Shaping the Future of Work
STEPHEN PURSEY
HEAD OF ECONOMIC AND SOCIAL POLICY ICFTU
HEAD OF ECONOMIC AND SOCIAL POLICY ICFTU
This lecture provides me with the opportunity to reflect on how the twin processes of globalisation and democratisation are affecting the role of trade unions. We in the trade union movement are thinking deeply about how to develop a new approach to labour/management relations based on the importance of respect for democratic rights and the need to ensure wide participation of workers in the continuous process of structural adaptation that characterises the global market.
As is shown in the ILO's latest World Labour Report, the industrial relations system faces many challenges. Perhaps the hardest thing to change in the world economy are the institutions we, and here I mean governments, employers and trade unions, have established to regulate our complex tripartite relationships. They are based on hard won compromises which many are reluctant to redo. And they are based on fundamental principles which most do not wish to undermine. However change we must. What I would like to attempt to do today is set out what I see as some of the foundations which seem to me necessary for the future of the world's industrial relations system. In doing so I am highly conscious of the fact that each nation has its own system and is likely to continue to have for many decades. Nevertheless, it is vitally important in an open world economy that our different systems are compatible one with another. I firmly believe that this is not only desirable but possible. Much of the work has to be done in the world parliament of labour, the ILO. But it is a task that has very wide implications for trade and investment, for employment and development, for society and for what has come to be termed the practice of good governance. I certainly do not claim that the ICFTU has all the answers but I do think that our starting point, and that of the ILO, of looking at the world of work and the contract of employment is a prism which sheds much light on the problems of ensuring that globalisation has a human face.
I will divide my remarks into four inter-related points:-
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the need to balance workers desire for security in employment with the constant pressure from the market on employers to adapt quickly and efficiently to changes in technology and trade;
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the significance of freedom of association both as a fundamental human right and as the means for social development, which in turn is a key to economic and political stability;
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the importance of ensuring a moral dimension to the functioning of markets and thus of progressing universal observance of core labour standards;
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the need for international co-ordination of policies for full employment and the elimination of poverty, built on strong national institutions that are capable of forging consensus for growth with equity.
Security and flexibility
As you might imagine, the ICFTU is frequently asked what should be the role of trade unions in a globalised market economy. Of course there is no one simple answer. Trade unions and the institutions of the labour market reflect the different histories of different countries, but I do believe that unions everywhere are facing very similar questions at the present time. And to put it very simply it is "how do we balance workers need for security in employment with the constant pressure from the market on employers to adapt quickly and efficiently to changes in technology and trade?"
Some politicians and employers do not see the need for balance at all, and perhaps I should briefly say why I think employers should be concerned about workers fears of insecurity; why unions have to come to terms with the need for structural change and adaptation; and why governments should aim to establish a sound framework of labour law to promote dialogue and agreement.
If workers are suspicious that their employer will lay them off or cut their wages or intensify the work process from one day to the next, they are unlikely to feel much loyalty to the company and its success. Perhaps a company can survive by creating an atmosphere of intimidation and threat, but in the modern world of constant innovation I doubt whether they can become leaders. In my experience the most successful companies and countries are those that are based on teamwork and partnership. And the key to both is trust.
Employers need workers they can trust to exercise initiative on the job, and workers need to trust management if they are to believe that change will be for the better rather than the worse. Likewise governments that respect the basic democratic rights of citizens, especially at the workplace, are creating mechanisms that will build up trust and enable workers to welcome and encourage change rather than see it as a threat to their livelihoods.
Employers should recognise that the cooperation and engagement of working people in adaptation and change is built on a sense of security that contracts of employment will not be arbitrarily changed. In too many companies that innocuous word "flexibility" has come to mean for workers lay-offs, unemployment, pay cuts, longer hours, increased stress and a higher risk of accidents and occupational disease. The absence of security in employment weakens the ability of companies and unions to work for change by agreement.
Just as companies need to understand workers fears about insecurity and look for ways to meet their aspiration for predictability in their employment contract, so workers and their unions have to come to terms with the fact that companies that do not change get left behind and die. Continuous product and process innovation is part of the reality of the global market, and comparative advantage lies with those companies that are best able to manage innovation. The most difficult challenge for management however is not in fact generating the new ideas but translating them into the organisation of work.
For unions to embrace a strategy of continuous adaptation the key ingredient is information and consultation. If we are to able to represent workers as they accommodate to change we must be able to contribute to management plans, point out problems, search for acceptable solutions, and above all allay workers fears that they might become the losers.
