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The International Dimensions of Work:

Some Implications for the UK

Ruth Mayne

An Oxfam Working Paper


OxfamGB1998

First published by Oxfam GB 1998.


Reprinted 1998

ISBN 0 85598 397 3

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Contents

Executive summary 5 Section 5 Possible solutions at the local


and international levels 38
5.1 Oxfam's community development
Section 1 Global trends 8
experience 38
1.1 Introduction 8 5.2 Oxfam's campaigning experience:
1.2 The extent and nature of globalisation 8 consumer pressure and corporate
1.3 The importance of work 11 good practice 43
1.4 Summary of global employment trends 11 5.3 Oxfam's international advocacy work 47
1.5 Summary of regional employment
trends 12 Section 6 Conclusions and
1.6 Global inequality 13 recommendations 52
6.1 Summary of implications for the UK 52
6.2 An agenda for reform 52
Section 2 Policy debates and responses to
6.3 Research 54
unemployment and changing patterns of
work 15 6.4 Networking 55
2.1 The debate on national policies 15
2.2 The debate on international policies 18 Annexe: Case studies from
2.3 Policy implementation at the national Oxfam's programme 56
level 21 Introduction 56
2.4 Policy implementation at the international Case study 1 Employment generation in the
level 23 Zabbaleen migrant community in Cairo 56
Case study 2 OMAFES: Credit for women in
Bamako 57
Section 3 Some implications for the UK 25
Case study 3 Ladywood Credit Union,
3.1 Globalisation and the UK 25 Birmingham UK 58
3.2 National policies 25 Case study 4 Brazil's campaign against hunger,
3.3 International policies 27 misery and for life 59
Case study 5 The tri-national campaigning
coalition against NAFTA 60
Section 4 The social impact of free-
Case study 6 Research and advocacy on the
market policies on employment and
impact of structural adjustment policies on
living standards 29
employment 62
4.1 The regressive role of free-market Case study 7 A common agenda: homeworkers
policies 29 organising internationally 63
4.2 Job losses 30
4.3 Job creation 31 Notes 65
4.4 Changing employment patterns and
conditions 33
4.5 Incomes, poverty, and inequality 36
Executive summary

Economic integration is linking markets around the governments are being reduced as a result of the
world, pitching governments, companies, and growing power and mobility of capital, the new
workers into unprecedented competition with each global rules on trade and investment, and the
other. The question is whether workers in North and deregulation and spectacular growth of financial
South are destined to be bitter competitors for jobs, or markets. They will be further eroded by the new
partners in a common global effort to improve the obligations imposed by the World Trade
lives of all working people. Organisation (WTO) and other new trade and
investment agreements, in particular the
The objective of this report is to provide an proposed new OECD Multilateral Agreement on
international perspective to work and employ- Investment, if it is implemented.
ment policy in the UK. It draws on the practical Grassroots experience suggests that globa-
and policy experience of Oxfam GB, an inter- lisation is bringing far-reaching changes to
national development agency. It argues that people's lives. The effects are particularly strong
part of both the cause of and the solution to the in weaker developing economies, but also
UK's recent employment problems lies at the apparent in the rich OECD countries. In fact,
international level. These problems include job international trade and investment is neither
insecurity, erosion of workers' rights and inherently good or bad for employment.
growing income inequality. It recommends that Although they generally help to promote
the UK voluntary sector should engage with growth, they may either enhance or undermine
Southern organisations, which are experienc- employment and living standards. Their impact
ing similar problems, to press for reforms to depends on many factors, including the control
international policies and institutions. and distribution of production and marketing,
the terms on which countries trade and receive
foreign investment, and the nature of the
Findings regulatory framework.
In practice, globalisation has brought signifi-
The paper focuses on the accelerated expansion cant gains to some countries and groups of
of international trade and investment exper- workers, while marginalising and excluding
ienced since the early 1980s or globalisation others. At a global level, it has been accompanied by
as it has become known. It is widely accepted mass un-and under-employment and a shift towards
that international trade and investment has more insecure, irregular, non-unionised forms of
some effect on employment and incomes. The work. This in turn has been associated with
controversy is over the size of that effect and the widening income inequality within and between
appropriate policy response. The prevailing countries. The paper argues that these trends are
consensus among policy makers is that trade due to the unequal nature of national and global
and investment flows play only a minor role in markets, the regressive effects of the free-
explaining the rise of unemployment or inequa- market policies which underpin them, and the
lity, when compared to national factors such as lack of an adequate international regulatory
technological change or consumer demand. In framework.
so far as they are recognised to have an impact In the industrialised countries, including the
this is assumed to be largely beneficial, leading UK, the impact of foreign trade on employment
to improved export and employment oppor- and wages has been relatively minor in compar-
tunities in richer and poorer countries alike. ison to the effect of national factors. The main
The report acknowledges that national competitive challenge for the UK is still mainly
policies still largely determine the terms on which from the EU and other high-productivity
national economies engage with the inter- developed countries, rather than developing
national economy. However, the powers of countries, although this picture is changing as
The international dimensions of work

competition from the transition economies and industries. The experience of Taiwan and
newly industrialised countries increases. Never- South Korea demonstrated that a relatively
theless, competition from lower-wage develop- equitable distribution of the benefits of foreign
ing countries has contributed to growing income trade and investment can be translated into
inequality in industrialised countries, reducing increased employment and poverty reduction.
demand for unskilled workers by around 20 per At the local level, the report shows how the
cent in recent years according to one analyst.1 impact of globalisation can also be modified by
This in turn has caused serious social disruption the actions of individuals, community-based
in certain sectors. It has also contributed to groups, and civil organisations. It provides
growing job insecurity and downward pressure some concrete examples of how support for
on workers' rights. These effects have been community development initiatives, or the
particularly pronounced in the UK due to the social economy as it has become known, can
labour market deregulation instituted by the help to generate self-employment and income
previous government. at the local level. Confidence-building, organis-
As for developing countries, globalisation ational strengthening, and advocacy work can
brought significant gains to a group of East help people to secure jobs and improve wages
Asian countries, representing a significant and conditions. One of the key lessons is the
proportion of the world's population; although importance of national, cross-sectoral, cam-
the recent financial crisis in the region has paigning coalitions, in achieving progressive
raised serious questions about the future pros- policy change: unfortunately, these cross-sector
perity of these economies. However, inter- coalitions are a recent development in the UK.
national trade and investment flows continue to However, such measures should be seen as
bypass many of the poorest countries almost complements, rather than alternatives, to
completely. Globalisation is also contributing to government commitments to securing full
growing inequality within developing countries employment and fair working conditions.
by favouring certain groups and regions over
others, and failing to create enough new jobs to
compensate for those lost during restructuring. Recommendations
One of the key lessons for the UK resulting
from an assessment of different international With regard to the policy implications of globalis-
and national experiences is that the negative ation, the report challenges the accepted wisdom
effects of labour-market regulations on growth, that the route to more and better jobs is to adapt
investment, and jobs tend to be dwarfed by to global realities by deregulating national
deflationary and high-interest-rate monetarist markets. Even within the constraints imposed by
policies. Overly-rapid, unselective integration globalisation, the UK and other governments
into highly unequal global markets has also could do more to promote equity and social
been damaging to local industries and jobs, cohesion. For example, there is arguably scope
especially in weaker economies. for the UK government to strengthen labour
Another important lesson for the UK is that rights, and raise progressive income and corp-
cheap labour strategies entail high social costs orate taxes, without damaging competitiveness.
and cannot lay a sound basis for long-term Richer governments also have a responsibility to
economic expansion. Indeed, labour-market ensure that their markets remain open to the
deregulation, combined with the effects of the exports of the poorest countries. They will
growing mobility of capital, has weakened the therefore need to compensate and retrain
bargaining power of labour and been an workers who have lost their jobs as a result of
important cause of growing income inequality foreign competition, and take active measures to
and job insecurity. Evidence suggests that long- help the economy adjust to competition.
term competitive advantage is shaped far more Nevertheless, globalisation does restrict the
by human capital and control of new technol- ability of the UK and other governments to
ogies than by wage levels. The early success of significantly improve employment opportun-
the East Asian economies, for example, was built ities and conditions by acting on their own.
on investment in education, skills, and research Higher inflation or labour costs may have short-
and development. Government intervention to term economic costs, especially in developing
direct trade and investment flows was also countries which cannot compensate with high
initially helpful in promoting knowledge-based levels of productivity.
Introduction

Increasingly, employment generation and that workers are part of the solution, rather
protection of labour rights requires coordinated than a barrier, to achieving growth and compet-
action by governments at the international level. itiveness. This in turn will require the collection
Oxfam, along with other international NGOs and of convincing evidence. It will also require
workers' organisations, is advocating a middle developed countries to meet their commitments
path between the extremes of a global free- to provide market access, debt relief, and
market which consigns large swathes of humanity technology transfer to developing countries.
to subsistence incomes, and beggar-thy- Finally, the report makes a series of recom-
neighbour protectionism which generates econ- mendations for poverty-focused organisations
omic inefficiencies and may ultimately lead to in the UK. These include the need for detailed
economic collapse. It would entail the adoption of research on the likely impact of new inter-
more expansionary policies, the regulation of national economic rules on employment and
foreign trade and investment in order to protect poverty in the UK; and joint advocacy between
workers and the environment, special treatment UK-based development agencies, international
for developing countries, and reforms to inter- networks, and Southern organisations, to
national institutions to make them more demo- influence international policies and institutions.
cratic and accountable. International regulation
may entail some loss of GDP, a small rise in
inflation, and higher prices for consumers but
these costs need to be set against the high social Outline of the paper
cost of inaction which may eventually threaten the
Section 1 provides an overview of the phenom-
stability of the multilateral trading system.
enon of globalisation and recent economic
From Oxfam's perspective it is important trends, including changes in the nature of
that international policies reflect the needs and investment and employment, and the growth of
concerns of the people most affected by global inequality within and between nations. Section
economic integration. This in turn implies an 2 summarises national and international policy
important advocacy role for international debates about the causes of unemployment and
alliances of community-based and civil organis- the changing patterns of work. Section 3 draws
ations. This suggestion rests on the belief that out some preliminary implications for the UK.
workers share a long-term common interest in Section 4 draws on Oxfam's experience and
preventing growing job insecurity, and a global research, as well as wider evidence, to examine
downward spiral of wages and conditions. This the combined impact of national and inter-
is not to deny the short-term conflicts and national policies on the level, pattern and
competition which can exist between workers in conditions of employment in the UK and
countries at different levels of development. elsewhere. Section 5 examines Oxfam's work on
But it does suggest that there should be a shared employment and livelihood issues, including
concern to find ways of reforming the inter- community development work, campaigning
national trading and investment system to and international advocacy. Section 6 provides
ensure that all workers receive their fair share of conclusions and recommendations.
the fruits of economic progress. The report was originally written in 1996 to
In terms of the need for international regula- provide an international perspective to the
tion, the paper recommends, among other Work and Opportunity Programme of the
things, coordinated international advocacy aimed at Joseph Rowntree Foundation, to strengthen its
strengthening the supervisory mechanisms of the understanding of the recent changes in the UK
International Labour Organisation (ILO) with labour market and to make recommendations
respect to core labour standards, reforming the regarding its research, policy-influencing, and
WTO to ensure that trade does not damage practical work. In preparing the paper for
workers' rights, with binding obligations on publication, it has not been possible to incorpor-
international business to adhere to agreed ate any new material to reflect the policies of the
standards relating to working conditions. present UK government, which came to power
However, progress on such issues will depend after the general election of 1997.
on convincing policy-makers and companies
Section 1: Global trends

