Labour Movement Issues

The fundamental situation facing IUF members and the labour movement generally, is that we are losing power, power vis-à-vis employers and governments and in society generally. There are, of course, exceptions - companies and enterprises where unions have maintained or even increased their strength.

Precisely because the IUF has always taken a strong position in defense of trade union and democratic rights and refused all concessions to authoritarian regimes, IUF affiliates have been able to utilize the possibilities opening up in countries like Indonesia to effectively organize independent unions for the first time in many decades. But the global trend is one of diminishing power and influence, industrially and politically.

The decline shows itself in a variety of ways. The global tendency over the last two decades (again, with individual exceptions which don't, however, negate the trend) is one of declining membership, declining employment in the IUF sectors in those countries where union membership was greatest, a decline in the number of permanent jobs, and a general decline in workers' share of national income alongside the growth of structural unemployment and poverty. Politically, this decline is manifested in a general inability to reverse the movement towards deregulation, the dismantling of social welfare and social security systems, and the creation of global trade and investment regimes which give unprecedented power to transnational corporations.

Some 25 years of rapid growth in the world capitalist economy, roughly from the onset of the Korean War through the global recession of 1973-4, and a favourable political environment, led to real growth, high employment levels, stable employment relations and an increase in union bargaining strength. Wage increases took place in parallel with the growth of profits and productivity, enabling the expansion of social welfare systems and a politics of social compromise, at least in the capitalist democracies. Unions benefited enormously from this conjuncture, but it came to an end, and nothing during this period of expansion prepared the labour movement for what was to follow.

One of the most significant features of the subsequent decades has been the delinking of the established relationship between wages and productivity. Productivity continues to grow but wages no longer keep pace with profits and productivity. In the OECD countries, wages have stagnated or declined. In the case of China, the greatest magnet for foreign investment in manufacturing over the last decade, the delinking of wages from profits is complete (this is after all one of the purposes of dictatorship!). The relationship in the rest of the world falls between these two poles. This delinking has negative consequences for society as whole.

The growth of international money market funds and the unprecedented capital mobility which is both driving and benefiting from the global deregulatory project has brought about the financialization of manufacturing, services and even agriculture. Investors in these sectors now demand rates of return equal to those obtainable in global financial and stock markets, rates unthinkable even a decade ago. The head of Deutsche Bank recently stated that return rates of 20% on investment should be the eventual target for investors. The example of Danone - a company which recognizes the IUF - is typical. The company invested a considerable part of its considerable profits last year in buying back its own stock, an operation designed for no other purpose than to boost its share price. These unprecedented rewards for investors are the flip side of "jobless growth" and the vanishing wages/productivity/job creation link.

Financialization and deregulation mean that workers are being squeezed in ways which traditional bargaining strategies have been powerless to resist. The ability of corporations to reap inflated profits through downsizing, production transfers, joint ventures which elude regulatory requirements, the casualization of employment relations, union-busting and simple speed-up on a global scale, in the context of a global rollback of labour, social and environmental standards, has proven difficult to resist. Unions fight back, but their energy and mobilizing power is dissipated in an endless series of defensive struggles. As a result, labour's industrial and political agenda has tended, for understandable reasons, to contract at a time when new strategies, new programs and new alliances are an urgent matter of survival. Jobless growth may work for employers, but for unions, operating in a situation of declining strength, deepening inequality (both between and within countries) and a radical shift in the global balance of social forces, it is simply not an option if we are to deliver permanent gains for our members and hope to shape the wider social and political agenda.