It is a practical impossibility to anticipate all the employment implications of technological and market change for employment. What governments, employers and unions need therefore is a framework for continuous discussion and bargaining at several levels of the economy. Tripartite institutions are vital to dealing with the national dimensions of change, including training and education. Company and plant level bargaining is the key to the smooth adaptation of employment within the enterprise. Local and regional cooperation initiatives are essential to avoiding widening gaps between job opportunities in different parts of the country.
The balancing mechanisms for security and flexibility in employment need constant adjustment to keep pace with constant structural change. In my view, governments, employers and trade unions need to focus on creating mechanisms for discussion and agreement about what should be the legal framework for contracts of employment and for bargaining at company and enterprise level. Strong unions and strong employers can and should be free to bargain over agreements that reflect the conditions faced in particular industries and companies. In many cases these collective agreements can be superior to the minimum provisions provided by labour law. Governments and parliaments cannot legislate for all the different situations workers and employers have to address although they can set good basic standards which are consistent with international obligations, especially to fundamental rights set in ILO Conventions.
Freedom of Association and Social Development
Turning to my second point, the ILO Conventions on freedom of association remain an essential foundation for a new industrial relations system and social development, and with their emphasis on the essential elements of law need to ensure the free functioning of trade unions are vital to proper dialogue and negotiation. Their observance also sends a clear message to trading partners that the country accepts what I believe is an emerging common global culture built on the democratic rights of citizens, a market economy and a social responsibility to promote equity through participation.
If you ask a stranger "who are you" they will often answer by telling you their occupation as well their namea People's sense of identity and personal esteem is intimately bound up with what they do for a living. If you become unemployed or if you become trapped in a job that is degrading and debilitatingd that vital sense of self respect is destroyed. The work experience is clearly more than just a means of earning a livelihood and escaping from poverty, it is also the main way people participate in, for want of better words, civil society.
Where individuals enjoy the right to set up organisations of their own choosing, the state is recognising that people can get together to change the way society functions; they are citizens. Where freedom of association does not exist, the state is in a position to command its subjects to obey and not to question or challenge authority. Of course other freedoms are tremendously important, freedom of expression, of religion, the right to a fair trial and so on, but it is freedom of association which creates the possibility for citizens to win other freedoms.
The market can achieve many things but one it cannot do is build social cohesion. That is a product of the institutions and relationships both public and private that constitute civil society. And it seems to me that the institutions and relationships that are developed around the workplace are an essential determinant of both economic progress and social justice. They have to be constantly adapted and naturally reflect the particular experience of different countries, regions and industries, and because liberalisation of trade and capital markets is moving ahead so fast, also the global pressures that are penetrating into areas of policy that had previously largely been thought of as only of national concern, especially to the process of job creation and work relations.
Creating an enabling environment for employment and sustainable livelihoods is directly related to all other aspects of international co-operation. Without social justice we cannot expect to achieve economic and political stability. Without the underpinning of international policies and programmes to promote justice, social conflict bursts out in all sorts of unpredictable and dangerous ways. As well as being the moral course of action, social development is productive.
The Morality of the Market and Core Labour Standards
My third point is the need for morality in the market. We often forget that markets made by an infinite number of individuals constantly making decisions and contracts that affect others and that when they do so they have a choice. My experience as a trade union official is that the vast majority of workers, employers and politicians when given the chance to do the right thing, the moral thing, prefer to do so. Their problem is identifying the consequences of their decisions and thus finding what the right choice is. The challenge is to try and design a market system which makes it easier for people to behave in ways consistent with their own and society's values, and which engenders sufficient trust that others will do likewise. Markets are run by people and people are moral beings.
For trade unions the question is can we help to construct rules for the market that are simple, easily understood and accepted, so that when decisions are taken, citizens including corporate citizens face incentives and disincentives that help them to behave in ways that society as a whole regards as right.
Of course, this begs the question as to whether there is some sort of general consensus about moral standards. This was a tough question when the geographical boundaries of the state and the market were more or less the same but now we are moving towards a global market which stretches over the national and cultural boundaries within which we have traditionally debated moral standards and how to apply them. It is now more difficult to answer the question but it is still very relevant to the day to day work of business and trade unions.
We have spent a lot of time recently talking to trade unionists, politicians, business people and journalists all over the world about core labour standards. It seems to me that there is an emerging consensus that there are a limited number of universal principles which are very widely accepted regarding human rights at work. Furthermore we have not found any great cultural barriers in these discussions. There are very practical questions about resources, responsibilities and the way various institutions function, but on the basic issue of right and wrong we see few major difficulties on what has come to be known as core labour standards.