1.1 Introduction countries who already participate in the global


market economy, increasing the global supply
The term 'globalisation' refers to the recent of labour and exerting downward pressure on
accelerated integration of the world economy wages.7 Many of these 3 billion receive signifi-
through the expansion of trade, investment, cantly lower wages than their Northern
and financial flows, underpinned by the counterparts: labour costs are $25 an hour in
revolution in information and communications Germany, $16-$ 17 an hour in the US and
technology. Globalisation is linking labour Japan, but only $5 in South Korea, $2.40 in
markets around the world, pitching workers Mexico, and 50 cents or less in China and
into fierce competition with each other in an Thailand (although, as we shall see, the differ-
unprecedented manner, and profoundly alter- ences in unit labour costs are much smaller
ing employment patterns and conditions. As the when productivity differences are taken into
Financial Times reported 'there is a real risk that account).8
the integration of the world economy will ... These trends have revived fears that
impose insufferable costs on the world's globalisation is creating new jobs in the poorer
workforce.'2 developing countries at the expense of richer
The fear which globalisation invokes for UK ones such as the UK, and hence, in order to
workers is graphically illustrated by the recent remain competitive, labour costs and standards
transfer ofjobs by British Polythene Industries must be reduced in a global 'race to the bottom'.
from Telford to China, where wage costs are This report explores the arguments and
one-tenth the UK level, after Telford workers evidence behind these perceptions.
had trained the new Chinese workforce.3
In recent years, many countries in the Third
World and former Soviet block and Eastern 1.2 The extent and nature of
Europe, especially those implementing IMF globalisation
and World Bank structural adjustment policies,
have adopted free-market policies, opening up There is some disagreement about the extent to
their borders to trade and investment. These which globalisation represents a qualitatively
countries are becoming increasingly powerful new development in the global economic
in economic terms, and now account for 43 per system. The evidence suggests that economic
cent of world output, 30 per cent of world trade, integration has indeed accelerated since 1960
and 45 per cent of foreign exchange reserves.4 but that it is not an unprecedented phenom-
Moreover, the share of developing countries enon. In some respects, in particular in the
in world exports of manufactures has jumped openness of economies to trade (measured by
from 10 per cent in 1980 to an estimated 22 per the ratio of trade to GDP) and capital (measured
cent in 1993 (although South-East Asia gener- by current account balance to GNP), the current
ated over 75 per cent of these exports).5 international economy is less open than it was in
Manufactured imports from developing the period between 1870 and 1914.9 Then as
countries now account for roughly one-third of now, economic integration was associated with
all US imports, compared to 14 per cent in profound political, social, and cultural upheavals. The
1970. In the EU, imports of manufactured fact that there have been previous periods of
goods from developing countries have risen economic globalisation does not make it any less
from 5 per cent to 12 per cent of total imports in necessary to assess the nature and implications
the same period.6 of globalisation today, and more urgently, to
Globalisation has brought 3 billion people of find ways of enhancing and spreading its
working age in Asia, Latin America, and Eastern wealth-creating potential, and minimising its
Europe to join the 1 billion from OECD negative effects.

8
Global trends

The growth of foreign trade and The uneven geographical distribution of


investment trade and investment
Since 1984 the volume of world trade has grown The surge of trade and investment has been
faster than world output, marking a return to reflected in a restructuring of the global
the rising post-war trend before 1974.10 There economy, in which some countries emerged as
has also been a steady increase in openness winners and others as losers. The distribution of
across most of the developed and developing trade and investment remains highly unequal,
worlds, particularly in the East Asian econ- with trade and investment flows largely skewed
omies. In 1960 the share of trade in the GDP of in favour of OECD countries and a handful of
the industrialised countries averaged 12 per developing countries. North America, Europe,
cent; it is now over 2 0 per cent." I n certain parts and Japan are the main originators and destin-
of the developing world, trade growth has been ations of foreign investment, accounting for 75
even more impressive, reaching about 80 per per cent of the total accumulated stock of FDI
cent of GDP in East Asia, before the current and 60 per cent of the flow.
economic crisis affecting the region. Even Developing countries have significantly
China, virtually isolated from the world econ- increased their share of world manufacturing
omy less than 20 years ago, exports 25 per cent exports, although in 1993 South-East Asia
ofGDP. accounted for over 75 per cent of these
Since the early 1980s, the growth of trade has exports.14 However, the 48 least developed
been eclipsed by the expansion of private capital countries now account for less than 0.3 per cent
flows, in particular foreign direct investment of world exports, less than half the level of two
(FDI), which has been expanding at a rate decades ago.15 This situation is likely to get
unparalleled in the post-war period. Flows of worse, as a projected two-thirds of the economic
FDI in 1994 exceeded $220bn, a four-fold benefits of the most recent round of the
increase from 1981-1985, compared to an Uruguay Round of GATT will go to indust-
increase of about 50 per cent in the value of rialised countries. Sub-Saharan Africa, the
trade.12 The growth in FDI in the service sector world's poorest region, stands to lose from the
has been one of the most notable features of the agreement.16
recent surge in foreign investment.13 In recent years, inflows of FDI into
An important new feature is the spectacular developing countries have surged from $31bn
increase in global short-term financial flows. in 1990 to $80bn in 1993. However, in 1992 ten
The daily turnover on foreign-exchange countries accounted for 76 per cent of the total
markets is over $ 1 trillion, double what it was in foreign direct investment in developing countries,
1989. Only 10 per cent of this reflects real trade while the 48 least developed accounted for only
in goods and services, with the other 90 per cent 0.6 per cent of total flows. Sub-Saharan Africa
relating to currency speculation (20 years ago, has been almost totally bypassed by these
the proportions were reversed). The composi- flows.17 One estimate suggests that nearly two-
tion of flows has also changed, with a shift from thirds of the world's population has been
bank lending to bonds and other securities, and written off the map as far as foreign investment
the development of a wide range of financial is concerned.18 Of the total accumulated stock of
instruments. FDI, 75 per cent is accounted for by North
The expansion of theseflowsis related to the America, Europe, and Japan, who also benefit
deregulation of government controls over from 60 per cent of the flow; these three areas
international trade, investment, and finance in are the main originators and destination of FDI.
the late 1970s and 1980s, and the subsequent
consolidation of these measures in bilateral, The control of foreign investment and new
regional and international trade and invest- technology
ment agreements (examined in later sections). A critical new feature of this phase of
It is also related to the development of satellite globalisation is the growing concentration of
communications, which allows cheap and investment in the hands of a few transnational
instantaneous analysis and communication of corporations (TNCs), combined with control
information, and to lower transport costs, and over the cutting-edge new technologies which
the development of new information tech- are increasingly a precondition for inter-
nology both of which facilitate the rapid national competitiveness. The ease of transfer
relocation of production. of these technologies allows multinationals to
The international dimensions of work

organise production on a global scale, allowing investment is replaced by new forms of social
them to transfer high technology to the best and and environmental regulation of international
cheapest production sites, making them super- business.
competitive. For example, in Hermosillo in The freedom of governments to implement
Mexico, a Ford plant built in 1986 which, unlike fiscal and monetary policy is also being
the company's other Mexican plants, uses Just- circumscribed by the increased power of
in-time and Total Quality Control procedures, currency speculators. This power is clearly
achieves higher quality levels than any of Ford's illustrated by the breaching of the Exchange
other North American plants, similar product- Rate Mechanism in 1992 on Black Wednesday,
ivity rates to US workers, but has a markedly and the collapse of the Mexican peso in 1994.
smaller wage bill.19 Further constraints on governments are the
In the early 1990s, there were an estimated influence of monetarist ideology with its empha-
37,000 TNCs, controlling about 170,000 sis on deflationary policies, and the rolling back
affiliated organisations.20 The 100 largest of taxation and the mushrooming of financial
corporations control over one-third of the stock subsidies to create a favourable investment
of foreign investment, while 40 percent of world climate for foreign investors. Poorer countries
trade takes place within companies. The ten who cannot afford these incentives are penal-
largest TNCs control assets which represent ised; the public revenues available for employ-
three times the total income of the world's ment generation or social services are reduced;
poorest 38 countries with a population of over and the flow of foreign investment distorted.
one billion people (excluding China and Data from UNCTAD shows that the use of
India).21 Over 90 per cent of TNCs are based in incentives has grown in almost every region in
developed countries. Of the 500 largest, nearly the world in the past few years, with 103
40 per cent are based in the US and 25 per cent countries offering incentives in the early 1990s.
in Japan. The headquarters of large numbers of In Eastern Europe, for example, 80 per cent of
TNCs are also in the UK, Germany, and countries offer 'tax holidays' to investing
France.22 companies.24
The growing mobility of capital is also seen as
Implications for relations between states, having weakened the bargaining power of
multinationals and labour organised labour and its ability to protect labour
Some analysts have argued that these trends standards. This allows TNCs to exploit differences in
have served to increase the power of capital, standards between countries, and fosters competitive
relative to governments and labour. This in deregulation between governments seeking to offer
turn has led to the progressive abandonment of the most favourable conditions to investors. The effects
social goals, such as full employment, and has can be seen in the spread of free trade zones, the
negatively affected the quality of employment. weakening of trade unions, deregulation of
They suggest that the current global restruct- labour markets, and spread of flexible working
uring is driven by the attempts of companies to practices in many countries. Moreover, the
recuperate falling profits due to the rigidities of increasing ease with which technology can
the post-war period and in particular the deep accompany capital across borders is breaking
recession from the 1970s onwards. There is a the link between high technology, high prod-
move away from the large-scale fixed-capital uctivity, and high wages: it is now possible to use
investment, strong interventionist states, and the latest technology but pay subsistence wages.
strong unions of the post-war period, towards (The impact on labour standards is explored in
new, flexible forms of production.23 Section 3.)
The dismantling of government controls However, the growing power of capital has
over trade and investment, and the increased been tempered to some extent by the growth of
power and mobility of multinationals, are seen consumer power. Certainly, an increasing
to have weakened the power of the nation state. number of companies have felt obliged to adopt
Because such a large proportion of internation- voluntary codes of conduct on labour and
al trade and investment occurs within multi- environmental issues in response to consumer
nationals, the concept of a self-regulating free demands. However, consumer pressure is most
market is no longer relevant. The challenge effective with companies which have a brand
therefore is to ensure that the control formerly name to protect. It cannot and does not
exercised by governments over trade and influence all companies. (Further limitations of

