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Globalization affects all regions of the world and all its workers, both employed and unemployed. That is why organizations such as the International Labour Organization (the ILO) and the International Trade Union Confederation (the ITUC) have dedicated themselves to studying it and ensuring that it promotes social justice for everybody not just economic enrichment for a few.

Globalization and the ILO

In 2008 the ILO responded to widespread uncertainty in the world of work - ranging from financial turmoil and economic downturn to growing unemployment, informal work, and insufficient social protection, plus increasing globalization - by adopting a crucial Declaration of principles and actions. The  Declaration on Social Justice for a Fair Globalization is designed to help countries, labour organizations, employer representatives and others in their efforts to confront the effects of globalization.

 “The demands of the modern world of work are changing and this Declaration strengthens our effort to respond through the Decent Work Agenda”, said ILO Director-General Juan Somavia. “Not only does it signal a major change towards balanced economic and social policies, but it equips the ILO with a formidable tool to pursue the promotion of a fair globalization based on Decent Work.”

            “The Declaration speaks of the need to make a different reality possible,” said ITUC General Secretary Guy Ryder. “In place of our world of income inequality, high levels of unemployment and poverty and the growth of unprotected work, the adoption of this Declaration demonstrates a common commitment to build a world based on social justice.”

            The Declaration marks the most important renewal of the ILO since the adoption of its historic “Declaration of Philadelphia” in 1944. In addition, it marks a significant step forward in respecting, promoting and realizing the Declaration on Fundamental Principles and Rights at Work adopted by the Organization in 1998. It stresses the fundamental principles of freedom of association and the right to collective bargaining, the elimination of all forms of forced labour, the effective abolition of child labour and the elimination of discrimination in employment and occupation as the Organization’s bedrock principles.

            Most importantly, the Declaration declares that full and productive employment and decent work should be put at the centre of economic and social policies. It asserts that these policies should be based on the four
equally important strategic objectives of the ILO, though which the Decent Work Agenda is expressed: employment, social protection,  social dialogue, and international labour standards. It stresses that these objectives are interconnected. They are: “inseparable, interrelated and mutually supportive. Failure to promote any one of these objectives hinders progress towards achieving the others”.

            What’s more, these objectives are declared universal, which means that all ILO members must pursue policies based on the four strategic objectives.

Other parts of the Declaration emphasize gender equality and non-discrimination, and call for a new package of international labour standards to be promoted everywhere, in particular the “governance” standards, covering tripartism, employment policy and labour inspection, in addition to the core labour standards. Freedom of association and collective bargaining are now formally codified by the ILO as enabling rights for the realization of Decent Work for all.

            By adopting the Declaration the ILO has committed itself not only to confront the effects of globalization in order to ensure greater social justice in the world, but also re-orient and re-shape itself.  The changes in how the ILO works will have significant effects for the Organization and also the organizations it works with – governments, trade unions, employer associations and other bodies. For example, the Organization will fully align its major goals and programmes to the requirements of the Declaration. This in turn will influence the design and implementation of Decent Work Country Programmes and ILO support to UN country programmes.

What is globalization?   

           Globalization is characterized by diffusion of new technologies, the flow of ideas, the exchange of goods and services, increases in capital and financial flows, internationalization of business and business processes, as well as the movement of persons, especially working men and women. It is a process of economic cooperation and integration which is reshaping the world of work in profound ways. It affects not only economic conditions, but also the social, political and cultural environments of countries and regions.

 On one hand, globalization has helped a number of countries benefit from high rates of economic growth and employment creation, to absorb many of the rural poor into the modern urban economy, to advance their developmental goals, and to foster innovation in product development and the circulation of ideas.

             On the other hand though, global economic integration has caused many countries and sectors to face major challenges of income inequality, continuing high levels of unemployment and poverty, vulnerability of economies to external shocks, and the growth of both unprotected work and the informal economy, which impact on employment and the protections it can offer.

 The key elements of economic globalization are world trade, foreign direct investment, financial flows and new technologies, especially communication technologies.

 World trade

 World trade has expanded rapidly since the 1980s. Since 1986, it has consistently grown significantly faster than world gross domestic product (GDP).

 Throughout the 1970s, trade liberalization within the framework of the General Agreement on Tariffs and Trade (GATT) was modest and gradual, and involved the industrialized countries much more than it did the developing ones.

