rights of the person and of workers;
- collective rights;
- rights to social security.
The sections of part 2 are as follows:
- implementation of the charter;
- verification of compliance with the charter.
The process of negotiating and ultimately adopting the charter will be lengthy, and will certainly not be void of difficulties. The Charter, in establishing the social profile and labour rights of workers in Mercosur: (a) establishes supranational labour and social standards and the supervisory machinery for monitoring implementation binding on the signatories of the Treaty of Asunción; (b) requires governments to bring their national labour standards on par “from the bottom upwards”; and (c) serves as a source for directives and draft legislation on the subject areas included. Logically, the CCSCS document should be viewed as a working draft for tripartite debate and negotiation. Hence, the charter may be amended in order to achieve consensus among the parties.
Use the charter to regulate bargaining framework
In drafting the charter, workers’ organizations were seeking a form of integration in which the social dimension would not be confined to a set of basic labour standards which would require the parties to comply with a core of ILO Conventions and with domestic labour legislation (as is the case with the Nafta). The trade unions agreed on a model for the social dimension of Mercosur which links labour and social rights with the national societies and political systems, so that the Charter would serve as an instrument for regulating various public and private spheres of negotiation. The social charter is also a special programme with far-reaching implications, which progressively seeks to renew societies, economies and political systems. The Charter will have a bearing on policies which focus on production systems and on improving quality of life, employment levels, etc.
The Charter is a long-term strategic objective, the adoption and implementation of which imply a change in the correlation of forces in the individual countries which will foster progressive popular blocks and bridle “wildcat capitalism”.
Will foster social consciousness
With reference to workers’ organizations, the Charter will regulate the supranational labour market and will have an impact on national labour markets. For this reason, it is a priority focus for trade union action. Indeed, the establishment of a supranational labour market regulated by the Charter will guarantee the rights of workers, particularly collective and individual rights, social security, etc., and foster the emergence of “corporate citizenship” in Mercosur.
In 1997, tripartite negotiations commenced within Subgroup No. 10 to arrive at an Additional Protocol to the Treaty of Asunción which includes labour and basic trade union rights (in the guise of a social clause), with mechanisms for monitoring compliance and sanctioning infringements by member States. But this Protocol will only be accepted by the legal organizations if it states that it constitutes the first step towards incorporating the Charter in the supranational normative structure of Mercosur.
The impact of Mercosur on labour legislation
The extent of the positive social effects of regional integration will depend ultimately on the growth of the economy and of trade, income distribution policies, etc., and will be felt in the medium and long term. In contrast, negative impacts on jobs may be much more immediate. The establishment in 2006 of an intraregional free trade zone with zero tariffs between the countries of the block, including Mercosur, may well cause situations of sectoral unemployment as the result of the disappearance or downsizing of companies, or even of whole sectors of production in the countries without tariff protection who are unable to compete with the other countries in the group. The other negative impact of integration lies in the effect of “social dumping”.
Trade union agendas by branch of activity
The reduction or removal of tariff protection for trade between the countries in the region, together with the requirement that the block as a whole should compete more effectively with the rest of the world, may prompt enterprises to endeavour to enhance their competitiveness at the expense of working conditions, and governments to tolerate, if not encourage, such practices. The existence of large numbers of multinationals in Mercosur will lead to the rapid formation of supranational business spaces. These phenomena mean that trade unions must coordinate their actions by branch of activity in order to control the multinationals, an end which might best be achieved through supranational collective bargaining approaches.
Supranational standards
Labour legislation is the normative network of labour relations under which workers are protected, and it cannot therefore be left to ignore the effects of integration on the labour market. The Charter of Fundamental Rights will create supranational standards. However, a supranational labour law should also be developed for the purpose of regulating these new regional-level circumstances and of harmonizing respective national labour legislations in the light of new regional circumstances.