10
Global trends

voluntary codes are explored further in Section on paid employment, because of its importance as
5.) The ethical investment movement offers a determinant of welfare and income distribu-
another source of countervailing power to tion in the UK, because of its growing
capital, but the huge potential of worker importance in developing countries, and
investments in pension schemes remains largely because of the growing integration between
untapped. labour markets in the UK and elsewhere as a
result of globalisation. This in turn is resulting
in a growing commonality of experience.
1.3 The importance of work Where appropriate, brief reference is also made
to small-scale independent producers because
What must be avoided at all costs is seeing human of their importance as a source of livelihood in
beings as merely the means ofproduction and material developing countries, and their growing
prosperity, regarding the latter to be the end of the importance in richer countries such as the UK.
causal analysis a strange inversion of ends and However, this focus still leaves out the vast
means. Bestowing value on human life only to the amount of unpaid and largely unrecognised
extent that it produces profits the "human capital" work carried out by women around the world,
approach has obvious dangers. In its extreme form whether in the home, in the provision of com-
it can easily lead to slave labour camps, forced child munity services, or in subsistence agriculture,
labour and the exploitation of workers by management which is not reflected in national economic
as happened during the industrial revolution. statistics.
(UNDP 1994 Human Development Report).

For Oxfam, work is not just a means to generate 1.4 Summary of global
economic growth, income or consumption, as employment trends
the more extreme versions of free-market
theory would suggest, but is important in its Paid employment has always been an important
own right. It fulfils a basic human need, and the source of livelihood in the industrialised
right to work is a fundamental human right countries, but in recent years has become increas-
enshrined in international conventions. Work is ingly so for people in developing countries. This
a determinant of welfare and, as the recent is especially true in regions such as Asia and
Enquiry for the Churches into Unemployment Latin America, where large numbers of people
and the Future of Work points out, it is also a have been displaced from their traditional liveli-
service to the community and wider society.25 hoods as rural producers. In Latin America, for
The quality of jobs is as important as the example, 60 per cent of the poor live in urban
quantity. Policy makers often point out that areas, and are largely dependent on wage
although the jobs created by globalisation may labour or informal self-employment for their
be of poor quality they offer higher incomes survival. By 2025 it estimated that 57 per cent of
than unemployment, or work in the informal or the population in developing countries will be
rural sector. However, this should not imply a living in urban areas many of them making a
passive acceptance of poor quality jobs. The living from wage labour.26 Even in rural areas,
experience of Oxfam's partners suggest that increasing numbers of people have become
higher incomes do not necessarily equate with a wage labourers. At the same time, an increasing
better quality of life. There is much evidence, proportion of the world labour force is engaged
both in the UK and overseas, of personal stress, in activities that are linked to international trade
ill health, crime, and family/community stress and capital flows.27 However, this growing
and breakdown associated with poor quality, dependence on wage labour and international
insecure jobs. Women working in the free trade markets is occurring at a time when unemp-
zones in Dominican Republic, for example, are loyment is rising and paid employment is
often unable to see their children because of the becoming increasingly insecure.
long hours worked, causing great personal Many workers, especially those in Northern
distress and a breakdown of family life. countries, experienced great improvements in
Work can take many forms, including paid their living standards during the post-war
employment, independent and self-employed period. Over the last 15 years, however, while a
production, and unpaid subsistence and large group of workers have continued to gain,
domestic work. The main focus of this paper is a significant number have experienced a

11
The international dimensions of work

marked deterioration in employment oppor- time, women are expected to continue perform-
tunities and conditions, eroding many of the ing their unpaid domestic labour, such as caring
hard-won gains of the post-war period. The for the young and elderly. In many countries,
recent phase of globalisation has been accom- women's domestic responsibilities have intensi-
panied by mass un- and under-employment, fied over recent years as a consequence of cuts in
the erosion of basic labour rights, and spreading state health and education services. Despite this,
job insecurity in many countries. This has in their domestic work remains unrepresented in
turn contributed to growing global poverty, national accounting systems. Meanwhile, in
widening inequalities, and social disintegration. many countries, unemployment is growing
The World Bank estimates that 120 million among men, creating emotional pressures and
people are unemployed globally.28 According to in some instances intensifying domestic conflict
the ILO, millions more suffer from under- and violence. In the UK for example, in 1996
employment, bringing the figure up to nearly male unemployment was 10 per cent against 7
one billion people, or approximately 30 per per cent for women.
cent of the entire global workforce.29 This Children also form a significant part of the
represents an increase of one-fifth from the workforce, particularly in developing countries.
ILO's 1994 estimate of 820 million, and has A recent report by the ILO doubled its estimate
occurred despite a steady recovery in the world of the number of child workers worldwide to
economy. This has led some analysts to suggest more than 250 million. The report links the
we are entering a period of 'jobless growth'. increase to greater economic insecurity and
However, in some developing countries, much more flexible work practices resulting from the
of this increase in unemployment reflects rapid transition to market economies and the
rapidly growing populations. impact of IMF structural adjustment pro-
In many areas labour markets are char- grammes.33 However, only a minority work in
acterised by a dwindling core of highly-paid, the export sector. This is not a problem
secure, permanent workers, and a growing confined to poorer Southern countries: accord-
number of 'working poor' in insecure, poorly- ing to Anti-Slavery International, the majority
paid jobs with poor working conditions. The of the 1-2 million school-age children who are
growth of free trade zones, and the spread of employed in the UK are working illegally.34
flexible forms of work in the formal sector, such The denial of basic labour rights remains
as temporary, part-time, and casual work, widespread. The 1980s saw a distinct trend
means that a job in the formal sector no longer towards de-unionisation, decentralisation of
guarantees an escape from poverty. In some collective bargaining, and deregulation of the
Latin American countries more than 40 per cent labour market in virtually all industrialised
of wage-earners are poor.30 Self-employment in countries.35 Globally, a 1995 report estimated
the informal or 'third' sector is also increasing, that there had been a 65 per cent increase in
although a growing proportion of the informal reported repressive action against organised
workforce is linked to the formal sector through labour in the previous three years, spreading to
sub-contracting relations. Many of these 98 countries, the highest total so far. The rise in
workers suffer from low incomes, and a lack of abuses is attributed to pressures from globa-
rights, and work in dreadful conditions.31 lisation.36
Women have increased their participation in
the workforce in many countries in recent years,
providing them with an important new source 1.5 Summary of regional
of income and, potentially, independence. In employment trends 37
Latin America, for example, female participa-
tion in the labour force has increased from 22 A large group of workers in the first and second
per cent in 1970 to 30 per cent in 1990.32 But generation of newly industrialised countries
women continue to face great discrimination, (NICs) in East Asia experienced an unambig-
and barriers to certain jobs, and tend to be uous improvement in employment and wages
concentrated in low-paid, insecure jobs. Their in the 1980s. It is interesting to note that a
wages are often considerably less than those of number of these countries relied on a significant
men doing similar work, and they do not degree of state intervention for their success.
necessarily maintain control of their income Nevertheless, authoritarian regimes, weak
within the household. Even when working full- labour legislation, and the denial of basic trade-

12
Global trends

union rights and collective bargaining still all countries. Wage employment fell by as much
remain problems. Neither are the gains totally as 30 per cent in Bulgaria and Hungary.42 Real
secure, as the recent financial crisis in Asia wages have also fallen sharply throughout the
demonstrates. Some of the first generation region, increasing poverty and inequality in
NICs, such as South Korea and Taiwan, are now many countries. In South Asia, employment
also threatened with a loss of jobs to low-wage trends were mixed, with some growth in the
countries such as Indonesia and China. South formal sector including manufacturing employ-
Korea has also recently lost some jobs to the UK. ment. Bonded and child labour are still
This provoked a government attempt to dereg- widespread, wages are generally very low, and
ulate the labour market. under-employment and poverty widespread.
In the industrialised world, unemployment
has reached proportions not witnessed since the
1930s, averaging around 8 per cent and 1.6 Global inequality
affecting 35 million people, three times the level
in the 1950-60s. This has occurred despite only The 1996 UNDP Human Development Report
a small increase in the labour force, and shows that, while there has been a dramatic
continued economic growth. There are another surge in economic growth in some 15 countries
estimated 15 million or so 'discouraged' since 1980, bringing rapidly rising incomes to
workers, who do not register as unemployed many of their 1.5 billion people, economic
because they have given up hope of finding decline or stagnation has affected 100 countries,
work or have unwillingly accepted a part-time reducing the incomes of another 1.6 billion.
job. The US and UK have gone further than It also states that over the past 15 years the
other countries in bringing down unemploy- world has become more economically polarised
ment. However, even here there are problems: both between countries and within countries,
wage differentials reached levels not recorded arguing that 'if present trends continue, econ-
since the last century.38 Differentials also omic disparities between the industrial and
widened in the 1980s in 12 out of 17 industrial developing nations will move from inadequate
countries studied by the OECD. Real wage to inhuman.' The gap in per capita income
growth decelerated sharply in all OECD between the industrial and developing worlds
countries during the 1980s and first half of the tripled from $5,700 in 1960 to $15,400 in 1993.
1990s.39 Over 100 million people in the OECD The ratio of the shares of the world's richest to
live below the poverty line.40 the poorest people doubled from 30:1 to 60:1
Latin America, the region which has gone over the last 30 years. The assets of the world's
furthest in integrating into the global economy 358 billionaires exceed the combined annual
on the basis of free-market policies, exper- incomes of countries with 45 per cent of the
ienced a collapse in growth, investment, and world's people.
formal sector jobs, and a significant decline in In many instances, inequalities have also
real wages during the 1980s, a situation which grown within countries, including in many
has not yet been reversed by renewed growth in OECD countries, notably the US and UK, and
the 1990s. The spread of flexible labour developing countries (an issue which is explored
practices and job insecurity in Latin America's further in Section 4). Inequality matters because
modern sector has striking parallels with it deters investment and growth. UNCTAD-
developments in the UK and US labour markets. points out that what is especially disturbing is
These trends have been associated with a that the increased concentration of national
significant increase in the number of people income has not been accompanied by higher
living in poverty and inequality.41 Sub-Saharan investment and faster growth. In the North
Africa, which introduced similar policies in the profits are at levels not seen since the 1960s but
1980s, has experienced similar trends in large in the main they now generate much less
part due to its inability to compete in global investment and employment than previously.
markets. In the South, the rich often receive more than
Unemployment in transition economies in half of the national income, but private produc-
the former Soviet Union and Eastern Europe tive investment is rarely sufficient to generate a
has risen explosively since the introduction of significant increase in per capita income.43
market reforms in 1990, and by 1994 unemploy- Inequality is important because of its links to
ment rates had reached double figures in almost poverty. Evidence from developing countries