 (The GATT was  a multinational treaty to promote trade by the reduction of tariffs and import quotas. Its work was taken over by the Word Trade Organization – the WTO – in 1995. Trade liberalization refers to, among other things, the lowering of trade barriers such as tariffs. The world domestic product [GDP] is the market value of all final goods and services made in the world in a year.)

 In contrast to the 1970s, from the early 1980s onwards, the extent of world trade began to accelerate.  This trade expansion did not occur uniformly across all countries though, with the industrialized countries and a group of 12 developing countries accounting for the biggest share. In fact the majority of developing countries did not experience significant trade expansion. The World Bank reported in 2002 that the top 12 developing countries had a total of about 75% of all the manufacturing exports from developing countries. The rest – only 25% - came from the remaining 176 developing countries and territories. Significantly, most of the Least-Developed Countries (LDCs) - a group that includes most of the countries in sub-Saharan Africa - experienced a proportional decline in their share of world markets, despite the fact that many of these countries had implemented trade liberalization measures.

 The top 12 developing countries in terms of manufacturing exports in the 1990s were; China, South Korea, Taiwan, Singapore, Malaysia, Mexico, Thailand, Hong Kong (China), India, Indonesia and Turkey.

     Foreign Direct Investment (FDI)

 Foreign Direct Investment (FDI) is the movement of capital across national frontiers in a manner that grants investors control over the acquired asset, such as a company. Firms that use FDI are known as multinational enterprises. Production in the foreign country is largely financed by the multinational. Profits accrue to the  multinational through sales made by its foreign affiliate.

 During the early 1980s, FDI accelerated, both absolutely and as a percentage of world GDP. This is because, since 1980, the policy environment worldwide has been far more conducive to the growth of FDI. Over the 1990s, the number of countries adopting significant liberalization measures to attract FDI increased steadily. Indeed, there are only a few countries that do not actively seek to attract FDI. However, the hopes of many developing counties have not been fulfilled. Despite the rapid growth of FDI flows to developing countries, investment remains highly concentrated in about 12 of these countries.  The top 12 developing countries in terms of FDI received about 75% of the global investments. The other developing countries – 176 – received 24%

 Apart from their increased volume, the nature of these foreign direct investments has also changed. The information and communications technology (ICT) revolution, coupled with declining transport costs, has made the growth of far-flung, multicountry based production of goods and services both technically and economically feasible. Production processes can now be unbundled and located across the globe to exploit economic advantages arising from differences in costs, resources availabilities and the state of the investment climate. Components and parts can easily be trans-shipped across the world and assembled at will. The communications revolution has enable the coordination and control of these dispersed production systems.

                    Financial Flows

 In the early 1980s the international structure of finance – called the Bretton Woods System – began to break down and unprecedented capital flows between nations began to increase. The System, which had been put in place after the Second World War, was based on closed capital accounts and fixed exchange rates (based on the gold standard). As the System broke down international trade and foreign direct investment began to grow dramatically. Financial liberalization – the removing of trade barriers - had created the policy environment for expanded capital mobility.

Since the late 1980s there has been a global trend towards even great financial liberalization. This has ranged from relatively simple steps such as the unification of exchange rates and the removal of controls over the allocation of credit in the domestic market to full-blown liberalization of the financial sector that included the opening up of capital accounts. Within the developing world, the latter type of reform was initially confined to a group of middle-income countries with a relatively greater range of institutions of financial intermediation that included bond and equity markets. The action in terms of the explosive growth in private financial flows from North to South was concentrated in these “emerging markets”.

 These financial flows consisted of elements such as: investments in the equity markets of countries by investment funds (a major part of which was on behalf of pension funds), bank lending to the corporate sector, and short-term speculative flows, especially into currency markets. Lending through the international bondmarket also increased in the 1990s in the wake of financial globalization.

 Again, the top 12 developing countries were the receivers of most of the inflow of capital with about 75% of the total in the 1990s. (China alone accounted for some 24% of the inflow). The other developing countries attracted only about 25% of the inflow.

 New technologies

 The trade flows of the 1980s and 1990s were greatly advanced by the advent of new technologies, especially information communication technology (ICT).

