I thank you for the honour bestowed on SEAPAT to reflect upon the role of the ILO in the coming century. I have to send outa few SOS signals, however, because a new Director-General is waiting in the wings to lead the ILO into the 21st century who may have quite different ideas from the ones presented here. Another constraint that I face is that I cannot simply extrapolate from the Organization’s broad constitutional mandate where it might be going in the years ahead. I also wish to respect fully our Active Partnership Policy, which puts governments and the social partners at the centre of what the ILO secretariat should be doing. Furthermore, there have been many suggestions this afternoon which, taken together, constitute an impressive agenda in their own right.
What I can offer, therefore, is my personal reading of the challenges ahead and how to meet the most important one - poverty. In tackling this question I will focus on fundamentals - not the economic fundamentals that are much invoked in this part of Asia - but the politico-economic fundamentals of reducing poverty in contemporary society. The point of my presentation is that the best way to fight poverty is through the expansion of democracy and the strengthening of tripartism.
At the threshold of the 21st century, the world does not suffer from a lack of technological progress. Technological prowess has driven us into the corner of nuclear weapons. Environmental degradation is upon us. Most of all, there is widespread and large scale poverty. Poverty undermines the balance of terror that nuclear weapons may impose on responsible governments. Poverty disables environmental improvements. Poverty is morally, socially and economically unacceptable. "Poverty anywhere", postulated the ILO’s foresightful Declaration of Philadelphia, "constitutes a danger to prosperity everywhere". Combating poverty, in my view, is the single most important challenge the ILO has to address for as long as I can see ahead.
The most effective weapon against poverty is the expansion of democracy, and this on both economic and political grounds. On economic grounds because in the age of mass communication there is no more trade-off between democracy and economic growth; and because populations push democracies to put education, and therefore productivity, above all else. The fundamental political grounds for having democracy pull the cart of poverty are that true democracies are bound to turn their attention to the poor; they have to institute effective mechanisms of poverty relief; they cannot get away with promises of a better tomorrow, as the communist regimes did for a while; and because true democracies know that the economic trickle-down effect is a trickle at best but not a solution to the problem of poverty. True democracies also know that they have to strike a balance between growth and redistribution. That balance may well be shifting, because in true democracies nothing is cast in stone except the principle of accountability.
When social instability threatens, democracies will not send in the tanks. They will seek to resolve legitimate grievances. To that end, they will have to go beyond tokenism and symbolic measures, because - as a wise person once said - you can fool some of the people some of the time but not all the people all the time.
Democracy is the most effective and durable reinsurance against instability. There were one or two historical exceptions to this law of politics, notably in the country of my birth - Germany - where democracy was not solidly installed in the minds of all people and where poverty fell prey to a charismatic nationalist. In the 21st century, however, one cannot have stability without democracy. Outside the Democratic People’s Republic of Korea, where the walls of isolation are beginning to crumble under the twin assault of grinding poverty and knowledge of prosperity elsewhere, in the age of ubiquitous access to information about other citizens’ or other peoples’ living and working conditions, authoritarian or dictatorial regimes cannot durably respond to the legitimate aspirations of those who have been left behind. Only democracies can! And democracies can both educate and motivate the poor to pull themselves up by their own bootstraps.
It is not surprising, therefore, that the first of the ILO’s major objectives in recent years has been to support the development of democracy. Combating poverty has been another major objective.
Recent history holds many lessons. The failure of the communist command economies in the 1980s points to the stifling effects of undemocratic procedures. A communist regime can force or motivate some of the people some of the time but not all the people all the time.
The growth spurts experienced in the 1950s and 1960s in Western Europe, and in the last several decades in East and South-East Asia, show striking parallels and instructive differences, which warrant to be compared briefly.
In both regions, foreign direct investment (FDI) played an important role. So did exports. Much of the FDI was export orientated, even in Western Europe. Public ownership was an important feature, not only of utilities, but privatization set in early in some Western European countries. It progressed haltingly in others, as it does in this part of the world.
