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AUTHOR: Andreas BREITENFELLNER
AUTHOR: Andreas BREITENFELLNER
TITLE: Global unionism: A potential player
SOURCE: International Labour Review 136 no4 531-55 Wint '97
The magazine publisher is the copyright holder of this article and it is reproduced with permission. Further reproduction of this article in violation of the copyright is prohibited.
"The loss of freedom by workers anywhere in the world is a definite threat to the freedom of workers everywhere."(FN1)
Trade unions are typically omitted from studies on international political economy, and apparently for good reason. At first glance, labour simply does not feature as a front line player in international relations. In the post Second World War order, they acted predominately within states, sheltered by international arrangements like the Bretton Woods system or the Marshall Plan, and by national consensus based on Fordism, Keynesianism and protectionism. A climate of cooperation, both within and between states, was triggered by vivid memories of the Great Depression and its consequences, and by the imperatives of the Cold War. Closer examination, however, reveals that trade unions did play an important role in forging what, from today's point of view, is called the "Golden Age" (Marglin and Schor, 1990). They were acutely aware of the desirability of achieving a stable external environment that fostered economic growth and thus bolstered their domestic bargaining position. Although they were to some extent coordinated internationally, they acted as silent lobbyists to their governments, which remained the chief arbiters of foreign policy.
The situation changed substantially after the collapse of the fixed exchange rate system and the first oil shock in 1973. The new forces of structural change and globalization swept away earlier mainstays of stability. On the international scene, financial markets became far more important as a result of currency volatility, debt crises, reduced transaction costs and deregulation; and multinational corporations (MNCs) became more powerful as a result of increasing capital mobility and declining transport and communication costs (Strange, 1995). Global money and global business gained greater influence on access to technology and resources which, in turn, gave them enormous bargaining power against territory-bound states and trade unions. Governments certainly lost some measure of their sovereignty, and, to the extent that unions relied on governments, they also were negatively affected. Meanwhile, trade unions had already been shaken by structural adjustment and new production management methods that favoured a diversified and flexible, non-unionized workforce. On the domestic front, the diversification of the exit-options of business, the deflationary pressure exerted by financial markets on governments, and the diminished clout of labour combined to erode or change the tripartite consensus where it existed. Furthermore, unions found themselves in a more hostile climate as public authorities turned their inability to guarantee full employment into an affirmative stance of radical free-market liberalism. Reagan- and Thatcher-style de-unionization strategies set standards which even social democratic governments could not effectively oppose.(FN2)
It would appear to be self-evident that if business and capital go global, then government and labour should follow suit. However, the seductive short-term benefits promised by competition hamper such a process. Trade unions, like nation-states, may be reluctant to cooperate. Despite their professed ideals and internationalist traditions, they tend to vie with each other in the worldwide bid for scarce resources such as technology and capital. Unlike states, however, such behaviour jeopardizes the very existence of unions. Thus, the imperative of global unionism follows from the rationale of unionism itself.
Since global unionism per se apparently does not yet exist, the following discussion has to resort to some speculation, though consistent and logical conclusions may be inferred from an analysis of the present. Global unionism is not an end in itself, but a means of resolving problems that arise in the world economy. First, unions could be instrumental in spurring governments to cooperate with each other. Second, they may reproduce their national function at the worldwide level by instigating tripartite agreements between global labour, global business and the international community of states in order to bring global financial markets -- i.e. the fourth player -- under control.
This approach of course focuses on the institutional dimension of the international political economy. Institutionalism is a fourth option, alongside laissez-faire, protectionism and residual structuralism. The issue is not a purely academic consideration, nor is it a matter merely of long-term economic efficiency; what is at stake ultimately is the pursuit of social justice and global security. Structuralist approaches have been invalidated, for the most part, by the end of the Cold War. Radical liberalism tends to ignore inequality and its potential for causing social unrest and civil war. Mercantilist responses may trigger irrational nationalism and trade wars. Only the establishment of reliable institutions and a commitment to cooperate -- two aims of global unionism -- can contribute to achieving stable international relations.
This article sketches the effects of international trade and investment on welfare and on working conditions, and then discusses the impact on social policies of the globalization of financial markets. It subsequently describes the dilemma of labour organizations and makes a theoretical case for global unionism, before examining the disparate foundations of global unionism within the international labour movement and enlarging upon strategic alternatives. It closes with a summary and an attempt to counter some anticipated criticisms.
LABOUR IN THE GLOBAL ECONOMY
"In fact, the real problématique of globalization is, arguably, the growing disparity between the mobility of labour and of capital" (Campbell, 1994, p. 187).
Globalization has generated considerable excitement among the rank and file of workers in industrialized countries. Economists, businessmen and journalists have been quick to reassure: "Rather than damaging wages and throwing people out of work in advanced countries, globalization has been a force for prosperity in much of the world" (Wolf, 1997, p. 14). Others, including not only trade unionists, but also social and political scientists, draw a somewhat bleaker picture of the current economic process. "The global economy is a great leveller -- but it levels downwards" (Gallin, 1994, p. 111). "It undermines every nation's ability to maintain social cohesion" (Greider, 1997, p. 7). However, common sense and comparative observation suggest that some stand to win and others stand to lose from the ongoing process. This analysis seeks to go beyond sensationalism by comparing theory and evidence.
The IMF describes globalization as "the growing economic interdependence of countries worldwide through the increasing volume and variety of cross-border transactions in goods and services and of international capital flows, and also through the more rapid and widespread diffusion of technology" (1997, p. 45). Globalization rests upon improved technologies that reduce transport and communications costs, as well as on organizational innovations, both of which expand the range of tradeable goods and services. It is driven by the liberalization of trade and investment and the deregulation of financial markets, and it is underpinned by a radical shift towards neo-classical economic policies. The latter, in turn, were recommended on account of the perceived success of export promotion in East Asia, the failure of import substitution elsewhere in the South, the collapse of centrally planned economies and the problems experienced by Keynesian regulation in the West.
At the same time, evidence exists of a global employment crisis and of growing inequality between and within countries. Over the past two decades, the employment situation has deteriorated in most parts of the world. Many advanced economies, particularly in Europe, suffer from persistently high unemployment. While employment levels are much higher in the United States, the real wages of its manufacturing workers have dropped substantially. This implies the existence of a "diabolical dilemma" (ICFTU, 1996, p. 25) which obliges industrialized countries to choose between mass unemployment and the presence of "working poor".(FN3) Most countries of Africa, Latin America and South Asia are experiencing sharp declines in real wages, high unemployment and expansion of the informal sector. Unemployment rates in excess of 10 per cent are now common in Central and Eastern Europe. In the world as a whole, the World Bank estimates that some 120 million people are unemployed and at least 800 million underemployed (World Bank, 1995). The only exceptions are Japan -- where unemployment is disguised -- and, still, the fast-growing economies of East Asia. Thus, there appear to be grounds for the apprehension that globalization results in job losses and income inequality.