The decades of growth and expanding employment in the OECD countries also saw a continuous process of concentration and the rise to dominance of the agrifood transnationals. Once the political balance of power and regulatory environment shifted against labour, these companies were in a position to qualitatively advance their market positions and power through mergers, acquisitions, greater horizontal and vertical integration, "global branding" strategies and strategic alliances along the production chain. Concentration in the agrifood industry has always existed, and has historically even been seen as an aid to union organizing. There can be little doubt, however, that the ability of these companies to exercise their concentrated, oligopoly power on a global scale gives them a capacity to impose conditions along the food chain on a scale which is qualitatively greater than anything seen in the past. More recently, the global expansion of the retail giants has added to this pressure on both food workers and, further back along the supply chain, agricultural workers and small farmers, as the enormous buying power of the retailers leaves little room for negotiation or resistance to suppliers of primary or semi-processed goods. Global fast food chains, which along with supermarkets are now the primary buyers of raw or semi-processed products, exert a similar downward pressure. Exploited and abused migrant labour, in the OECD countries as well as in the developing world, thus not only continues to play a significant and even expanding role in agricultural production, where it is traditional. It is infiltrating into traditionally unionized sectors such as meatpacking.

A mere handful of companies now utterly dominate global processing, food production, and commodity trading. A similar situation applies in agriculture, where inputs have come under the domination of a handful of seed, pesticide and biotech conglomerates (often in fact the same companies) and the global traders set prices at the farm gate. The corporate agenda has been boosted significantly by the WTO's Agreement on Agriculture, which deprives countries of the tools they need to protect food security and domestic food production from the transnationals; by the WTO GATS, which has helped clear the way for the globalization of the transnational retailers; and by the WTO TRIPS Agreement, which gives the corporations the right to impose their GM seeds (and the pesticides that go with them) and consolidate their monopoly of agricultural inputs. Patents have always served as primary tools for constructing cartels. What is new is the ability of the "life science" corporations to patent life, and the imposition of TRIPS rules which make it illegal for countries to, for example, produce the drugs they need to save lives at a cost their peoples can afford.

Finally, we can observe that the consolidation of corporate power along the food chain is both the result of technical/organizational changes in the way food is produced and an engine for driving this process further. Concentrated, hyperintensive production techniques, both in agriculture and food processing, are highly destructive of rural livelihoods, the environment, working conditions for food workers and ultimately employment in the food sector. The destruction of small and medium enterprises, the transportation of primary, processed and semi-processed foodstuffs over long road and air routes, and the destruction of local food systems under the impact of cheap, subsidized imports are destroying employment in both developed and developing countries. Even where union organization remains strong, the employment figures show a steady decline. If present trends continue - which is to say if the IUF and its members are not able to take on the employment-destroying aspects of the system as a whole, a task which is not the same thing as fighting individual plant closures - we will be increasingly unable to secure decent jobs for our current and future members. It is not only a question of the IUF's, and the broader labour movement's, responsibility to society, though that is a commitment the IUF has always taken seriously. It is a question of basic survival.

Over the last two decades, the HRCT sector has experienced employment growth - at times quite rapid, though we can expect employment growth to slow - but a general degradation of working conditions. Heavy reliance on migrant, seasonal and casual labour, insecurity, high turnover and a general lack of skills training characterize employment. While HRCT does not share the job-destroying characteristics of food and agriculture described above, it does show a trend towards consolidation and concentration of ownership on a parallel scale. The social, political and industrial challenges confronting HRCT workers therefore consist in bringing under control the unregulated nature of a sector whose uncontrolled expansion threatens to undermine and ultimately destroy the natural and social basis of the tourism industry.

Two basic conclusions emerge from this analysis. First, agricultural and food workers must be able to more effectively confront and constrain through collective action the transnational companies which are driving the corporate globalization of food and agriculture. Getting the companies to the negotiating table by gaining international recognition - not through illusory "codes", "compacts" and "social responsibility" exercises but through recognition and negotiation - must continue to be a priority. We need to give life and substance to international organizing by attempting, with the resources we have, to bring the isolated struggles our members are engaged in into a more coherent and effective global force. This aspect of our work is further elaborated under items 4, 6 and 7.
However, organizing for recognition, even if we succeed in using that recognition to facilitate the further organizing which is the goal, is not sufficient. Global deregulation - a world in which the corporations increasingly write the rules - means we need to struggle for a new global regulatory framework to affirm our rights and to put in place the kinds of social and environmental safeguards which the WTO, the international financial institutions and the regional and bilateral trade and investment regimes are so rapidly undermining.
If the global consequences of increased corporate power are evident, the tools we need to fight back are considerably less so. But here as well, we must first recognize that we are losing. The drive to include sweeping corporate investment guarantees against current and future public interest legislation to protect workers, consumers and the environment did not die with the Multilateral Agreement on Investment (MAI) in the OECD. It is being implemented through regional and bilateral investment agreements negotiated by the US and the European Union, all "social" rhetoric to the contrary. It continues to haunt the WTO "development" round negotiations. These treaties are then used to ratchet up the pressure at the WTO, just as NAFTA helped shape the first WTO investment rules and bilateral negotiations paved the way to the TRIPS.

