| GB.268/WP/SDL/1/2
268th Session Geneva, March 1997 |
| Working Party on the Social Dimensions of the Liberalization of International Trade | WP/WP/SDL |
FIRST ITEM ON THE AGENDA
Continuation of discussions concerning the programme
of work and mandate of the Working Party
(b) Additional replies to the questionnaire on the impact
of globalization and trade liberalization on the
attainment of ILO social objectives
Contents
A. Background and trends
B. Employment and wages
C. Freedom of association and union membership
D. Equality of opportunity and treatment
E. Child labour
F. Working conditions
G. Social security
H. Export processing zones
III. Attitudes to liberalization and globalization: Changes in national legislation
IV. International action and cooperation
V. General comments, suggestions and information
1. At its 267th Session (November 1996), the Working Party on the Social Dimensions of the Liberalization of International Trade discussed a report submitted by the Office on the replies to the questionnaire on the impact of globalization and trade liberalization on the attainment of ILO social objectives.(1) The report was based on replies from about one-quarter of all ILO constituents. Among the concerns expressed was the rather modest rate of response. It was felt that constituents could be given more time to respond, and a short summary of the main points could be produced for internal use.(2) Accordingly, field offices of the ILO were asked in early December 1996 to inform constituents of the extension of the deadline. Over 50 additional replies were received by mid-February 1997, mostly from developing countries. Drawing on these and the earlier replies, the present report summarizes the main findings of the survey. Updated statistical tables are available separately.(3)
2. A total of 180 constituents in 98 countries responded to the questionnaire. From 19 countries replies were received from all three constituents. The additional replies raised the rate of response from 25 per cent of ILO constituents to 35 per cent. They also helped to improve the distribution of the sample by reducing disparities in response rates across different categories of constituents. None the less, employers' organizations, the least developed countries and Africa continue to be relatively under-represented, while governments, the industrialized countries, Europe and -- a new development, Latin America -- are relatively over-represented. The main findings remain much the same as those reported previously. They are however likely to be more reliable because of the larger size of the sample and its improved distribution. In view of the limitations of the exercise (mentioned in the previous report), the overall rate of response and the non-random nature of the sample, the findings reported below should be interpreted with caution.
3. For reasons explained in the previous report, it unfortunately proved difficult to utilize the background information systematically. A few observations, however, may be made. First, total employment rose over the past decade in virtually all developing countries for which data were provided. The increase was of the order of 30 to 40 per cent in most cases. By contrast, all European transition economies in the sample experienced a decline of roughly 10 to 20 per cent. The changes in industrialized countries were in both directions, and varied from -15 to +15 per cent over the decade. Secondly, the share of women in total employment in 1995 was mostly in the range of 20 to 40 per cent in developing countries, around 50 per cent in transition economies, and from 35 to 50 per cent in industrialized countries in the sample. This share increased somewhat in most countries. The share of women in the main export sectors varied much more across countries than in the economy as whole. Thirdly, about a quarter of the respondents reported a reversal in the position of some sectors of their economy from substantial net exporters to substantial net importers, or vice versa. The changes occurred in all types of economies and sectors.
4. The constituents' perceptions of the effects of globalization and trade liberalization on net employment and real wages diverge. Workers tended to have a negative assessment of the past effects and expected little improvement in the future. Governments and employers, however, perceived mixed effects in the past but showed considerable optimism for the future. There was widespread agreement that these processes had done little to reduce wage disparities. In fact, more than half of the replies from governments and workers said that they had widened the disparities, although most employers saw no substantial effect. The tendency of these processes to accentuate wage differentials was expected to be less pronounced in the future by governments and employers, but not by workers.
5. The classification of results by type of economy reveals a less favourable perception of the effects on the part of constituents in developing and transition economies than of those in industrial countries. However, the former look forward to significant improvements in the future, whereas the latter do not. This appears to reflect the greater scope in the former economies for further integration in the international economy, which, as many replies indicated, would open the world markets to their exports, promote growth and generate employment.
C. Freedom of association and union membership
6. The survey confirms the common view that the rate of union membership has tended to decline in most countries. The data provided suggested that the rate fell three times as often as it increased over the past decade. There were some dramatic declines, in particular in transition economies. But there were also a few spectacular increases, for example in Mozambique and South Africa, and near total membership in others, for instance Cuba and Finland.
7. Union membership rates in the main export sectors do not appear to be systematically different from those in other sectors of the economy. About half of the replies saw no significant difference, and where a difference was observed the answer was as likely to be "higher" as "lower". Nor was there much of a difference in overall trends: membership rates fell more often than they rose in the main export sectors as well as in sectors facing import competition.