We have focused on three areas. The first of these is that people should be able to choose what work they accept or, to turn it around, that they should not be forced to work, even as punishment for a crime. In a sense we are all forced to work in order to make a living, but what I am talking about is slavery. I should also say that work in prison as part of programmes to help reintegrate offenders into society is not forced labour but it does have to be very carefully designed to make sure that that is the objective not the exploitation for private profit of people who have had to be deprived of their liberty. In my experience nobody these days will defend the practice of slavery as moral behaviour. Where it survives the authorities either deny its existence or claim that they do not have the resources to eliminate it. Even those few totalitarian regimes they continue the practice as part of systems of repression and control are increasingly defensive in their own perverse attempts at moral justification.
In terms of the moral argument, child labour is closely related to forced labour. Nearly every where I go it is accepted that it is not right for children to have to go to work when they should be at school. The international norm for the minimum age for employment is fifteen, or in exceptionally poor countries thirteen. Children are vulnerable because they are not able to exercise free choice and their physical and mental health can be severely impaired, especially if they are exposed to hazardous and arduous conditions and long hours of work. I find very few people who defend child labour. Some say that it is a lesser evil than other means of survival for very poor families or that in certain conditions it has some educational value but this poses a different set of problems. As I see it the debate is not about the morality of child labour but rather about how to eliminate it by organising ourselves and applying resources to address its root causes. There is widespread agreement that alongside labour laws which reflect societies' wish to stop the practice, there needs to be increased investment in education places and a major effort to ensure that parents of child labourers, who were themselves often forced to work as children and are now extremely disadvantaged on the labour market, get the chance to earn a decent living and support their offspring through to adulthood.
A second basic universal right is that working people should be able to form and join organisations of their own choice to voice their common concerns. This is a fundamental prerequisite for the functioning of a democracy and applies in the workplace as well as in society at large. It enables the individual worker to redress the inherent imbalance in the power relations that determine contracts of employment. Furthermore by creating the possibility of collective bargaining gives trade unions and employers the opportunity to solve many problems that otherwise might require resort to extensive labour legislation and expensive litigation.
The counterpoint of freedom of association is the right not to be forced into an organisation that workers do not want to join or they cannot control democratically. The ICFTU has spent a good deal of its nearly fifty years of existence fighting regimes which tried to subvert the concept of trade unionism for their own purposes. Unfortunately we still find ourselves having to help workers in many countries to win the struggle to have their own and independent unions recognised in law and freed from restrictive controls. In such countries, I find many in government and business who are essentially saying that they accept the principle of freedom of association but want a few more years of the old dictatorship's laws limiting union rights while they push through a major restructuring of industry. I have argued that this outdated reflex of authoritarianism is actually going to make it harder to adapt and will not work. But to return to my theme the wider point is that few governments and employers directly challenge the principle that where workers want to form and join their own unions they should not be denied that freedom.
The third component of the core labour standards is that it is wrong to discriminate in employment on grounds of sex, or religion, or race, or ethnic origin, or political opinion, or membership of a trade union. Discrimination is a pervasive problem in most societies, difficult to eradicate and has a tendency to reappear just when you thought you had got to the bottom of the problem, but I find few responsible leaders who will defend it. Equality of opportunity on the labour market is widely supported because it is morally right and because it has the added value of being economically efficient.
As I have already suggested, core labour standards are not simply a moral issue or a so-called social question divorced from the functioning of markets. The workplace is where the commercial world interacts most directly with people's sense of what is right and wrong in the way they and fellow workers even in far distant parts of our globalised economy are trading. The contract of employment is the first in a chain of contracts that constitute the world trading system. If the process for making such contracts is not founded on some minimum universal precepts of morality, the legitimacy of the whole system is seriously weakened. As I have argued experience tells me that we have broad agreement on the essential principles because they correspond to universal cross cultural ideas of justice, fairness and human dignity. Furthermore, I think the Singapore Ministerial Meeting of the WTO showed that governments recognise that the way people are treated at work is relevant to the efficiency and political support for a rule-based international trading system. This is a significant development for business but perhaps has not yet been fully appreciated.
