Globalization, Informal Economy, Decent Work & Challenges for Trade Unions

1. Globalization, Informal Economy, Decent Work & Challenges for Trade Unions Arun Kumar

2. Globalization?Participants views…

3. Why Globalisation? • Capital needs markets…new markets for profits; for natural resources • Developing countries need to grow, need capital, access to new technology, goods & services; • Investors need free trade, minimum or no regulations on capital & safe guarding of their investments; • Economic reforms, free trade & Globalization!

4. Share in World Income/GDP Share in World Trade Share in FDI Share in Portfolio Investments HIC (80.5), MIC (11.5), LIC (2), China & India (6) HIC (72.9), MIC (15.6), LIC (2.7), China & India (8.7) HIC (76.6), MIC (12.5), LIC (1.1), China & India (9.8) HIC (76.6), MIC (12.5), LIC (1.1), China & India (9.8) Global Background (2002, in %) Source: ILR, 2004/1-2, Vol 143, ILO, Geneva

5. What is Globalization Promoting? • Basic thinking:Supremacy of markets, Government - a problem! • One size fits all kind of policies: Open markets for trade, investment & capital flows, seek FDI rather than foreign aid, no performance requirements on FDI, cut govt deficit, privatize, deregulate & reduce role of govt in economic activities, and so on • In the labour markets – promote employment flexibility

6. Implications of New Policies • Shift from development cooperation to free trade; • Free Trade means - More competition between Unequals; • More freedom to Capital; • Adverse impact on devt & employment – many developing countries may remain providers of natural resources & low value products; • The policies that helped developed countries to develop are now considered trade distorting and hence to be done away.

7. Effects on Labour • Downsizing, increasing workloads & job insecurity – results of flexibilization in labour markets; • Weakening of public services (transport, health care systems, basic education, etc as public expenditure & role of Govt in these sectors declines); • Deterioration of labour standards & social protection provisions; decline in social dialogue – consultations & tripartite machinery • Growing informal economy – rural-urban migration as agriculture becomes non-viable for small farmers – casual insecure jobs in urban areas with no social protection;

8. Why is Informal Economy Growing? • Lack of growth of employment in the formal sector – due to slow growth of economy &/or faster growth of population • Due to economic restructuring policies – declining public investments on social & economic sectors - adversely impacts on workers chances of finding employment in modern/ organized sectors, leaving people with no choice but to seek survival in informal sector activities • Restructuring in production & services sectors (decentralizing of production, sub-contracting & outsourcing, downsizing of employment, encouragement of self employment, home working, part time work, etc.) • Other reasons - ???

9. Effects on Trade Unions • Weakening of TUs – thru membership losses, thru new HR policies, outsourcing & preference for casual labour (growing unorganized & informal sector workers); • Trade Union memberships are declining memberships range from 3% - 19%; Union density lowest in agriculture & informal economy dominated countries & declining in most countries; work & employment relations in informal economy (sector with growing employment) make it difficult for traditional forms of organizing. • What else? Participants experiences

10. So, what are TUs saying? Answer does not lie in Protectionism • Ensure Justice, Equity and Democracy in the new global order; • Need for role of State and public regulation of business and international trade; • Review Free Trade – to re-focus on the objectives of Devt, Employment & Poverty reduction – multilateralism rather than bilateralism. • Respect for basic International Labour Standards for promotion of Decent Work; • Representation & Participation of TUs in economic and social policy matters;

11. What is ILO saying? ILO set up World Commission on the Social Dimension of Globalization in Feb 2002. Its report in Feb 2004 highlighted that for fair globalization – Global markets need ‘governance’ i.e. a set of institutions & rules for equitable functioning to: • Avoid market failures (e.g., economic crises); • Redress vast inequalities between & within countries; • Strengthen mechanisms for delivering social protection - manage change. Equally importantly it called for wider & more democratic participation of people and countries in the making of policies that affect them.