The concern regarding the impact of trade on labour in industrialized countries is theoretically supported by the Stolper-Samuelson theorem which predicts that increasing imports from low-wage economies will lead to a fall in the relative price of labour-intensive goods competing with those imports, and in the relative wages of low-skilled workers. If labour market rigidities impede the downward adjustment of wages, then unemployment among these workers will increase. Foreign direct investment (FDI) will lead to the relocation of low-skilled jobs to low-wage countries, thereby exacerbating the effects of import competition.
A lively debate has arisen among economists as to whether theoretical predictions have been borne out by experience and whether the magnitudes are significant. Adrian Wood (1994) presented a sound theoretical framework and extensive empirical evidence.(FN4) He argued that the cumulative effects of North-South trade expansion in the 30 years up to 1990 caused a 20 per cent reduction in the demand for unskilled labour in the North, which was equivalent to its rate of unemployment and of wage dispersion. Lawrence and Slaughter (1993) considered trade to be only a minor explanatory factor and could not confirm the decline in the relative prices of labour-intensive products predicted by the Stolper-Samuelson theorem. In contrast, Sachs and Shatz (1996) were able to identify such relative price changes. The differences in the results of these studies indicate that the problem is, in part, one of data.(FN5) It is also one of conception.(FN6) Standard (Heckscher-Ohlin) trade theory, from which the Stolper-Samuelson theorem derives, is not the only framework to infer that integration might have a negative impact on equity. A number of different methods produce similar results, even without changes in relative prices,(FN7) but these seem to be simply ignored by many studies (e.g. IMF, 1997, p. 53).
Many economists express reservations regarding the magnitude of trade and investment effects. In 1992, the share of developing countries' manufactured exports in the OECD market was just 3.1 per cent, up from 0.4 per cent in 1970 (UNCTAD, 1995, p. 137). This sort of ratio, however, understates the impact of trade on labour markets, for two reasons. The first relates to the huge wage differential between North and South whereby imports from low-wage countries contain a far larger labour component than the same value of goods in the import-competing industry.(FN8) The second reason is the introduction of defensive process-rationalizing technologies in response to Southern competition. Although such business strategies have kept import penetration low, the demand for low-skilled labour in the North has none the less been reduced (Wood, 1994).
Similarly, FDI outflows are said to represent no more than 0.5 per cent of GDP in the industrialized countries (Lee, 1996, p. 488, citing Krugman, 1994a). But this does not include investment financed by the profits of foreign subsidiaries, which might double that figure. Nor does it take account of the leverage effect on FDI of modern management methods, such as joint ventures, franchising and outsourcing. The purpose of much of this cross-border investment is, however, to gain access to new markets, which is why anecdotal evidence of the substitution of capital investment for high-wage labour should not be interpreted at face value as a general trend. At all events, such FDI-to-GDP or trade-to-GDP ratios do not reflect the weakened bargaining position of labour as its demand curve becomes more elastic because of the sheer potential for substituting foreign for domestic labour. The situation is in no way mitigated by the fact that, on occasion at least, managers merely allege such exit-options in order to bring pressure to bear on workers and their representatives; it just illustrates the seriousness of the problem confronting labour.
Many authors seek to allay concern by drawing attention to the mutual benefits of economic integration (Lee, 1996). Theory and evidence support this view, simultaneously demonstrating that these benefits are unequally distributed. Industrialized countries' exports have benefited mainly highly-skilled workers, "symbolic analysts" in Reich's (1991) terminology, while FDI has obviously favoured owners of capital. Both developments emphasize the patterns of growing income disparity. The sizeable share of factor service sector incomes in the United States and the United Kingdom may already denote a shift towards a "rentier economy" (Sachs and Shatz, 1996, p. 12). Much of the increase in demand for low-productivity and low-paid services in those countries clearly originates from those individuals whose position has improved as a result of globalization (UNCTAD, 1995, pp. 205-208).
Another prediction of the Stolper-Samuelson theorem is that the relative wages of low-skilled workers in developing countries will rise as industrialized economies dismantle their trade barriers. Indeed, the southeast and east Asian economies succeeded in combining rapid economic growth with comparatively low inequality, though in contrast to several Latin American countries where income disparity increased in the aftermath of trade liberalization. Various factors could account for this seeming inconsistency, among them labour market deregulation and an increased demand for highly-skilled workers due to the introduction of new technology, or a shift of comparative advantages in middle-income economies (World Bank, 1995). Meanwhile, booming exports from large low-wage countries, such as China, India and Indonesia, may have worsened the terms of trade of labour-intensive products, thereby depressing the wages of low-skilled workers in the South. Finally, the Heckscher-Ohlin model itself can be modified by allowing for outsourcing when explaining wage dispersion in both the North and the South (Feenstra and Hanson, 1996).
Some commentators go so far as to proclaim the emergence of a "global labour market" comprising 2.5 billion people today (World Bank, 1995, pp. 9 and 50). In this process, international migration has not necessarily played an important role since trade in goods and services, in conjunction with capital flows, are substitutes for labour mobility. The advent of the transition economies and the growing participation of the populous developing countries in the world market system have significantly increased the supply of labour competing for investment and employment opportunities. In 1990, the developing countries' share in worldwide manufacturing employment already exceeded 50 per cent (Lee, 1996). Yet the high wage discrepancy between developing and industrialized economies can only partly be attributed to a productivity gap. Unit cost differentials between North and South range between 30 and 60 per cent in various industries (Bloom and Brender, 1993, p. 19). Over and above differences in product quality, the existence of trade barriers and the lower overall level of labour productivity in developing economies, this disparity may indicate the existence of labour oppression by authoritarian regimes.(FN9) Consequently, trade unionists fear that "European, North American, Japanese or Australian labour is in direct competition with the labour force of countries where wages are kept ten to twenty times lower, with both rising unemployment and falling wage levels in the old industrialized countries" (Gallin, 1994, p. 109). Such statements should not be taken literally, however. Over two-thirds of the workforce in the industrialized economies is employed in the predominantly non-tradeable service sector (Krugman, 1994b). In low-income economies, by contrast, the bulk of employment is still in the rural subsistence and urban informal sectors. On average, only 12 to 15 per cent of jobs in these economies are in tradeable, modern-sector activities (Lee, 1996, p. 492). Indeed, labour markets retain a predominantly domestic focus. None the less, services are becoming increasingly tradeable, and are attracting more substantial FDI. Even where this is not occurring, services constitute important inputs for export and import-competing industries.
The perception of globalization as an exclusively North-South phenomenon is inaccurate, since the bulk of trade and investment occurs within the advanced OECD area. Growing competition between the three dominant industrialized trading blocs is proving to be at least equally important. Over the last three decades, the shares in world economic activity of the United States and western Europe (except Germany) declined, while that of Japan and the Asian NICs increased. The old industrialized areas thus appear to be vulnerable not only to competition from low-wage economies, but also to competition from producers with high levels of quality, flexibility and productivity. Clearly, intra-industry trade also opens the door for new markets, but strategic trade and investment policies can lead to a welfare-decreasing "prisoners' dilemma".
