Essay: Combining the Argument of Our Force with the Force of Our Argument

John Evans, General Secretary of the Trade Union Advisory Committee to the OECD, explores the implications of globalisation for the trade union movement – and the unions' growing response.

Introduction

The growing inequality in the global economy over the last two decades is stark evidence that the union role in achieving social justice is needed more than ever at the very time that market-driven globalisation makes trade union action to achieve this objective more difficult. But it would be wrong to lose sight of the opportunities for changing the policy agenda as compared with the situation only a decade ago. The achievement of social justice and sustainable development in the global economy has become a central element of public debate. The examples of 40,000 trade unionists demonstrating at the WTO Ministerial in 1999 in Seattle or 100,000 demonstrating at EU summits show that workers can be mobilised on globalisation issues in a way that would have been unthinkable ten years ago. The World Bank's own internal assessment has recognised that NGO's, including trade unions, are often more trusted by the public on governance issues than governments themselves or business. The fact that the debate on globalisation has become a central political issue in many countries now strongly motivates the trade union movement to translate that public concern into concrete achievements for our social justice agenda.

The erosion of the legitimate role of the state and in particular the effective public regulation or "governance" of markets – is the most serious threat from globalisation, not trade or investment per se, on which many of our members depend for their livelihoods. Yet this approach to globalisation is not an inevitable fact of life, it is a result of an international policy agenda which trade unions have a crucial interest in seeking to influence. The essence of this agenda is economic but it has profound social implications. It ultimately influences the environment in which trade unions operate or even are allowed to operate. Whether this is called the "Washington consensus" or the "neo-liberal agenda" matters little. It emanates from Finance and Trade Ministries and Central Banks. International Capital and business interests in general are highly active, both formally and informally, in shaping this agenda.

We must not allow the notion to be accepted that a narrow range of policies is pre-ordained or inevitable because of globalisation. A framework of mechanisms has to be developed for the governance of global markets. These range from binding international regulations covering specific fields; looser forms of "soft law"; better co-ordination of national policy; regional integration; continuing national regulation; and more loosely regional or district level policies. Whilst binding, "hard" mechanisms of regulation at a global level will only be able to cover a limited number of areas. They are therefore not an alternative for the looser forms of co- ordination and co-operation in other areas. At the same time whilst the reduction of national government sovereignty may be real, the nation state remains a major consumer, producer and distributor which is not going to whither away to make way for multinational corporations. There does however need to be a wider debate in the international trade union movement on which issues we seek to base our defence of sovereignty through pooling it internationally and where we wish to defend the sovereignty of the nation state.

Our ability to change the agenda on globalisation depends on both efforts to influence institutions at the national, regional and global level and the ability to "campaign and mobilise" trade union members on global economy issues. We have to do both and ensure that there is a strategic link between the two. On the one hand, making demands to international organisations will achieve little if it is not based upon pressure at national level that is in turn reflected in membership awareness and activism. On the other hand, pressure from the workplace or the streets may be dissipated over time if we offer only heat and no light. We must combine the argument of our force with the force of our argument.

These issues now transcend the old division of the world or the global union movement into "developing" and "industrial" countries. An attack on union rights anywhere in the world now affects us all, the campaign for "globalising social justice" has itself become global. At a European level, action for a "social dimension" to European integration is a longstanding and serious demand of European trade unionists, which has yielded concrete results. Action in the Americas, Asia and Africa for a comparable "social dimension" has become a priority demand for the ICFTU's Regional Organisations, despite the widely differing nature of the regional integration processes.

The Impact of Globalisation on Workers

"... in the current process of globalisation we have a system of what I call global governance without global government". Joseph Stiglitz (2001 Nobel Laureate in Economics)

In practice globalisation affects trade unions' ability to improve the lives of our members and working people in general. The attitude of many employers towards unions, including attitudes towards union recognition, policy concerning labour costs and their attitude to technological change and work organisation are increasingly dictated by international competitivity and international "fashions". The threat of delocation to an offshore site has become common in negotiations and in some cases it has become the reality. This is contributing to an imbalance in the power of unions and employers in the labour market. It also comes at the same time as governments are stepping away from their responsibilities to set a policy framework, whether in the setting of tax rates, economic policy management, and interest rate policy or exchange rate policy.