It is also a very positive development and not as is sometimes naively thought simply an added cost or complication to doing business in a rapidly changing world. There are four main reasons why I believe business can and should think deeply about this issue. First, consumers all over the world are concerned that when they buy a product not only are they getting value for money but they are also not inadvertently contributing to the ill-treatment of the workers who produced it. The rising trend of companies and business associations talking to unions and non-governmental organisations about codes of conduct is clear evidence that not being tarnished with stories of exploitation is important and that a credible commitment to treating workers decently is a good selling point and constructive component of an overall corporate image. Some of the first wave of such codes look to me to be mainly a public relations exercise and a deeper commitment throughout the business and a readiness to be audited on performance by independent assessors is needed if codes are not to backfire on companies. Nevertheless, I am encouraged by the response so far and ready to go further in this sort of partnership.
Second, where contracts of employment are based on good minimum standards a foundation is put in place for trust and co-operation in the management of change and in the improvement of productivity. This yields better wages and working conditions increased profits and investment, and ultimately wider and deeper markets. Abuse of basic standards is not productive, locks enterprises and whole nations into a low value added, insecure and unstable production system. By treating workers decently companies start down a road which releases the creativity of the workforce rather than engender bitterness and conflict.
Third, as education levels rise and employers look for workers who use their brains as well as their hands, as democracy spreads, as people gain access to a media which shows them what is happening in the rest of the world, the workplace cannot remain an island of authoritarian attitudes. And this is not just a question for a few highly trained core workers in industrial countries. Genuine teamwork and partnership is only possible where relations between workers and employers are on a more equal, and yes, moral basis. Unions that are freely chosen by workers are not some extraneous outside element in this relationship but rather a vital means of organising dialogue and discussion as well as more formal negotiations.
Fourth, we have to recognise that there is a problem of the short and the long term. Abuse of core standards is in my view a bad strategy for all governments and employers and good practice does pay off. However it is always possible for the unscrupulous to break the rules, the moral contract, make a quick profit and run from the consequences. And the more the unscrupulous get away with it the bigger the problem becomes. We have to recognise this issue and deal with it, otherwise moral behaviour is penalised and the rules based system weakened to the cost of all. Our job is to expose such cases and try to protect workers who cannot protect themselves, and I am not short of employment. But it is not just a responsibility of unions, business too needs to strengthen its self discipline and so do governments.
I believe that underlying the construction of the global market there is already an implicit moral contract which is becoming more and more explicit in different ways. I have focused on labour standards because it directly affects workers in a very tangible way, but there is also a very live debate about international standards concerning bribery and corruption. We should not allow ignorance, misunderstanding or manipulation to lead us into ducking the challenge of identifying and applying universal principles. We are making progress even if from the trade union perspective it is agonisingly slow at times. And the bottom line for business and governments is that if a stronger commitment to values such as those I have outlined as core labour standards can be spread, that intangible but essential element of trust in the parties to contracts will increase and the costs of working in a global market fall.
International Co-ordination of Policies for Growth with Equity
My fourth point is the need for international co-ordination of policies for full employment and the elimination of poverty. I do not believe social development and the eradication of poverty is possible without full employment. And I do believe full employment is still possible, although defining it especially in developing countries is not always easy. It is important as a goal because unemployment is a waste and a burden we cannot afford. The 1996 ILO Conference made considerable progress on the implications of increased international interdependence for employment policies. With globalisation the pursuit of full employment requires a combination of national and international policies.
National policies must aim to increase the speed of adaptation to change. Resistance to change stems from fear and insecurity. Flexibility and security in employment need not be in contradiction to each other, but public policy must aim to get the balance right, because the market alone will not. Education and training, together with active labour market policies to help match workers to job opportunities, are the main focal points for employment policy. Market mechanisms cannot create the broad base of skills and the ability to learn new skills throughout working life that workers and society need.
Liberalisation of trade and of capital markets impose a high price on countries that fail to achieve price stability. Let us be frank, inflation and devaluation were escape routes for governments and countries that failed to resolve social conflicts. That escape route is no longer available partly because of IMF disciplines but also because governments of all colours know that a persistent high public deficit is very costly to finance now that there are no captive savings markets. For workers this is not such a bad thing because inflation always hits the weakest hardest and price instability holds back investment both by the private and public sectors.
However, simply achieving and maintaining low inflation does not miraculously end conflicts about the distribution of income and wealth. The new stronger international pressures mean that the national institutions for identifying and resolving conflicts have to become stronger and more effective. Otherwise rather than being seen as a potential source of growth and prosperity globalisation will appear to many as a restraint on their aspirations for justice and a decent life. This could lead to protectionism and ultimately to violence which could spill over national boundaries into international conflicts.