This short and unavoidably incomplete presentation of the subject demonstrates that it is too early to pronounce the conjectured havoc of globalization to be "largely mythical" (Wolf, 1997). An element of exaggeration may be present and doubts may never be fully resolved. "But if exaggeration is unwarranted then so too is complacency" (Lee, 1996, p. 493). Globalization clearly bestows net benefits on advanced economies, but it should also be acknowledged that low-skilled labour is subject to at least some harmful effects. Of course, other factors may share responsibility for the emerging polarization, such as sluggish growth, technological change, female participation in the labour market, and deregulation and de-unionization, but it does not make sense to isolate these phenomena from each other. Many of these determinants could be endogenized in a model -- which would admittedly be difficult to construct -- of structural shift towards a "global post-industrial economy" (Zamagni, 1996). In such a dynamic framework, the combined effects of the uncertainties of global financial markets, "hypercompetition", uncooperative state behaviour and increasing inequality per se might slow down worldwide economic growth. A vicious circle would be set in motion, before which even the most pessimistic trade unionists would quail.
LIMITS TO NATIONAL SOVEREIGNTY
" M arkets are going to become the policemen of politics."(FN10)
While competitiveness has been described as a "dangerous obsession" (Krugman, 1994b), growing inequality should also give cause for concern, whether it derives from globalization alone or in combination with technology, structural shifts or anything else. References to the transitory character of skill mis-matches are not very helpful, since "transitory" can mean a whole generation or more. Education and training are already broadly accepted as a useful answer (Wood, 1994). Yet, it will take time for the desired results to become visible. It will take even longer for the strategies targeting the cutting edge of high-value-added production and involving intensified research and development to produce results. Senior low-skilled production workers who have lost their jobs will hardly be consoled by recommendations for lifelong learning. At least in the short run, they should be compensated by those who are benefitting from globalization. Under normal circumstances, this would be an easy task, since the gains of the winners are likely to exceed by far the detriment suffered by the losers. But the circumstances are not normal.
While trends in trade and cross-border investment are following "normal" integration patterns which were already taking shape at the end of the last century, the globalization of financial markets constitutes a genuinely new process. Money has gradually been uprooted from its functions in the productive economy -- i.e. barter, storage and numéraire -- and a sort of "casino capitalism" has emerged. During the course of the past two decades, the ratio of global financial transactions to world output has increased from 15:1 to 78:1 (Hoffmann and Hoffmann, 1997, p. 11). This process, in which the "real" economy is increasingly supplanted by a "fictitious" economy, was sparked off by the collapse of the Bretton Woods system of fixed exchange rates. Subsequently, the trend was reinforced by the emergence of Eurodollar markets inflated by petrodollar surpluses; debt crises and the establishment of offshore banks; speculative bubbles and the creation of derivative markets; high interest rates generated by the increasing risks assumed by the banking system; relatively low private investment causing economic growth to slacken which, in turn, resulted in higher public deficits (Schulmeister, 1995).(FN11)
In the production sphere, the explosion of liquid international funds has produced a shift in firm culture towards a rather short-term-oriented, so-called Anglo-Saxon model of capitalism. The proliferation of "shareholder values" has prompted efforts to reduce variable costs, notably wages (Hoffmann and Hoffmann, 1997). Although not yet totally "footloose", MNCs are playing a pioneering role in adapting investment strategies to the new paradigm via lean production, global sourcing, offshore funding and other such means. The consequent labour shedding and tax evasion exacerbates the problems to which labour markets and budgets are subject. In turn, the proliferation of methods whereby firms may remove themselves from domestic jurisdiction has pushed governments gradually to eliminate capital controls in order to remain competitive, thus surrendering even more of their sovereignty to short-term capital flows (Goodman and Pauly, 1995).
States -- and even regions, such as the European Union -- are increasingly competing for that financial capital as well as for FDI, which is also becoming decisive in terms of access to knowledge and technology (Drucker, 1996). Under the triple pressure of sluggish growth, high debt and high interest rates, countries find themselves in a "strait-jacket of international financial markets" which threatens their national autonomy (ICFTU, 1996, p. 32). Monetary, fiscal and social policies are today more sensitive to the judgements of global financial markets. The discretion of governments, including central banks, over interest and exchange rates has been reduced, and the scope for deficit spending has been curtailed. "Soothing the speculators has meant deflationary policies" (ICFTU, 1996, p. 32). Greater capital mobility hampers governments' capacity to tax and regulate, at a time when the need for active labour market programmes and redistribution is greater than ever. "Lean government" is, in turn, laying additional burdens on the crisis-ridden labour markets. "Th e golden age of egalitarian policy is apparently over" (Bowles and Gintis, 1995, p. 559).
This does not mean, however, that financial market globalization generates a unique "best practice" of policies and institutions to which all countries are obliged to conform. Labour and capital markets are still organized differently in such similarly successful economies as the United States, Japan and Germany. National policies still have their place in employment policy and labour standards. "However, a basic paradox in the current phase of globalization is that, at the same time as the social dislocations caused by increasing international competition are rising, the capacity, and even perhaps the will, of governments to take such compensatory or ameliorative action is weakening" (Lee, 1996, p. 496).
In short, the impact of financial market globalization on macroeconomic policies is a much less controversial issue than that of production and longterm investment. Differences may, however, emerge in the attitude towards this process, which ultimately depends on distinct value systems. An affirmative stance welcomes the new discipline imposed on governments: "The forces of globalization increase both the benefits of good policies and the cost of failure. Although no group of workers can rely on the forces of convergence to raise their wages automatically, neither need they fear that such forces will unavoidably pull their wages down. Whether a new golden age arrives for all depends mostly on the responses of individual countries to the new opportunities offered by this increasingly global economy" (World Bank, 1995, p. 54). From a more structuralist point of view, and in trade union parlance, a new "global feudalism" may be viewed more pessimistically: "If national laws are rendered impotent, then so are a nation's citizens" (Greider, 1996, p. 336). Such scepticism is not without foundation, according to Greider: first, competition can destroy invested capital as even viable factories have to close; second, production overcapacity depresses wage levels worldwide; third, wage depression and unsteady capital investment perpetuate insufficient demand (1996, p. 335).(FN12) Both views depart somewhat from an institutionalist perspective which focuses mainly on the "evil of uncertainties" precipitated by unregulated globalization. The fact that American trade unionists, in particular, tend to put forward more radical interpretations might have to do with their own, less-than-rosy outlook.(FN13)
THE CHALLENGE TO TRADE UNIONS
"The slogan "Think global; act local" needs to be reversed. It is global action that is now needed" (MacShane, 1996, p. 3).
While the negative impact of globalization on workers may still be open to question, there can be no doubt that unions are the great losers of growing interdependence. International union leaders perceive that "our movement is now under attack on a global scale and with an intensity never before experienced in its history. Unions at the national level are seeing much of what they have achieved being undermined by global financial and industrial decisions" (ICFTU, 1996, p. 5). But to what extent are such perceptions founded in fact?