13
The international dimensions of work

suggests that the incidence of poverty tends to tion with well-being, may have to be revised. It
be more responsive to changes in inequality may also create a basis for solidarity between
than to economic growth. Moreover, the exper- groups of workers in rich and poor countries.
ience of Oxfam's partner organisations in the Inequality also matters because it can be an
UK and elsewhere suggests that growing important cause of low growth. The Inter-
inequality has also been associated with the American Development Bank recently
spread of social problems such as rising, crime, identified inequality as one of the main barriers
delinquency, violence, and drug abuse. For to economic growth in Latin America. Social
example, in Colombia, homicide rates tripled unrest deters investors, and poverty depresses
between 1983 and 1993; in Peru they increased internal markets and exacerbates fiscal
five times between 1986 and 1991; and in problems through lost tax revenue. Inequality
Panama they doubled between 1988-1990.44 In has also been identified as a source of economic
richer countries, recent studies suggest that for inefficiency in the UK. Nevertheless, a recog-
some groups of people, the negative effects of nition of growing income inequality must be
social and environmental disintegration are tempered by the acknowledgement that, in
beginning to outweigh the gains from rising many countries, average incomes have risen
incomes and consumption. This suggests that and social indicators, such as life expectancy,
the assumptions underlying orthodox econ- infant mortality, and literacy, have shown a
omic policy-making, which equates consump- steady improvement.

14
Section 2: Policy debates and responses to
unemployment and changing patterns of work

For more than a decade, the international among the social democratic parties in the
policy agenda has been dominated by free- North, centre-left parties in the South, and
market monetarist policies aimed at reducing international organisations such as the ILO,
inflation. Now, rising unemployment and UNICEF, UNDP, and the Regional Economic
inequality are forcing employment policy back Commissions of the United Nations. Some
into centre stage. The policy debate in both elements of this approach have recently found
richer and poorer countries focuses largely on selective support from the World Bank and
whether supply-side or demand-side factors are OECD. Workers' organisations and non-
responsible for rising unemployment and government organisations (NGOs), and other
inequality; and on questions about the role of campaigning groups, have fiercely criticised
labour market institutions and government these policies, from a poverty, rights, or
policy. In terms of international policies, a environmental focus.
crucial question is how far international trade
and investment flows are responsible for these Growth
trends, compared to other factors such as new Both free-marketeers and neo-Keynesians
technology. There are also other less orthodox agree that growth is a crucial determinant of
critiques from trade unions, poverty-focused employment creation. Environmentalists, in
groups, and environmentalists. These different contrast, argue that continued growth is neither
approaches are examined below before turning a desirable or feasible route to higher employ-
to a review of actual policy responses. ment because of the strict physical limits exerted
by environmental constraints on further
output-growth (although this does not preclude
2.1 The debate on national growth through efficiency improvements). It is,
policies however, generally accepted that Southern
countries, because of their greater poverty, will
Free-market policies became increasingly have to continue expanding output for some
prominent in the late 1970s and 1980s in time yet.45 But because of the global
response to what were seen as the growing environmental implications, Northern govern-
contradictions and inefficiencies of the previous ments should ensure that they help poor
set of interventionist policies. The failure of countries in the South to gain access to modern
interventionism was demonstrated by a severe environmentally-friendly technologies.
financial crisis, characterised by huge burdens Many environmentalists are also pessimistic
of debt, in many developing countries. North- about the potential of growth to create
ern countries were also affected, though to a employment due to the job-saving effects of new
lesser extent, by budgetary problems, high technology. It is argued that, in contrast to
debts, and rising inflation. Internationally, the previous job-replacing technologies, informa-
leading proponents of free-market policies have tion technology pervades all sectors, is being
been the IMF, World Bank, the OECD, and introduced more rapidly, and makes work
certain governments, notably the UK, US, and more mobile so that new jobs will be perman-
Chile. These three countries can be considered ently shifted round the globe.46 Such instability
as test cases for the effectiveness of these is creating high levels of structural unemploy-
policies. ment, and exacerbating inequality by raising
In recent years a neo-Keynesian counter- the productivity and price of skilled workers.
critique has begun to emerge in response to the This view forms the basis of the 'end of work'
growing social problems associated with free- theories which have recently gained some
market policies. This approach is dominant prominence in the mainstream debate.

15
The international dimensions of work

The role of supply-side and demand-side jobs and higher wages as the labour market
factors tightens. But they argue that this is frequently
One area of contention between the free- prevented from happening because govern-
marketeers and the neo-Keynesians is whether ment legislation and trade unions artificially
factors of supply or demand are more raise wages and benefits above their true market
important determinants of growth, and hence value, thereby pricing workers out of jobs.
of employment creation. The free-marketeers Crudely put, countries are seen as facing a
argue that 'supply-side distortions' in labour choice between high employment protection
and capital markets, caused by inefficient with persistent unemployment, as seen in many
government intervention in many countries in European countries; or lower protection but
the 1970s and 1980s, fostered an inefficient, with higher rates of employment, as seen in the
inward-looking, and capital-intensive pattern of US and UK.
growth. This contributed significantly to poor The neo-Keynesians draw on a growing body
economic performance, and increasing unem- of evidence which suggests that there is not such
ployment and under-employment. High wages a strong trade-off between jobs and labour
and rigid labour-market protection are also standards as free-market theory suggests. For
blamed for inhibiting growth and investment. example, a recent comprehensive survey of 100
The World Bank has singled out inflexible German companies in ten industrial sectors
minimum-wage agreements, restrictive regula- showed that companies which place workers at
tions on job security, and severance pay, the core of their strategies also produce higher
maternity or other gender-based benefits, high long-term returns to shareholders than their
levels of employers' taxation, contributions to industry peers, outperform their competitors,
non-wage benefits, and inefficient public and create more jobs, demonstrating that good
employment schemes.47 In the case of capital employment practices are good for business
markets, it has blamed subsidised credit, and employment.49 In addition, various recent
overvalued exchange rates, and export taxes for studies show that measures to protect the
artificially cheapening the cost of capital, labour-market, such as minimum-wage regula-
promoting capital imports, and discriminating tions, employment security, and employers'
against labour-intensive and export sectors. taxes, do not necessarily have a significant
negative effect on employment in the long term,
In contrast, the neo-Keynesians, while admit-
although there may be short-term costs
ting that some of the supply-side reforms
associated with restructuring. Much will
introduced in die 1980s were necessary, still
depend on the level at which the minimum
believe that die effect of government regulation
wage is set, and whether it is binding; and on the
and trade unions on investment, growth, and
structure of production (for example, the size of
employment is dwarfed by the negative effect of
firms and whether they are subcontracted or
low domestic demand.48 They argue that the
independent).
recent widespread adoption of over-deflationary
and high-interest-rate macro-economic policies Evidence on minimum wage protection50 in
has been mainly responsible for low investment, Chile, Costa Rica, Colombia, the UK, and the
poor growth, and rising unemployment in the US suggests that it has not had a significant
1980s and early 1990s. effect on employment, and in some cases may
Economists in developing countries also have had a positive effect.51 According to the
argue that free-market theory puts too much 1996 OECD Employment Outlook, countries with
emphasis on the role of relative prices as wage floors and healthy benefit-payments are
determinants of growth and employment. faring better than their Anglo-Saxon counter-
Instead, they emphasise the structural barriers parts, and minimum wages do not appear to
to growth and employment creation, such as cause job losses among the most affected
unequal land distribution and the lack of access groups, including women, young people, and
of small producers to financial capital, skills, the unskilled. Other evidence cited is that
and markets. unemployment increased while wages fell
dramatically, in Latin America in the 1980s. In
the UK, rising wage-inequality was associated
The role of government regulation with increasing unemployment of the less
Advocates of free-market policies generally skilled. In the US, real wages fell both relatively
assert that growth automatically leads to more and absolutely, but this did not coincide with

16
Policy debates

significant changes in the unemployment rate the bargaining power of labour. This view has
of the less skilled.52 Research in OECD countries recently found backing from the ILO, which
has shown that over the long term, increases in argues in its 1996 World Employment Report that
employers' taxes are often shifted back onto as much of 20 per cent of the overall increase in
workers in the form of lower wages. Moreover, wage dispersion in the US and UK can be
weak employment protection increases hiring accounted for by the decline in unionisation,
but also increases firing, so there are few long- labour-market deregulation, and other institu-
term gains from flexibility.53 tional changes. A growing body of analysts also
The neo-Keynesians argue further that argue that deregulation fosters a new class of
labour-market deregulation may win markets working poor by undermining the rights of
and save some jobs in the short run, but the those in work, and contributes to growing job
strategy is ultimately economically inefficient insecurity. Even the OECD, in a departure from
and self-defeating. Long-term competitiveness its normal free-market line, has recently argued
depends on productivity rather than wage that minimum wages, strong trade unions, and
levels per se. Therefore the idea that low wages generous welfare benefits help to defend the
and standards are necessary for competitive- social fabric of industrialised nations against the
ness is wrong; low wages also reduce purchasing corrosive impact of wage inequality.57
power, and thereby undermine growth and Some trade unions go further and argue that,
employment prospects. This has been far from exacerbating income differentials
acknowledged by the World Bank to be a cause between insiders and outsiders, improved
of the failure of the structural adjustment rights and conditions for insiders provide
programme in Bolivia in the 1980s.54 Some outsiders with a bargaining position to achieve
economists have gone so far to suggest that this working conditions in line with those of
is the 'Achilles' heel' of the capitalist system.55
permanent workers. They argue that increased
The lack of employment rights and social incomes for marginalised outsiders could be
security encourages defensive reactions from generated by a fairer distribution of produc-
workers and thereby inhibits worker mobility. tivity gains between profits and wages, rather
Low wages and flexible labour practices may than by eroding the incomes and rights of
insiders. The fact that a growing number of
cause wages to fall below their 'efficiency level',
impairing workers' productivity through high small businesses and home-based workers are
labour turnover, low commitment, or poor linked to large successful formal-sector comp-
health.56 anies and multinationals by sub-contracting
relations would imply that labour rights can be
Distributional issues extended to them without incurring the kind of
Free marketeers have argued that labour- enforcement difficulties or job losses which it is
market regulations and trade unions not only claimed would occur in genuinely independent
inhibit growth and employment, but have or informal-sector small businesses. In other
exacerbated income inequality. The World words, large retailers or manufactures should
Bank, for example, argued in its 1996 World be able to take responsibility for working
Development Report that, because labour market conditions along the sub-contracting chains and
regulations can only be successfully enforced in absorb the resulting increases in costs.58
the formal sector, they exacerbate the income The most radical campaigning groups
gap between privileged 'insiders' in the formal suggest that, if large numbers of workers
urban labour market, and the marginalised remain unprotected by labour standards, it is
'outsiders' in the unprotected, informal or rural not the standards which need to be changed but
sectors. In other words, the 'insiders' absorb an the economic development model itself, which
unfair share of the benefits of gains in is incapable of providing for large sections of
productivity. The World Bank has therefore society
promoted labour-market deregulation as a
central plank of policy. Policy recommendations
Some neo-Keynesians have accepted this Free-market policy solutions are aimed chiefly
view, but others, along with trade unions and at supply-side reforms to remove labour market
NGOs, have argued that it is the deregulation, and capital 'distortions'. The typical policy
rather than the regulation, of labour markets package involves a combination of fiscal discip-
which has exacerbated inequality, by weakening line to reduce inflation and cut the balance of