 For example, apart from their increased volume, the nature of foreign direct investments also changed. The ICT revolution,coupled with declining transport costs, made the growth of far-flung, multicountry production of goods and services both technically and economically feasible. Production processes can now be unbundled and located across the globe to exploit economic advantages arising from differences in costs, resources availabilities and the state of the investment climate. Components and parts can easily be trans-shipped across the world and assembled at will. The  communications revolution has enable the coordination and control of these dispersed production systems. ICT made possible the improved and speedier knowledge of foreign markets, the development of “round the world and round the clock” financial transactions, and the emergence of new financial instruments, especially derivatives such as futures contracts.

 There have also been more direct impacts through the diffusion of new technologies to developing countries. This has occurred principally, though not exclusively, through the activities of multinational enterprises (MNEs). However, as in the case of trade and foreign direct investment.  there are serious North-South imbalances in access to knowledge and technology. Almost all the new technology originates in the North, where most research and development occurs. This is an important source of the dominance of MNEs in the global marketplace. (There are some 65,000 MNEs in the world and about 850,00 MNE foreign affiliates.)

 The effects of the new technology have also given a distinctive character to the current process of globalization, as compared to similar episodes in the past. The natural barriers of time and space have been vastly reduced. The cost of moving information, people, goods and capital across the globe has fallen dramatically, while global communication is cheap and instantaneous and becoming ever more so. This has vastly expanded the feasibility of economic transactions across the world. Markets can now be global in scope and encompass an expanding range of goods and services.

Towards a better globalization

        The combined and interactive effect of these developments in trade, foreign direct investment, finance and technology, has had a profound and varying impact on different economic sectors, types of enterprises, categories of workers and social groups. The crucial question now is how do we react to these impacts in order to make globalization work for everybody, not just some corporations.

            In order to answer this question the ILO put in place a World Commission on the Social Dimension of Globalization.  In 2004 the Commission produced a report which became the basis for many of the discussions leading to the ILO’s Declaration on Social Justice for a Fair Globalization in 2008.

            In its report (entitled “A Fair Globalization: Creating Opportunities for All”) the Commission declared that “A better globalization is the key to a better and secure life for people everywhere in the 21st century”  The Commission defined its motive in this way:

We believe the dominant perspective on globalization must shift more from a narrow preoccupation with markets to a broader preoccupation with people. Globalization must be brought from the high pedestal of corporate board rooms and cabinet meetings to meet the needs of people in the communities in which they live. The social dimension of globalization is about jobs, health and education – but it goes far beyond these. It is the dimension of globalization which people experience in their daily life and work: the totality of their aspirations for democratic participation and material prosperity. A better globalization is the key to a better and secure life for people everywhere in the 21st century.

 The Commission called for:


A focus on people

The cornerstone of a fairer globalization lies in meeting the

demands of all people for: respect for their rights, cultural identity and autonomy; decent work; and the empowerment of the local communities they live in. Gender equality is essential.


A democratic and effective State

The state must have the capability to manage integration into the global economy, and provide social and economic opportunity and security.


Sustainable development

The quest for a fair globalization must be underpinned by the interdependent and mutually reinforcing pillars of economic development, social development and environmental protection at the local, national, regional and global levels.


Productive and equitable markets

This requires sound institutions to promote opportunity and enterprise in a well-functioning market economy.


Fair rules

The rules of the global economy must offer equitable opportunity and

access for all countries and recognize the diversity in national capacities and developmental needs.


Globalization with solidarity

There is a shared responsibility to assist countries and people excluded from or disadvantaged by globalization. Globalization must help to overcome inequality both within and between countries and contribute to the elimination of poverty.


Greater accountability to people

Public and private actors at all levels with power to influence the outcomes of globalization must be democratically accountable for the policies they pursue and the actions they take. They must deliver on their commitments

and use their power with respect for others.


Deeper partnerships

Many actors are engaged in the realization of global social and economic goals – international organizations, governments and parliaments, business, labour, civil society and many others. Dialogue and partnership among them is an essential democratic instrument to create a better world.


An effective United Nations.

A stronger and more efficient multilateral system is the key instrument to create a democratic, legitimate and coherent framework for globalization.


 Better governance

             The central concern for the Commission as it studied globalization was better governance.  In its Report it said: “Many recognize the opportunities for a better life that globalization presents. We believe their hopes are realizable, but only if globalization is subjected to better governance at all levels.”

 The Commission argued that the problems related to globalization are not due to globalization as such but to deficiencies in its governance. Global markets have grown rapidly without the parallel development of economic and social institutions necessary for their smooth and equitable functioning.

 At the same time, there is concern about the unfairness of key global rules on trade and finance and their asymmetric effects on rich and poor countries.

