ACTRAV Symposium on Income Inequality, Labour Market Institutions and Workers'Power: Statement by Luc Cortebeeck,President ILO Workers’ Group
Dear colleagues,
It is a great pleasure to be with you this afternoon. I regret that due to previous commitments I could not be present during the whole week but I am glad to see that you have worked hard and have had fruitful debates. Let me also thank ACTRAV for the organization of this important Symposium.
I also want to thank the Director-General for his presence at the closing session of our meeting. We are happy to have a chance to share with you our thinking including on how the ILO could contribute to reverse the trend of growing inequality that is so harmful for equal opportunity, social cohesion, social justice and sustainable development.
We had a comprehensive debate about the causes of inequality, its negative impact on societies and on nearly everybody’s quality of life and on the need for a multifaceted policy response. Prof. Wilkinson showed how badly inequality affects nearly all spheres of our lives.
Social Justice is at the heart of the ILO’s mandate as set out in the constitution, the Declaration of Philadelphia and the Social Justice Declaration. It cannot be solved in the labour market alone and cannot be achieved at national level only. What is needed is a re-thinking of the current globalization and development model to make it more inclusive, building upon all the elements of the decent work agenda. In 2008, the Social Justice Declaration recalled that as trade and financial market policy both affect employment, it is the ILO’s role to evaluate those employment effects to achieve its aim of placing decent employment at the heart of economic policies.
Some key areas of work have been identified in the course of this Symposium in order to reduce income inequalities and build workers’ power. You will see that often they concentrate on the need to reinforce the ILO’s agenda and I would like to share them with you.
Governance
Financialization has been the driving force to shift profits to financial operations and speculation instead of wages and productive investment in the real economy. There cannot be a neoliberal finance-driven economy and expect that labour market institutions on their own can withstand the rising tide of market pressure.
In addition to financial regulations this will require changes in the system of corporate governance based on inclusive social dialogue to instill more accountability in the way enterprises are run to prevent abuses in pay differentials, to move away from “short-termism” in the conduct of economic affairs and direct profits towards investment in the real economy.
Quality employment
Reducing inequality requires quality employment. Universal application of labour standards, formalization of the informal economy, elimination of precarious employment and extension of centralized collective bargaining are essential to stop the race to the bottom. Furthermore the creation of unemployment benefits and employment guarantee schemes are essential for reducing market pressure on workers. The state as employer must be exemplary in providing quality employment. In addition, public utilities and services, the promotion of the social economy and of workers’ cooperatives are key strategic areas to create quality employment and to provide crucial goods and services to society. Workers around the world would benefit enormously from a renewed investment of the ILO in this area.
Public investment to boost aggregate demand
We see a key role for higher mass income, public services and public investment to stimulate aggregate demand and provide the collective public goods that are indispensable for fair and inclusive societies. The ILO has a key role to play in providing guidance for good social standards in public investment and public procurement based on ILO Convention 94 (labour clauses in public contracts).
Ending austerity
Austerity policies are currently practiced in over 100 countries in the world. In all these countries workers have been made to pay for a crisis which they have not caused while the financial sector who is at the origin of the crisis remains insufficiently regulated. Austerity will lead to long periods of recession or very sluggish recovery. The ILO would do an incredible valuable service to the international debate and to debates at national level to present a coherent macroeconomic alternative to failed austerity policies. In so doing it would be important to also highlight two elements: the burden of fiscal austerity should not be put on the workers and the poorest segments of society; and policies aimed at flexibilizing the labour markets should be reversed given that there is no evidence that such flexibility will stimulate employment and economic growth.
Austerity policies are not part of the solution, but part of the problem. Colleagues from Japan described how the country has suffered from 20 years of deflation. Today the wrongly designed European Monetary Union is also forcing countries into the vicious cycle of wage cuts, deflation and a rising debt burden. The mainstream recipes do not work for working people. We are confident that the recently created research department of the ILO will be instrumental in putting forward evidence-based alternative policies to allow the ILO to step up its advocacy work and country assistance to counter the economic myths and ideological positions that are currently driving the debate.