17
The international dimensions of work

payments deficit; privatisation and market deflationary bias caused by high interest-rates.
deregulation to reduce government ineffic- They also tend to advocate a greater role for
iencies and allow the market to allocate government, for example through job subsidies
resources; devaluation and the opening-up of to compensate low-paid workers, public invest-
the economy to international competition and ment to create employment, and a flexible
investment, to promote competitiveness. regulatory framework to protect workers'
Labour-market deregulation is also sometimes rights. The latter may entail some support for
combined with devaluation to 'correct' labour- the minimum wage and for pay ceilings.
market distortions and promote competitive- NGOs and trade unions tend to promote the
ness. Together these policies are supposed to strengthening of workers' organisations and
encourage a more efficient allocation of more effective national and international social
resources away from inefficient import-substi- regulation of companies to protect workers'
tuting and subsidised state enterprises, to new rights and living standards. However, there is
efficient domestic and export sectors. also a growing (albeit belated) recognition
International institutions, such as the World among trade unions, especially in the South, of
Bank, acknowledge that these policies may the need to increase representation of tradition-
create a negative effect on growth and employ- ally marginalised groups such as women, and
ment in the short term due to recession and 'flexible' workers. However, their continued
restructuring, but in the long term they are failure to do so in some instances has resulted in
expected to expand output and exports. For growing disillusionment and the establishment,
developing countries, the World Bank has by some of these groups, notably homeworkers,
argued that the additional benefit is that of their own organisations. (See Annexe Case
enhanced trade will promote increased special- Study 8 below for an account of the home-
isation in labour-intensive goods, thereby workers international campaign for a new ILO
increasing the demand for labour and reducing convention on homework.)
poverty and inequality.59 Northern environmentalists argue that new
As a result of mounting criticisms during the jobs should be created through the redis-
1980s about the devastating social costs of tribution of existingjobs, the job-creating effects
structural adjustment programmes (SAPs), the of recycling activities, and state financing of
World Bank began to promote the establish- socially useful jobs. They also argue for a shift of
ment of emergency employment programmes taxation from employment to natural resources,
and public works to help to compensate and for example, through the imposition of an
protect vulnerable workers during restruct- energy tax, in order to promote job creation.
uring. It has also recendy begun to stress the (The energy-tax proposal has now been taken
role of public investment in infrastructure, up by policy-makers and was put forward by the
training, and education to help countries to EU in 1993, when it argued for a reduction in
adapt to changing global markets and reduce social-security contributions to be financed by a
unemployment and inequality. It increasingly carbon tax.) They also put greater emphasis on
advocates active government intervention to the importance of promoting the social econ-
help workers to find jobs, especially in periods omy, or informal sector, as it is known in
of adjustment. The new emphasis on 'human developing countries. This may take the form of
capital' in promoting growth is leading to a co-operatives, family or community businesses,
convergence of thought with some neo- or local savings and credit schemes. An example
Keynesians. However, the core of free-market of economic initiatives in the informal economy
thinking remains intact among the inter- in the UK is the increasing number of Local
national financial institutions and many Exchange Trading Schemes (LETS).
governments.
Although neo-Keynesians see a role for
supply-side reforms their main solution to 2.2 The debate on international
unemployment is still expansionary policies policies
aimed at expanding the demand for labour.
While they also see investment in skills and Most of the debate in the UK still focuses on the
education as vital, they argue that this alone will national causes of unemployment and income
not increase the supply ofjobs. They stress the inequality. But the effect of the accelerated
need to regulate financial markets to lessen the expansion of trade and investment and finan-

18
Policy debates

cial flows on jobs has recently become a subject largely concentrated in OECD countries.
of intense international debate among Second, trade optimists argue that it is
economists, because of anxieties about the incorrect to suggest that any increase in output
possible impact on jobs in richer economies of in poorer countries must be at the expense of
the North. All agree that international trade richer ones, as is commonly assumed. Increased
and investment have an effect on employment exports give developing countries more money
and incomes in richer and poorer countries; the to spend on imports from developed countries
controversy is over the size of the effect and the (and vice versa). Any negative effect trade might
appropriate policy responses. The debate is have on the structure of employment is likely to
polarised between 'trade optimists' and 'trade be localised and temporary. Third World
pessimists'. The main point of contention with manufactured imports account for only around
respect to developed economies is whether 3 per cent of GDP in most industrial countries,
increased competition from low-wage countries, and the manufacturing sector now only
or technological change, is the more important accounts for a relatively small proportion of
determinant of rising unemployment and their GDP and employment (for example 18 per
income inequality. There is also a growing cent of GDP and 17 per cent of employment in
debate about the development impact of the US).61 The main competitive pressure on
foreign investment; not whether such flows can most developed countries comes from other
be beneficial, but whether there should be any developed countries.
significant restrictions on them. Such observations have led others to
reinvoke national factors as the main cause of
Trade 'optimists' rising unemployment and wage inequality in
The optimistic view is supported by the majority developed countries. Krugman has argued that
of governments and most international it is the labour-displacing effects of new
institutions. According to conventional theory, technology on less skilled workers that is
free trade will generate efficiency gains by contributing to unemployment and wage
encouraging countries to specialise in those inequality in the developed world.62 He also
goods in which they have comparative presents evidence to suggest that the demand
advantage relative to other countries. Although for skilled labour has decreased in many sectors,
there may be short-term transitional costs as not just in those industries facing wage
resources are relocated from import-competing competition from developing countries. A
industries to export industries, in the long run possible cause is that the composition of
output, and hence employment, will increase in domestic demand in richer countries has shifted
all countries. Moreover, free trade and foreign away from manufactured goods to services.
investment are also supposed to bring addition-
al gains, such as expanded economies of scale, Trade 'pessimists'
competitive spurs to firms, increased access to The trade pessimists comprise a small group of
capital and technology, and improved skills. academics and policy-makers, the vast
According to this view, the fear, prevalent in proportion of Southern and Northern NGOs,
the UK, that the Third World will take output international trade unions, and environment-
and jobs from richer countries, is misguided on alist groups, along with protectionist elements
several counts. First, because productivity is in the North. They are sceptical that trade and-
much higher in richer countries, unit labour investment liberalisation will necessarily lead to
costs vary much less than wage differentials greater efficiency and growth. The economic
alone would suggest, limiting the incentive for benefits from trade depend on whether or not
capital to transfer to cheap-labour sites. the products are being exported into fast-
Moreover, as capital costs, research and develop- expanding markets. Recent evidence suggests
ment, and marketing increase in importance, the that the terms of trade for manufacturing
competitive advantage of low wages is being exports from developing countries fell over the
eroded. This view is supported by a recent period 1970-1991.63 But even if trade usually
OECD study on trade and labour standards confers benefits, they argue that this does not
which shows that there is no long-term imply that total liberalisation is the optimal
competitive advantage to be gained from lower- policy choice. The evidence from the early
ing core labour standards,60 and reinforced by economic successes in East Asia suggests that the
the fact that trade and investment flows are still 'infant industry' argument for protection

19
The international dimensions of work

remains valid if governments have the skills to the unskilled, thereby increasing inequality.
implement it effectively. (See section 2.3 below The pessimistic view has recently found
for further discussion of this point.) support from Adrian Wood, a British academic,
Moreover, critics argue that the contribution who has argued that because Third World
of unregulated foreign investment to growth exports are concentrated in labour-intensive
may be more limited than often assumed. sectors, the impact on the labour market will be
Because of their superior capacity in relation to large. Furthermore, he contends that labour-
domestic competitors, multinationals may be saving technology is itself in large part induced
able to abuse their market power, for example by increased competition from low-wage
to extract monopoly profits. Transfer pricing producers. He concludes that trade with devel-
within multinational companies may allow oping countries reduced the demand for
companies to avoid paying taxation. The IMF unskilled workers in developed countries by 20
has recently acknowledged that an excessive per cent in the 30 years to 1990, with three-
inflow of foreign capital may cause the quarters of that decline taking place in the
exchange rate to appreciate, resulting in rising 1980s.64 Patrick Minford has recently argued
inflation, a loss of competitiveness, and balance that increasing competition from developing
of payments problems, as occurred in the recent country manufactures accounts for some 1 per
crisis in Mexico. Multinationals may also create cent per annum of the relative wage decline
an excessive outflow of foreign exchange experienced by OECD countries. He concludes
through foreign purchases or profit repat- that globalisation 'packs a huge punch which it
riation. They may also fail to reinvest locally, has taken massive Western technological and
create dynamic backward linkages, or transfer public spending to dilute..' and that '...trade's
skills and technology to the host country. general blessings have always been built on
Some of the stronger criticisms relate to the income redistribution'.65
negative distributional effects of trade and With respect to poor countries, standard
investment liberalisation. Many trade unions trade theory predicts that free trade will lead
and NGOs argue that foreign trade and them to specialise in products which use less-
investment mainly serves a narrow range of skilled labour, thereby increasing the incomes
established interests, and as such, fails to benefit of this group relative to skilled labour, and thus
the mass of unskilled workers globally. They reducing inequality. However, the trade
argue that it contributes to unemployment and pessimists argue that this effect will not be
growing inequality because it allows multi- realised because trade liberalisation favours
national companies to relocate production, or certain groups over others, and the job-creation
threaten to do so, to the cheapest production effects of free trade in the new export sectors are
sites, thereby leading to a global lowering of insufficient to compensate for the loss of
labour standards for unskilled workers. This is livelihoods in labour-intensive industries and
exacerbated by policy competition between among small-scale producers. A recent
governments to offer foreign investors the most UNCTAD report argues that in almost all devel-
favourable conditions. oping countries that have undertaken rapid
With regard to richer countries, the trade trade liberalisation, wage inequality has
pessimists believe that capital mobility and free increased, most often in the context of declining
trade will provoke a steady shift of manufact- industrial employment of unskilled workers
uring production to low-wage countries, and large absolute falls in their real wages, of the
decreasing employment and exacerbating order of 20-30 percent in some Latin American
inequality in the North. This view is backed up countries.66 Chile and Mexico are particularly
by standard (and quite ancient) trade theory notable examples.
which predicts a widening wage gap between Moreover, they argue that the relocation of
skilled and unskilled workers in developed foreign investment from richer to poorer
countries (a fact which is generally played down countries will fail to benefit the mass of workers
by the free-trade optimists for fear of exacer- in these countries due to its limited job-creating
bating protectionist tendencies). According to capacity in the face of massive and growing
this theory, trade liberalisation is supposed to labour reserves, and the effects of authoritarian
lead richer countries to concentrate on governments and international policy compet-
products using skilled labour, resulting in an ition in holding down wages and benefits.
increase in the incomes of this group relative to Multinationals may also introduce highly

