ACTRAV Symposium

Income Inequality, Labour Market Institutions and Workers’ Power

Inequality is on the rise, both on a global level and within most countries. While the world economy is on a slow recovery, the spread of precarious employment relations contributes to widening the gap between the rich and the poor.

In most parts of the world, labour market institutions with their equalizing effects are under attack. Responding to the increasing importance of the topic for the Global Labour Movement, this Symposium focuses on three dimensions of inequality:
  1. Drivers of inequality and its impact on society
  2. Policy areas and trade union strategies to combat inequality
  3. Role and potential of the ILO to support trade unions in their efforts to reduce inequality
A policy change towards more equality is urgently needed, but overcoming the status quo requires broad alliances for change, both nationally and internationally. This Symposium aims at stimulating the discussion on how to make workers' organisations a strong pillar of a coalition for justice and inclusion. Trade unionists and labour experts from around the world are invited to discuss the issue with a particular focus on the following questions:
  • What are economic and social policy alternatives to the current inequality-enhancing and crisis-ridden globalisation regime?
  • What are successful and feasible wage and social policies to ensure greater equality?
  • How to re-gain national policy space for progressive reform policies even under the constraints of neoliberal globalisation?
  • What are successful examples of trade union mobilisation and alliance building to counter neoliberal regulations and corporate irresponsibility at the national and international level?
  • What is the role and potential of ILO Standards and ILO policy guidance to reduce inequality?

 Executive Summary of the Background Report

The report The Challenge of Inequality: Time for Change tackles one of the most encompassing challenges of our time: Inequality. It is argued that inequality is not an irrevocable phenomenon, but a political choice which has been actively promoted in the past. Liberalisation of trade and capital markets have led to a dictate of competitiveness while fiscal, monetary, and labour market polices have weakened the position of labour and strengthened transnational capital, in particular in the finance sector. With shrinking scope for redistributive policies, inequality has grown both on a global scale and within most countries.
In many countries, economic gains are mainly benefitting people at the higher end of the income pyramid, while the majority has hardly benefitted due to widespread wage restraint. In this situation, women, minorities and migrants are particularly left behind.
As recent research has shown, high levels of inequality have a consistently negative impact on welfare indicators such as life expectancy, literacy, infant mortality, homicides, mental illness and social mobility. In addition, this report shows how inequality threatens other key factors of human well-being such as democracy, public security, social stability and economic and environmental sustainability. After tracing and countering the neoclassical discourse in favour of inequality, the report advances three sets of policy options for achieving greater equality. To increase the income share of the bottom 40 per cent of the population, aspects such as Freedom of Association, minimum wages, social protection floors and universally accessible public services are crucial. For capping the income growth of the highest income groups, policies such as progressive taxation, regulation of the financial sector, salary ceilings for management and automatic marginal tax rises as well as a closure of tax havens are needed. Finally, the middle income group needs to be strengthened by increasing employment security and reducing precarious employment, extension of collective bargaining coverage, strengthening responsible public procurement, establishing comprehensive social security systems, promoting economic democracy, strengthening high-quality public services and combating housing segregation.

The traditional core areas of union activities – labour market institutions and social policies - are crucial to achieving greater equality. However, this needs to be complemented by consistently high levels of public investment and universal public services and policy measures to tackle the power of the financial sector and multinational companies as well as widespread tax fraud and evasion. Despite broad public support for better social security systems, high-quality public services and protective labour legislation, many governments use the global economic crisis as a pretext to attack these institutions even harder.

The enormous task of the labour movement is therefore to translate the public aspirations for bigger equality into real political pressure by creating an alliance of the middle income group with the bottom 40 per cent against the top 10 per cent income groups that has increased its income share in nearly all societies. Where labour, as the traditional defender of social justice, succeeds in building inclusive alliances beyond its traditional core constituency of blue collar skilled male workers, much needed policy space can be regained - even under the difficult conditions of globalisation. This Symposium provides the opportunity to discuss ideas, experiences and strategies to move towards more equitable and inclusive societies.