Globalization and Global Trade Unionism PDF

Dr. Thor Indridason [email protected] Globalisation and Global Trade Unionism  Globalisation and Global Trade Unionism Globalisation Challenging globalisation – international trade unionism Globalisation ...

Dr. Thor Indridason [email protected] Globalisation and Global Trade Unionism  Globalisation and Global Trade Unionism Globalisation Challenging globalisation – international trade unionism 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: - 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 of market globalisation Dimensions of market globalisation Social outcomes Firm-level outcomes  Globalisation Drivers, dimensions and outcomes Drivers of market globalisation ▪ Worldwide reduction of barriers to trade and investment ▪ Market liberalisation and adoption of free markets ▪ Integration of world financial markets ▪ Advances in technology Dimensions of market globalisation Social outcomes Firm-level outcomes  Globalisation Drivers, dimensions and outcomes Drivers of market globalisation Dimensions of market globalisation ▪ Integration and inter-dependence of national economies ▪ Growth of global investment and financial flows ▪ Globalisation of production activities – networks ▪ Globalisation of services Social outcomes Firm-level outcomes  Globalisation Drivers, dimensions and outcomes Drivers of market globalisation Dimensions of market globalisation Social outcomes ▪ Contagion: rapid spread of financial Firm-level outcomes or monetary crises between countries ▪ Offshoring and flight of jobs ▪ Impact on wages ▪ Effects on national culture ▪ Loss of national sovereignty  Globalisation Drivers, dimensions and outcomes Drivers of market globalisation Dimensions of market globalisation Firm-level outcomes Social outcomes ▪ Countless business opportunities for internationalised firms ▪ New risks and intense rivalry from foreign competitors ▪ Internationalisation of the firms value- chain  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 ▪ A firm of particular nationality with partially or wholly owned subsidiaries within two or more national economies ▪ Such firms expand overseas primarily through foreign direct investment (FDI) ▪ FDI may entail either purchase of existing facilities (M&A) or the building of new facilities (“greenfield” investment) ▪ The purpose of FDI is to achieve partial or complete control over marketing, production or other activities in another economy ▪ Investments may be in services, manufacturing or commodity production ▪ MNCs spread ideas, tastes and technology throughout the world  The Multinational Corporation – an agent of globalisation Declining trade International Trade barriers Foreign Direct Globalisation MNCs Investment Technological Global Production change Networks Drivers Process Agent Outcomes  The Multinational Corporation – an agent of globalisation Iternational Trade Average Tariff Rates – Manufactured products PERCENT OF VALUE 1913 1950 1990 2005 France 21% 18% 5.9% 3.9% Germany 20 26 5.9 3.9 Italy 18 25 5.9 3.9 Japan 30 - 5.3 2.3 Holland 5 11 5.9 3.9 Sweden 20 9 4.4 3.9 Great Britain - 23 5.9 3.9 United States 44 14 4.8 3.2 Source: Hill 2009  The Multinational Corporation – an agent of globalisation Figure 1.1: Volume of World Trade and World International trade 1970 - 2004 Production, 1950-2004 3100 26.0x 2600 Index 1950=100 2100 1600 1100 600 7.5x 100 50 54 58 62 66 70 74 78 82 86 90 94 98 02 19 19 19 19 19 19 19 19 19 19 19 19 19 20 Total Merchandise Exports World Production  The Multinational Corporation – an agent of globalisation Foreign Direct Investment Growth 1992 – 2006 Production output (world) 45 % International trade 150 % FDI 700 %(ow)/883%(iw) In 2009, global FDI stocks were 30 per cent of the world GDP comp[ared with only 10 per cent in the early 1990s  The Multinational Corporation – an agent of globalisation Foreign Direct Investment 1980 - 2008 (US $ billions) Economy 1980 1990 2000 2008 World 692.7 1942.2 5757.4 14909 (x21.5) (100) (100) (100) (100) Developed 390.7 1412.6 3960.3 10213 (x26.1) economies (56.4) (72.7) (68.8) (68.5) Developing 302.0 529.6 1736.2 4276.0 (x14.1) economies (43.5) (27.2) (30.1) (28.7) Cohn 2012  The Multinational Corporation – an agent of globalisation Global Production Network - Boeing  Globalisation, jobs and incomes – the mechanisms The impact of politics International and ideologies trade Trade Globalisation MNCs FDI Jobs & wages Production Technological change Domestic Weaker union firms bargaining leverage Politics Union busting neo-liberalism Dergulation  Globalisation, jobs and incomes – the mechanisms The challenge of International global competition trade Trade Globalisation MNCs Jobs & wages Low-cost imports Technological change Domestic Weaker union firms bargaining leverage Politics Union busting neo-liberalism Dergulation  Globalisation, jobs and incomes – the mechanisms Employment relations International – the power dimension trade Globalisation MNCs FDI Jobs & wages Technological Investments change (job creation) Domestic abroad Weaker union firms