But such negative impacts are not inevitable. The issue is how to change the policy agenda. The public debate has become heavily polarised between most governments and business groups who claim that globalisation has created unprecedented growth and wealth and many NGO's who see it as a source of growing poverty, inequality and destroyer of native cultures. The experience of globalisation over the past twenty years does have two sides; on the one hand, living standards have risen significantly in East Asia and poverty has fallen as countries have successfully used global markets to expand exports and have developed technology. Elsewhere in the developing countries health advances have allowed life expectancy to increase steadily. However the ability to harness globalisation and its advantages has been very uneven. The ratio of average incomes in the world's twenty richest countries to those of the world's poorest has risen from twenty to one in 1960 to forty to one now. The United Nations Development Programme (UNDP) has noted that 66 countries are poorer now than a decade ago. More than 10 million children in developing countries still die every year from preventable diseases.

Whilst there are plenty of potential links between this rising inequality and globalisation of trade and investment, this is not an inevitable relationship. The measures of inequality within countries have shown differing developments when faced by globalisation – following the deregulation of markets and attacks on unions in the United States, United Kingdom and New Zealand after 1980 the basic measure of income inequality (the "Gini coefficient") increased – quite strikingly in the UK and New Zealand. Over the same period income inequality has little changed in Continental Europe or East Asia. A study for the OECD on inequality in Latin America by the economist James Robinson1 came to the same conclusion – that it has been the political attack on unions and democratic institutions that have had the main impact in terms of increased inequality.

It is therefore the link between globalisation and the weakening of governments and institutions which is at the core of the growing inequality rather than trade, investment. and the increased openness of the economy per se. At the national level institutions such as strong trade unions and public economic and social policies to manage and regulate markets have helped ensure that growth is distributed throughout societies which in itself makes good economic as well as social sense. The role of public policy at the national level and social institutions such as unions has come under severe pressure. The shift of markets to the global level has not been matched by an international framework and institutions in place that can ensure justice and equality. It is this situation that Joseph Stiglitz has dubbed "global governance without global government". He argues "International institutions like the World Trade Organisation, the IMF, the World Bank, and others provide an ad hoc system of global governance, but it is a far cry from global government and lacks democratic accountability. Although it is perhaps better than not having any system of global governance, the system is structured not to serve general interests or assure equitable results. This not only raises issues of whether broader values are given short shrift; it does not even promote growth as much as an alternative might" (American Prospect, January 2002.).

An additional challenge for trade unions is the shift to dealing with transnational or multinational firms which make capital more mobile than workers – this can threaten existing employment, threaten collective bargaining and shift power relations. As stated above, the threat of delocation of a plant to an offshore site has become the standard play in industrial relations. These pressures are greatest along the three North/South, East/West "frontiers – Mexico/US, Central/Eastern Europe, China/East Asia. A study by Cornell University in 2000 for the US Deficit Review Commission (Uneasy terrain: The Impact of Capital Mobility on Workers, Wages, and Union Organising) found that despite the then longest boom in American history workers were feeling more insecure than ever before. More than half the firms surveyed, when faced by union organising drives had threatened to close the plant and move to another country. In some sectors the figure rose to 68 percent. The study also found that only a small percentage (5 percent) of firms did actually close and move – but the perception becomes part of reality. This is increasing the imbalance of relative power of unions and employers in the labour market.

For some employers and governments it is convenient to exaggerate the loss of local or regional sovereignty. It allows a "deresponsibilisation" of elites from the results of their actions. The conservative government in Britain (1979-97) was one of the most vociferous in arguing for the need to weaken unions and de-regulate labour markets to conform to a model of competitiveness existing in some unspecified place in East Asia. Yet, in 1997 the then Korean government justified its attempt to restrict trade union rights by saying that South Korea had to lower its labour standards to stop Korean firms from moving to Scotland and South Wales – attracted by the flexible labour markets in Britain. This argument was made to me personally by the then Korean Labour Minister in the midst of a general strike against the restrictions.