Trade union membership has certainly plummeted -- down by one-quarter in the past two decades, from 36 to 27 per cent of the total workforce in the OECD area (Ariza Rico, 1995, p. 3). And it is striking that this should occur just as globalization trends were emerging, but could it not be mere coincidence? The disaggregation of international, unweighted average union density, however, exhibits only small changes within different sectors, thus suggesting that the main pressure derives from sectoral shifts in employment. Yet a so-called shiftshare analysis on a cross-country basis shows that, with the exception of the United Kingdom, the "structural drag" between sectors accounts for little of the decline. The average share of public sector trade union membership has risen with employment and, except in France and the United States, the gap between public and private sector union density has not increased. "All of this seems to indicate that changes in aggregate unionization rates generally result mainly from movements within individual industries" (OECD, 1991, p. 115). Within services, for example, the downward trend in unionization of expanding and highly productive, strategic producer services -- compared to low-wage personal services, where union membership is already low -- points to the pattern of polarization associated with increasing individualization of labour relations. Other aspects of structural change, such as a shift from blue-collar to white-collar occupations, from full-time to temporary and part-time work, from male to female employment and from large to small and medium firms, also have an impact (OECD, 1991, pp. 112-115). The substantial disparities between countries demonstrate, none the less, that institutional factors still make a decisive contribution to the relative stability of trade union density. On a microeconomic level, the new forms of business organization and the division of internal labour markets into core and periphery, closer ties between workers and management, or successive waves of corporate restructuring have contributed to the decline of unions. Finally, the part played by unemployment in discouraging workers from joining unions should not be underestimated. Many of these developments can be attributed to globalization, although its impact on unionization and equity can hardly be isolated from that of other factors, such as new technology and workforce diversity. "This range of experience would seem to suggest that economic interdependence per se is not synonymous with the decline of trade unions" (Campbell, 1991, p. 39).
Unions now appear to be on the defensive. It is "ironic that just as trade unions in many countries around the world have been forfeiting influence and membership the need for a strong employee voice in corporate decision-making, industry-level interactions and national policy-making is growing" (Locke, Kochan and Piore, 1995, p. 156). In comparing the situation in industrialized countries, researchers observe a fundamental transformation of labour relations where differences between national systems become blurred and systematic variations within countries appear. These common patterns of synchronized social polarization in terms of income and working conditions underline the influence of growing economic interdependence, interrelated with other phenomena (op. cit., p. 159).
In theory, economic integration and increasing competition can be expected to erode the bargaining power of trade unions. If wages and employment conditions are to be taken out of competition, labour organizations "must cover the extent of product markets" (Campbell, 1991, p. 43). But while product markets have expanded, the scope of union organization has failed to follow suit. In addition, the existence of a broader range of exit-options makes global businesses more reluctant to commit to bilateral or tripartite agreements with labour and government for the provision of public goods. By the same token, union strategies to influence the regulatory framework tend to fail because government policies themselves are becoming ineffectual. Furthermore, while MNCs select their managers carefully in keeping with their global corporate culture, unions are at a disadvantage as regards the skill structure of their officers (in terms of languages, communication skills, etc.). It is not by accident that trade unions interact with their clients and their negotiating parties mainly within national boundaries: it is part of their function as labour market organizers to stake out a clearly-defined area of protection. And such labour market protection has always tended to involve protectionist measures. Today, however, the increasing mobility of goods and capital allows such obstacles to be readily circumvented, thereby prompting the trade union movement to adopt a global approach. Under the present circumstances, however, it is not possible to contemplate any organizational form of global labour market.(FN14) Thus, global unionism would not make national strategies obsolete. Rather, the main objective -- and difficulty -- is to provide labour protection without protectionism.
Before making a theoretical case for global unionism, the general economic rationale for unionism should be clarified. Trade unions provide workers with a collective voice with which to communicate their preferences and proposals. Those proposals go well beyond their direct interests and often bring benefits for society as a whole. Unions usually oppose injustice and discrimination and promote equality (though at the risk of possibly inefficient wage compression).(FN15) Improvements in working conditions (e.g. job safety) and restraints on employers' arbitrary actions are also to the public good. However, it can be argued that the monopolistic behaviour of unions can have negative effects on non-unionized workers (World Bank, 1995, p. 81). Yet monopolistic bargaining structures may be more efficient than decentralized forms, if one is to judge from the small wage premium of unionized workers in Europe (half) compared to that in the United States. One might then suspect that labour markets would be characterized simultaneously by monopolies on the supply side and monopsonies on the demand side. When labour and management are organized at the industry and national levels, collective bargaining will tend to reconcile higher employment and higher wages, enhancing the efficiency of the economy as a whole (Frank, 1994, p. 590).(FN16) Centralized socio-economic agents with the power to impose penalties on free-riders are usually inclined to exercise social responsibility and thereby assure positive externalities, like stability. Moreover, experience with the introduction of innovative modes of work organization and new technologies in Germany suggests that the presence of strong social partners can foster beneficial solutions in the trade-off between stability and flexibility (Locke, Kochan and Piore, 1995). Countries with corporatist and non-adversarial industrial relations systems -- such as those of Austria, Germany, the Netherlands or the Scandinavian countries, which generally enjoy high productivity and wages -- offer telling examples of the unexpected virtue of "monopolistic" labour organization.(FN17) In addition to their economic function of balancing production and distribution, trade unions also have a democratic function, in that they give people a say in their working life, and a social function in combating unemployment, poverty and exclusion (ILO, 1997, p. 27).
Such reasoning may be applied beyond the national level as employers, and particularly MNCs, become global monopsonies. Trade unions have four types of strategic options to cope with globalization. The first involves raising wages and labour standards -- this is global unionism in the narrow sense. The second relates to restricting capital mobility with a view to reducing the capacity of business to shop for cheaper labour (e.g. consultation rights and codetermination). The third seeks to facilitate labour market adjustment to competition in high-wage and high-performance industries (Campbell, 1991, p. 44). The last focuses on economic policy coordination and institutional arrangements to promote stability and prosperity. All these objectives can be pursued through the dual channels of private agreements with employers and the legislative system which, in conjunction, constitute the basis for a tripartite system of industrial relations. But is it realistic to seek to replicate such a social partnership system on a global level? An assessment of the feasibility of these strategies calls for an analysis of historical developments and of the current situation.
THE FRAGMENTARY FOUNDATIONS OF GLOBAL UNIONISM
"The working men have no country" (Marx and Engels, 1848, p. 142).
From its very inception, the labour movement has endeavoured to reach out beyond national borders. In contrast to the early craft or "bread and butter" unions in the United Kingdom and the United States, the political unionism of continental Europe was largely shaped by franchise restriction. Slower industrial development, church hostility(FN18) and state prosecution triggered the emergence of conflicting political currents of a socialist, anarcho-syndicalist or confessional nature, among others. It might further be argued that the suppression of an internationally-coordinated reaction gave impetus to both labour internationalism and nationalism. However, this conflict between nationalism and internationalism, which led to the schism of the labour movement during the First World War and the Russian Revolution, persists today. After the Second World War, an attempt to unite the two tendencies by creating the World Federation of Trade Unions came to nothing after it was misused as an instrument of the Cold War; anti-communist unions walked out and formed the International Confederation of Free Trade Unions (ICFTU) and Christian unions went their own way and founded the World Confederation of Labour. But even within the ICFTU, ideological battles continued regarding United States' influence, developing countries and the growing interest in détente. Finally, the rise of "Euro-unionism" culminated in the foundation of the European Trade Union Confederation which linked socialist, communist and Christian centres (Busch, 1980).
