APPENDIX 19
Memorandum submitted by the Trades Union
Congress and the International Confederation of Free Trade Unions
(ICFTU)
INTRODUCTION
1. The TUC and ICFTU commend the UK Government's
commitment to eliminating global poverty and to meeting the International
Development Targets. The White Paper makes a number of commitments
which we welcome. At the same time, we question the efficacy of
the White Paper's approach to poverty elimination which is built
on open markets and liberalisation. In addition, an effort is
needed to integrate comprehensively, throughout the different
policy areas, a greater emphasis on respect for freedom of association
that could empower the poor and give them a say in the decisions
that affect their development.
MANAGING GLOBALISATION
2. We are pleased that the White Paper recognises
that ways need to be found to manage and structure globalisation
so that it supports fundamental human rights and sustainable development,
and generates prosperity for ordinary people, particularly the
poorest. Left unchecked, globalisation would lead to their further
marginalisation and impoverishment. The ICFTU and TUC have long
advocated a social dimension to globalisation and argued, in particular,
that the international trading and investment system must serve
the interests of people by improving working and living conditions
and by protecting their fundamental human rights.
3. We support the view that globalisation
is not an irresistible force and that governments and international
institutions are instrumental in determining its outcome.
4. We agree that strong and effective regulatory
systems are needed at the national and international level to
manage the systemic risks of globalisation such as financial volatility.
The White Paper makes some helpful recommendations on regulating
international financial markets. The trade union Movement has,
over the past decade, consistently advocated that governments
abandon the market deregulation approach to globalisation that
has dominated the policies of the international institutions.
Economies must be shaped and governed by public policy if they
are to function effectively in meeting the expectation of societies.
This is as true in a global environment as in national ones.
5. The Government's stated support for the
ILO Declaration on Fundamental Principles and Rights at Work and
for taking action against child labour is encouraging. In recognition
of the key role of empowerment of the poor (as emphasised
in the World Development Report 2000-01), the Government must
go beyond the White Paper in emphasising the cross-cutting importance
of freedom of association as a basic principle in tackling poverty.
The key to empowerment of the poor is self-organisation and that
requires independent and democratic trade unions, co-operatives,
rural workers' organisations and other kinds of self-help associations
like mutual societies which all depend for their existence on
freedom of association. For women or others oppressed by society,
the right to create and join organisations to advance and defend
their interests can make all the difference. In all these cases,
the right of the poor to organise into their own organisations
and to have their freedom of association respected in general
is essential. Accordingly, the importance of the core labour standards
identified by the ILO Declaration needs to become a flagship element
in the UK Government's development policy. Increased assistance
is needed to those countries which demonstrate their genuine commitment
to achieving full adherence to the ILO core labour standards.
6. We welcome the White Paper's commitments
to increase development assistance; promote poverty reduction
at the WTO; strengthen the trading capacities of developing countries;
reduce corruption; ensure respect for human rights and a greater
voice for poor people in developing countries; improve conflict
prevention; improve health and education for poor people; enhance
policy coherence at the national and international level; support
sustainable development; and promulgate a new International Development
Bill which would provide an opportunity to introduce new approaches
to development and to weed out discredited practices such as tied
aid.
OPEN MARKETS
AND INEQUALITY
7. However, we do not share the White Paper's
conviction that open markets are always the best way to tackle
poverty and that this formula can be applied across the board.
We support fair and transparent world trade and back the removal
of trade barriers while emphasising the primacy of social concerns.
Because of their circumstances, there is a need for the special
and differential treatment of developing countries to enable increased
flexibility, including taking tariff-freezing, tariff-raising
and import limiting measures when necessary. We welcome the White
Paper's commitment to extend the Uruguay Round implementation
deadlines for developing countries, where necessary. Countries
should also be able to safeguard strategic service sectors, particularly
in the case of publicly provided social services like education,
health, water and other utilities—and this would also be
consistent with the White Paper's own acknowledgement (para 57)
that "Only the state can ensure the provision of key public
services".
8. The White Paper claims that there is,
on average, no relationship between openness and inequality or
between growth and inequality. In other words, there is no link
between globalisation and inequality. The White Paper also argues
that inequality between countries is falling. However, its calculation
does not address the growing inequality within countries caused
by globalisation. The experience of the international trade union
movement suggests that the reality for the majority of the world's
population is continuing poverty. Take as an example, workers
in East Asian countries who built the economic miracle. They and
their families were later sacrificed to a financial crisis for
which they were not responsible. It is a different matter for
elites in such countries, who have been the main beneficiaries
of globalisation, and whose wealth inflates their countries' Gross
National Product figures.