The greatest danger is not globalisation itself; it is rather to argue policy paralysis as a result of it. Unions must campaign with renewed vigour for effective policies and institutions to govern globalisation. A spectrum of mechanisms for governance is available with, at one end of the spectrum a set of "hard" international regulations covering specific fields (e.g. WTO); in the middle, looser policy co-ordination (e.g. G8, OECD, IMF); regional integration (e.g. European Union); continuing national regulation; and more loosely regional or district level policies. Whilst binding, "hard" mechanisms of regulation at a global level will only be able to cover a limited number of areas; they need to be supplemented by looser forms of co- ordination and co-operation in other areas.

However, most of all we need to campaign for coherence between institutions. The existing international economic governance architecture shows a striking imbalance in the power and enforcement capabilities of different institutions. Those institutions representing economic interests and property rights – the World Trade Organisation, International Monetary Fund and World Bank – have strong enforcement mechanisms and are predominantly dominated by Finance and Economic Ministers. Those representing the social, human rights or environmental area have low enforcement capabilities and group Ministries that often have less power at the national level. The result is a "governance gap" and a lack of coherence at the global level – significantly greater than exists at the national level. As a result policy leads to a "two speed" globalisation where property rights are protected at the international level and human rights are not. It is unacceptable that the world system of governance has binding protection to guarantee the rights of intellectual property, investors' rights, and even environmental standards and yet at the same time denies enforceable protection for human rights including core labour rights.

Regulating Globalisation

If trade unions are to do their bit to fill this "governance gap" with a vision of public policy that offers human and civil rights a primary place at the global level, five key imperatives must continue to be addressed as fully as possible.

(i) Enforcing the respect for core labour standards

"An ethical globalisation is our best hope for building bridges of respect and understanding between people of different cultures, traditions and walks of life. It is our best hope for shining a light of scrutiny on those who would violate the rights of individuals and groups" Mary Robinson United Nations High Commissioner for Human Rights. World Social Forum, Porto Alegre, February 2002

Globalisation has drawn dramatic attention to the need to guarantee core workers rights on a global basis. Rather than trade providing increased resources for improving living and working conditions, it can result in governments reducing workers' rights in order to minimise labour costs and attract foreign investment. This negative competition to attract investment is increasing. The update in 2000 by the OECD of its 1996 report on "Trade and Labour Standards" noted that the number of export processing zones in the world had risen from some 500 zones at the time the 1996 study was written to about 850 zones – not counting China's special economic zones – in 1999. There are many differences between export processing zones around the world but they tend to have one over-riding characteristic. In almost all zones, trade unions are not tolerated. In some cases, this is due to special exceptions to national laws so that freedom of association cannot be exercised. More often, it is not so much the law but simply the reality that trade union officers are physically prevented from entering the plants or even from entering the zones at all. The consequences of the lack of union representation can be seen in poor and often dangerous working conditions and low wages. The entry of China into the WTO has also brought to centre stage the issue of abuses of workers rights and comparative advantage.

Beyond EPZ's at least fifteen million children are working in export production, in sectors like mining; garments and textiles; shoe production; agriculture; carpet manufacture; manufacture of footballs; and production of surgical instruments. A minority of countries is prepared to tolerate child labour in the belief that it will give them a competitive edge. Any short-term gain will be far outweighed by the long-term damage being done to a country's human capital by putting its children in factories rather than in classrooms.

Tens of millions of workers are also engaged today in forced labour. This is modern-day slavery. In Burma, hundreds of thousands of indigenous people, supervised by armed guards, work or have worked on infrastructure, railway and pipeline construction for foreign companies such as TOTAL-Elf-Fina, UNOCAL and Premier Oil.

But one of the most disturbing violations of trade union rights remains in Colombia. No less than 177 trade unionists were assassinated in 2001, up from 128 in 2000 and 69 the year before. Many of these have been trade unionists working for multinational companies, shot down by paramilitary death squads of the "United Self-Defence Forces of Colombia" (AUF). Unions have filed civil action suits in US courts against companies such as Drummond coal in Alabama and Coca-Cola in Florida alleging involvement in the killings of union representatives in their Colombian plants.

The goal of effective regulation to guarantee core labour rights must be pursued. Achieving other goals will be difficult as long as core labour rights can be easily denied. Functioning civil society is necessary to build up a momentum for effective governance of global markets.