Freedom of association and extension of collective bargaining
As the Social Justice Declaration reminded us the rights enshrined in Conventions 87 and 98 are enabling rights. But regrettably many governments and employers fail to respect them. In too many countries governments act contrary to their obligations under voluntary ratified conventions, undermining or even destroying existing collective bargaining arrangements and weakening trade unions. Yet, there is widespread evidence of a strong relationship between trade union density, collective bargaining and reduction of wage inequality. It is therefore important that the ILO assists countries to provide the environment that ensures that all workers can enjoy the benefits of collective representation and collectively protected wages and working conditions.
Collective bargaining and the right to strike are essential for workers to rebalance an unequal employment relationship. Without comprehensive collective bargaining it is impossible to create a broad middle class and democratic societies. The colleagues from South Africa learning from the experience in Brazil and Uruguay are currently working with the government on a comprehensive new approach to secure universal collective bargaining coverage.
We want to reiterate the importance of the June 2013 conclusions of the recurrent discussion on social dialogue that provide the ILO with a strong mandate on collective bargaining. The ILO and ACTRAV are well positioned to undertake active advocacy work and provide tailor-made advice on how best to promote greater collective bargaining coverage and more centralized and coordinated systems.
We also want to recall the conclusions of the ACTRAV Symposium on collective bargaining that provide relevance guidance as well.
Minimum wage
A living minimum wage is indispensable as a wage floor. It is not a substitute for collective bargaining, but a state guarantee against the worst forms of exploitation and a key building block for a fair wage structure.
Social Security and progressive taxation
The horizontal and vertical extension of social security and progressive taxation systems to pay for it are essential to reduce inequality and provide income security. The ILO Recommendation 202 provides excellent guidance and is an important tool to formalize the informal economy. There is fiscal space even today to implement social protection programmes provided progressive tax reforms are implemented. More resources can also be found if serious measures were undertaken to fight fiscal evasion and if there was a shift in spending priorities away from military spending. An important point is the strategic role of debt and how it is being used to dismantle the state, social security and to force the privatization of public services. Instead, debt restructuring has to be a component in a global strategy to fight inequality.
Gender pay gap
We also discussed the persistence of the gender pay gap which reflects the continued discrimination of women in the labour markets and societies. To address it we need comprehensive policies including minimum wages policies, centralized and coordinated collective bargaining systems, policies related to care, sharing of family responsibilities and maternity protection.
In the Conference discussion on sustainable enterprises a few years ago we all agreed that the maternity convention is one of the four ILO technical conventions that are highly relevant for the creation of sustainable enterprises. For these reasons, we consider that the promotion of sustainable enterprises should go hand in hand with the promotion of the ratification of the Maternity Convention.
Migration
In many countries migrants face discrimination and are treated as second class workers. Participants from the Gulf region highlighted the terrible conditions migrants are facing. The construction work ahead of the World Cup in Qatar provides an opportunity to draw the world’s attention to these forms of exploitation. What we see in Qatar are inexcusable working conditions denying migrant workers their basic rights, decent wages and safe working conditions. What is urgently needed - building on the ILO Conventions on migrant work - is to guarantee the right of migrants to join trade unions and to benefit from decent working conditions. The priority given by the ILO on migration opens up new avenues to position the ILO at the center of this debate with a view to promote a right’s based approach. Trade unions are keen to play an active and positive role to make this happen.
Multinational companies and decent work
Another big challenge is the aggressive profit maximization strategies of multinational companies. The Rana plaza accident is only the peak of the iceberg. Trade unionists and academic experts reported that unilateral voluntary corporate social responsibility by and large does not yield positive results. We need to have more binding rules. Without the right to organize, without support for real workers representation in enterprises, without properly resourced labour inspection, without legal responsibility of enterprises for its subsidiaries and the supply chain, without genuine and results orientated social dialogue no real progress will be made. The big global buyers have a direct responsibility for the informalization of economies. They dictate prices that force their suppliers to push their employees into precarious and informal employment. Multinationals must be brought to the ILO. In this regard we welcome the debate that took place at the October Governing Body on engagement with the private sector and stand ready to engage in this debate recalling that the 2007 conclusions on sustainable enterprises reminded that enterprises are also made up of workers and not only entrepreneurs.
