BackgroundWorkers need diverse financial services to accumulate assets, generate income, and manage risks at each stage of their lives. Nevertheless, they are often overlooked by banks and other financial institutions. In many countries, and particularly in developing countries, workers still lack access to formal financial services including savings, credit, insurance, remittances and payments. Even if financial services are available, they may come with some challenges. Services may not be affordable, they may not meet the needs of a particular worker’s household, or they may not be available within reasonable physical proximity nor regulated and overseen to protect clients. Furthermore, workers may not have the adequate capabilities to make sound financial decisions.
Many trade unions are filling a gap in the financial markets for the benefits of the members, the unions and the communities. By offering financial services – either directly or indirectly, they can strengthen loyalty among their members, attract new members, improve their outreach to workers in the informal economy, and potentially increase their revenues. An ILO survey undertaken with 166 unions worldwide highlighted that 60 per cent already offer some sort of financial service, and an even larger percentage, 69 per cent, are interested in starting or improving their offering.
The institutional options that trade unions use to provide financial services are diverse. Yet trade unions often recognize, or are learning from experience, that providing financial services – whether banking or insurance - requires more specialization and expertise than other support services they may offer.
Trade unions often need assistance to provide financial services effectively, so the take-up by members is high enough to sustain and maintain the services without draining the union’s main resources and reserves. In some cases, unions also need to build their capacities to advocate for an enabling environment for financial inclusion, to develop financial education programme for their members, and to reach out to investors.
The lack of inclusive finance for workers is not a new challenge for trade unions. Unions in the USA, Europe, Japan and other countries have been pioneering interventions to provide their member with alternative sources of financing and insurance since the early 1900s.1 A number of banks and insurance companies set up by trade unions in the past hundred years are operating today, owned partially or fully by unions and serving workers with the trade union values, providing an important “social finance” option. The knowledge and expertise accumulated by those financial institutions and their respective labour movement over the years are considerable and could be extremely valuable for trade unions in their journey to offer financial services professionally.
With these observations in mind, the ILO Social Finance Programme and the ILO Bureau for Workers’ activities seek to establish of a global partnership of organizations with trade union roots willing and able to provide technical assistance and resources to build trade unions’ capacity to enhance financial inclusion.
The overall objective of this meeting is to explore the feasibility of establishing a global partnership of trade union financial institutions and other key trade union organizations to enhance financial inclusion of workers.
The immediate objectives are:
- Create a forum for financial institutions that have trade union roots to exchange on their experience in promoting inclusive finance for workers in their respective countries.
- Present and discuss the concept of a global partnership of trade union affiliated financial institutions
- Define possible goals, membership principles, governance systems, services to be provided, and financing mechanisms for the global partnership.
- Develop a roadmap for the development of the global partnership.