Union "lobbying" of the WTO and the international financial institutions, if we are to be honest, has not slowed down the companies' drive to radically rollback society's capacity at the local, national and regional level to regulate through legislation the activities of transnational investors. We are handicapped by having to follow an agenda which is not ours, confined to tinkering with a program which is fundamentally, radically anti-democratic and designed to lock workers and the poor into a position of permanent inferiority vis-à-vis the transnationals. Voluntary agreements to allow the affordable production of anti-retroviral drugs to treat HIV/AIDS patients keep falling apart for the simple reason that the pharmaceutical companies have an international treaty (the TRIPS Agreement) which effectively outlaws the kinds of measures that could save millions of lives. Syngenta recently tried to patent the process by which plants produce flowers, thus giving them an effective global monopoly of many of the world's major food crops. They failed, but they and others will be back, and we need to confront this global power grab. Brazil can win a case against the US on illegal cotton subsidies, but there will be no compensation under WTO rules for millions of small farmers and workers who have been crushed by over a decade-long decline in commodity prices which has taken many crops to their lowest prices since the Great Depression. The agrifood transnationals, on the other hand, have helped create the commodity glut and have profited handsomely from it. There is a thick net of international rules, regulations and treaties which confirm their power to do so, but nothing - as yet - that would give us the power to reverse the trend.

If we know the goals - reshaping the food system by fighting for our rights - and we know the problems, we also have to admit that traditional remedies are no longer adequate. Regulating and constraining corporate power can't be accomplished with traditional tools, because that power has changed - it is now global, and more highly concentrated. We need to confront, rather than lament, the financialization of the IUF sectors and their subordination to the demands of investors in the financial markets. We need to ask if traditional anti-trust/anti-competitive measures, for example, are adequate in today's context, whether we need new tools (we almost certainly do), and what those tools might be. Concentration as such is not the only issue. Wal-Mart was busting unions long before it went global. Conversely, there are global companies which can be dragged to the bargaining table, but which pose issues for the IUF's global membership which go far beyond the traditional collective bargaining agenda because they impact on workers backwards and forwards along the supply and retail chains and on the food system as a whole. How do we formulate these demands? How do we fight for them?
In short, the basic challenge confronting IUF members and the labour movement as a whole is to confront and to roll back global deregulation and the corporate trade and investment regime by opposing to it a coherent global project of our own. While the challenge may appear daunting, we must never forget that the historic gains of the labour movement - gains which profoundly transformed the world we live - seemed scarcely realizable when we first began to fight for them. We fought and we won. There was nothing inevitable about the corporate advances of the last two decades. We were simply out-organized at all levels, or, failed to organize because we didn't appreciate the significance of what was taking place.

We must also not forget that significant reforms have never come about by tacking a wish list on to the employers' program. Labour must regain the coherent vision and the independence of thought and action which have always been the force behind genuine reforms. So much slippage has taken place that the very notion of "reform" is today monopolized by the right, and inevitably applies to one or another deregulatory move. If it is certain that we can only meet the challenge by organizing, mobilizing and campaigning, it is also certain that we are dealing with vital questions which demand efforts and resources which would strain the resources of an organization many times greater than ours.