With the Cold War at an end, the ICFTU, with its 127 million members,(FN19) is now by far the most important worldwide labour organization. Since their creation at the turn of the century, the industry-based and more pragmatic International Trade Secretariats (ITSs) developed a successful response to MNCs by organizing worldwide works councils.(FN20) In contrast to the labour diplomacy conducted by the political factions, the constructive activity of the ITSs in coordinating national strategies may have paved the way for global unionism. Trade unions are already represented in several international organizations or institutions, such as the Organization for Economic Cooperation and Development (OECD) and the International Labour Organization (ILO). The latter is unique in that it is tripartite, including governments, employers and workers, offering an example of how a future "global social partnership" might function. If the ILO were strengthened, it could take its place beside the World Trade Organization (WTO), the International Monetary Fund (IMF) and the World Bank in the concert of world economic organizations.
More recently, trade unions have strengthened their position in regional free trade areas, notably under the North American Free Trade Agreement (NAFTA),(FN21) in which trade is already linked to basic workers' rights, and in the European Union. In 1994, the efforts of the European Trade Union Confederation (ETUC) to develop a European system of industrial relations were rewarded by the EU Directive on European Works Councils (EWC).(FN22) Some 1,150 companies are affected by its implementation. However, the significance of the Councils goes far beyond Europe, since almost 200 United States-based MNCs are also covered (Danis, 1996, p. 90).(FN23) Another major breakthrough in European collective bargaining was the agreement on parental leave signed by the social partners in 1995 (Hoffmann, 1996, p. 12).(FN24) In general, the aim of social cohesion in terms of living and working conditions is set out in the social chapter of the Maastricht Treaty, which prepared the ground for economic and monetary union. Europe promises to become the chief laboratory for experiments in global unionism.
One of the organizations nearest to being a global trade union is the International Transport Workers' Federation (ITF), whose affiliates total some five million members in 120 countries. In international shipping, "the ITF has come close to imposing a worldwide minimum wage ten times higher than some local rates" (The Economist, 1997, p. 85). Even vessels under a flag of convenience are guaranteed safe passage only if they pay the stipulated remuneration, together with a donation to the Federation's welfare fund; 100 ITF inspectors around the world hand out union seals of approval without which the ship-owners risk strikes, boycotts and the perishing of cargo. However, it is unclear whether the Federation can serve as a model for other unions, since seamen are physically concentrated and are consequently much easier to organize than other workers.(FN25)
But other organizations can also successfully fight international labour campaigns, as was demonstrated by the telecommunications unions in the case of Sprint, an American MNC which fired Hispanic workers who wanted to organize a subsidiary.(FN26) Subsequently, members of German, French, Mexican and Nicaraguan unions, in turn, put pressure on their respective employers to include labour standard clauses in cooperation contracts with that company (MacShane, 1996, p. 25). Codes of conduct are of course a relatively weak instrument, since they generally deal, in a unilateral manner, with matters relating to third parties.(FN27) Prompted by a tragic fire in a Chinese toy factory where 87 women were locked in, such a code was recently agreed by Artsana, an Italian-based toy multinational, and the three Italian national trade union centres. Artsana's subcontractors worldwide are now required to ensure that the trade union rights and other core labour standards enshrined in ILO Conventions are observed, and to offer "decent pay and working conditions". Any breach will result in the cancellation of contracts. Compliance is monitored through independent on-site inspections, and is subject to annual assessment (see ICFTU, 1997b). But, even with appropriate monitoring procedures, codes of conduct serve at best as complements to direct agreements which include subcontractors so as to deal with "chameleon corporations" that behave responsibly only where national regulation or union ascendancy leaves them no choice.
Two recent cases of cross-border industrial action merit closer attention. The first "Euro-strike" (ILO, 1997, p. 41) was sparked off in early 1997 when the partly State-owned French car manufacturer Renault announced the closure of its plant in Vilvorde, Belgium. This decision, which involved the loss of 3,000 jobs, precipitated stoppages coordinated by the European Metalworkers' Federation in Belgium, France, Spain, Portugal and Slovenia. In Belgium, workers throughout the automobile industry and in some other sectors went out on strike. The World Confederation of Labour called on its members to refuse work transferred from Vilvorde to other sites. Several hundred Belgian "flying pickets" concentrated on mobilizing French workers. Belgian newspapers called for a consumer boycott, and public orders were cancelled. About 70,000 workers from all over Europe participated in demonstrations in Brussels and Paris. The company was twice convicted, in France and Belgium, for disregarding two EU Directives relating respectively to European Works Councils and to collective redundancies. This gave the ETUC the occasion to lobby for amendments to these regulations.(FN28) The affair became a major issue in the French parliamentary election campaign. Yet, despite the Socialist victory, a government enquiry supported the redundancy plans subject to a negotiated "social plan" providing for early retirement, retraining and re-employment at other Renault sites (Ewing, 1997, pp. 6-7; Labour Research, 1997, p. 9). These events served to demonstrate the potential of transnational labour unity and -- to quote Marc Blondel, the leader of France's Force Ouvrière (FO) -- marked "the birth of a more reactive and less technical European unionism" (Libération, 1997, p. 2).
A satisfactory settlement was likewise reached in another key trade union dispute, against the Japanese tyre producing group, Bridgestone/Firestone, Inc. Some 2,300 workers who were striking against announced pay cuts and reduced working conditions were laid off and replaced. Following a two-year stand-off, the International Federation of Chemical, Energy, Mine and General Workers' Unions (ICEM), helped the United Steelworkers of America to launch a "cyberstrike", by providing a list of addresses on its web site to facilitate the unauthorized occupation of the sites and electronic mail boxes of the company's management, as well as of those of car makers and distributors, tyre retailers, banks and other bodies with a stake in Bridgestone (Peter, 1997). Finally, the multinational was forced to back down and re-hire the dismissed workers.
Economic globalization has also created opportunities for trade unions. New and inexpensive technologies have swept away communications barriers and opened the way for joint efforts in research and bargaining. Cross-border interaction between workplaces is now possible. In this sense, the Internet is not only a medium but also a message.(FN29) Although its impact should not be overstated, it can play a part in democratizing unions and empowering members,(FN30) although the fact that Internet access varies within and between countries may create a new hierarchy. Just-in-time production and subcontracting procedures make businesses vulnerable to strikes affecting the production of essential components without which the entire production network can be brought to a standstill. Employers may seek to protect themselves by adopting the counter-strategy of parallel sourcing, but this is costly (Van Liemt, 1992, p. 466). Unions may also make global consumers a new source of power, through "social labelling",(FN31) and address their campaigns to shareholder groups. Multinational offenders could be embarrassed by complaints to the ILO, or they may be brought to justice through international legal proceedings before the European Court of Justice (MacShane, 1996, p. 26).
