Globalization and Global Trade Unionism PDF

Globalisation and Global Trade Unionism Assaad Dib LPTC - NBC Oct 2024 Globalisation Globalisation – what is it? Definition: The movement towards the expansion of economic and social ties between countries through the spread of corporate institutions and the capitalist philosophy that leads to...

Globalisation and Global Trade Unionism Assaad Dib LPTC - NBC Oct 2024 Globalisation Globalisation – what is it? Definition: The movement towards the expansion of economic and social ties between countries through the spread of corporate institutions and the capitalist philosophy that leads to the shrinking of the world in economic terms. The Great Globalisation Debate The great globalisation debate centres around the question: how globalised are we, really? The "Inter-National" economy perspective: - The principal entities are national economies - Trade and investment produce growing interconnection between these still national economies - Increasing integration of more nations and economic actors into world market relationships - Increasing centrality of investment relations between nation (rather than trade) - Continue relative separation of the domestic and the international frameworks of policy-making and economic management (Hirst & Thompson, 1999) Globalisation: Drivers, Dimensions and Outcomes Drivers, dimensions and outcomes Dimensions of Market Globalisation Globalisation Drivers, dimensions and outcomes Globalisation Drivers, dimensions and outcomes Drivers of globalisation and the multinational corporation The Multinational Corporation – an agent of globalisation It is often said that multinational corporations (MNCs) are the "agents" of globalisation. This raises two questions: What is a multinational corporation and What activities or behaviours make the MNC an "agent" of globalisation? The Multinational Corporation – an agent of globalisation The MNC – a definition Definition and Expansion Purpose and Scope A firm of particular nationality with partially or wholly owned The purpose of FDI is to achieve partial or complete subsidiaries within two or more national economies. control over marketing, production or other activities in another economy. Such firms expand overseas primarily through foreign direct investment (FDI). Investments may be in services, manufacturing or commodity production. FDI may entail either purchase of existing facilities (M&A) or the building of new facilities ("greenfield" investment). MNCs spread ideas, tastes and technology throughout the world. MNCs and Globalisation The Multinational Corporation – an agent of globalisation International Trade Average Tariff Rates – Manufactured products Interpretation: The chart shows a steady decline in average tariff rates for manufactured products globally, from over 20% in 1913 to under 3% by 2023. Reasons: 1. Globalization and Trade Liberalization: Over the decades, trade agreements like the General Agreement on Tariffs and Trade (GATT) and the World Trade Organization (WTO) have significantly reduced tariffs, promoting freer trade and global integration. 2. Technological Advancements: Increased transportation and communication technologies have facilitated global trade, reducing costs and making it more competitive. 3. Market Competition: As businesses seek out new markets and lower production costs, they have actively pushed for tariff reductions to gain a competitive advantage in global markets. 4. Economic Integration: Regional trade blocs like the European Union (EU) and the North American Free Trade Agreement (NAFTA) have also contributed to lower tariffs and increased trade within their respective regions. The Multinational Corporation – an agent of globalisation International Trade Growth Interpretation: Between 1970 and 2004, international trade increased 26-fold, but between 2004 and 2023, it only grew about 2.5 times, showing a slowdown. Reasons: Global Economic Recessions: The global financial crisis of 2008–2009 significantly slowed trade growth, as did other downturns such as the European debt crisis. Trade Wars and Protectionism: Tensions between major economies like the U.S. and China, especially post-2016, have led to the imposition of tariffs and non-tariff barriers, slowing global trade. COVID-19 Pandemic: The pandemic disrupted supply chains and reduced global demand, further hampering trade growth. Maturity of Global Supply Chains: Much of the explosive trade growth in earlier decades came from the integration of developing countries into global supply chains. By 2004, many economies were already deeply integrated, leaving less room for dramatic growth. The Multinational Corporation – an agent of globalisation Foreign Direct Investment Growth 1992 – 2024 Interpretation: FDI stocks grew from $692.7 billion in 1980 to $14.9 trillion by 2008, and further to $45 trillion by 2023. Reasons: Emergence of New Markets: The rise of China, India, and other emerging markets has attracted massive foreign investments, as companies seek access to new consumers and cheaper production bases. Digital and Technology-Based Investments: The growth of the digital economy, including investments in tech startups, e-commerce, and the digital infrastructure, has driven much of the FDI growth since 2008. Globalization and Liberalization: In the 1980s and 1990s, many countries liberalized their economies, opening up to foreign investors. The spread of multinational corporations (MNCs) and cross-border mergers further boosted FDI. Shift Toward Emerging Economies: As traditional markets became saturated, MNCs began shifting more capital toward emerging economies, leading to sustained FDI growth. The Multinational Corporation – an agent of globalisation Foreign Direct Investment Growth across regions Foreign Direct Investment (FDI) Growth Across Development Regions (1980-2024) for developed economies, developing economies, and transition economies: Developed Economies: Significant growth in FDI stocks, especially after 2000, driven by technological advancements, globalized markets, and cross-border investments. Developing Economies: FDI has grown rapidly in the past two decades, particularly in emerging markets like China, India, and parts of Africa, as they integrate more into the global economy. Transition