Governance of Globalisation: ILO's Contribution, by Robert Kyloh

Forward by Giuseppe Querenghi, Director, Bureau for Workers' Activities, ILO, [9 November 1998]

Interest in the impact of “globalization” has moved beyond the boardroom and banking circles. Today the implications of increased economic interdependence between nations is just as likely to be discussed by a group of workers on the factory floor as it is in the financial press. However the terminology and the interpretations differ substantially. For the financial barons, trade specialists and captains of industry globalization represents the golden age of opportunity and freedom. In explaining the benefits of free trade, increased foreign investment and greater scope for market forces the proponents of an integrated world economy are likely to mention: the jobs created by multinational enterprises and increased international investment; the productivity gains from spreading the latest technology to developing countries; the participation of the masses in stock markets through equity funds; the need to maximise the comparative advantage of different countries; the efficiency gains from “contracting out” and more flexible labour markets; and the discipline that these developments exert on governments to diminish expenditure and create a favourable investment climate.

By comparison, discussions about the impact of globalization on the factory floor are more likely to focus on how, because of greater competition, they are expected to produce more output with fewer workers; about the longer working hours or extra shifts that have been introduced without any pay increase; about their friends that are now unemployed after their company “downsized”; and about how management is threatening to move production to China or Indonesia if labour costs cannot be reduced still further. Other less fortunate workers will not even have the luxury of discussions within the factory because they face victimisation if they are caught complaining or attempting to form a trade union that might protect their basic rights. In industrialised countries globalization and increased competition are seen as contributing to widening income differentials; the growth of precarious forms of work and less job security; attacks on the social security system; and the erosion of collective bargaining and trade union influence.

Given the competing interpretations and implications of globalization, debates about the topic have been passionate. The international trade union movement has not been a passive observer of this discourse. Most trade unions are searching for ways to counteract the influence which liberalisation of international trade and investment has had on the bargaining power of labour. At the same time, the trade unions are concerned to preserve the benefits that globalization can potentially deliver through faster economic and employment growth, more affordable consumer goods, and greater political stability through economic interdependence. In any case the trend towards economic interdependence across nations is unlikely to be reversed in the near future.

Consequently the trade union movement seeks to maximise the benefits for workers of closer economic ties while searching for ways to mitigate the undesirable repercussions of increased competition. The trade union response to globalization is being formulated at various levels from the shop floor to the international forums.

The two articles in this volume review and expand upon some of the strategies being pursued at the upper end of this spectrum.

The first article reviews the historical precedents to the current phase of globalization and previous attempts to construct a international institutional framework to simultaneously promote faster growth, free trade and fair labour standards. Possible steps to strengthen the influence of the International Labour Organization (ILO) in regard to both national economic policy and the implementation of international labour standards are considered.

The second article concerns “codes of conduct” for multinational enterprises and their network of suppliers. Such codes are usually a set of rules established by the head office of a large corporation which are aimed at eliminating various forms of labour exploitation (such as child labour) throughout the multitude of small firms that are subcontracted to supply inputs to the parent company. Due to pressure mounted by trade unions and various NGOs about labour exploitation among the subcontractors of high profile multinational companies, these codes are back in vogue. This article examines various examples of codes, both old and new, and makes recommendations about the content, development process and monitoring mechanisms that are necessary to make them effective instruments in the fight against child labour and other forms of exploitation.

This publication, produced under a project funded by the Government of Italy, brings together several aspects of the international trade union agenda which is being developed in response to the challenge of globalization. It explains and elaborates policies and position papers adopted by various international trade union centres, as well as arguments raised by representatives of the trade union movement in debates about globalization, labour standards and full employment. While the responsibility for the opinions expressed in this publication rests solely with their authors, it represents a valuable resource to people wanting to understand more clearly the emerging trade union perspective on these issues.