20
Policy debates

capital-intensive technologies, limiting the means of lowering labour costs and making
number ofjobs created and raising the salaries exports more competitive in many developing
of skilled workers, thus increasing inequality. countries, under SAPs, and was also used in
The trade pessimists claim that, as well as some Northern countries, such as the UK.
widening inequalities, foreign trade and Despite these moves, labour markets have
investment may have other negative social, recently been singled out by the IMF and World
environmental, and cultural effects. Invest- Bank as an area in need of further deregula-
ments in extractive industries often contribute tion.68 Many governments in Latin America and
to serious environmental problems and disrupt Africa, as well as in the US and UK, have already
indigenous communities. The availability of taken steps in this direction. In contrast, the EU
foreign goods may shift demand in a socially until now has managed to retain a relatively
undesirable way and undermine local cultures. generous level of social provision through the
Social Chapter, but this is increasingly under
threat. Significantly, a recent meeting of
2.3 Policy implementation at the European Union Social Ministers called for
'reforms to social security systems that hinder
national level job creation'.69
The structural adjustment programmes (SAPs) In developing countries, import liberalisa-
imposed by the IMF and World Bank on tion, from which the North has much to gain in
indebted countries in exchange for new loans, the form of new markets, has been imple-
following the debt crisis of the early 1980s, are mented more vigorously than almost any other
the purest expression of free-market policies.67 aspect of SAPs apart from devaluation. Latin
SAPs generally involve fiscal stabilisation; America now has lower tariff protection than
privatisation; devaluation combined with any other developing region.70 Much of Sub-
liberalisation of trade and investment; and Saharan Africa has undergone a transformation
deregulation of financial, labour, and agricult- in trade policy of only marginally less
ural markets. They were initially introduced to impressive dimensions.71 Asian countries, too,
correct the inefficient policies which were especially the Philippines and Indonesia, have
believed to underlie the Third World debt been removing tariff and other barriers to trade
crisis, and were particularly prevalent in Africa, at an accelerating rate.
Latin America, and the Caribbean. More Trade liberalisation has increasingly been
recently the transition economies of Eastern accompanied by the lifting of government
Europe, the former Soviet Union, and parts of controls over foreign investment as governments
Asia have begun to adopt the neo-liberal recipe, compete to offer the most favourable environ-
also under the auspices of IMF and World Bank ment to foreign investors. The UNCTAD
programmes. In Africa there have been more Division on Transnational Corporations and
than 160 World Bank and IMF structural Investment have calculated that in 1992 there
adjustment programmes, covering more than were 43 countries which had passed 79 pieces of
30 countries, and over 100 in 18 countries in legislation in this regard, all of which were
Latin America and the Caribbean, since the liberalising measures. These measures have
early 1980s. To a lesser extent, the free-market significant implications for the distribution of
ideology has also influenced the policies of a employment within and between richer and-
growing number of richer countries as they poorer countries, as we will see below.
become subject to intensified competition. The growth record of countries undertaking
Unusually for richer countries, the UK was the more extreme forms of free-market policies
forced to adopt an IMF stabilisation pro- has not been auspicious. Per capita income fell
gramme in the 1970s. The UK subsequently drastically in Latin America and Africa during
went furthest among Northern countries in the 1980s. The renewed growth rates in Latin
implementing free-market policies, and helped America in the 1990s, which the IMF and World
to pioneer and promote them internationally Bank have attributed to the introduction of
from 1979 onwards. free-market policies, is still well below that of the
For all countries, intensified competition in pre-1980s period and that of the Asian tigers.
recent years has made labour markets a critical, Eastern European and Central Asian countries
although contested, area of reform. During the have also suffered dramatic declines in incomes
1980s devaluation was used extensively as a as part of the process of transition towards

21
The international dimensions of work

market economies. The IMF and World Bank counterparts to pick and choose policies, at least
argue that the decline would have been worse until recently. The specific mix and weight
without adjustment programmes, an assertion given to the curtailment or restraint of public
which it is impossible to prove; and that expenditure, cuts in social security and welfare
individual cases of poor performance are often programmes, reductions in progressive taxa-
due to non-compliance with the conditions of tion, abandoning of full employment policies,
their structural adjustment programmes. In curbing of trade unions, and increased privatis-
fact, although adherence has inevitably been ation, varies from country to country. Many
mixed, some of their own studies show that have retained protectionist policies with respect
compliance has been relatively high. The World to agricultural products and certain industrial
Bank's third review of adjustment lending, goods, whilst preaching the virtues of free trade
published in 1992, confirmed that 'adjustment to die rest of the world (which has been
lending has not significantly affected economic particularly damaging to developing countries).
growth and has contributed to a statistically Germany, for example, is widely considered
significant drop in investment ratios.' to be an example of a country which has
Nevertheless, some countries, in particular successfully secured strong economic growth
the US, Chile, and the UK, have been cited as based on a comparatively high level of govern-
successful examples of the free-market model. ment intervention. It has recendy come under
Chile has achieved impressive growth and pressure to increase competitiveness by remov-
saving rates in the 1990s (although these are not ing some of its strong labour regulations and
so impressive when compared with the pre- cutting public spending; but Richard Layard
reform period), and has had to struggle has attributed its recent economic problems to
through a long and difficult transition period. the fact that it is transferring 5 per cent of GDP
The US model, which has often been cited as an to the former communist east, radier than
alternative to the European model, has secured intrinsic problems with its model of develop-
high growth in employment without inflation, ment. Layard has argued more broadly that the
but productivity growth has been very low in European model remains successful both in
comparison with Europe and productivity per terms of growth, jobs, and social indusiveness.74
hour is now lower in the US.72 Some of the more successful developing
The growth record of the UK is at best mixed. country alternatives to the free-market recipe of
Although productivity has grown recendy it was the IMF and World Bank have been provided
still 10 to 20 per cent less than in France and by the East Asian economies such as South
Germany, 30 per cent less than in Japan, and 60 Korea and Taiwan. The World Bank claimed in
per cent less than in the USA in the early its widely quoted report, The East Asian Miracle,
1990s.73 The UK's investment record is one of that the experience of the East Asian economies
the worst among industrialised countries. Its since the 1960s offered supporting evidence for
industrial base has shrunk more rapidly, with the view that trade liberalisation contributes to
the manufacturing sector in persistent current- reduced wage inequality in developing
account deficit, and some parts of its service countries.75 However, critics argue that in fact
sector are lagging behind France and Germany the significant lesson from these economies is
in terms of efficiency. The UK has slipped to that intelligent state intervention can play a
nineteenth place in the International Institute crucial role in achieving sustained export
for Management Development's World success, greater employment, and poverty
Competitive league table. Each of these countries reduction. In contrast to the policies to protect
have suffered from significandy growing inefficient, inward-looking, capital-intensive
inequality, job insecurity, and social exclusion, industries pursued by many Latin American,
issues which are examined further in sections African, and Eastern European countries,
3.3 and 3.4. intervention in these Asian economies was
The recent collapse of the communist selective and temporary, aimed at developing
economies eliminated the only valid alternative long-term comparative advantage, after which
system to capitalism. There are of course time companies were expected to operate in
different models of free-market policies, world markets. It included regulation of foreign
especially among the richer Nordiern coun- investment, selective trade protection, tax
tries, which are generally in a stronger incentives and lower import-dudes, and export
economic position than their poorer Southern subsidies. According to the same World Bank

22
Policy debates

report, the most important forms of state not be able to insist, as a condition of market
intervention which underpinned that growth access, that foreign companies meet minimum
could not be pursued today, because they would requirements for using local materials in the
be inconsistent with obligations under the production process. Nor will they be able to
World Trade Organisation treaties. oblige these firms to export a specific share of
Some East Asian countries also demonstrate their products, or limit their imports of
the importance of investment in education and component parts. The Agreement on Trade in
an even distribution of income and wealth in Services (GATS) prevents national govern-
promoting employment, and reducing poverty ments from restricting the entry of firms into
and inequality. South Korea and Malaysia sectors such as banking, insurance, and
devoted 22 and 18 per cent respectively of their advertising. Measures aimed at regulating the
public expenditure to education, compared activities of companies in terms of social and
with 12 per cent in the UK. As a percentage of environmental standards, transfer pricing,
GDP, government spending on education in restrictive business practices, and excessive
Britain has declined from 5.4 per cent in 1978- profit repatriation are conspicuous by their
89 to 4.8 per cent in 1990-1991.76 Early and far- absence.
reaching land-reform programmes in Taiwan More recently still, the OECD, backed by
and Korea were also important in extending pressure from the European Commission, the
economic participation. US, and several other industrialised countries,
has pressed for a more extensive free-standing
Multilateral Agreement on Investment (MAI),
2.4 Policy implementation at the to be open to both OECD members and non-
international level members alike, with an estimated completion
date of April 1998. The agreement would
The removal of government controls over trade reduce discriminatory government regulation
and investment, and other market reforms, are of foreign investors, provide greater security
being consolidated and extended in legally and protection for investments, and set up a
binding regional and international free-trade settlement mechanism for disputes. The MAI
agreements, such as GATT (the General would greatly increase the rights of TNCs,
Agreement on Tariffs and Trade, which is now backed by international law, with no
administered by the WTO77), NAFTA (North corresponding transfer of social and environ-
American Free Trade Agreement), and the mental responsibilities. If implemented it will
Maastricht Treaty in the European Union (EU). go far beyond than investment rules in the
Far from guaranteeing a 'level playing field', existing TRIMs agreement of GATT and
these global trade agreements reflect the remove many government tools for regulating
dominance of Northern countries and TNCs. foreign investment.78 (The implications for the
The most recent Uruguay Round of GATT UK are examined in Section 3.)
opened up new sectors to trade, such as banking In direct contradiction to these liberalising
and insurance, where Northern TNCs have a measures, the Uruguay Round extended to 20
comparative advantage; made further progress years the standard period for patent protection
in liberalising agricultural markets, thereby for intellectual property, where Northern
restricting the ability of Southern governments TNCs have a competitive advantage. It also
to protect their food systems against cheap failed to promote the free movement of labour,
imports dumped by industrialised countries; which would help to equalise wages globally;
and limited the rights of governments to control nor did it tackle the massive growth in the use of
foreign investment in the social interest. The subsidies by rich Northern countries to attract
WTO has also recently successfully concluded a foreign investment, which represents an unfair
deal to liberalise telecommunications services advantage over poorer countries, which cannot
and information technology products, and is afford to offer such high subsidies.
now pushing to liberalise trade in financial The Uruguay Round also failed to fully
services. address the array of Northern discriminatory
The Agreement on Trade Related Measures practices still facing developing countries'
(TRIMs) in the Uruguay Round of GATT products. For example, although the agreement
contains significant measures to loosen controls on agriculture involved reductions in direct
on investment. For example, governments will export subsidies, the OECD countries continue