None the less, the problems that beset cross-border solidarity are by no means negligible. The legal basis for transnational industrial action is circumscribed by the different national legislations and labour relations systems. Solidarity action is usually subject to strict requirements, such as the ability to demonstrate a valid interest in supporting the primary action. In some countries, notably in the United Kingdom, sympathy action not related to the narrowly-defined employer is not accepted even within national boundaries. However, trade unions have traditionally acted as instigators of legislative change. The Renault case has eloquently demonstrated that the possibility of enforcing European collective agreements by striking is less "futuristic" than it may have seemed (ETUC, 1997). In addition, global unionism must cope with a communications problem. The fact that multinationals generally use English as the first company language means that the same tends to occur in the labour movement. While this puts non-native speakers and their system of industrial relations at a disadvantage, it does facilitate the exchange of information and ideas; cultural diversity is a luxury that trade unions cannot always afford. Of far greater import than the above-mentioned technical difficulties, however, are the material benefits that can be gained from locational competition. At worst, this leads to conscious social dumping and, at the very least, to a squandering of resources.
Globalization offers organized labour the alternative of collaborating with employers to enhance productivity, adaptability and product or service quality, in exchange for job security and higher wages (MacShane, 1996, p. 26). One particular organization affiliated to the British Trade Union Congress (TUC) is currently demonstrating in a quite extraordinary manner just how far such "productivity partnerships" can go. The Amalgamated Engineering and Electrical Union (AEEU) has published a colourful booklet in several languages, including Korean and Japanese, which directly invites potential foreign investors to establish plants in the United Kingdom (AEEU, 1996). The union offers its human resource services, contacts with local authorities, links to production networks and the promise of industrial peace, in return for which it requests exclusive recognition (single union agreement). This is not to criticize the union for violating internationalist principles, but it exemplifies how industrial relations themselves are becoming a factor in global competition. But productivity pacts may be counter-productive if the macroeconomic environment is unfavourable to growth. Unions can avoid one-sided choices and diversify their strategies to include elements of international solidarity and national adaptationism. Economic integration may lead either to nationalism or to internationalism, the "twin tendencies of working class organisation" (Wills, 1997, p. 1). It is a natural reaction to retract into the national shell, but union leadership must "react logically, not instinctively" (Gallin, 1997, p. 5). Strategic thinking must be global in nature.
Should the international proclivity gain ascendancy, a new system of international industrial relations would become essential -- one in which the International Trade Secretariats might truly act as front-line industrial organizations. They can indeed play a crucial part in shifting the power relationship within multinational corporations -- the "real decision networks of the world economy" (ICEM, 1995, p. 4). These secretariats should already be involved in the action planning stage, as opposed to serving as a last resort when action has failed locally. They may become discussion fora, information nodes, service centres, assistance pools and rallying points for solidarity. Their databases could provide effective support for collective bargaining. An evaluation of "best practice" experiences in negotiation strategies could facilitate agreements involving works councils throughout the world. Such agreements could in turn serve as a basis for further organization. Decentralization of decision-making processes contributes to democratization, but it must not degenerate into "competitive regionalization". In view of the advanced stage of integration in Europe, regional trade secretaries there are required also -- though not exclusively -- to function as political lobbyists.
Choosing the appropriate strategy is not an easy task, and the different strategic approaches may even clash. Potential sources of contradiction should be identified in connection with the current mergers of International Trade Secretariats, such as that of chemical workers and miners into the ICEM. Such mergers may be undertaken with a view to strengthening international labour unity or to fostering synergies generated by cross-sectoral links or by vertical organization by product chains. Alternatively, they may simply be motivated by the fact that individual organizations' revenues are shrinking. A possible culmination of this process towards a "rational" structure of International Trade Secretariats aimed at avoiding "wasteful duplication of effort and expertise" might be to merge the current 15 branches into five: industry; public services; commercial and professional services; transport and communications; media and cultural services (ICEM, 1995, p. 7). Such an approach is countered by the argument that general purpose unions lose grass-roots links and span excessively diverse interests (ILO, 1997, p. 22). Yet, mergers respond to the reality of the current situation in which employers ignore sectoral divides and employees are losing their professional ethos. If the sectoral, industrial and regional structures within the unions are retained, the right balance may more readily be struck between centralization and democratization, thus ensuring that global power is locally based.
The relationship between unions in industrialized and developing countries is also a delicate matter. Since both Northern and Southern workers have a growing interest in strengthening the unions of low-wage regions, unilateral aid for union development becomes more attractive (Ross, 1995, p. 87). However, given fears of renewed "trade union imperialism", the "aid model" could be replaced by a "solidarity model" of mutual cooperation (Wills, 1997, p. 13). The International Metalworkers' Federation, for example, sees no clash between mutual support and traditional assistance by the stronger union to the weaker. This Federation is urging home country unions to help non-organized labour to organize in MNC host countries. In the same vein, it is experimentally including representatives from MNC subsidiaries as observers in the collective bargaining process (International Metalworkers' Federation, 1997, p. 34).
The former consensus regarding the modus vivendi with the official unions of countries which systematically violate labour and human rights appears to be vanishing. While the IUF continues to pursue a policy of strict exclusion of such official unions in order to encourage independent movements -- albeit sporadic -- to emerge, the International Metalworkers' Federation pursues a variable strategy of cautious approach and acceptance at the first signs of democratization.(FN32) Midway between these two positions, the policy of the Chemical Workers' International seeks to establish contact with any workers and plant-level representatives who attempt to "move the official labour apparatus onto a more independent line" (ICEM, 1997, p. 14). The ambitions of the ICFTU's Asian and Pacific Regional Organization to establish closer links with official Chinese and Indonesian unions were dampened when the regional secretary of the IUF was expelled from Indonesia for seeking to attend the most recent Congress of the non-recognized Indonesian Worker Prosperity Union (SBSI).
Factional differences within the international labour movement also arise on how to deal with the Bretton Woods institutions and other organizations. In contrast to the International Metalworkers' Federation which wants NGO status in the World Trade Organization and the World Bank, the ICEM refuses "loyal opposition" within institutions it deems fundamentally unjust. Similarly, the World Federation of Trade Unions (WFTU) is opposed to the OECD's proposed Multilateral Agreement on Investment which it considers to represent a threat to national sovereignty (see WFTU, 1997, p. 3), while the Trade Unions Advisory Committee to the OECD (TUAC) advocates the incorporation in the proposed Agreement of the OECD Guidelines for Multinational Enterprises and binding labour clauses. However, to over-emphasize such differences would be to misrepresent the international labour movement, since views do not effectively diverge on the overwhelming majority of issues. Moreover, a measure of diversification may even strengthen the effectiveness of global unionism by making it accessible from different angles and offering greater flexibility in its responses to new challenges.