9. In justifying the need for openness,
the White Paper argues that "No developed country is closed"
and holds out the newly industrialising East Asian countries as
examples of countries that have liberalised their way out of poverty.
This is misleading as all developed countries have at some point
in their history resorted to protecting their economies. Many
developing countries argue rightly that protectionism is still
alive in the industrialised world. The White Paper also glosses
over the fact that the East Asian economies passed through a phase
of sheltered development which contributed significantly to their
economic success. Therefore, the White Paper is mistaken to argue
(paras. 186-7) that world investment rules should be agreed upon
that would prevent developing countries from providing support
for their domestic infant industries, as that could impede fatally
their prospects of development.
KEY AREAS
FOR POLICY
COHERENCE
Core labour standards
10. The White Paper identifies the need
for policy coherence and points out that all developed country
policies towards the world's poorest countries should be consistent
with a commitment to sustainable development and poverty reduction.
The 1998 ILO Declaration on Fundamental Principles and Rights
at Work was strongly supported not only by trade unions but also
by employers and governments in developing and industrial countries
alike. It is a powerful tool in addressing poverty. The Declaration
needs an effective implementation mechanism in the ILO. Moreover,
it embodies standards that must become "system-wide"
and given effect in the programmes of all the international institutions.
Core labour standards should be embodied in IMF criteria and World
Bank development policies. To gain legitimacy, the WTO needs to
incorporate rules requiring its members to observe these fundamental
standards of the ILO.
11. However, as a promotional instrument,
the ILO Declaration cannot replace the binding treaty obligations
arising from ratification of the fundamental ILO Conventions themselves,
nor provide for the same level of scrutiny as the supervisory
mechanisms attached to ratified Conventions. While welcoming the
White Paper's stated support for the ILO Declaration and for Convention
182 on the worst forms of child labour (in the development of
which the Government and the TUC played key roles), the TUC would
hope that the Government would also proclaim and pursue support
for the ILO campaign for universal ratification and implementation
of all the fundamental Conventions, and for the other priority
Conventions on employment policy, labour inspection and tripartite
consultation.
12. The White Paper argues that imposing
trade sanctions on poor countries that do not fully comply with
all labour standards would punish countries for their poverty
and hurt the poorest most. There are several misconceptions in
this statement. Firstly, of course, core labour standards are
defined as "core" precisely because they are fundamental
human rights that can be respected by any country, regardless
of its level of poverty. Core labour standards are fundamental
human rights for all workers - irrespective of their countries'
development—that cover freedom of association and the right
to collective bargaining; the elimination of discrimination in
respect of occupation and employment; the elimination of all forms
of compulsory labour and the effective abolition of child labour,
including its worst forms.
13. Secondly, the trade union proposal to
include core labour standards at the WTO is not aimed at protecting
markets, but at protecting the rights of workers worldwide. All
industrialised country governments should actively demonstrate
their commitment to improve core labour standards through enhanced
trade incentives for developing countries which respect such standards
and increased development assistance to enable development in
this area. Any complaint that arises must go through a transparent
process which would enable countries to avail themselves of technical
assistance to remedy the situation. Trade sanctions should not
be used lightly and should only be a measure of the last resort
when governments obdurately refuse to uphold their international
obligations to respect core labour standards.
14. The common European Union (EU) policy,
dating from the Seattle 3rd WTO Ministerial Conference, calls
for "a joint ILO/WTO Standing Working Forum on trade, globalisation
and labour issues". The UK Government must maintain its support
for the proposal, and further clarify that the WTO General Council
needs to agree as soon as possible to set up such a working or
study group or similar body, with the participation of the ILO.
That body should be asked to undertake analysis and to make recommendations
about WTO statutes and procedures in order to ensure consistency
with respect for core labour standards. It should also examine
the social impact of trade more generally, including the impact
of trade policies on women and children.
15. The OECD Report on Trade, Employment
and Labour Standards, and subsequent work has found that observance
of such rights is consistent with good trade performance and economic
development. Observing core rights allows countries to follow
the "high route" to development whereby the benefits
are spread more fairly, accountability increased, and corruption
reduced. Conversely, there is little point in improving trade
access for developing countries, without at the same time ensuring
that authoritarian governments are prevented from exploiting their
own workers in order to take advantage of those improved export
opportunities.