Over recent years, there has been perceptible progress in shifting "conventional economic wisdom" to seeing core labour rights as having positive economic and social effects as opposed to being either an irrelevancy or a market distortion. Focusing on core standards (i.e. freedom of association, rights to collective bargaining, freedom from forced labour or prison labour, freedom from child labour exploitation and non-discrimination) has allowed broad universal acceptance of them as inviolable human rights in a way that the listing of 170 ILO Conventions would not. The agreement on the ILO in 1998 of a Declaration on "Fundamental Principles and Rights at Work" has facilitated this provision of a system-wide standard. The empirical and theoretical analysis of the OECD and World Bank now regards core standards and by virtue of this trade union recognition as at least neutral in their economic effects, and at best positive because of their influence on improving the quality of governance. The US labour movement economist, Tom Palley, has shown that improved freedom of association can increase growth by 1.2-1.4 percentage points on average2. The mainstream thinking of those involved in development assistance has also shifted to see core labour rights as a part of "participatory development and good governance" strategies. The OECD Development Assistance Committee's Poverty Reduction Guidelines adopted in 2001 now include the respect of labour rights as part of assistance programmes.

In the 1980's, far more countries and commentators would have argued that authoritarianism and free markets were necessary routes to achieving economic "take-off". Now they tend to remain silent. The fact that in 1997 the OECD was ready to censure the then government of Korea – a new Member – for not living up to commitments on freedom of association and collective bargaining given when it joined the Organisation, is significant and has had some positive impact on trade union freedoms on the ground although much still remains to be done to enforce key union freedoms in Korea. In addition the ILO's "Article 33" conclusions recommending that members take economic measures against Burma because of its systematic use of forced labour was an unprecedented move.

The debate has therefore moved on to such enforcement mechanisms. The international trade union movement has long demanded a "labour rights clause" in the World Trade Organisation and its forerunner the General Agreement on Tariffs and Trade (GATT). The Doha WTO Council in November 2001 did not move in this direction, faced by the firm opposition of a small number of developing country governments, scepticism from many developing countries and only lukewarm support from most industrialised countries and a few countries from the South such as South Africa. Conflicts between human rights and trade will however continue to increase and modest progress could be made by modifying GATT article XX, General Exceptions to clarify the primacy of human rights over trade rules.

At the same time the former UN High Commissioner for Human Rights, Mary Robinson, has called for the establishment of a codex of legal obligations that governments have already entered into to be established as a counter-balance to the market obligations that exist. All these proposals show the need to improve coherence in the international system.

(ii) A strategy for Multinational Companies

"... Some enterprises may be tempted to neglect appropriate standards and principles of conduct in an attempt to gain undue competitive advantage. Such practices by the few may call into question the reputation of the many and may give rise to public concerns." OECD Guidelines for Multinational Enterprises, June 2000.

The trade union response to multinational companies must be to ensure that there are rules to drive firms to adopt a "high road" as opposed to a "low road" to development. There must also be limits to negative policy competition to attract investment. The Global Unions Group through its Federations at the international level also has to develop collective bargaining relationships with companies. In short, we have to ensure that in terms of labour conditions we start a "race to the top" and stop the "race to the bottom".

TUAC has made a priority of seeking to maintain and encourage enforcement of the OECD Guidelines for Multinational Enterprises, which were revised by governments in 2000. The Guidelines are recommendations for good corporate behaviour that are primarily addressed to corporations based in those countries that adhere to them. These include the 30 OECD countries, plus Argentina, Brazil, Chile and the Baltic States. But the Guidelines also apply to business operations world-wide. More countries are now in the process of adhering to the Guidelines.

The Guidelines include prescriptive chapters covering most aspects of company behaviour from Employment and Industrial Relations to the Environment and Taxation. Though not binding in a legal sense, they are not optional for corporations. They cannot pick and choose among the provisions of the Guidelines nor subject them to their own interpretations. Their application does not depend on endorsement by companies. They are the only multilaterally endorsed and comprehensive rules that governments have negotiated, in which they commit themselves to help solve problems arising in corporations. They express the shared view of what major governments believe to be good corporate behaviour, and corporations are expected to abide by their contents in their business operations world-wide. Most importantly, the Guidelines are backed by an improved implementation procedure, where the ultimate responsibility for their enforcement lies with governments who have to establish National Contact Points (NCP's). This is a fundamental difference between the Guidelines and, for example, unilateral company codes of conduct. It makes the Guidelines more than just a public relations exercise. TUAC has produced a User's Guide for trade unions on how to implement the Guidelines and more than a dozen cases of potential breaches have already been raised with NCP's.