Trade unions have a genuine interest in a "Global New Deal" (Colling-sworth, Goold and Harvey, 1996). Despite repeated postponement, the question of incorporating so-called social clauses in the framework of the new WTO still heads the international union agenda. The ICFTU proposes a procedure whereby compliance with basic labour standards -- to which many countries are already committed under ratified ILO Conventions -- is made a precondition of trade concessions under the GATT/WTO. The objective is to prevent "social dumping" through child labour, forced labour or union suppression. The proposal continues to be dismissed by the governments of some developing countries as "social imperialism".(FN33) Controversy likewise surrounds the proposal to expand the autonomy of national monetary policies by a tax on speculation, as put forward by James Tobin: "Transactions taxes are one way, a quite innocuous way, to throw some sand in the wheels of super-efficient financial vehicles" (TUAC, 1995, p. 14). In addition, the International Metalworkers' Federation has called for tighter financial market regulation and worker control over pension funds, which are often used in a manner that is contrary to their best interests (1997, p. 37). It argues that international monetary and macroeconomic policy coordination should be encouraged in the interests of promoting economic growth, if the "diabolic dilemma" of unemployment and income inequality is to be tackled. A case can also be made for a sort of a "global Marshall Plan" for developing and transition economies, which would favour workers and trade unions in the advanced economies as well. In line with this, the ICFTU is demanding increased IMF lending quotas and Special Drawing Rights. However, the international labour movement is reluctant to call for the introduction of a global minimum wage as suggested by Greider (1996). Certainly, such a minimum wage would be hard put to accommodate the enormous disparities in productivity and living standards between countries. Nevertheless, procedures to secure the gradual convergence of employment conditions and remuneration are worth considering. Global bargaining could only make sense if it were underpinned by commitment to a solidarity principle as regards compensation matters.(FN34)
In many of these areas, trade unions may well find allies among other workers' organizations, social associations and NGOs (ILO, 1997, p. 47), provided they do not succumb to the temptation to see themselves as "privileged bearers of internationalism" (Wills, 1997, p. 3, citing Waterman, forthcoming). Opportunities for new partnerships are also generated by the pressure the International Metalworkers' Federation is putting on creditor countries' unions for reducing the debt of developing countries and for introducing environmental clauses.
"Global organization is not the same thing as international organization" (ICEM, 1995, p. 3). It includes an awareness of workers' interdependence along with a shared vision of social progress. Such an approach would envisage the control of enterprises by the stakeholders rather than by the shareholders (ICEM, 1995, p. 12). Innovative and proactive international manpower policies may prove effective in overcoming the negative image of unions as mere clubs for privileged wage-earners (ILO, 1997, p. 23) and may attenuate excessive concentration of power in corporate hands.
SUMMARY AND CONCLUSIONS
"Global markets need global rules backing coordinated policies"
(ICFTU, 1996, p. 47).
While economic integration is typically beneficial overall, it may well have undesirable distributional consequences. Little doubt remains that globalization -- in the form of increasing international trade and investment -- has had some negative impact on the wages and/or job security of low-skilled workers in advanced economies. In developing countries, its generally positive effects on the corresponding labour market segment depend on various institutional conditions. The crucial problem, however, is that the negative judgements of the fast-growing international financial markets tend to frustrate governments' efforts to redistribute. The outcomes of closer attention to education and infrastructure may be experienced by blue-collar workers only in the long run, and the scope for such "good policies" is limited by budget constraints. Hence, the reservations expressed by workers' representatives and politicians regarding globalization cannot be attributed -- or at least not exclusively -- to a lack of information, as is frequently alleged. This neither concludes the debate nor understates the opportunities offered by economic integration.
Like states, trade unions have lost some of their room for manoeuvre against global business and finance, which has triggered further depression of wages, working conditions and collective bargaining. Of course, other factors, such as structural change and technological and organizational innovations have also contributed to the decline of labour's bargaining power and to social polarization. However, the outlook is not unrelievedly bleak. States remain the "key unit" in responding to global change (Grunberg, 1996, p. 355), and in this framework national trade unions continue to strive to protect workers without resorting to protectionism. But, as the balance between economic and sociopolitical forces becomes skewed, states and unions must be complemented by some type of transnational element along the lines of inter-governmental cooperation.
This article has emphasized the significance of global unionism as a further desirable element in restoring the socio-economic balance of power. It has been argued that global unionism can draw on the tradition of labour internationalism. The organizational framework of the international labour movement as it has developed over time can serve as a basis, but requires a new lease of life. Indeed, global unionism goes beyond congress diplomacy, information exchange and policy coordination. It involves the ability to develop strategies, to operate and to bargain on an international level. What is needed is global action based on local experience. New and cheaper communication technologies facilitate the closer links between all levels of the labour movement. Trade unions should perceive themselves as being part of a global civil society, and forge strategic alliances with governmental and civil organizations. The ultimate aim of global unionism would be to institutionalize a system of tripartite social partnership for the purpose of regulating the global economy in the interest of greater equality, prosperity and stability. All this would no doubt entail a radical change in the attitudes of conservative and inward-looking labour organizations. "Globalization opens as many doors as it shuts" (Wills, 1997, p. 25, citing Agnew and Corbridge, 1995, p. 219). The real challenge of globalization is to take advantage of the new opportunities if international solidarity is to embrace more than traditional worker anthems.
Some possible criticisms have been anticipated, although many others have not been mentioned. It might be claimed that global unionism would transpose the insider/outsider problem to the world level.(FN35) Yet if the potential dangers of irresponsible or rent-seeking behaviour are to be minimized, broad categories of industries and occupations should be included within organizational units. At the opposite extreme, union pluralism might be advocated to prevent the appearance of a corporatist Leviathan -- an unjustified concern in the light of contemporary patterns of "de-unionization". This article has suggested that labour market monopolies or wage cartels are a pillar of efficient industrial relations. However, this is not to deny the usefulness of some degree of competition in maintaining a high quality of service and in avoiding opposition to necessary change. The co-existence of competitive product markets and a form of global unionism in the nature of a non-hierarchical network might go some way to ensuring the necessary flexibility.
Added material
Andreas BREITENFELLNER
Austrian Federation of Trade Unions (ÖGB).
FOOTNOTES
1 George Meany, former President of the American Federation of Labor -- Congress of Industrial Organizations (AFL-CIO), quoted in Gershman (1975, p. 2).
2 It would, however, be excessive to play off the ideological phenomenon of a "global hegemony of neoliberalism" (Arbeitsgemeinschaft für Wissenschaftliche Wirtschaftspolitik, 1997) against the material phenomenon of globalization. Increasingly, fierce competition and neoliberalism are allies, reinforcing each other while eroding labour's bargaining strength "from above" and "from below" (Wills, 1997, p. 2, quoting Peck, 1996, p. 233).
3 The situation is of course far more complicated. The fact that there are "working poor" has to do with the low productivity of many of the new jobs created in the United States ("hamburger economy"). While the labour productivity of the United States economy as a whole is low, that of manufacturing, and of producer services in particular, surpasses the bulk of OECD countries. The problem with such statistics is that productivity in the public and service sectors is basically measured by wages, with the result that Europe's higher overall productivity reflects the greater relative size of its public sector and its higher wage level in services, achieved through collective bargaining. But the dilemma remains that there appears to be a trade-off between a labour market dualism induced by deregulation and privatization, on the one hand, and higher wages and unemployment, on the other. Hence, under the conditions of slow economic growth, the only remaining choice is whether or not to introduce the insider/outsider problem into internal or external labour markets.
4 Wood (1994) used a framework of comparative advantages based on different skill levels within the workforce, thus circumventing the Leontiev paradox. (Leontiev found that the United States imported predominantly capital-intensive goods and exported relatively labour-intensive goods.)