16. Respect for core labour standards is
vital to poverty alleviation. Trade union membership provided
the point of departure in achieving the widespread elimination
of the grinding poverty in which today's industrialised countries
used to exist. One century ago, many workers lived lives of desperation
in trades and industries where poverty and exploitation were the
norm. Trade unions were the instruments used by those workers
to escape from poverty and live lives of dignity. Just as that
was true for the UK then so it remains true for the developing
world today. For example in Brazil, CONTAG represents landless
farm labourers and has a membership of 15 million (and is also
affiliated to the CUT, a national trade union centre). The role
of CONTAG has been recognised even by the World Bank as crucial
in ensuring that land reforms benefited the real poor and not
local elite. That example illustrates why defending freedom of
association and trade union action across the whole society is
so important, and why the UK Government needs to devote greater
attention to the promotion of core labour standards.
Taxation policies
17. Governments must maintain a sound tax
base for public finances against the background of globalisation.
The growth of offshore tax havens and international tax competition
have eroded the tax base and disproportionately shifted the burden
onto labour. We support the White Paper's commitment to acting
against such tax havens, while at the same time recalling the
importance of implementing a Capital Transactions Tax to impede
financial speculation and provide increased tax revenue.
Child labour
18. The Government has expressed its strong
support for ILO Convention 182 on the Elimination of the Worst
Forms of Child Labour. The Convention requires the removal from
work and into education of all children in the worst forms of
child labour and recognises the central importance of education
provision to prevention. A greater commitment is required from
governments, particularly those of industrialised countries to
provide resources to meet these goals. Furthermore, the Government
must provide resources to promote the universal ratification and
implementation of the ILO's over-arching Convention on child labour,
Convention 138 on the Minimum Age for Employment. There is no
evidence to support the view that children can work themselves
and their families out of poverty. The most productive approach
would be to educate them out of poverty and to replace child workers
with adults from extended families who should be paid adult wages
and ensured basic rights at work. Where this is not possible,
families should be subsidised for the loss of income from the
child and for the cost of schooling. The elimination of child
labour should be viewed as not just a moral imperative but also
an investment in the future of developing countries. Promoting
the transition from work-to-school for child labourers needs to
be integrated fully into the extensive UK Government work on education
promotion in developing countries, documented in Chapter III of
the White Paper. Convention 182 requires tripartite involvement
in the development and implementation of national programmes of
action to eliminate the worst forms of child labour. That is essential
in all ratifying states. The TUC awaits the Government's proposals
for such consultations in the UK.
Regulation of international financial markets
19. We welcome the White Paper's acceptance
of the need to regulate international financial markets. The cost
of financial crises such as the Asian crisis in 1997 has been
borne by working people in terms of lost livelihoods, unemployment
and poverty. Any discussions on the reform of the financial architecture
must involve trade unions if they are to have legitimacy and credibility.
20. Governments and international financial
institutions must establish a consultative mechanism with the
international labour movement, open a broader public consultation
on the financial architecture and introduce policies to: reduce
instability of the G3 currencies, through effective policy co-ordination
between Europe, North America and Japan; recognise the right of
governments to control short-term foreign capital flows; tax foreign
exchange transactions to reduce speculative currency flows and
to raise resources for poverty alleviation; establish binding
international standards for the prudent 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; and develop an
effective early warning system based in improved information systems
concerning currency flows, private debts and reserves.
Resolving the Debt Crisis
21. The TUC and ICFTU welcome the UK Government's
actions to cancel official debt for the poorest countries. Such
measures must now be followed by other OECD countries and the
HIPC debt reduction process must be accelerated to provide far-reaching
debt relief in the shortest possible time. The UK Government must
support measures by the international financial institutions,
which should likewise write off debts to the poorest, and allow
them to raise adequate finance to do so. The resources freed up
by debt relief must be used to promote poverty eradication specifically
through investment in basic health and education. Beneficiaries
must be obliged to observe basic workers' rights and other human
rights as a condition for debt relief.
22. We welcome the White Paper's endorsement
of the new poverty reduction strategy paper (PRSP) approach adopted
by the IMF and World Bank, which puts the responsibility on governments
to produce a coherent national programme for reducing poverty.
At the same time, we regret the lack of more than token consultation
with civil society on those programmes. For the PRSPs to match
up to the hopes vested in them by the White Paper, they will need
to be prepared on the basis of genuine consultations with representative
civil society organisations, including free trade unions. The
UK Government should, both bilaterally and through its weight
at the IMF and World Bank, make it clear that it expects governments
to conduct the PRSP process in full transparency and including
genuine civil society consultations.