Labour market institutions and precarious employment
Finally let me turn to labour market institutions. We have discussed how despite their proven record in addressing inequality these institutions are under attack. We have also seen how countries which have been successful in reducing income inequality have done so by strengthening these institutions. We have debated how higher collective bargaining coverage and centralized systems of collective bargaining reduce wage inequality and discrimination. We therefore need a strong advocacy by the ILO to counter the attacks on collective bargaining and stress the contribution of labour market institutions, particularly collective bargaining, in reducing income inequality.
In many countries employers try to circumvent labour legislation through outsourcing, agency work and precarious employment arrangements. These are deliberate attempts to create indecent work and breaking workers’ power. We focused our previous symposium on precarious work and identified considerable regulatory gaps that resulted in a widespread increase in indecent, precarious and unacceptable forms of work. Without reversing these trends a reduction in inequality will be impossible. The answer is not just to focus on vulnerable groups but create universal applicable rights and benefits for all workers. This requires comprehensive protective labour market institutions instead of a deregulatory agenda that attempts to make all workers more vulnerable.
Dear Director General, Dear Colleagues,
These are some of the elements and concerns flagged-up during the discussions. This is not the end of our work on these issues but one more step in trade union strategies to identify areas where they can intervene in order to shape positive change.
We know that ultimately change will depend on our ability and that of our allies to make changes on the ground, to mobilize, to organize and to build counter veiling power. The ILO is our first and key ally. The ILO was built because there is a power imbalance in labour markets. We reaffirm our will to work hand in hand with the ILO, in the promotion of ILO standards and a strong supervisory mechanism. We will jointly work towards the promotion of a development model deeply anchored in social justice and decent work.
I thank you for your attention.
It is a great pleasure to be with you this afternoon. I regret that due to previous commitments I could not be present during the whole week but I am glad to see that you have worked hard and have had fruitful debates. Let me also thank ACTRAV for the organization of this important Symposium.
I also want to thank the Director-General for his presence at the closing session of our meeting. We are happy to have a chance to share with you our thinking including on how the ILO could contribute to reverse the trend of growing inequality that is so harmful for equal opportunity, social cohesion, social justice and sustainable development.
We had a comprehensive debate about the causes of inequality, its negative impact on societies and on nearly everybody’s quality of life and on the need for a multifaceted policy response. Prof. Wilkinson showed how badly inequality affects nearly all spheres of our lives.
Social Justice is at the heart of the ILO’s mandate as set out in the constitution, the Declaration of Philadelphia and the Social Justice Declaration. It cannot be solved in the labour market alone and cannot be achieved at national level only. What is needed is a re-thinking of the current globalization and development model to make it more inclusive, building upon all the elements of the decent work agenda. In 2008, the Social Justice Declaration recalled that as trade and financial market policy both affect employment, it is the ILO’s role to evaluate those employment effects to achieve its aim of placing decent employment at the heart of economic policies.
Some key areas of work have been identified in the course of this Symposium in order to reduce income inequalities and build workers’ power. You will see that often they concentrate on the need to reinforce the ILO’s agenda and I would like to share them with you.
Governance
Financialization has been the driving force to shift profits to financial operations and speculation instead of wages and productive investment in the real economy. There cannot be a neoliberal finance-driven economy and expect that labour market institutions on their own can withstand the rising tide of market pressure.
In addition to financial regulations this will require changes in the system of corporate governance based on inclusive social dialogue to instill more accountability in the way enterprises are run to prevent abuses in pay differentials, to move away from “short-termism” in the conduct of economic affairs and direct profits towards investment in the real economy.