Trade unions basic role is thus even more important in this new age. Our job is to articulate grievances and negotiate with employers and governments to find solutions. We are problem solvers although some governments and employers perceive us as problem creators. The Copenhagen Summit commitment on basic workers rights is thus very important because it enables us to rebuild our role at the workplace and more broadly, and thus contribute to the forging of national and international consensus about how to achieve growth with equity.
The two main mechanisms available for resolving distributional conflicts are collective bargaining and the budget. For most of us our pay is our main source of income and thus agreement about pay structures within the firm and more widely have a profound effect on the distribution of income. Many but not all problems can be worked out directly through collective bargaining between unions and employers. In a increasingly competitive world few employers have the market power to pass on increased labour costs to consumers through price rises. Therefore collective bargaining is focusing more and more on how unions and employers can co-operate to improve productivity and thus both profits and pay. This is a positive development but means in turn that the mechanisms for information exchange, consultation and bargaining have to be improved so that all concerned see the costs and benefits of the various options available. Especially when decisions are tough we need a high quality process. Technocratic solutions which look fine on a computer model or in corporate headquarters will fail if they are imposed. Sometimes less elegant compromises built up through a more participative process will work better because they engage and commit the parties to making them work.
Similar arguments apply to the making of the national budget, which must ensure that the weakest in society are helped out of poverty and that the wealthiest shoulder a fair share of the burden. The broader the degree of political and social support for the tax and expenditure policies voted by parliaments, the more likely is it that governments will be able to keep to fiscal and monetary targets and thus avoid the penalties of financial instability. Tripartite economic and social councils are a reinforcement to the democratic process and help governments, employers and unions to follow polices that are convergent and consistent. Social development is to a large extent about using the budget to redistribute resources to activities and to people who need them and cannot get through the market. Social development programmes aim to give as many people as possible who are excluded from the market a chance to earn a sustainable livelihood and to support those who are especially vulnerable. Budget making is thus about persuading the "haves" that it is in their interest to support the "have nots".
And there is an international dimension to this process. We need more resource transfers across national boundaries but if this is to happen voters in the wealthier countries must have confidence in the process. Good governance principles are a vital component of a renewed drive to raise and make more effective official development assistance. Foreign direct investment in developing countries is important but it cannot replace international support to the role of governments in building up the infrastructure of social cohesion and the market.
The Copenhagen Summit and the mandate it gave to the ILO are important signs that governments are aware that market liberalisation does not produce social cohesion. And furthermore that in a global market, governments and the international institutions need to increase their co-operation on social policy, and review the way international trade and financial policies impact on society. The ICFTU is looking forward to how we need to adapt institutions at national and international level to realise the potential of increased trade and investment for the reduction of unemployment and poverty. We do not want to stop international economic integration but rather seek to ensure that the instruments of social policy are modernised and internationalised to meet the challenge.
Conclusions
To conclude, the workplace, around which trade unions seek to organise, is where people's values meet the market. The employment contract is not just an exchange of work for pay but a human relationship which should incorporate basic principles of respect and dignity. Furthermore treating people decently is not a cost for business but an investment. Mutual respect by both parties to the employment contract helps to create an environment of trust which is infinitely more productive than one of conflict and suspicion. This applies to both formal employment relationships and the way work is organised in the informal sector, although by definition the latter is more difficult to deal with because contracts are not always recognised and respected.
A focus on workplace issues is thus highly relevant to making globalisation work by giving it a human face. And it is an important means of demonstrating that the work of the ILO is relevant to the problems people are facing in their daily lives. The ICFTU for its part is ready to work closely with the ILO and other international agencies charged with implementing the Copenhagen agenda. One of the most valuable features of the Social Summit was the recognition that the reality of interdependence must be reflected in the way the international institutions work together. We ourselves have organised over 30 national and regional conferences on the social dimension of adjustment with our affiliates which have brought unions together with government, employers, international agencies, NGOs, academics and the media. They have proved to be important means of broadening agreement on how to ensure social progress at the same time as make significant adjustments to meet new international pressures. What we are trying to do as the ICFTU is to work out how to build the institutions for both co-operation and competition so that the innovation and dynamism of the market is balanced by respect for people and a stronger impulse for social cohesion.
The world is going through a period of enormous change. We have the opportunity to establish a strong platform for future prosperity. Consensus over the relationship between the ILO's core labour standards and the liberalisation of trade and capital markets is the key because it will give governments, employers and trade unions the tools to build new institutions to manage labour market change in ways that reflect the need for balance between security and flexibility at the workplace, in society and globally.
Thank you.