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Globalization, Informal Economy, Decent Work & Challenges for Trade Unions . Arun Kumar. Globalization? Participants views…. Why Globalisation?. Capital needs markets…new markets for profits; for natural resources

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Globalization? for Trade Unions Participants views…

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Why Globalisation? for Trade Unions

  • Capital needs markets…new markets for profits; for natural resources

  • Developing countries need to grow, need capital, access to new technology, goods & services;

  • Investors need free trade, minimum or no regulations on capital & safe guarding of their investments;

  • Economic reforms, free trade & Globalization!

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Share in World Income/GDP for Trade Unions

Share in World Trade

Share in FDI

Share in Portfolio Investments

HIC (80.5), MIC (11.5), LIC (2), China & India (6)

HIC (72.9), MIC (15.6), LIC (2.7), China & India (8.7)

HIC (76.6), MIC (12.5), LIC (1.1), China & India (9.8)

HIC (76.6), MIC (12.5), LIC (1.1), China & India (9.8)

Global Background (2002, in %)

Source: ILR, 2004/1-2, Vol 143, ILO, Geneva

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What is Globalization Promoting? for Trade Unions

  • Basic thinking:Supremacy of markets, Government - a problem!

  • One size fits all kind of policies:

    Open markets for trade, investment & capital flows, seek FDI rather than foreign aid, no performance requirements on FDI, cut govt deficit, privatize, deregulate & reduce role of govt in economic activities, and so on

  • In the labour markets – promote employment flexibility

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Implications of New Policies for Trade Unions

  • Shift from development cooperation to free trade;

  • Free Trade means - More competition between Unequals;

  • More freedom to Capital;

  • Adverse impact on devt & employment – many developing countries may remain providers of natural resources & low value products;

  • The policies that helped developed countries to develop are now considered trade distorting and hence to be done away.

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Effects on Labour for Trade Unions

  • Downsizing, increasing workloads & job insecurity – results of flexibilization in labour markets;

  • Weakening of public services (transport, health care systems, basic education, etc as public expenditure & role of Govt in these sectors declines);

  • Deterioration of labour standards & social protection provisions; decline in social dialogue – consultations & tripartite machinery

  • Growing informal economy – rural-urban migration as agriculture becomes non-viable for small farmers – casual insecure jobs in urban areas with no social protection;

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Why is Informal Economy Growing? for Trade Unions

  • Lack of growth of employment in the formal sector – due to slow growth of economy &/or faster growth of population

  • Due to economic restructuring policies – declining public investments on social & economic sectors - adversely impacts on workers chances of finding employment in modern/ organized sectors, leaving people with no choice but to seek survival in informal sector activities

  • Restructuring in production & services sectors (decentralizing of production, sub-contracting & outsourcing, downsizing of employment, encouragement of self employment, home working, part time work, etc.)

  • Other reasons - ???

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Effects on Trade Unions for Trade Unions

  • Weakening of TUs – thru membership losses, thru new HR policies, outsourcing & preference for casual labour (growing unorganized & informal sector workers);

  • Trade Union memberships are declining

    memberships range from 3% - 19%;

    Union density lowest in agriculture & informal economy dominated countries & declining in most countries;

    work & employment relations in informal economy (sector with growing employment) make it difficult for traditional forms of organizing.

  • What else? Participants experiences

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So, what are TUs saying? for Trade Unions

Answer does not lie in Protectionism

  • Ensure Justice, Equity and Democracy in the new global order;

  • Need for role of State and public regulation of business and international trade;

  • Review Free Trade – to re-focus on the objectives of Devt, Employment & Poverty reduction – multilateralism rather than bilateralism.

  • Respect for basic International Labour Standards for promotion of Decent Work;

  • Representation & Participation of TUs in economic and social policy matters;

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What is ILO saying? for Trade Unions

ILO set up World Commission on the Social Dimension of Globalization in Feb 2002. Its report in Feb 2004 highlighted that for fair globalization –

Global markets need ‘governance’ i.e. a set of institutions & rules for equitable functioning to:

  • Avoid market failures (e.g., economic crises);

  • Redress vast inequalities between & within countries;

  • Strengthen mechanisms for delivering social protection - manage change.

    Equally importantly it called for wider & more

    democratic participation of people and countries in

    the making of policies that affect them.