23
The international dimensions of work

to spend the equivalent of around $175bn protect their domestic textile and clothing
annually subsidising agricultural production industries from Third World imports by impos-
and farm incomes, equivalent to half the value of ing bilateral quotas, will not be fully phased out
the OECD's agricultural output.79 This has dire until 2005. Southern countries depend heavily
consequences for small-scale producers in the on their textile industries for foreign exchange
South. Similarly, the Multi-Fibre Agreement and jobs.
(MFA), which allows industrialised countries to

24
Section 3: Some implications for the UK

3.1 Globalisation and the UK growing convergence between the main


political parties in the UK in their acceptance of
The UK has always been a very open economy. free-market policies. However, even within the
According to a government White Paper on economic parameters set by globalisation, there
competitiveness by the Department of Trade is still a range, albeit a narrowing one, of differ-
and Industry: 'more than most countries, the ent policy options. The previous Conservative
living standards of our people and our Government chose to meet the challenge of
industry's competitiveness depend on the intensified global competition by pursuing a
ability to trade and invest freely... The UK is the strategy of cheap and flexible labour.
world's fifth-largest exporter and importer of Indeed, according to the OECD, the UK is
both goods and services... Exports are among the countries which have gone furthest
equivalent to more than one-quarter of GDP in pursuing neo-liberal policies and dereg-
and a major source of employment.'80 Although ulating labour markets. A 1991 Department of
imports from developing and transition Trade and Industry booklet, Britain the Preferred
countries are increasing in importance, the bulk Location, sums up the situation:
of UK trade is still with other developed
countries. The EU, for example, accounts for The overall cost of labour in Britain is significantly
some 60 per cent of UK visible exports. below that of other major European industrial
The UK also has the highest ratio of inward countries...There is no legal requirement for a
and outward investment to GDP of any leading company in Britain to recognise a union. Many
economy. It also has a greater stock of inward companies especially foreign-owned ones do not
foreign investment than any other major do so. Throughout Britain as a whole the number and
industrial nation.81 However, the outflows of percentage of employees who are members of trade
direct investment are much more significant unions has been falling since 1979. The balance of
than the inflows in contributing to GDP, power in industrial relations has shifted significantly
suggesting that the UK has much to gain from since 1979. Effective legal action can be taken
the liberalisation of other countries. against any union which seeks to organise unlawful
London boasts the second highest concen- industrial action; organisation of industrial action
tration of investment portfolios of pension will always be unlawful if, for example, the industrial
funds after Tokyo, many of which are managed action is 'secondary' (or 'sympathy') action taken by
overseas. The City of London also acts as a workers whose employer is not party to the dispute to
clearing house for vast amounts of financial which the 'primary' action relates; or if it is not wholly
capital. The UK economy is at one and the same or mainly about employment matters; or if it consists of
time a relatively powerful economic force in the picketing away from the pickets' own place of work;
global economy, and yet highly susceptible to legal proceedings can be brought to restrain a union
international economic trends. Globalisation from organising industrial action it if does so without
therefore offers both opportunities and threats. first obtaining majority support from a properly
The implications for government policy and the conducted secret ballot of its members.
labour market are examined in the following
sections. The international experience outlined in this
document suggests that a cheap labour strategy
can not lay the basis for long-term sustainable
3.2 National policies economic expansion. A more appropriate strat-
egy for a rich and developed nation like the UK
The restrictions that globalisation is exerting on would be to develop policies aimed at prom-
the power of governments to formulate and oting higher-value-added production based on
implement economic policy is illustrated by the new technologies and production techniques.

25
The international dimensions of work

Moreover, as argued below, even within the the ILO, and which has in turn contributed to
constraints imposed by globalisation, there is deteriorating job quality, and growing income
much that a UK government could do to inequality.
promote greater equity and social cohesion. In terms of the direct costs or benefits of
foreign investment, much depends on the
The effectiveness of the UK's cheap nature and quality of the investment. Foreign
labour strategy investment is generally seen as having brought
It is claimed that the UK's cheap and flexible new technologies, skills and management
labour strategy has helped to attract a sub- practices to the UK: workers employed in
stantial amount of foreign investment. The UK foreign companies are also often assumed to be
is the world's second largest outward investor, better paid and produce more per capita than
with a stock of 214bn of overseas investments the national average. But its actual impact
in 1995, and the value of overseas assets equal to depends on whether the investment has been
almost one-third of annual GDP. After the US, attracted by low wages, or high skills; whether it
the UK is the world's largest recipient of foreign is selling to the UK or European market;
direct investment and also attracts about one- whether it sources locally or overseas; whether it
third of all inward investment into the EU. constitutes a take-over, greenfield investment,
Foreign investment in Britain accounts for 24 or join venture; the management culture of the
per cent of net output, 32 per cent of net capital company, etc. So for example, the growing
expenditure, and 40 per cent of exports.82 In presence of South Korean companies in regions
1995 the UK's stock of inward investment stood such as Yorkshire and Humberside, Wales, and
at 160bn. There is also some evidence which Northern Ireland, has been in some part
suggests that these flows have been associated attributable to the low wages and high subsidies
with improved productivity due to the intro- on offer. While foreign investment has created
duction of new production and management around 160,000 jobs in Wales since 1983, the
ideas.83 strategy has been criticised for focusing on a few
However, the UK's cheap and flexible labour low-skill and low-wage industries such as the
force is not necessarily the main attraction for manufacture of television sets and cars. Jobs in
foreign investment. The UK's easy access to EU management, finance, and research and devel-
markets, its good infrastructure, relatively opment are frequendy maintained at die
skilled workforce, and high financial incentives foreign headquarters or filled by outsiders.
are also important. Moreover, the net contribu- R&D in Wales is reportedly one-third of the UK
tion of foreign investment to the economy is not average and declining.86
as significant as sometimes implied. Three times Over-reliance on foreign investment may
more investment flows out of the UK as flows also exacerbate job insecurity. Around 35 per
into it, leaving a gap of 12bn in 1994.84 A report cent of manufacturing industry in Wales is
by the Labour Party showed that 60 per cent of owned by foreign investors, who could leave
inflow of foreign capital in 1996 involved take- without warning. The recent financial crisis in
overs of British companies rather than net Asia has heightened fears about the potential
additions to investment.85 mobility of foreign investment.
Nevertheless, foreign investment has made The price of attracting or keeping foreign
an important contribution to job creation in the investment also includes the large sums spent
UK. According to the DTI's Invest in Britain on incentives such as tax breaks and financial
Bureau, recorded foreign investments have incentives. The UK has one of the lowest main
directly created or safeguarded 770,000 jobs corporate taxes on profits in the EU (33 per
since 1979. This represents 3 per cent of the UK cent). The government and regional develop-
workforce, and 18 percent of all manufacturing ment authorities also spend large sums on
jobs. But, as section 4 argues, the benefit of the financial subsidies, particularly in the Assisted
jobs created by foreign investment needs to be Regions. In 1994-5, for example, $89m was
set against the cost of attracting it. spent attracting Samsung to north-east England
One indirect cost of attracting inward and around $107m attracting Jaguar to
investment to the UK has been a generalised Birmingham, which worked out at $29,675 and
lowering of labour standards, which in some $107,400 per job respectively.87 Competitive
instances has been inconsistent with inter- bidding between the regions for FDI is
national labour law and standards oudined by increasing, despite efforts by the DTI's Industry

26
Some implications

Development Unit to adjudicate disputed cases; industry, and the large workforce, will also
and tensions are likely to increase with temporarily benefit from the prolonged phase-
devolution in Scotland and Wales. out of the MFA, although many argue that this
The funds used to attract FDI could instead delays the inevitable phase-out at the expense of
be used to stimulate home-grown investment developing countries.
and employment or pay for public services. By There are also significant costs. Because the
way of comparison, a recent survey for the UK has already gone a long way in opening its
Rowntree Foundation of different welfare-to- economy to foreign trade and investment89 it
work programmes across the UK indicated that would seem as if the new rules will not have
the majority fell in the cost bracket of from much affect on current policies. However, the
3,000-6,000 or 6,000- 10,000 per additional new agreements will significandy reduce the
person in work. ability of governments to regulate trade and
Another possible cost of the UK's dependence investment in the public interest which in turn
on foreign investment is growing social and has important implications for jobs.
cultural tensions. The Equal Opportunities The GATT rules on tariffs and quotas will
Commission and the Commission for Racial make it increasingly difficult for the UK to
Equality have recently had to prepare guidelines restrict imports as it currendy does on health or
on employment for Japanese companies safety grounds, or because of the abuse of
following complaints by their UK employees, human rights, or the unsustainable exploitation
who now number more than 750,000. The of natural resources. The WTO recently ruled,
guidelines advise them not to treat local for example, that the EU ban imposed on US
employees differently from Japanese ones, to beef imports produced with growth-hormone
avoid direct discrimination such as refusing ajob implants is illegal under GATT rules. The new
to non-Japanese staff or dismissing only non- trade rules may also cause other social and
Japanese staff in cost-cutting exercises, not to ask environmental policies to come under attack.
for 'only fair-haired women for interview for a The US argued that the provision of free dental
secretarial job', to ensure that all important care in some of Canada's provinces constituted
company information is available in the English an unfair trade practice under NAFTA rules,
language, and not to exclude local staff from because it subsidised the cost of labour.
meetings because they cannot speak Japanese.88 Voluntary organisations may also find their
(There are parallels here with the behaviour of actions restricted. The EU recendy direatened
UK and other OECD companies operating to take South Korea to the WTO because a
overseas.) 'frugality campaign' launched by a group of
local NGOs had caused a reduction in luxury
imports from the EU and was dierefore seen as
3.3 International policies an unfair trading practice. This raises import-
ant questions about the autonomy of NGOs.
The previous UK government was at the The MAI currendy under negotiation by the
forefront of efforts to promote trade and OECD goes even further than the GATT
investment liberalisation world-wide within the investment measures. Critics say that the deal
EU, the WTO (mediated through the EU), the will legalise an unprecedented transfer of rights
IMF and World Bank, and in the G7 countries. from citizens and governments to corporations,-
It has also been a strong supporter of structural without a corresponding transfer of social or
adjustment policies, as well as measures under environmental obligations. Unless it is substant-
GATT and the OECD Multilateral Agreement ively reformed, the proposed MAI would
on Investment (MAI), and has consistendy seriously restrict die ability of governments to
opposed moves for the international social regulate foreign investment in the public
regulation of trade and investment, including interest. It would give corporations the right to
the proposal for a Social Clause at the WTO and sue governments for breaches of the MAI rules
the Social Chapter in the EU (see below). The but not provide citizens or governments with a
new international rules open up important new corresponding right to sue investors. It would
investment and export opportunities to UK prevent the screening-out of undesirable for-
companies, especially in services. They also eign investment, or any restrictions on foreign
create a much more predictable trading and ownership of sensitive national assets, unless
investment environment. The UK's clothing exempted from the agreement. (The UK