8. There were no remarkable patterns emerging from the replies as to which type of organization the workers of multinational enterprises tended to belong to, as compared to those of domestic enterprises. However, about half of the replies suggested that, compared to domestic enterprises, multinational enterprises tended more to affiliate to national or sectoral organizations. Most other replies indicated no clear tendency in this respect.
9. About half of the replies from industrialized countries saw no change in the proportion of workers covered by collective agreements during the past ten years, either in the economy as a whole or in the main export sectors. Most replies from developing and transition economies, however, indicated that there was indeed a change, although it was not systematic. Where there was a change, workers were more likely to suggest a decline than governments, which saw increases as often as decreases. Employers' replies fell in between.
10. According to most replies, especially from governments and employers, trade liberalization and globalization had no effect on the exercise of freedom of association or on the right to engage in collective bargaining. Half of the workers' replies also echoed this view. However, where an effect is perceived, there is a sharp contrast between workers -- who consider that these processes had led to a limitation of such rights -- and governments and employers, who tend to feel the opposite. The reasons given for an "extension" often had to do with the emergence of a market economy, privatization and the spread of democracy, all leading to the strengthening of social partners and opportunities for the exercise of freedom of association and collective bargaining. The proponents of "limitation" sometimes invoked much the same reasons to back up their assessment. Most assessments, however, attributed the limitation to such factors as the spread of MNEs, the curtailment of union activities in EPZs and the dismantling of labour codes.
D. Equality of opportunity and treatment
11. Women seem to be less present in the main export sectors than in other sectors of the economy. About half of the replies suggested that the percentage of women in the main export sectors was lower, and another third that it was about the same. This presence, however, may have been rising more often than falling over the past ten years, especially in developing countries. Most respondents were of the view that trade liberalization and globalization had had no effect on equality of opportunity and treatment for workers during the past ten years. Where the reply indicated an effect, governments and employers generally saw it as positive, whereas workers felt that it was negative.
12. In 15 countries, government replies indicated an increase in reported violations of child labour over the past ten years. In most cases, this was believed to be attributable to a rise in the incidence of child labour rather than greater compliance. Nine governments reported a decrease and attributed this to greater compliance. In 27 countries, the number of reported violations remained about the same over the past ten years.
13. The extent of child labour in the economy was stated as "small" in about one-half of the replies, including several from industrialized countries, and as "large" in about one-tenth of them. The remaining replies indicated its absence. Whatever their breakdown, however, relatively more replies suggested that the extent of child labour was lower in the main export sectors than in the economy as a whole. One-half of those answering the relevant question estimated that the main export sectors accounted for less than 1 per cent of child labour in the country. Another quarter put this proportion at 1-4 per cent and a few at over 20 per cent.
14. Most replies indicated that the extent of child labour in the main export sectors had either fallen or remained unchanged during the past ten years. Workers, however, were far more likely to suggest the opposite than governments and employers. The availability of a large pool of cheap labour, high unemployment, high unionization in the main export sectors and traditional family values were among the reasons mentioned for why child labour in the main export sectors was limited or not growing. An increase was typically associated with rising poverty, the growth of the informal sector, lack of adequate monitoring and laxity in the application of labour laws prohibiting child labour. A decline, on the other hand, was usually attributed to a reduction in poverty, an increase in schooling, strict monitoring, international pressure, awareness campaigns and the effective application of relevant labour laws.
15. There are apparently no systematic differences in the occupational accident/illness rates between the main export sectors and comparable sectors producing for the domestic market: about half of the replies saw no difference, and the rest were more or less evenly divided. The rates were said in most cases to have fallen or remained unchanged in the main export sectors, as well as in the economy as a whole. About one-half of the workers' replies, however, suggested that they had risen. On the whole, the situation in industrialized countries appears to have improved considerably over the past ten years, whereas in transition economies it was more often said to have deteriorated than improved.
16. The questionnaire inquired about constituents' perceptions of the possible impact of trade liberalization and globalization on certain aspects of the social security systems in their countries over the past ten years. An overwhelming proportion of replies from industrialized countries saw no effect on coverage, either in terms of the proportion or the categories of workers covered. About 30-40 per cent of replies, however, indicated a decrease in benefits provided and in the net financial sustainability of the system. Four-fifths of the replies reported no changes in the legal status or operation of the system. The most deleterious effects on social security systems are observed in transition economies, with many replies suggesting a deterioration in coverage, benefits and the financial sustainability of the system. Changes in the legal status and operation of the system were widespread. The picture that emerges for the developing countries is on the whole more encouraging. While about half of the replies indicated no effect in response to the relevant questions, both coverage and benefits were more often said to have increased than decreased, and the net financial sustainability of the system had as often improved as deteriorated.