There are a variety of other instruments and measures related to the conduct of multinational enterprises. The OECD Guidelines exist alongside the ILO Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy, which are based on universal standards, were designed with the participation of trade unions and employer organisations firmly included, and have a role for governments. The ILO Tripartite Declaration has been less frequently used by trade unions than the OECD Guidelines, in part because the follow-up procedures do not tend to contribute to problem-solving and because of restrictive receivability requirements for consideration of cases.

The UN Global Compact launched by the UN Secretary-General, Kofi Annan, in 1999 is a vehicle to promote global dialogue built around nine principles that include the core labour standards as well as fundamental standards for human rights and the environment. The dialogue involves global employers and global unions. It also encourages individual enterprises to endorse the Compact. Although its role is quite different from both the ILO Tripartite Declaration and the OECD Guidelines, it is consistent with both instruments. It can facilitate discussions between ITSs and companies and can help create a climate conducive to the negotiation of framework agreements. Although Guidelines implementation is based on national procedures, they can also contribute to social dialogue, particularly if such dialogue is encouraged by NCP's. This also has the potential to encourage global social dialogue and agreement.

There are other, non-governmental, but multilateral, activities in the area of corporate conduct. The Global Reporting Initiative (GRI), a private effort with support from the United Nations Environment Programme (UNEP), is working to establish common international standards to be followed by corporations in reporting on social and environmental sustainability. Efforts are being made to ensure that the common standards are consistent with international labour standards and the OECD Guidelines. If it develops adequate standards and procedures, GRI could become a benchmark for investors. Social Accountability (SA) 8000 has been one of the pioneers in multilateral, private initiatives, and trade unions have been involved in the development of its code, which is based on international labour standards. It also has mechanisms for verification and certification. The Ethical Trading Initiative (ETI), although based in one country, the UK, deals with the conduct of UK-based enterprises overseas. It is governed by a board composed of three representatives each of companies, unions, and NGOs. ETI runs pilot programmes related to the implementation of company codes of conduct that are consistent with the ETI code.

In addition Global Union Federations have now negotiated approaching 20 framework agreements with multinational companies at the international level. In sum, there is an evolving "tool-box" of instruments that the Global Union movement can now use to act as a counterweight to capital. It has to use them effectively.

(iii) Strengthening the European Social Model

The process of European political and economic integration has allowed cross-frontier regulation of labour standards and multinational enterprises to move well beyond that achieved internationally. For many on the centre-left in Europe, the European Union's "Social Dimension" is the response to globalisation. The European trade union movement has sought:- to establish a framework of minimum standards to stop "social dumping"; to establish consultation, information and negotiation rights with multinational companies at a European level; to expand the structural funds of the European Community and to establish better economic "governance" at the European level. One of the most significant developments in this process for trade unions has been the passing of the European "Work's Council" Directive, requiring multinational companies to establish consultative machinery for their workforces at the European level.

However, the reappearance of the "Eurosclerosis" debate against the background of once more rising European unemployment is in danger of stalling progress on the European Social Dimension. The alliance of the Blair, Aznar and Berlusconi governments against further social regulation at the Barcelona Summit in March 2002 is a clear sign of this. If the "social agenda" is to progress, the battle of ideas has to be won to show that it is possible to manage change in firms, industries, regions and labour markets in a socially equitable way. A "model" of industrial organisation has to be developed which is both competitive and socially acceptable. European countries have to restructure on the basis of a high set of labour standards practices not on the basis of a low wage model of development.