The CCSCS has been instrumental in framing trade union policies to meet the challenges of building up a progressive supranational labour law by establishing a committee to undertake the following tasks: (a) study legal procedures for labour standardization in the regional integration spaces; (b) draft core international labour standards (based on ILO Conventions); and (c) determine how national labour laws are affected by regional economic integration.
Foundations for a supranational trade union culture
of progress and solidarity in Mercosur
It may be fairly confidently stated that within the next ten years the economic and political structures of Mercosur will have been consolidated. The basic objectives of free trade and an imperfect customs union will have been achieved through staggered customs agreements (culminating in an across-the-board zero tariff by the beginning of the next century). The markets of the Mercosur countries are rapidly flowing into one another, through division of labour policies based on the fundamental intentions of establishing Brazil as the main industrial/financial hub, and Argentina as the main agro-industrial hub. The supranational system includes a supranational “bank”, BANASUR, which will coordinate economic and financial operations between member States. The division of labour in the integration space has been furthered by the activities of multinational enterprises and of large economic groups. Mercosur will vibrate between the two centres of attraction represented by the large free trade zone which the United States proposes for the entire American continent, and the recently-established European Union. Companies based in Asia, particularly Japan, are already endeavouring to establish links with Mercosur.
Head- on collisions
However, in constructing this subregional economic space, clashes are bound to occur between governments seeking to protect sectors of production and services, and in connection with the security of borders. Basically, a choice of two substantive modes of integration exists: one concentrates almost exclusively on the interests of companies, and the other which might be termed as representing a model of self-sustaining balance and development between national markets and supranational markets.
Cultural networks: solidarity or individualism
The institutional construction of Mercosur includes political and institutional components that might be either positive, for example, promoting the construction of Parliaments, strengthening the FCES, or negative, e.g. eroding or destroying the image of institutions of democratic political participation such as political parties, trade unions and employers’ organizations, or progressive social movements. Finally, on the cultural front, the construction of Mercosur might lead to either the construction of a network of national and supranational scientific and educational institutions based on shared values of integration, common objectives and solidarity between people, or to a system of values based on individualistic capitalism and on economic success and consumerism of privileged segments of national societies and social exclusion caused by poverty and the absence of quality education and vocational training for other sectors of national societies. The first cultural option would have the effect of strengthening national societies, while the second would lead to balkanization and fragmentation of the weaker groups in the nations’ civil societies. The latter could well prove a fertile breeding ground for turning demands for social equity into hate and chauvinism among the excluded.
Cultural choices and the media
Meanwhile, the increasing influence of the media, particularly television, Internet and publications, will be decisive in determining which of these cultural objectives prevails. It is to be noted that there is already talk of “cultural” Mercosur, that is, a series of policies and activities pursued by universities, research centres, NGOs, etc., with a view to promoting cultural exchange, compatibility among study programmes, and cooperation in scientific research. Trade unions should join these endeavours to promote culture, science and education in the region.
Overcoming national prejudices
The trade union organizations of the countries involved cannot remain indifferent to the choices facing confronting Mercosur. Trade unions will see their future positions strengthened or weakened, depending on which alternative prevails. During the short period between 1990 and 1996, the CCSCS, the activities of the ITSs, the Latin American Confederation of Workers (CLAT), etc., have allowed the previously isolated working populations of the respective member States, which used to entertain strong nationalistic prejudices, to draw closer together and take the first steps towards overcoming nationalistic prejudices between trade unions and to make progress in confidence building and in developing a common trade union discourse. This unprecedented situation, which was made possible to a large extent by the activities of the CCSCS and of the international trade union movement, should be viewed as an integral part of a system of political, social and moral values shared by the workers of the member States. It will take time to forge a supranational trade union culture, but it will be immensely beneficial for the workers and the peoples of Mercosur whose work and sacrifice daily contribute to the construction of the supranational economic, social and political space.
Note
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Ouro Preto Protocol
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Updated by TH. Approved by GQ. Last updated: 30 April 1998.
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