 An additional concern is the failure of current international policies to respond adequately to the challenges posed by globalization. Market opening measures and financial and economic considerations predominate over social ones. Official Development Assistance (ODA) falls far short of the minimum amounts required even for achieving the Millennium Development Goals (MDGs) and tackling growing global problems. The multilateral system responsible for designing and implementing international policies is also under-performing. It lacks policy coherence as a whole and is not sufficiently democratic, transparent and accountable. These rules and policies are the outcome of a system of global governance largely shaped by powerful countries and powerful players.

 “There is a serious democratic deficit at the heart of the system”, said the Commission. Most developing countries still have very limited influence in global negotiations on rules and in determining the policies of key financial and economic institutions. Similarly, workers and the poor have little or no voice in this governance process. There is thus a wide range of issues to be addressed at the global level.

 The Commission pointed out that there is wide international agreement on what must be urgently strived for:

• Good political governance based on a democratic political system, respect for human rights, the rule of law and social equity.


•An effective national state that ensures high and stable economic growth, provides public goods and social protection, raises the capabilities of people through universal access to education and other social services, and promotes gender equity.


• A vibrant civil society, empowered by freedom of association and expression, that reflects and voices the full diversity of views and interests. Organizations representing public interests, the poor and other disadvantaged groups are essential for ensuring participatory and socially just governance.


• Strong representative organizations of workers and employers which are essential for fruitful social dialogue.


 The Labour Movement

    In 2000, the international trade union movement – made “globalizing social justice” its prime objective for the new millennium. This was not a new objective new but one that trade unions had been pursuing for more than a decade. Over this period the trade union movement adopted several different strategies to influence the process of globalization. These included: pressuring key governments at regular meetings of the G8 and similar economic summits; an intensive effort to introduce labour and social issues onto the agenda of regional economic  and trade meetings; and an effort to engage directly with multinational companies through the negotiation of framework agreements covering fundamental issues like child labour, bonded labour, discrimination and freedom of association.

     In addition, for the last decade or so the international trade union movementhas sought to influence globalization through attempts to reorient some of the activities and policies of international agencies such as the World Bank, IMF, WTO, the UN Conference on Trade and Development (UNCTAD) and the OECD. At the same time, trade unions have devoted considerable resources to promoting greater consistency and cooperation between the multilateral organizations responsible for economic development, trade and social policy. In particular, they have encouraged the international institutions with an economic mandate to broaden their perspective and put more emphasis on equity, human rights and social considerations.

The impact of the trade union movement on globalization and the policies of the key international institutions depends partly on their influence on the decisionmaking

process. For instance, within the ILO trade unions are a key part of the governance

structure and exercise considerable influence over the policies of the organization.

In other international organizations, such as the OECD, there exists a formal structure for consultations with both the labour movement and the business community that enables the social partners to engage in regular policy discussions with OECD staff and government representatives. This is why the Commission recommended that formal consultation structures similar to the OECD type should be established at the World Bank, the IMF and the WTO. This would provide trade unions with structural entry points into the workings of the international organizations exercising a profound influence over globalization. This would enhance the external transparency, accountability and credibility of the international organizations with an economic mandate. Similar arrangements could be made in the burgeoning number of inter-regional and bilateral trade, investment and economic cooperation arrangements.

 Also: the development of industrial democracy and collective bargaining at national level has historically provided an important mechanism to promote productivity

and equitable outcomes at work, and to give workers and trade unions an important voice in the production process. Given the growth of global production systems, new institutions of social dialogue between workers and employers seem likely to develop around them and may well play an increasingly important role in the global economy.

 For example, there are now more than 25 Framework Agreements between Global Union Federations and multinational companies. While the content of these agreements differs, most cover the core international labour standards and some also cover issues such as a “living wage” and health and safety matters. Regional and global works councils are also being increasingly used to foster social dialogue.

 The negative impacts of globalization can be minimized and benefits better distributed if there is better governance of the process and increased democratic involvement of all the key actors, especially the representatives of working people around the world.


Discussion questions

            How can the ILO’s Declaration
on Social Justice for a Fair Globalization be promoted?

             What should role should national and international labour organizations play in the creation of a better globalization?



             ILO Declaration on Social Justice for A Fair Globalization


            Report on of the World Commission on the Social Dimension of Globalization




             ITUC: Globalization and Global Governance