bargaining leverage Politics Union busting neo-liberalism Dergulation  Globalisation, jobs and incomes – the mechanisms Employment relations International – the power dimension trade Globalisation MNCs Jobs & wages Production Technological change Domestic (Threat of) firms transfer Weaker union bargaining leverage Politics Union busting neo-liberalism Dergulation  Globalisation, jobs and incomes The advanced economies ▪ Changes and trends in labour market institutions and policies ▪ Decentralisation of collective bargaining ▪ Productivity bargaining – “competitive” wage policies ▪ Wage flexibility rather than wage restraint ▪ Increased importance of skills development ▪ Weakening of the trade union movement ▪ Membership decline ▪ Collective agreement coverage ▪ Declining labour standards? – “race to the bottom”?  Globalisation, jobs and incomes The advanced economies ▪ The undermining of employment, jobs and wages ▪ Reduced manufacturing employment through imports of finished manufactured products from low-wage countries ▪ Imports from developing countries only about 20% of total imports but tend to be concentrated into specific sectors ▪ Low wages and greater world capacity for producing manufactured goods can lower the prices of many international goods. ▪ 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  Globalisation, jobs and incomes The advanced economies ▪ The undermining of employment, jobs and wages ▪ The very large increases in direct investment flow to other countries have meant ▪ reduced investment in the domestic manufacturing/service base – reduced job creation – and ▪ significant growth in the foreign manufacturing capacity capable of competing directly with manufacturers in the advanced economies ▪ As trade drives workers out of manufacturing and into the lower-paying service sector not only are their own wages reduced but this helps reduce the wages of those already employed in service jobs  Globalisation, jobs and incomes The advanced economies ▪ The undermining of employment, jobs and wages – a summary ▪ Undermining of trade unions and collective bargaining ▪ Loss – “export” – of jobs ▪ Downward pressure on wages ▪ Declining living standards ▪ Increased inequality between groups of employees ▪ 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 – structure Membership base National / Regional Employment sector, trade, organisations industrial sector cooperation International Trade Global Union Union Confederation Federations ITUC coordination GUFs  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.  The international trade union movement Confronting globalisation ▪ 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  The international trade union movement Confronting globalisation ▪ ICFTU/ITUC 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: ▪ 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).  The international trade union movement Confronting globalisation ▪ 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.”  The international trade union movement Confronting globalisation ▪ ITUC’s involvement played a decisive role in the adoption by the ILO’s 2009 Global Jobs Pact: ▪ to guide national and international policies aimed at stimulating economic recovery, creating jobs and providing greater social protection for workers. ▪ ITUC’s 2nd Congress (2010) underscored that full respect for ILO’s core labour standards must be a fundamental pillar of the global trade regime an reaffirmed its support for the incorporation of a social clause into WTO statutes: ▪ would require all products traded between countries to be produced and distributed in compliance with international core labour standards as crucial instrument for social justice.  The international trade union movement Confronting globalisation 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 international trade union movement Confronting globalisation The Global Union Federations (GUFs) ▪ Established in the late 19th century (as ITSs) – became GUFs in 2002 and united under a collective network, Global Unions. ▪ Independent bodies organised internationally by employment sector, trade and (most often) industrial sector. ▪ Devoted to represent the economic interests of their affiliated member organisations. ▪ Approximately 30 ITSs in the 1960s but currently only 10 GUFs. ▪ By many considered the most operational structures of international trade unionism.  The international trade union movement Confronting globalisation Global Union Federations (GUFs) – main activities ▪ Worker representation within MNCs ▪ Development of new forms of international solidarity by setting up “global trade union alliances” ▪ Bringing together trade unions from different countries representing workers within a single MNC ▪ Negotiations of International Framework Agreements (IFAs) which include the eight core ILO conventions and other international labour standards  The international trade union movement Confronting globalisation 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 he control of the signatory MNC. ▪ They are not legally binding.