5 Sachs and Shatz (1996, p. 39), for example, exclude the computer industry from their sample, which they believe to be an exception on account of its outstanding productivity growth. They also use relatively high estimates for the "magnification effect" linking the behaviour of relative prices and wages. Furthermore, the scant availability of reliable statistics has led to the glaring omission of services, which already account for one-third of world trade, and for half of FDI.
6 Lawrence and Slaughter (1993) discovered that the ratio of non-production to production workers has been increasing in US manufacturing, contrary to the Stolper-Samuelson predictions. This supports the interpretation of technological progress as being "biased" against unskilled labour, and constituting an additional source of the growing income disparities. Yet, such technological change has been evident for almost a century and was associated until the early 1970s with a narrowing rather than a widening wage gap (Sachs and Shatz 1994, p. 41). Moreover, there is reason to question whether occupational distinctions are an accurate proxy for skill differences since, in modern manufacturing, blue-collar workers frequently need a much higher level of education and experience than many back-office clerks.
7 Krugman and Venables (1995, pp. 860-875) present a simple model with interaction between scale economies and continuously falling transport costs which, at a certain critical level, would entail the convergence of wage rates between the core and the periphery region. Sachs and Shatz (1996) developed alternative approaches including highly realistic assumptions of capital mobility or monopolistic competition where low-skilled workers are forced to seek jobs in low-paid, non-tradeable sectors. Additionally, they offer a model of global markets, in which the division of labour is increased by technological change, therefore favouring high-skilled workers.
8 Such factor intensity reversals are disregarded by theorems in the nature of Stolper-Samuelson.
9 For example, 1996 is reported to have been the "worst year ever for union repression". Violations of trade union rights occurred in 108 countries, including 264 murders, 2,000 injuries, 4,264 arrested activists and 153,494 dismissals for being union members (Fiet Info, 1997, p. 6; ICFTU, 1997a).
10 Hans Tietmeyer, Governor of the Bundesbank, at the World Economic Forum in Davos, 1996, quoted in Yuste Ramos, Foden and Vogel (1996, p. 5).
11 There are, of course, alternative interpretations. Most prominently, the IMF (1995) traces the slow-down of growth back to public deficits themselves. While allowing for some additional impact of financial markets, liberalization and decreasing returns on productive capacity, it makes government dissaving responsible for high interest rates and their adverse effect on growth. Although this explanation coincides with the crowding-out effect of text book economics, it lacks the appeal of the present argument, which characterizes government behaviour as a response to macroeconomic difficulties arising from monetary uncertainties.
12 In response to the first, typically Marxist assumption, it might be countered that much of this obsolete capital is already written off. Furthermore, it can be auctioned and, at the low transport costs of today, easily transferred even from one continent to another, as happens with whole steel plants shipped from Europe to Asia. The second argument is underpinned by anecdotal evidence which, although difficult to generalize, should be taken seriously. For example, the labour costs per hour for a worker in the Mexican export processing zone (maquiladora) decreased from 1.12 to 0.56 dollar between 1981 and 1989. The example given to support the third argument, however, is striking. The worldwide capacity of automobile factories would be sufficient to produce 45 million cars a year, but demand does not exceed 35 million (Greider, 1996, p. 335).
13 Another explanation might lie in the United States' more adversarial system of industrial relations.
14 By analogy with the theory of an "optimal currency area" something like an "optimal area of labour market organization" might be considered.
15 As illustrated by the cases of Austria and Japan, this need not lead to compression of wage differentials.
16 Here the analysis of a monopsonistic labour market is applied to minimum wage law, but could be easily extended to monopolistic labour supply.
17 As long as product markets remain competitive, the rent-seeking behaviour of unions will be constrained.
18 At least until the papal encyclical Rerum Novarum of 1891.
19 This figure has only been prevented from declining by the affiliation of new organizations, like South Africa's COSATU.
20 The ITSs' membership comprises some 200 million. With current union density estimated at 5 to 10 per cent of the global workforce, the aim of global labour market organization appears to be unattainable.
21 The social clauses in the NAFTA keep legislation and jurisdiction in the hands of national authorities, allowing for bilateral arbitration procedures.
22 An example of EWC compatibility with international human resource management is provided by the Norwegian Kvaerner Group, which employs about 23,000 people in 50 countries. By 1992, the company had come to view itself as an "international company", making English the language of meetings, communication and training, and establishing a committee in each of its operational divisions. Two years later, a working party was created to reconcile different industrial relations cultures with a view to the establishment of a future European Works Council (European Industrial Relations Review, 1994, pp. 21-23).
23 The EWC Directive has been criticized for including only information and consultation rights and, hence, possibly weakening national codetermination rights. Indeed, a General Motors chief executive expressed the hope that the EWC might be used to "limit the power of German unions" (ICEM, 1995, p. 5). Unless the EWC is seen as a means to the end of multinational works councils -- entirely independent of any region or nation -- it "will be more of a hindrance than a help to the workers" (op. cit., p. 6).
24 Other breakthroughs in international collective bargaining were negotiated as early as the 1980s, such as the contracts between Danone (the former BSN) and the IUF (International Union of Food, Agriculture, Hotel, Restaurant, Catering, Tobacco and Allied Workers' Associations).
25 After the successful strike against United Parcel Service (UPS) in the United States, ITF is attempting to organize the company's worldwide workforce of over 200,000 workers. The same is planned with the staff of deregulated airlines.
26 Other examples are the IUF's historic campaigns against Nestlé in 1973 and Coca Cola in 1980 and 1984.
27 A pioneering agreement on codes of conduct between two international partners, the food workers' international (IUF) and the French-based multinational Danone, was signed in 1994. One year later, the same International Trade Secretariat achieved agreement with the Accor hotel group which, for the first time, included franchisers.
28 The rulings of the French courts demonstrated the EWC directive to be a sound basis for transnational labour law, while urging its transposition with effective sanctions into national legislation. Therefore, calls by Members of the European Parliament for further European codes of conducts should be viewed with scepticism (Lorber, 1997).
29 Meanwhile, a plethora of union homepages are now on-line, providing international labour news, propelling labour campaigns via strike pages, boycott lists, corporate watch and government pages; they give access to industrial relations libraries, research databanks and online publications. See, for example, http://www.igc.org./labornet/index.html.
30 Freedom of communication is still limited. For example, "sending an e-mail to a trade union activist in China or Burma is likely to do him or her more harm than good" (Trade Union World, 1997, p. 9).
31 As in the case of codes of conduct, the credibility of social labels hinges on effective verification procedures laid down in formal agreements (ILO, 1997, p. 43).
32 Attempts by some member organizations to secure the expulsion of the official Indonesian Metal Workers' Union from the International Metalworkers' Federation have so far failed, but it is likely that an independent Indonesian union will join the Federation as well.
33 The WFTU notes, in connection with this debate, that MNCs and their subcontractors, who are "the actual entities responsible for the non-implementation of international labour standards managed to escape criticism" (1997, p. 2).
34 A first step in this direction is to provide information which makes the different remuneration systems comparable (see, for example, International Metalworkers' Federation, 1996).
35 Experience in Europe, where unions have recently pursued a policy of real pay restraint in exchange for job protection, precludes the general application of the insider/outsider model (Fajertag, 1996).
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