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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?
Resources
ILO
Declaration on Social Justice for A Fair Globalization
http://www.ilo.org/public/english/bureau/dgo/download/dg_announce_en.pdf
Report
on of the World Commission on the Social Dimension of Globalization
http://www.ilo.org/fairglobalization/report/lang--en/index.htm
ITUC:
Globalization and Global Governance
http://www.ituc-csi.org/spip.php?rubrique4
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