17. A majority of replies did not include answers to the questions in this section of the questionnaire, perhaps because EPZs are absent in the countries concerned and are not envisaged in the near future. The share of EPZs in total exports varies enormously, from as little as 1 to 2 per cent to over 60 per cent. The same is true of employment. Most EPZ workers are women. Most respondents expected the level of employment in EPZs to rise, but they differed sharply as to whether the terms and conditions of employment in the EPZs were similar to those in comparable sectors in the rest of the economy. While most governments and half of employers suggested that this was the case, almost all workers said that it was not so. For some constituents, employment conditions in the EPZs were better; for many more, particularly workers, they were worse. The latter pointed to the lower wages and benefits in some cases, the absence of social security, old-age benefits or profit-sharing, the prevalence of temporary contracts, and the non-application of labour laws and standards in such areas as freedom of association and the right to engage in collective bargaining. The most often cited reason for the difference was the need to attract investment under fierce competition.
III. Attitudes to liberalization and globalization:
Changes in national legislation
18. Respondents were asked to specify whether, in the context of the global economy, various factors act as advantages or disadvantages for their countries. All three groups of constituents ranked wage costs and social security costs as, on the whole, the least advantageous of the six options given. Skills of the labour force received the best ranking from governments and workers, but employers opted for the capacity to innovate and adapt. In industrialized countries, wage costs and social security costs were regarded as somewhat of a disadvantage, whereas labour skills, the labour relations climate, labour productivity, and the capacity to innovate or adapt were considered advantageous, in decreasing order of importance. The low level of wages in transition economies provided the greatest advantage, followed by the skills of the labour force. From the perspective of respondents in developing countries, all factors were regarded, on average, as providing a slight advantage, except wage costs, which were perceived as being neutral.
19. The survey shows clearly that the "challenge" of globalization and trade liberalization is taken very seriously indeed by most countries, especially developing and transition countries. This is reflected in widespread and substantial modifications in national legislation that have been enacted over the past decade to take better advantage of the opportunities created by these processes.(4) The most common changes, as suggested by over 70 per cent of replies in each case, were designed to promote exports, attract foreign investment and improve training and retraining. Changes in legislation in regard to the establishment or promotion of EPZs, labour subcontracting, statutory minimum wage, terms of engagement, working time, termination of employment and other changes to increase labour market flexibility were also mentioned by roughly half of the respondents. Concern at the adverse social effects of globalization and trade liberalization, however, may have been rather less pervasive: the least common changes in legislation related to special schemes for workers having lost their jobs as a result of trade liberalization and other measures to mitigate the possible negative effects of globalization. Changes in legislation are expected to be more common in the next few years than in the past in all subject-areas.
20. Roughly half of the respondents, in total or in individual categories, thought that trade liberalization and globalization had had no effect on the means of action available to their governments to promote the social goals of the ILO. Of the rest, most workers felt that the means of action had been reduced, while most employers expressed the opposite point of view. An enhancement was often attributed to the positive growth effects of liberalization: growth would obviously facilitate the pursuit of social goals. On the other hand, privatization and the diminishing role of the State, also due to liberalization, were often cited as reasons why the means of action available had been reduced. Rising unemployment, wage erosion, the removal of subsidies and labour market deregulation were among other reasons mentioned.
21. Most respondents, especially from industrialized countries, did not see much of an effect of trade liberalization and globalization on their countries' ability to ratify and apply ILO Conventions on workers' fundamental rights or on other labour standards. The rest were evenly divided between those who found that this ability had been reduced and those who held the contrary view. Workers were more inclined to see greater difficulties than governments or employers. The classification of replies by type of economy suggested that, where trade liberalization and globalization had influenced this ability, the effect had usually been to make it easier to ratify and apply the Conventions in transition economies, more difficult in industrialized countries and mixed in developing countries.
22. There is a very large measure of agreement among respondents (82 per cent) that trade liberalization and globalization call for the universal recognition and application of workers' fundamental rights. While workers were overwhelmingly in favour (89 per cent of replies), governments (84 per cent) and employers (71 per cent) were not far behind. Support is less strong in regard to other labour standards (65 per cent), but the pattern is the same and a majority of governments and employers share this view. Furthermore, nearly all of those who agreed that trade liberalization and globalization call for the universal recognition and application of fundamental workers' rights were of the view that this aim should be pursued within the framework of the ILO. About a quarter of them favoured also pursuing the matter elsewhere, the World Trade Organization being the most common additional forum suggested, particularly by workers' organizations.
23. Many respondents expected that more use would be made in the future of the four types of measures mentioned in the questionnaire to promote respect for international labour standards. The most widely expected (70-80 per cent of replies) are codes of conduct for enterprises or industries, applied on a voluntary basis, and the development of a labelling system for goods and services produced in accordance with workers' fundamental rights. Boycotts of imported products by trade unions, consumers or other non-governmental groups and the extraterritorial application of national laws were expected by about half of the respondents. Workers were more prone than governments and, especially employers, to expect resort to such measures in the future, except in the case of codes of conduct, which were expected by four-fifth of respondents in each group. As to which measures would be welcomed by the respondents, codes of conduct and labelling were the most favoured options.