Posted by IUF at 09:21 AM | Permalink

Enlargement in 2004 by no means put an end to the integration of central Europe: countries whose development lags a long way behind - such as Bulgaria, Croatia and Romania, as well as the entire Balkans and Turkey - are seeking admission. And yet enlargement was effected without establishing stable social security systems and industrial relations in the accession countries.

This generates problems for the social stakeholders, above all for the trade unions in both western and central Europe, since the social dialogue mechanisms thus far developed neither reflect the new reality- wage undercutting and social dumping - nor appear likely to help solve these problems.

We shall describe below the genesis of the western European social model and the socio-political reality of central Europe. We shall adopt a trade union perspective and make plain that, unless trade unions and industrial relations can be thoroughly Europeanised and internationalised, Europe's unique social policy approach may soon be a thing of the past.

Arrival

The political upheaval of 1989/90 was widely perceived in central and eastern Europe as a “return to Europe": back to the rule of law and pluralist democracy; away from Moscow's sphere of influence. The decisive majorities in the EU referendums should be viewed in this light but also, in the context of NATO membership, as an unambiguous vote for a Europe of peace and prosperity. In this sense 1 May 2004 provisionally concluded a process which propelled central Europe back into the heart of European politics. Critics, on the other hand, maintain that accession is incomplete and comes at a high social price.

The new EU citizens’ low turnout at the European Parliament elections - only about 26 percent - is hardly surprising since considerable disenchantment set in during the accession process. The central European countries' desire for accession always did derive more from perfectly comprehensible national interests than from Euro-euphoria. Wherever would that have come from?

The scale and speed of the accession process were determined by the fastest and most comprehensive privatisation and deregulation possible. The establishment of social institutions, social security provision and industrial relations ranked far behind the all-pervasive turbo-capitalism and the all-consuming acquisitions by foreign investors.

While the transformation from a command economy to a market economy has just been completed at breathtaking speed and the societies of central Europe are struggling to organise themselves politically and socially, they look on with astonishment as western European society delivers itself up to individualism and post-materialism, dismantling social security systems and benefits. No sooner have the 75 million new EU citizens escaped from Real Socialism and drawn closer to the alternative, promising model of a market economy than the welfare state disappears before their very eyes. This is not what they had expected.

Protagonists in the building of civil society in central Europe are witnessing a retrenchment of the welfare state and attempts by western European society to defend itself against several threats simultaneously. Firstly the challenge of globalisation, which seems unstoppable in its drive to subject the entire world to economic dominance and turn social standards into disadvantages in terms of cost and location. Then there is the European Union which, driven by industrial interests, first established the largest internal market in the world and then brought about European monetary union. To make matters worse, eastward enlargement also fuels internal fears and potential threats which are unscrupulously exploited in the popular press: here the threat of migration; there the spectre of a "brain and care drain".

With wages and labour costs in central Europe more than two thirds lower than in the west, there are growing fears of social dumping and the transfer or relocation of production to countries where taxation and non-wage labour costs are lower. This has led at the eleventh hour to helpless outbursts of local patriotism and to equally unrealistic demands for European tax harmonisation so as to create "fair minimum tax rates".

Even the simplest economic facts are ignored in this collective bout of European social Darwinism. For example, the fact that productivity in central Europe is actually rising by around 4% per year, which represents a positive development if the much-dreaded wave of migration is to be forestalled. Yet despite this trend, the level of productivity in the accession countries - at US $14.50 per hour - still lies well below that in the EU of 15, at US $ 36.20. Nor is much notice taken of the fact that the huge profits made from export trade with the accession countries create jobs in the west.

The fall of the Berlin Wall increasingly exposed western Europeans to media-orchestrated social dumping, aimed at safeguarding company sites and preserving the welfare state, whilst in central Europe, on the other hand, the trade union structures required to take defensive action or even launch a proactive pan-European campaign do not exist. All of this is taking place against the background of organisational malaise among central European trade unions and industrial relations which can be depicted - perhaps rather too schematically - as follows:

The reputation and condition of trade unions after 1945 and 1989 could not have been more different. The end of fascism left behind a morally and politically invigorated trade union movement, whereas after the end of communism even social-democratic policy-making bears the stigma of despised, outdated collectivism.