Quality employment
Reducing inequality requires quality employment. Universal application of labour standards, formalization of the informal economy, elimination of precarious employment and extension of centralized collective bargaining are essential to stop the race to the bottom. Furthermore the creation of unemployment benefits and employment guarantee schemes are essential for reducing market pressure on workers. The state as employer must be exemplary in providing quality employment. In addition, public utilities and services, the promotion of the social economy and of workers’ cooperatives are key strategic areas to create quality employment and to provide crucial goods and services to society. Workers around the world would benefit enormously from a renewed investment of the ILO in this area.
Public investment to boost aggregate demand
We see a key role for higher mass income, public services and public investment to stimulate aggregate demand and provide the collective public goods that are indispensable for fair and inclusive societies. The ILO has a key role to play in providing guidance for good social standards in public investment and public procurement based on ILO Convention 94 (labour clauses in public contracts).
Ending austerity
Austerity policies are currently practiced in over 100 countries in the world. In all these countries workers have been made to pay for a crisis which they have not caused while the financial sector who is at the origin of the crisis remains insufficiently regulated. Austerity will lead to long periods of recession or very sluggish recovery. The ILO would do an incredible valuable service to the international debate and to debates at national level to present a coherent macroeconomic alternative to failed austerity policies. In so doing it would be important to also highlight two elements: the burden of fiscal austerity should not be put on the workers and the poorest segments of society; and policies aimed at flexibilizing the labour markets should be reversed given that there is no evidence that such flexibility will stimulate employment and economic growth.
Austerity policies are not part of the solution, but part of the problem. Colleagues from Japan described how the country has suffered from 20 years of deflation. Today the wrongly designed European Monetary Union is also forcing countries into the vicious cycle of wage cuts, deflation and a rising debt burden. The mainstream recipes do not work for working people. We are confident that the recently created research department of the ILO will be instrumental in putting forward evidence-based alternative policies to allow the ILO to step up its advocacy work and country assistance to counter the economic myths and ideological positions that are currently driving the debate.
Freedom of association and extension of collective bargaining
As the Social Justice Declaration reminded us the rights enshrined in Conventions 87 and 98 are enabling rights. But regrettably many governments and employers fail to respect them. In too many countries governments act contrary to their obligations under voluntary ratified conventions, undermining or even destroying existing collective bargaining arrangements and weakening trade unions. Yet, there is widespread evidence of a strong relationship between trade union density, collective bargaining and reduction of wage inequality. It is therefore important that the ILO assists countries to provide the environment that ensures that all workers can enjoy the benefits of collective representation and collectively protected wages and working conditions.
Collective bargaining and the right to strike are essential for workers to rebalance an unequal employment relationship. Without comprehensive collective bargaining it is impossible to create a broad middle class and democratic societies. The colleagues from South Africa learning from the experience in Brazil and Uruguay are currently working with the government on a comprehensive new approach to secure universal collective bargaining coverage.
We want to reiterate the importance of the June 2013 conclusions of the recurrent discussion on social dialogue that provide the ILO with a strong mandate on collective bargaining. The ILO and ACTRAV are well positioned to undertake active advocacy work and provide tailor-made advice on how best to promote greater collective bargaining coverage and more centralized and coordinated systems.
We also want to recall the conclusions of the ACTRAV Symposium on collective bargaining that provide relevance guidance as well.
Minimum wage
A living minimum wage is indispensable as a wage floor. It is not a substitute for collective bargaining, but a state guarantee against the worst forms of exploitation and a key building block for a fair wage structure.
Social Security and progressive taxation
The horizontal and vertical extension of social security and progressive taxation systems to pay for it are essential to reduce inequality and provide income security. The ILO Recommendation 202 provides excellent guidance and is an important tool to formalize the informal economy. There is fiscal space even today to implement social protection programmes provided progressive tax reforms are implemented. More resources can also be found if serious measures were undertaken to fight fiscal evasion and if there was a shift in spending priorities away from military spending. An important point is the strategic role of debt and how it is being used to dismantle the state, social security and to force the privatization of public services. Instead, debt restructuring has to be a component in a global strategy to fight inequality.