12. ILO’s Response – Decent Work For All!All those who work, have rights at work! What is Decent Work? Work that is productive, gives fair income, security in the workplace & social protection for the family, equal opportunities & treatment, better prospects for - personal devt & social integration, freedom to organize & participate in decision making

13. How is DW to be achieved? • Creating productive jobs – thru sustainable economic & social devt; • Guaranteeing fundamental rights at work to all workers; • Providing basic social protection for all – a minimum protection against low or declining living standards; • Promoting social dialogue for policy formulation & conflict resolution;

14. Fundamental Principles and Rights at Work (1998) • Freedom of association & recognition of the right to collective bargaining • No forced/compulsory labour • No child labour • Elimination of discrimination in employment and occupation …. a global social floor

15. TUs support Decent Work TUs support the integrated approach of ILO to address the social impacts of globalization: Because the concept of Decent Work - • Focuses on core rights, addresses all workers, in all economic sectors (formal, informal); • Is participatory, promotes Social Dialogue & seeks to involve all social partners • Is Dynamic – progresses as the economy changes

16. Trade Union responses to the challenges posed by Globalization • Mergers of trade unions – GUFs; • ITUC – merger of ICFTU, WCL & some other unions – on 1 Nov 2006, Vienna; ITUC represents 311 affiliated national trade union centres of 155 countries & territories representing some 168 million members. • 4 new regional organizations (in Africa, Asia, Latin America, & Europe/Central Asia) have also been created

17. Trade Union Responses • Campaigning for Core Labor Standards (CLS) policies at development finance and other multilateral institutions (IFC and World Bank) • Inclusion of CLS clauses in trade agreements • Development cooperation programs to strengthen worker/union rights (primarily EU) • Organizing and including migrant & other informal sector workers – in many countries unions are increasingly working with workers’ centers or associations that serve informal sector or migrant workers

18. Trade Union Responses • Global Collective Bargaining (GUFs have signed International Framework Agreements to promote MNCs’ commitment to ensuring basic labor conditions, including workers’ right to organize & bargain collectively • 55 agreements in place covering approx. 5 million workers worldwide • Build alliances with other social partners on mutually agreed agenda – links with world TU bodies, Women’s movement, NGOs where necessary, Consumer movement – role of international labour solidarity. • Participants views on national responses?

19. Challenges for the international trade union movement • How to ensure workers’ rights in global economy? • How to influence employment creation policies? • How to balance demands for increased employment flexibility with workers rights to social protection? • How to organize in globalizing economy and in new work place environment (given employment flexibility, informal economy and increasing mobility of capital)?

20. Negotiating change at national level … • Ensure Right to Organize & Right to Collective Bargaining! • Adopt policies that apply to all workers & prevent further divisions of workers in the labour market –put all workers in one boat. • Set nationwide floor labour standards –that apply to all workers & employers (de-link labour standards from permanency of employment); Roof to be attained thru Collective Bargaining – the right to which should be ensured.

21. Negotiating Change… • What is the floor that employers should respect? • Core labour standards of the ILO • Freedom of Association –the right to form unions, the right to recognition • Right to Collective Bargaining • Basic social security contribution • Access to skills training • No discrimination, No child labour

22. Why Labour Standards? Labour Standards are not just a question of workers rights BUT are also means to promote economic growth! Labour standards create conditions for growth of domestic markets since they enable sharing in gains of growth & spread of purchasing powers – this makes domestic economic growth more sustainable.

23. Getting back to basics Trade unions must strengthen their organizing and bargaining power. HOW? Challenge 1: Creating an“Enabling Environment” for Trade UnionActivities Challenge 2: Building Capacity ofUnions in Organizingand CollectiveBargaining

24. Group Work • How has Globalisation affected workers & trade unions in your country? [List the major changes in economic & labour policies that have affected (positively or negatively) the employment & Trade Unions] • What actions has your trade union taken or can take to meet challenges of Globalization & free trade? • What role can the International Trade Union Movement play in assisting national unions to meet the challenges of Globalization?