Within the OECD, there are two quite divergent analyses of labour markets that have crystallised in the debate over European unemployment. The conventional "neo-liberal" view of many European Finance Ministries and Central Bankers in OECD countries is that the origin of the problem lies in the inability of the labour market to adapt to macro economic shocks over which governments now have little control. The focus of policy is therefore to reduce "natural" rates of unemployment through a search for labour market flexibility. This has been behind the recommendations which continue to be promoted by the OECD Economics Department to decentralise collective bargaining systems; remove administrative extensions to agreements; weaken minimum wage regulation; and to use competition in product markets to keep downward pressure on nominal wages. The slogan "making work pay" has become a synonym for reducing unemployment benefits, not raising low pay.

There is strikingly little practical evidence to support many of the policy elements described. There is little confidence that such policies will reduce unemployment through high-quality employment creation. The "unemployed poor" risk being transformed into "working poor" with the same social consequences. These doubts were echoed by the OECD itself in the successive OECD Employment Outlooks up to June 2000 which honestly reviewed the evidence on wage dispersion, employment protection and employment creation. Moreover, countries as such as the Netherlands, Ireland and Denmark have all succeeded in combining strong economic performance and equity by not following the "Anglo-Saxon" model of "Americanised" labour markets.

A more positive view of the policy options emanates from work being carried out in the OECD with regard to: – new growth theory; local development; technological change; the nature of "flexible organisations"; skill acquisition and education policy; and corporate governance issues. Some of this was brought together in the OECD "Growth project" published in 2001. The changing strategies of firms towards the global market are seen to be a key factor. One interpretation of this work is that firms in the OECD area are becoming polarised. On the one hand, there are those trapped in old production systems having to compete in an ever-tougher global market with low wage competition from non-OECD countries. Increasingly it is not the firms themselves, which have to compete but the workers in different countries bidding for their jobs with the same employers. On the other hand, there are firms which have shifted to new forms of work organisation in which a high premium is given to the flow of knowledge and innovation. These "high skill – high trust" organisations compete in a different and clearly more benign world than their mass production rivals. In high trust organisations, workers also need to have a "voice" through their unions.

The policy implications of this are that governments or indeed regional authorities can move their economies onto higher growth paths by encouraging technological diffusion, innovation, "good practice" work organisation and the development of appropriate infrastructures for the "information society". "Learning societies" and knowledge-based firms are the key to success. In this scenario labour market deregulation is not a central issue. Internal functional flexibility of workers in line with changing work organisation is much more important to firms. Flexibility to "hire and fire" looks at best irrelevant and at worst could encourage the low wage/ low skill route to competitiveness. The challenge for OECD countries is how to move the whole of their societies and not just an elite onto a "high route" to competitiveness.

Many of the same issues arise in the parallel debates taking place in the overall discussion on corporate governance around the issue of "stakeholder capitalism"; on strategies for regional, district or community level development strategies; and on the development of sustainable consumption and production. The OECD Guidelines on Corporate Governance adopted in 1999 do have a "stakeholder" chapter that was achieved due to union pressure and arguments.

Establishing a "new paradigm" in this area is not just a question of "hard" international regulation, it is a question of shifting attitudes and winning the arguments and shaping the strategies of different levels of government and firms.

(iv) Developing a Policy Framework for Faster Sustainable Growth

The 1990's have been a decade of relatively fast economic growth in the United States, but of slow growth and consistent gaps in Europe between the output growth realised and the growth in productive potential of the economy.

To counteract this situation Global Unions and the ETUC have consistently called for a more expansionary macroeconomic strategy and a new international structure to co-ordinate policy as a necessary condition for fighting unemployment. Progress in this area faces three central problems:- diverging analysis and political priorities between different industrialised countries; the hegemony in policy-making of Central Banks; and the related globalisation of financial markets.

Diverging priorities in macroeconomic policy over the 1990's to some extent replaced the supply-side consensus of the 1980's, but they prevented a co-ordinated policy response coming from the G7 Finance Ministers. The broad approach to monetary policy in the United States was for the Federal Reserve Bank to test that the waters keep growth going until inflationary constraints really did appear. Japan had shown itself ready to intervene (ineffectively) through traditional public work programmes when faced by a continuing recession. It is in Europe where the battle is still being fought for the economic architecture, the policy stance of the European Central Bank and hence priorities of the Union. The central issue must be to use economic policy to support economic growth and employment.