Gender pay gap
We also discussed the persistence of the gender pay gap which reflects the continued discrimination of women in the labour markets and societies. To address it we need comprehensive policies including minimum wages policies, centralized and coordinated collective bargaining systems, policies related to care, sharing of family responsibilities and maternity protection.
In the Conference discussion on sustainable enterprises a few years ago we all agreed that the maternity convention is one of the four ILO technical conventions that are highly relevant for the creation of sustainable enterprises. For these reasons, we consider that the promotion of sustainable enterprises should go hand in hand with the promotion of the ratification of the Maternity Convention.
Migration
In many countries migrants face discrimination and are treated as second class workers. Participants from the Gulf region highlighted the terrible conditions migrants are facing. The construction work ahead of the World Cup in Qatar provides an opportunity to draw the world’s attention to these forms of exploitation. What we see in Qatar are inexcusable working conditions denying migrant workers their basic rights, decent wages and safe working conditions. What is urgently needed - building on the ILO Conventions on migrant work - is to guarantee the right of migrants to join trade unions and to benefit from decent working conditions. The priority given by the ILO on migration opens up new avenues to position the ILO at the center of this debate with a view to promote a right’s based approach. Trade unions are keen to play an active and positive role to make this happen.
Multinational companies and decent work
Another big challenge is the aggressive profit maximization strategies of multinational companies. The Rana plaza accident is only the peak of the iceberg. Trade unionists and academic experts reported that unilateral voluntary corporate social responsibility by and large does not yield positive results. We need to have more binding rules. Without the right to organize, without support for real workers representation in enterprises, without properly resourced labour inspection, without legal responsibility of enterprises for its subsidiaries and the supply chain, without genuine and results orientated social dialogue no real progress will be made. The big global buyers have a direct responsibility for the informalization of economies. They dictate prices that force their suppliers to push their employees into precarious and informal employment. Multinationals must be brought to the ILO. In this regard we welcome the debate that took place at the October Governing Body on engagement with the private sector and stand ready to engage in this debate recalling that the 2007 conclusions on sustainable enterprises reminded that enterprises are also made up of workers and not only entrepreneurs.
Labour market institutions and precarious employment
Finally let me turn to labour market institutions. We have discussed how despite their proven record in addressing inequality these institutions are under attack. We have also seen how countries which have been successful in reducing income inequality have done so by strengthening these institutions. We have debated how higher collective bargaining coverage and centralized systems of collective bargaining reduce wage inequality and discrimination. We therefore need a strong advocacy by the ILO to counter the attacks on collective bargaining and stress the contribution of labour market institutions, particularly collective bargaining, in reducing income inequality.
In many countries employers try to circumvent labour legislation through outsourcing, agency work and precarious employment arrangements. These are deliberate attempts to create indecent work and breaking workers’ power. We focused our previous symposium on precarious work and identified considerable regulatory gaps that resulted in a widespread increase in indecent, precarious and unacceptable forms of work. Without reversing these trends a reduction in inequality will be impossible. The answer is not just to focus on vulnerable groups but create universal applicable rights and benefits for all workers. This requires comprehensive protective labour market institutions instead of a deregulatory agenda that attempts to make all workers more vulnerable.
Dear Director General, Dear Colleagues,
These are some of the elements and concerns flagged-up during the discussions. This is not the end of our work on these issues but one more step in trade union strategies to identify areas where they can intervene in order to shape positive change.
We know that ultimately change will depend on our ability and that of our allies to make changes on the ground, to mobilize, to organize and to build counter veiling power. The ILO is our first and key ally. The ILO was built because there is a power imbalance in labour markets. We reaffirm our will to work hand in hand with the ILO, in the promotion of ILO standards and a strong supervisory mechanism. We will jointly work towards the promotion of a development model deeply anchored in social justice and decent work.
I thank you for your attention.