Suggestions for future research
24. Many replies contained suggestions for future research or indicated support for proposals already put forward at previous meetings of the Working Party. Among the latter were the proposals by the Workers' group relating to national reviews by the ILO of the respect of workers' fundamental rights by member States, a review of the effectiveness of ILO machinery to support workers' fundamental rights, a study of the use of labour market incentives to attract foreign direct investment, and a consideration of the links between respect for labour standards, productivity and economic development.
25. A recurring theme for research was the need for more detailed empirical analyses of the impact of trade liberalization and globalization on the social objectives of the ILO. The proposal for country studies in particular was welcomed by a number of respondents. Some constituents recommended analyses of the social effects of IMF, World Bank and UNDP policies. More narrowly focused were suggestions for the analysis of the impact of globalization and trade liberalization on urban centres and the informal sector and on industries in developing countries with small domestic markets. The development of a system of indicators was also proposed as a means of regularly assessing the extent of exposure to globalization and trade liberalization and its impact on individual countries. Other suggestions related to specific dimensions of trade liberalization and globalization or specific contexts. These included analyses of the unique situation of transition economies and the presence of multinational enterprises in them, employment in export sectors, the international movement of labour and the advantages enjoyed by developed countries due to globalization. Other proposals concerned the relationship between trade liberalization and labour standards and global developments in productivity and competitivity in different countries. Comparative studies on union rights and freedom of organization in multinational enterprises and on respect for fundamental workers' rights in EPZs were also suggested.
26. Finally, several suggestions related to this type of survey itself. A follow-up questionnaire was proposed, to be sent in about five years, so as to improve understanding of the real impact of trade liberalization and globalization, particularly on developing countries. Other proposals in this vein recommended sending appropriate questionnaires to multinational corporations, and to individual trade unions or affiliates of trade union confederations to seek their views.
27. A number of respondents put forward suggestions on other measures and other fora through which the issue of the impact of trade liberalization and globalization on the attainment of ILO social objectives may be addressed. Among the measures proposed are: the inclusion of a social dimension in all multilateral development assistance, discussion in the Governing Body's Committee on Legal Issues and International Labour Standards of the extension of supervisory procedures concerning core labour standards, the promotion of specific labour standards through coordinated programmes of technical cooperation and development assistance, conducting periodic surveys, and holding discussions and seminars on topics related to the issue. Among other fora mentioned by the respondents are the WTO, OECD, UNCTAD and international financial institutions.
Ways of asserting the ILO's role
28. Constituents were asked for their views on how the ILO should assert its role and achieve its objectives on this issue within the wider international community. The suggestions may be grouped under the following main headings:
(a) Strengthening of the ILO's standards-related action: The active promotion and implementation of international labour standards, in particular core standards, were recommended by some constituents. In this connection, it was also proposed that the ILO should seek international consensus on what the core labour standards are and communicate this definition to the international community. The strengthening of the supervisory machinery was also recommended by several constituents, as was redirecting the focus of ILO standard-setting activities towards the revision and modernization of existing standards, as well as the development of a new Convention to tackle the exploitation of child labour.
(b) Strengthening of the ILO's analytical capacity: Another approach suggested by many is through continuous and objective research, the dissemination of information, and the evolution of the ILO as a "centre of excellence" on the subject. A conference on trade liberalization and globalization was also suggested.
(c) Outreach: Suggestions under this heading include the promotion of tripartism and consensus building, technical cooperation on labour and social matters, awareness raising and education, the facilitation of worker training, and the establishment of mechanisms to enable ordinary workers to become familiar with the ILO's work.
(d) Inter-agency cooperation and coordination: A number of replies suggested that the ILO's lead role in this area be asserted through more effective cooperation and coordination with other concerned international organizations, such as the WTO, IMF, World Bank and the European Union so as to ensure, as far as possible, that workers' rights were not adversely affected by liberalization. Some constituents were of the view that the ILO should defend a formal linkage between respect for fundamental workers' rights and participation in international trade. Some others, however, took the position that the ILO should not deal with trade matters or seek to take a lead role or approval for the imposition of constraints, which may well do more harm than good. It was suggested that the ILO should call for the creation of a working party on the issue in the WTO and obtain standing observer status in the WTO. The creation of an ILO/WTO advisory committee on labour standards was also suggested.
Geneva, 3 March 1997.
2. Oral report of the Chairperson to the Governing Body. See GB.267/PV: Minutes of the third sitting.
3. Details on classification and statistical procedures may be found in the previous report.
4. It is worth pointing out that, while most answers in other parts of the survey reflect perceptions of impact, those relating to modifications of national legislation provide more factual indications of impact.