One notable difference between the two regions resides in the interlocking openess and expansion of domestic consumer markets. Subject as Western European governments were to the accountability that derives from democracy, they had to satisfy the rising aspirations of their populations in terms of higher wages and increasing consumption. This had the effect of establishing a much broader and more solid economic base than is characteristic of most of East and South-East Asia. Keynesian counter-cyclical measures in Western Europe tended to be quite effective until regional integration - first a common market, now an economic union - began to dissipate a portion of their intended domestic impacts across borders to neighbouring countries. Keynesians were eventually replaced by monetarists and the Deutsche Bundesbank. But the basic perspective remained the same: to ensure that domestic consumer markets could florish while keeping down the rate of inflation so as not to cheat people out of their hard-earned incomes.
Another telling difference between the two regions is the development of social security systems and safety nets. While the inception of social security in Bismarck Germany owes nothing to democracy, its extension since Beveridge does. It was the spectre of poverty and instability which moved Bismarck and Beveridge. It moved Western Europeans after the Second World War to such an extent that economic downturns have never incurred a situation that called into question the stability of society in its social, economic or political manifestations. Nor has social security incurred motivational dependence. Most people have a horror of depending on anything other than work. The several authoritarian or dictatorial regimes in East and South-East Asia, on the other hand, have decried social security systems and safety nets as unnecessary - almost "un-Asian" - and as a hindrance to economic growth. Blinded as these regimes were by the inflow of FDI and heady GNP growth rates, they conveniently overlooked the mild gesturing of this "normative" body in Geneva called the ILO.
For sure, growth was pulling people out of poverty, almost entirely so in the Republic of Korea and Malaysia. But countless millions remained poor or very poor throughout the region. And growth was built on flimsy structures and not underpinned by the development of mechanisms to provide income replacement in the formal sector and some kind of income support in the informal sector or for agriculture’s poor.
I am not claiming wisdom through hindsight. But I do find disturbing some of the reactions to the ILO’s report on The social impact of the Asian financial crisis, which was submitted to the Bangkok meeting of East and South-East Asian countries, 22-24 April 1998. The ILO’s proposal that the development of social protection be accorded "an important priority for future action" (p. 57) and that "the strengthening of democratic institutions (be) central to the post-crisis economic model that is required" (p. 51), fell on deaf ears. Social protection continues to be equated with expenditures which, it is said, one cannot afford - including in the Philippines.The notion of democracy was actually omitted from the conclusions when they were considered at this meeting.; Yet none less than the President of the Republic of Korea, Kim Dae Jung, said recently that "in every country in Asia ... the major reason for failure was lack of democracy" (International Herald Tribune, 24 February 1998).
To go back to the comparison of the Western European with the East and South-East Asian experiences in combating poverty, tripartism - which is rooted in democracy - is another differentiating feature. Tripartism is not something cultural. It is procedural and, more fundamentally, political. Tripartism, as you well know in the Philippines, means that governments permit employers and workers to organize themselves autonomously and admit them into policy-making circles, both for consultation and for decision-making. This kind of tripartism was one of the pillars of Western Europe’s progress and stability. It has been, as far as I can judge, partly responsible for the fairly shock-less absorption of the Asian financial crisis by the Philippines’ formal sector. By contrast, the lack of tripartism as I have defined it accounts in some measure for the continuing confrontations between workers, employers and the Government in the Republic of Korea and the looting in Indonesia. As regards Thailand, there are stirrings of true tripartism. On Malaysia "the jury is still out."
I am convinced that tripartism will be an indispensable mechanism for East and South-East Asian countries in tackling the question of poverty head on in the 21st century. This calls for help in the establishment of autonomous workers’ and employers’ organizations where they do not yet exist and for their strengthening where they already exist. It calls for the organization of the rural poor as well as of the informal poor, be it through autonomous organizations or out-reach activities by formal sector bodies. Personally, I would very much like to see the ILO support developments in these respects, including here in the Philippines.
Incomplete as it was in this short presentation, the comparison of Western Europe and this part of the world brings out forcefully that:
Durable social, economic and political stability does not come from making unskilled workers agree to managers’ business plans at enterprise level. Stability derives from the satisfaction of consumers’ needs and the setting up of procedures to address grievances, notably the persistence of poverty.
I would wish the ILO to bear these fundamentals in mind in the 21st century and to be fearless in the pursuit of tripartism in all sectors of the economy. I see no better way of combating poverty!
For further information, please contact the South-East Asia and the Pacific Multidisciplinary Advisory Team (SEAPAT) at
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