Given the power over monetary policy now vested in independent central banks including the ECB, there clearly is a need to reform the objectives of central banks so that they will support a pro-growth regime instead of thwarting it. The one dimensional pursuit of price stability has now to give way to an approach which does allow decisions to be made on the balance of risks and trade-offs between the objectives of employment and inflation. The theoretical battle is being fought around whether or not monetary policy does affect the real economy in the longer term. Many of the features of this current debate don't look particularly new, they mirror very closely the policy debate of the 1920's in Europe and the United States. By the 1930's it is significant that the conventional wisdom had shifted to concern at falling prices and deflationary expectations rather than inflationary expectations. Policy shifted to putting floors in markets rather than de-regulating them.

If stable and sustained long-term growth is to be realised changes must be made to the financial market architecture. Global unions have put forward over the last five years a range of measures designed to establish better regulation of international financial markets. These include:

• Improved fiscal and monetary policy co-ordination between the emerging reserve currency blocks of the Dollar, Yen and Euro in order to generate more stable parities, along with the progressive removal of large long-term current account deficits and surpluses;

• Recognition of the right of states to control short-term foreign capital inflows and outflows in the interest of domestic macro-economic stability;

• Binding international standards for the prudential regulation of financial markets covering capital reserve standards, limits to short-term foreign currency exposure, controls and certification on derivatives trading and other forms of leveraged investment built in credit;

• Ensuring that banking systems are transparent and bound by effective disclosure criteria;

• Improved information on currency flows, private debts and reserves;

• Serious examination of the implementation of an international tax on foreign exchange transactions, – the Tobin Tax, as recommended by the UN "Copenhagen + 5" Conference (June 2000), and more recently by some European governments. This could be linked to a possible increase in Special Drawing Rights for developing countries.

For too long the debate over financial market reform has been held behind closed doors by bankers and finance ministry officials. This has prevented the voices of trade unions and the public in general from being heard. The institutions charged with developing financial market reforms remain closed to discussion with the labour movement and civil society, though there are some tentative signs of opening up from the new managing director of the IMF. Labour must have a "place at the table" in these debates. The OECD should work as a "bridge" to make this happen.

(v) Debating the future of the Public Sector

Despite the agenda of deregulation indicated above this has had little impact on the overall "size" of the state in the industrialised countries. Government expenditure as a share of GDP in the OECD area as a whole has changed little from around 40% on average over the last decade. Recent OECD figures show the governments' tax take to be little changed in OECD countries. The State at different levels remains responsible for administering very substantial proportions of national income. The challenges ahead are increasing the demands on public finances not reducing them:- the ageing of most OECD populations and the need to ensure sustainable pension systems; the need to invest in lifelong education; the need to reverse the decline in infrastructure investment; counteracting the growth in world poverty through increases in resources for development assistance.

There needs to be a non-ideological debate on the role of the public sector that accepts the notion that an effective public sector is an economic as well as social necessity. A "social" agenda must on the one hand espouse the need to change the management of public services and administration to make them responsive to the public and not just to save money. "Partnership" approaches to change do work. On the other hand, the pressures of ageing and health care costs, together with the delivery of lifelong learning are going to dominate the debates on resource allocation. This will be a global debate and we need to really "re-invent government" and not re-invent the private sector, paid for by taxpayers.

Conclusions

The response of the trade union movement to globalisation is not therefore to bemoan changes or react defensively. The response is to campaign for the mechanisms of governance to manage them. To fulfil the legitimate aspirations of consumers, employees, and investors, markets require effective governance, whether or not they are organised on a national, regional or global scale. Against a background of globalisation it is the forms of governance that have to change not the principle. Unions globally are a major force with NGO's of arguing for the need to fill the "governance gap". But unions themselves are also changing:- reaching out to new groups of workers, using new sources of influence, such as their control over pension funds and developing through the global unions their strategies for dealing with multinational enterprises. The challenge is to shape the global debate on globalisation and to show that the unions are a key part of the solution to re-linking economic development and social progress.

1 James Robinson, Where does inequality come from? Ideas and Implications for Latin America" OECD Development Centre, 2001
2 Tom Palley, The Economic Case for International Labor Standards: Theory and Some Evidence

Placed on Fabian Global Forum, May 2002.