Paris, 08/01/2009
Conference podcast
To view the symposium's contributions, see its website. John Monks participated at the second session on Globalisation and social justice.
Globalisation and social justice
Saying ‘I told you so’ is not the best way of winning friends and influencing people.
So I will spare you a list of trade union warnings about the disaster we all face because of the out-of-control activities of a range of financial institutions. In 2006 and 2007, we were concerned by the hedge fund and private equity booms – and the mind blowing rewards available to the stars of these industries. The standard response from political leaders was that it would all come out painlessly, risk was widely spread, and these firms were a great wealth creating asset. In a phrase, I was fussing about nothing.
This Candide-like optimism has led us to the present crisis, the reasons for which are clearer than the routes to recovery. One point stands out above the others – we are a long, long way from having created the political and regulatory institutions to help contain the risks of globalisation. We – and most of the world – may well have been beneficiaries of the open global economy. But these benefits will be quickly forgotten as millions in Europe and elsewhere face unemployment. The free movement of capital, goods and services will not survive if there is not a European and international response to deal with global risks – and if the alternative, a retreat into national fortresses is not to become inevitable.
Joseph Stiglitz has written very well about who is to blame with prime suspects being the indulgent Federal Reserve, the culture of de-regulation, the shared complicity of bankers, accountants, and ratings agencies in boosting their own massive earnings, and commercial banks who forgot their primary responsibility to manage prudently as they pursued their bonuses and stock options. All these showed a Bourbon-style arrogance as they enjoyed a period of huge excess, forgetting what is right and what is wrong.
That inquest about blame apportionment must go on. But more immediately, we must coordinate action to promote recovery. Otherwise protectionism and, who knows, social unrest, will become inevitable. We have had a reminder of the last phenomenon in Greece recently.
Let us be clear. We have witnessed the implosion of international financial capitalism. Workers’ taxes now bail out bankers while lay-offs rise in most of our countries. The repercussions on the real economy are there for all to see. Social peace cannot be taken for granted.
It is now widely acknowledged that a fundamental re-engineering of economic command and control at international level is firmly on the agenda. That needs to be acted upon, and fast.
Calls we have heard for some time for an Economic – and I would add Social – Security Council should now make full sense to all.
Deregulation and unfettered markets must be out. Democratic control and fairness are in.
We need a New Green Deal as Barack Obama is proposing – a step I welcome. But we also need a New Social Deal in which the objectives are to develop a new system out of the rubble, a system which is less alienating, less divisive, fairer, less of a casino where the winner takes all.
Immediately, we need to act on jobs, to help people in the labour market who have precarious jobs, and to stop regular jobs becoming more precarious. We need an EU-US partnership on sustainable development which, of course, presupposes that the EU itself can speak with one voice. Modest steps were taken with the adoption by the European Council last month on the climate change package and the Recovery Programme.
Our action needs to be truly European. It should be inclusive. We need to increase demand-side action coming from the European and national levels. We need to include workers and unions in the New Social Deal by strengthening collective bargaining so as to avoid a new round of ‘beggar-thy-neighbour’ policies, and to strengthen us as a necessary, countervailing pressure in relation to the financial world and unthinking shareholder value.
We need to facilitate restructuring, not by making it easier to hire and fire, but in protecting and creating new decently-paid and productive jobs. As one Australian trade union leader put it, ‘the new business mantra for 2009 must be the three Rs – retain, reskill and redeploy’. It should not be widespread job shedding. The temporary short-time working schemes in some countries should become general.
We need to help worker mobility across our internal borders, not by undermining fundamental rights – as has resulted from ECJ judgments last year – but by ensuring that migrant workers will be welcomed because they do not pose a threat to established agreements. The European Council last month at least agreed that the high importance they attached to workers’ rights would be confirmed. That confirmation needs a new legal base.
Pascal Lamy is quite right in warning us all not to turn towards national protectionist trade policies.
Remember the Smoot-Hawley Act that was a catalyst in the Great Depression for the severe reduction in US-European trade from its high in 1929 to its depressed levels of 1932. That in turn contributed to the tensions which led to war.
In the same way as the EU single market requires a social dimension, so does the global market. ILO standards must not be undercut by WTO agreements.
As members of this panel know, the European and international trade union movement has for years pressed for a social dimension to international trade. Basically, the decent work agenda with workers’ rights at its centre needs to be advanced as an integral part of our trading relationships. That is not protectionism. That is good governance, an essential condition for the widespread acceptance of free trade.
In the new generation of Free Trade Agreements being negotiated, the Commission has already decided to seek the incorporation of sustainable development chapters.
But we haven’t seen such progress at the multilateral level – in the WTO context. This is now imperative, not as a protectionist measure but indeed to prevent protectionist sentiments that we see growing around us.
As part of the new settlement we are seeking we must ensure that trade is at the service of development and democracy. Health and access to medicines, poverty eradication, protecting the environment, ensuring observance of human, democratic and trade union rights. These should be underpinned by a fair trading system.
The WTO is much criticised. But in our view we need more of it. Not less. Multilateralism is the way forward. The WTO, properly adapted and democratically controlled, can be the instrument to advance it.
The current, desperate crisis causes huge problems for all of us but it offers opportunities too. We need to grasp them, and do so now.