Foreign direct investment and multinational enterprises
23. The role of foreign direct investment
(FDI) in development should not be overestimated. Multinational
enterprises (MNEs), widely seen as the key forces behind globalisation,
are primarily responsible for foreign direct investment. However,
not all MNE investment creates jobs and opportunities. Increasingly,
foreign investment takes the form of cross-border mergers and
acquisitions (M & As) in which MNEs take over or merge with
existing companies. In the case of FDI flows to developing countries,
M & As represent a very high proportion. M & As can lead
to some job creation but they can also lead to job losses through
"rationalisation" where the MNE seeks to reduce its
workforce to cut out duplication between existing and new employees.
In addition, MNEs will frequently outsource existing production
processes to other countries if this enables them to cut costs.
24. Another key area for policy coherence
is the effective regulation of the global activities of multinational
enterprises to ensure that they observe the labour rights of their
employees and also contribute to the "high route" to
economic development in poorer countries. The OECD Guidelines
for Multinational Enterprises, which are mentioned in the White
Paper, have the potential to contribute to the realisation of
this goal. We urge the UK Government to set up a transparent and
effective implementation mechanism, in co-operation with the TUC.
It should also support an adequately resourced outreach programme
by the OECD to enable countries beyond the OECD area to benefit
from the Guidelines' implementation. Just as the White Paper calls
for international co-operation to avoid a "race to the bottom"
on taxation policy (para. 191), so is co-operation needed to avoid
a race to the bottom by denial of core labour standards.
25. The TUC welcomes the Government's continuing
support for the Ethical Trading Initiative, in which the TUC,
its affiliates, and the international trade union organisations
play a key role. While corporate codes of labour practice or voluntary
social initiatives like the ETI cannot be a substitute for good
law properly applied and enforced, or for the sustainable improvement
in workers' incomes and conditions which can be reached through
collective bargaining, they can promote, among employers, a culture
of compliance with good law and a recognition of the importance
of respect for core labour standards in the achievement of sustainable
and equitable development. The ETI has become one of the most
significant initiatives of its type in the world, largely due
to its tripartite structure and governance and its experimental
approach to exploring good practice in the implementation of a
code of labour practice based on ILO standards, including monitoring
and independent verification. The present and growing plethora
of initiatives, however, threatens to develop into a competitive
free-for-all in which private institutions promote competing and
conflicting "standards" for monitoring supply chains.
Such a development is a barrier to establishing internationally-agreed
benchmarks for social auditing competence, which companies and
their stakeholders need if monitoring is to be done credibly.
The tripartite ILO, as the repository of the standards on which
any credible code of labour practice must be based and of the
greatest concentration of knowledge and expertise on labour inspection
and workplace conditions, is the correct place for such authoritative
and international benchmarks to be developed. The TUC would welcome
further active government support in pursuit of this aim.
26. The White Paper takes a blithely optimistic
view of the effects of foreign investment that does not explain
the accelerating expansion in the number of export processing
zones (EPZs) around the world, where basic workers' rights are
violated in order to increase countries' attractiveness to multinational
companies. World-wide, 80 per cent of the workers in the zones
are women, who suffer routinely from sexual harassment, poor working
conditions, fertility tests and, on a virtually universal basis,
denial of their rights to organise. The White Paper fails to address
this situation, indeed it even extols the virtues of Bangladesh's
huge female employment expansion in export processing zones. Indeed
sectors in which freedom of association is most commonly denied-EPZs,
the public services, agriculture, and the informal sector-are
those sectors in which the majority of workers are women. This
omission sits uneasily with the White Paper's recognition (para.
72) that "Development requires the empowerment of women".
The denial of the right to organise to women workers is the surest
means of denying them their opportunity for self-empowerment,
which would provide them a means for asserting their rights.
27. The UK Government should condemn and
curb the activities of British companies behaving unethically
or fraudulently in developing countries. Accordingly, in the spirit
of the ILO Conference Article 33 Resolution on forced labour in
Burma, the Government should also require British companies to
disinvest and should ban all imports from Burma until the Burmese
regime puts an end to forced labour in that country.
CONCLUSION
Employment promotion and improved social protection
systems are essential elements of an integrated strategy to eliminate
poverty. Decent work is the most fundamental counter to poverty.
Strong and independent trade union organisations provide a firm
foundation for democracy and economic stability, which are necessary
if living standards are to improve in developing countries. We
urge the Government to commit itself to working with trade unions,
including building their capacity in developing countries where
necessary, to achieve the goals set out in the White Paper. Promotion
of the core labour standards identified in the ILO Declaration
needs to become a flagship element in the UK Government's development
policy.
Trades Union Congress and the International Confederation
of Free Trade Unions (ICFTU)
January 2001
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