Economies: Moderate growth due to economic reforms in Eastern Europe and Central Asia after the fall of communism, but the rate has been slower compared to the other regions. Source: Simulated data based on trends from UNCTAD World Investment Reports and Global FDI Data. Declining Trade Barriers (1990-2023) Declining Trade Barriers (1990-2023) Interpretation: The chart shows a steady decline in trade barriers from 1990, with the index falling from 6 to 2 by 2023. Reasons: Trade Liberalization: Bilateral and multilateral trade agreements (e.g., NAFTA, the European Union’s expansion) have significantly reduced traditional trade barriers. Technological Advancements: The rise of digital trade and services has created new types of cross-border commerce, where tariffs and barriers have a reduced role. Services and E-Commerce Expansion: The increasing role of digital platforms and e- commerce means that many services can now be delivered across borders without facing traditional tariffs or physical barriers. Protectionism vs. Technology: While some protectionist measures have resurfaced (e.g., U.S.-China tariffs), the overall trend of declining barriers continues as technology facilitates easier trade in services and data flows.from 6 to 2 by 2023. This is driven by trade liberalization, technological advancements, and the expansion of services and e-commerce across borders. Wage Stagnation in Advanced Economies (2000- 2023) Interpretation: Wages in advanced economies have grown very slowly, with an index rising only from 100 in 2000 to 115 in 2023, indicating wage stagnation. Reasons: Globalization and Outsourcing: While offshoring has slowed, the lingering impact of past outsourcing continues to suppress wages in manufacturing and service sectors. Automation and Technological Change: Automation and AI have increasingly replaced low- and middle-skill jobs, leading to fewer high-paying job opportunities and wage suppression in many sectors. Decline of Labor Unions: Unions have historically driven wage increases, but their influence has diminished significantly in advanced economies, especially in the private sector, reducing the bargaining power of workers. Income Inequality: As technological advances have disproportionately benefited high-skilled workers and capital owners, wage inequality has widened, leaving many middle- and lower- income workers with stagnant wages. ITUC Advocacy Growth Interpretation: The advocacy efforts of the International Trade Union Confederation (ITUC) have significantly increased, particularly in recent years, reaching an index of 100 by 2023. Reasons: Rise of the Gig Economy: The growing prevalence of precarious, short-term work through platforms (e.g., ride-hailing, food delivery) has prompted ITUC to advocate for stronger protections for gig workers. Pandemic-Related Job Losses: COVID-19 exacerbated labor issues globally, with widespread job losses and declining working conditions, leading ITUC to ramp up advocacy efforts, especially for vulnerable workers. Focus on Platform Workers: In response to the challenges faced by gig and platform workers, ITUC has increasingly focused its campaigns on securing better labor rights, social protections, and benefits for these workers, who often lack traditional union representation. Globalization of Labor Rights: ITUC has also intensified its efforts to push for global labor standards, especially as multinational corporations expand their operations in countries with weaker labor protections. The Multinational Corporation – an agent of globalisation Global Production Network -Boeing Globalisation, jobs and incomes – the mechanisms Globalisation, jobs and incomes – the mechanisms Globalisation, jobs and incomes – the mechanisms Globalisation, jobs and incomes – the mechanisms Labour Market Changes in Advanced Economies Changes and Weakening of the trends in labour trade union market institutions movement and policies Membership decline Decentralisation of Collective agreement collective bargaining coverage Productivity bargaining – "competitive" wage policies Wage flexibility rather than wage restraint Increased importance of skills development Declining labour standards? "Race to the bottom"? Globalisation, jobs and incomes: The advanced economies Undermining Employment Impact on Wages Reduced manufacturing employment through imports of Low wages and greater world capacity for producing finished manufactured products from low-wage countries manufactured goods can lower the prices of many international goods. Imports from developing countries only about 20% of total imports but tend to be concentrated into specific sectors Since workers' pay is tied to the value of the goods this can lead to reduction in workers´ wages in the developed economies In many cases the threat of direct foreign competiton or of the relocation of production can lead workers to grant wage concession to their employers Investment Flow and Job Creation Reduced Domestic Foreign Competition Growth Wage Reduction Impact Investment The very large increases in direct As trade drives workers out of The very large increases in direct investment flow to other countries have manufacturing and into the lower- investment flow to other countries have meant significant growth in the foreign paying service sector not only are their meant manufacturing capacity capable of own wages reduced but this helps competing directly with manufacturers reduce the wages of those already reduced investment in the domestic in the advanced economies employed in service jobs manufacturing/service base – reduced job creation Globalisation, jobs and incomes The advanced economies The undermining of employment, jobs and wages – a summary Undermining of trade unions Downward pressure on wages Increased inequality between and collective bargaining Declining living standards groups of employees Loss – "export" – of jobs i.e. those exposed to foreign competition and those who are sheltered from it The international trade union movement Confronting globalisation The international trade union movement: Confronting globalisation The intensification of international trade and FDI over the last quarter of a century, driven by multinational firms, have highlighted the need to renew worker representation internationally. It is