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ILO’s Response – for Trade Unions Decent Work For All!All those who work, have rights at work!

What is Decent Work?

Work that is productive, gives fair income,

security in the workplace &

social protection for the family,

equal opportunities & treatment,

better prospects for - personal devt & social integration,

freedom to organize &

participate in decision making

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How is DW to be achieved? for Trade Unions

  • Creating productive jobs – thru sustainable economic & social devt;

  • Guaranteeing fundamental rights at work to all workers;

  • Providing basic social protection for all – a minimum protection against low or declining living standards;

  • Promoting social dialogue for policy formulation & conflict resolution;

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Fundamental Principles and Rights at Work (1998) for Trade Unions

  • Freedom of association & recognition of the right to collective bargaining

  • No forced/compulsory labour

  • No child labour

  • Elimination of discrimination in employment and occupation

    …. a global social floor

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TUs support Decent Work for Trade Unions

TUs support the integrated approach of ILO to address the social impacts of globalization:

Because the concept of Decent Work -

  • Focuses on core rights, addresses all workers, in all economic sectors (formal, informal);

  • Is participatory, promotes Social Dialogue & seeks to involve all social partners

  • Is Dynamic – progresses as the economy changes

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Trade Union responses to the challenges posed by Globalization

  • Mergers of trade unions – GUFs;

  • ITUC – merger of ICFTU, WCL & some other unions – on 1 Nov 2006, Vienna;

    ITUC represents 311 affiliated national trade union centres of 155 countries & territories representing some 168 million members.

  • 4 new regional organizations (in Africa, Asia, Latin America, & Europe/Central Asia) have also been created

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Trade Union Responses Globalization

  • Campaigning for Core Labor Standards (CLS) policies at development finance and other multilateral institutions (IFC and World Bank)

  • Inclusion of CLS clauses in trade agreements

  • Development cooperation programs to strengthen worker/union rights (primarily EU)

  • Organizing and including migrant & other informal sector workers – in many countries unions are increasingly working with workers’ centers or associations that serve informal sector or migrant workers

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Trade Union Responses Globalization

  • Global Collective Bargaining (GUFs have signed International Framework Agreements to promote MNCs’ commitment to ensuring basic labor conditions, including workers’ right to organize & bargain collectively

    • 55 agreements in place covering approx. 5 million workers worldwide

  • Build alliances with other social partners on mutually agreed agenda – links with world TU bodies, Women’s movement, NGOs where necessary, Consumer movement – role of international labour solidarity.

  • Participants views on national responses?

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Challenges for the international trade union movement Globalization

  • How to ensure workers’ rights in global economy?

  • How to influence employment creation policies?

  • How to balance demands for increased employment flexibility with workers rights to social protection?

  • How to organize in globalizing economy and in new work place environment (given employment flexibility, informal economy and increasing mobility of capital)?

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Negotiating change at national level Globalization…

  • Ensure Right to Organize & Right to Collective Bargaining!

  • Adopt policies that apply to all workers & prevent further divisions of workers in the labour market –put all workers in one boat.

  • Set nationwide floor labour standards –that apply to all workers & employers (de-link labour standards from permanency of employment); Roof to be attained thru Collective Bargaining – the right to which should be ensured.

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Negotiating Change Globalization…

  • What is the floor that employers should respect?

  • Core labour standards of the ILO

  • Freedom of Association –the right to form unions, the right to recognition

  • Right to Collective Bargaining

  • Basic social security contribution

  • Access to skills training

  • No discrimination, No child labour

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Why Labour Standards? Globalization

Labour Standards are not just a question of workers rights BUT are also means to promote economic growth!

Labour standards create conditions for growth of domestic markets since they enable sharing in gains of growth & spread of purchasing powers – this makes domestic economic growth more sustainable.

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Getting back to basics Globalization

Trade unions must strengthen their organizing and bargaining power.


Challenge 1:

Creating an“Enabling Environment”

for Trade UnionActivities

Challenge 2:

Building Capacity ofUnions in Organizingand CollectiveBargaining

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Group Work Globalization

  • How has Globalisation affected workers & trade unions in your country?

    [List the major changes in economic & labour policies that have affected (positively or negatively) the employment & Trade Unions]

  • What actions has your trade union taken or can take to meet challenges of Globalization & free trade?

  • What role can the International Trade Union Movement play in assisting national unions to meet the challenges of Globalization?