Farewell to the social model?

In keeping with the principle of subsidiarity, the social model is clearly limited in scope. Since social security systems have developed along different lines, the EU lacks competence in this area.

Directive 94/45EC on the establishment of the European Works Council (EWC) was long regarded as the operational showpiece of the social dialogue. Ten years on, however, the intended Europeanisation or even internationalisation of EWCs in transnational companies has evidently failed to materialise, repeatedly thwarted by straightforward language barriers but also by competition between different national sites. This is particularly worrying because such competition will take on dramatic proportions in the EWCs of the 25-member EU, with its striking east/west wage differential. It will not only erode wage levels in the west; we know of instances where, allegedly to safeguard particular sites, workforces in central Europe have agreed to pay freezes or even to work unpaid. Wage competition comes from Ukraine and Moldova, but the undercutting knows no borders since just beyond Moldova lie the next low-wage and low-tax countries: Russia and China.

Just as social policy still falls under the auspices of national governments, wage policy remains the exclusive prerogative of national trade unions. Let us summarise and attempt to compare the reality in central and western Europe.

While criticism in western Europe is levelled at regional sectoral collective agreements and wage cartels, collective bargaining in central Europe is confined to company agreements or, worse still, to bargaining-free zones in prospering SMEs.

In this precarious situation, trade unionists in central Europe will look at the position in western Europe and ask: has the social model in the west safeguarded jobs, improved workers' rights, preserved social security systems and strengthened the trade unions through increased membership? And if the west answers “no”, trade unions in both west and east will have to wave goodbye to some cherished beliefs and unrealistic expectations.

Searching for a new direction

Clearly, eastward enlargement will challenge the existing European social model. This should be seized as an opportunity for a Europe-wide debate and review of the social dimension in the EU of 25. A realistic, targeted strategy must take account of the following truths:

Industrial relations are still determined nationally 95% of the time, so strong local and national trade unions are a prerequisite for action at European level. At least two conclusions can be drawn here: firstly, attention must be focused at sectoral and at national level on strategic companies and sectors, with a view to conducting effective recruitment campaigns in the foreseeable future. Secondly, relations between workplace representatives/works councils and sectoral trade unions must develop into a constructive strategic alliance.

Eastward enlargement is by no means complete following accession. On the contrary, it lacks a social dimension reflecting the disparities between east and west and offering realistic tools for a harmonisation of industrial relations. The "social deficit" of eastward enlargement has already had an impact on taxation and wage policies, social security systems, labour law and the role of trade unions in society.

Possible solutions

One could simply wait for economic performance and growth in central Europe to catch up and bring about a harmonisation of living standard and working conditions within one or two decades, thereby aligning wages and social benefits. That would be a fatalistic approach and would wreak havoc in social policy terms: the longer the trade union vacuum lasts in the east, the lower the eventual level of social policy harmonisation will be.

A proactive approach consists of a Europe-wide trade union strategy. As well as reviewing the social model, the standards ratified at accession must be rigorously implemented and enforced. The problem in many cases is not low-wage countries but low-cost countries. Norms, standards and legal provisions are simply not applied or even monitored, obviously leading to cost advantages and lamentable working conditions.

The second - and much trickier - aspect consists in overcoming the contradiction between European rhetoric and the reality of trade union organisation. If transnational companies are regarded as the flagships of globalisation and worldwide standard-setting, work within them is an indispensable part of the much-needed internationalisation of industrial relations. Only in that way can regulatory mechanisms and minimum standards be created to put an end to cutthroat downward competition.

The success story of the EU in the post-war period lay in its creation of prosperity and the absence of war and violence. Now, after the end of the Cold War, Europe's social value system must ensure acceptance and integration. That would make the European trade unions part of - or even the driving force behind - an urgently required debate between politicians and citizens, not in a spirit of resignation but looking to the future.

Posted by IUF at 09:19 AM | Permalink