often argued, that by shifting their investments to countries offering inferior social protection and poorer terms and conditions of work, multinational corporations have contributed to the deterioration of working conditions in industrialised countries and fuelled competition between workers in the developed and developing world. In this context. Trade union organisations must use supranational spaces more effectively in order to ensure the respect of fundamental social rights and the improvement of working conditions worldwide. International trade unionism has, since the 1990s, undertaken an in-depth reorganisation of its structures and a review of its strategies in order to reinforce trade union unity. ICFTU and ITUC The International Confederation of Free Trade Unions (ICFTU, est. 1949) the largest and most powerful of the three international union federations of the 20th century. Became the International Trade Union Confederation (ITUC) in 2006 when merging with the World Confederation of Labour (WCL). ITUC's primary mission: … the promotion of workers' rights and interests, through international cooperation between trade unions, global campaigning, and advocacy within the major global institutions …" Main areas of activity include: Trade unions and human rights Economy, society and the workplace Equality and non-discrimination International solidarity ICFTU/ITUC and International Organisations The international trade union movement confronting globalisation has always prioritised lobbying and working closely with international organisations such as the ILO, OECD and the UN on matters relating to labour and trade union rights. In the early 1970s ICFTU began campaigning for development of rules of conduct for multinational firms. This campaign led to two significant outcomes: ILO's 1977 Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy; OECD's Guidelines for Multinational Enterprises (promoting implementation of social policies as well as employment and labour relations issues within MNEs). ILO's Declaration of Fundamental Principles ICFTU and the ITSs played an important role in formulating ILO's Declaration of Fundamental Principles and Rights of Work (1998). The Declaration sets out 8 of ILO's Conventions as Core Labour Standards Since the 1990 ICFTU/ITUC and the International Trade Secretariats (ITSs) (Global Union Federations (GUFs) since 2002) have worked together and with NGOs to have a social clause adopted in international trade agreements. ITUC has, in the context of global economic and social challenges, lobbied major international financial institutions and met with heads of states (G8 and G20) promoting "… an alternative vision of a global economy which responds to the basic notions of social justice." ITUC's Role in Global Jobs Pact The international trade union movement's response to confronting globalisation has been significant, particularly through the actions of the International Trade Union Confederation (ITUC). The ITUC's involvement played a decisive role in the adoption by the ILO's 2009 Global Jobs Pact. This pact was designed to guide national and international policies aimed at stimulating economic recovery, creating jobs and providing greater social protection for workers. Furthermore, the ITUC's 2nd Congress in 2010 made important strides in addressing globalisation's impact on workers. The Congress underscored that full respect for ILO's core labour standards must be a fundamental pillar of the global trade regime. It also reaffirmed its support for the incorporation of a social clause into WTO statutes. This clause would require all products traded between countries to be produced and distributed in compliance with international core labour standards, serving as a crucial instrument for social justice. Regulating Multinational Corporations ITUC has called for regulation of MNCs for the purpose of protecting the full exercise of trade union rights: Action plan between ITUC and the Global Union Federations (GUFs) within the Council of Global Unions. Supporting the building of networks and trade union organisations within MNCs, the negotiations of International Framework Agreements (IFAs) and any activities that strengthen trade union cooperation within MNC's supply chains. Corporate Social Responsibilities' policies complementary but not sufficient. The Global Union Federations (GUFs) History and Structure Purpose and Significance Established in the late 19th century (as ITSs) – Devoted to represent the became GUFs in 2002 economic interests of and united under a their affiliated member collective network, organisations. Global Unions. By many considered the Independent bodies most operational organised internationally structures of international by employment sector, trade unionism. trade and (most often) industrial sector. Approximately 30 ITSs in the 1960s but currently only 10 GUFs. Global Union Federations (GUFs) – main activities Worker representation within Development of new forms of Negotiations of International MNCs international solidarity Framework Agreements Global Union Federations GUFs are developing new forms GUFs engage in negotiations of (GUFs) focus on worker of international solidarity by International Framework representation within setting up "global trade union Agreements (IFAs) which Multinational Corporations alliances". These alliances bring include the eight core ILO (MNCs), ensuring that workers' together trade unions from conventions and other rights and interests are different countries representing international labour standards. protected on a global scale. workers within a single MNC. These agreements help establish global labour standards across multinational corporations. International Framework Agreements (IFAs) International Framework Agreements (IFAs) set out rights relating to trade union recognition and social negotiations at the supranational level. IFAs do not replace collective agreements (collective bargaining) at the national or local levels. Main characteristics IFAs incorporate the standards included in the ILO's 1998 Declaration on Fundamental Principles and Rights at Work. They cover worldwide all establishments and salaried employees under the control of the signatory MNC. A key point to understand is that IFAs are not legally binding.