27
The international dimensions of work

government is currently seeking an exemption Although the UK is already a relatively


from these rules to minimise foreign ownership deregulated economy, the negative effects of
of fishing fleets to help to conserve depleted the MAI may become increasingly pronounced
fishing stocks.) It may prevent governments as dependency on foreign investment increases.
insisting on joint ventures, technology transfer, In Wales, for example, because of the failure of
employment of local personnel, or domestic inward investment to close the poverty gap with
content of products, designed to maximise England and Scotland, there is a growing
employment creation and the transfer of debate about the need to put stronger emphasis
technology or skills. It may also prevent govern- on helping Welsh enterprises to grow, but that
ments giving special treatment to infant may be prohibited by the MAI. More widely, if
industries. The freeing-up of capital which the agreed, the MAI will serve to establish the dis-
MAI entails would also exacerbate downward credited free-market policies of the last decade,
pressure on labour and environmental stand- which are associated with growing poverty and
ards and a mushrooming offinancialincentives. inequality.

28
Section 4: The social impact of free-market policies
on employment and living standards

In this section the experience of the UK is over the last 15 years free-market policies have
compared to that of other countries, in partic- in many instances exacerbated rather than
ular the US and Chile, which are also alleviated the economic and social problems
considered to be successful examples of the free- which they set out to cure.
market model. While there was dearly scope to reform
protectionist policies, it did not follow that the
market, left to itself, would necessarily improve
4.1 The regressive role of output, jobs, and welfare. Moreover, the free-
free-market policies market policies which were promoted by the
IMF and World Bank were unnecessarily
Globalisation is neither inherently bad or good regressive. They included an emphasis on
for employment and living standards; it can cutting government expenditure rather than
either enhance wealth and jobs, or undermine switching expenditure or increasing tax
them. Whether it has a positive or negative revenue as a means of meeting fiscal targets;
impact depends on many factors, including the raising regressive forms of taxation such as sales
national and international control of produc- tax while reducing progressive forms such as
tion and marketing, and the terms on which income tax and corporate taxes; privatisation
countries trade and receive foreign investment, without effective new forms of regulation; the
among other things. dismantling of national redistributive mechan-
The evidence outlined above shows that isms without putting new forms of protection in
while globalisation has generated considerable their place; too great a reliance on foreign trade
benefits for some, it has been accompanied by and investment; and an emphasis on achieving
growing un- and under-employment and competitiveness through devaluation and
deteriorating conditions for a large group of labour-market deregulation rather than by
workers. The IMF and World Bank have increased productivity.
argued that this situation is the inevitable short- There are striking parallels between this
term cost of adjustment from the previous set of approach and the policies adopted by the UK in
inefficient, interventionist policies to more the 1980s. The Invest in Britain Bureau boasts
efficient free-market ones, and that the situation that the UK has one of the lowest main
would have been worse without the reforms. In corporate tax rates on profit in the European
contrast, Oxfam believes that the gross inequal- Union, low personal taxation rates, generous
ities which characterise national and inter- capital allowances for business, no exchange
national markets, and the exclusionary nature controls or any other restrictions on profits sent
of the free-market policies introduced during overseas, liberal and undemanding labour
the 1980s, are the causes of the problems. regulations, labour costs significantly below
This is not to deny that sound economic other European countries, 24-hour, seven-days-
policies are needed in countries facing chronic a-week production standards in many indus-
trade and financial difficulties. There is also an tries, free movement of goods, services, capital,
important role for the market, and a pressing and people within Europe.
need to make governments more efficient and The following section draws on Oxfam's
accountable. It is also true that an overemphasis programme experience and research in the UK
on social issues at the expense of economic and overseas, as well as wider evidence, to
considerations can generate inefficiencies. But examine the combined impact of national and
Oxfam's participative research programme on international policies on the level, pattern, and
the social impact of structural adjustment conditions of employment in both richer and
policies in developing countries indicates that poorer countries.

29
The international dimensions of work

4.2 Job losses imports as they neglect the effects of trade on


productivity increases. It is estimated that the
One of the main factors contributing to rising phase-out of the MFA will accelerate job losses
un-and under-employment in developed and in the UK clothing industry, and another
developing countries has been the widespread 50,000 jobs could move overseas by the end of
adoption of deflationary monetary policies by the next decade.
governments during the 1980s, entailing high While retailers such as British Home Stores
interest-rates, restrictive credit policies, and and C&A have sourced most of their clothes
cuts in public-sector employment. Another from overseas for some time, 77 per cent of the
important factor, especially for developing garments sold by Marks and Spencer are
countries, has been their overly rapid and reportedly made here. But the stated intention
unselective integration into highly unequal of Marks and Spencer's main suppliers is to shift
global markets, generally encouraged by the production overseas.
IMF and World Bank. Contrary to common In other sectors, leading German chemical
perception, job loss through company reloca- firms such as Bayer have transferred industrial
tion is increasingly affecting developing as well plastics plants to China. In Germany, over half
as developed countries. of all companies are reported to be planning a
transfer of production to other countries.93 Levi
Developed countries is cutting manufacturing jobs by one-third in
Northern countries are generally better North America because of competition from
equipped than developing countries to compete rivals selling cheap jeans made in low-wage
in world markets because of their control of new Asian countries.94 There are signs that job losses
technology, higher levels of skills, and better in developed countries due to relocation are not
infrastructure. However, they are also exper- just restricted to the declining manufacturing
iencing substantial job losses as a result of trade sector. The skill-intensive and service sectors in
and investment liberalisation. While many of the richer countries are also beginning to feel the
these losses are often dismissed because they effects of global competition. Many typically
occur among dead-end jobs in declining 'female' jobs are being created in developing
industries, such industries were often import- countries, as data-processing, tele-communica-
ant employers and their demise can have tions, and financial services are moved from
devastating social effects on communities. industrialised countries. Computer giants such
Oxfam's Clothes Campaign has examined as Texas Instruments and IBM now maintain
the effects of foreign competition on the UK software companies in Bangalore; international
clothes industry, a labour-intensive and highly airlines, banks, and insurance companies now
mobile industry, and one particularly affected employ armies of data-processors in countries
by foreign competition because labour costs such as the Dominican Republic, India, and
account for about one-third of total production Thailand, all linked by computer via satellites.
costs. Around 400,000 jobs have been lost in the In the US even the very lowest estimates
UK clothing industry since 1979, far more than indicate that there has been a net loss of 1.4
in other European countries.90 But with million jobs due to the excess of imports over
another 400,000 employees left, it still remains exports.95 The Economist magazine has predicted
one of the top six employers.91 Despite the that globalisation will wipe out millions ofjobs,
restrictions imposed by the MFA, clothing and the effect on richer economies is likely to
imports from developing countries account for increase as manufacturing exports increase
54 per cent of all imports, and come mainly from newly emerging market economies such as
from the NICs such as Hong Kong, South China, Eastern Europe, and the former Soviet
Korea, Thailand, and more recendy, China and Union.96
Eastern Europe. Analysts have estimated that However, the effects of foreign competition
between 17 per cent and 30 per cent of the on richer countries have arguably been dwarfed
industry's decline up until the early 1990s was by the negative effects of deflationary macro-
due to imports, of which an estimated 9 per cent economic policies. Many countries abandoned
was due to imports from developing countries. full employment as a policy priority in the early
The rest was due to productivity increases and 1970s; restrictive monetary policy and financial
changes in domestic demand.92 However, these deregulation have pushed up interest rates to
figures seriously underestimate the impact of historically high levels and increased their

30
The social impact

volatility. In the UK, real interest rates for the IMF/World Bank programme, coupled with the
period 1981-1992 were double the average for imposition of severely deflationary policies
the previous 20 years.97 These factors have been entailing high interest-rates and a severe
associated with a sharp decline in investment curtailment of credit, resulted in a 14 per cent
and therefore employment. In Europe, capital decline in industrial production during the
stock has grown at only 3 per cent a year since period 1990-1993.103 This was combined with
the early 1980s: half the level of the 1960s.98 In severe cuts in public employment to meet tight
order to meet tight fiscal targets, cuts have been fiscal targets, and job losses through privatis-
made in public-sector investment and employ- ation. Official unemployment jumped from 11
ment, the main source of new jobs in many per cent to 22 per cent between 1990 and
European countries, which has also contributed 1993.104 Under-employment rose from 33 per
to rising unemployment. cent in 1988 to 54 per cent in 1994.105
In Zambia, where Oxfam also supports local
Developing countries groups, fragile industries have been damaged
Contrary to common perception, which by punitive interest rates and a surge in
assumes that company relocation arising from competition from cheap imports. More than
the increased mobility of capital mainly three-quarters of Zambia's textile factories have
threatens jobs in richer countries, there are closed in the last few years, reducing textile
signs that it is also beginning to affect jobs in towns such as Livingstone to centres of mass
developing countries. Rising wage costs in the unemployment.
first generation of the newly-industrialising The impact of trade liberalisation is not just
countries (NICs) have prompted the transfer of confined to workers in manufacturing industries
investment to South-East Asia, where wage costs in developing countries: its effect on the millions
are one-tenth of those in South Korea and of small informal and agricultural producers in
Taiwan." Vietnam, China, and Indonesia have these countries may be far more drastic. Small-
diverted foreign investment from the second scale farmers in developing countries are often
generation of NICs. forced to compete, without adequate access to
More surprisingly, South Korea has lost jobs credit or technical assistance, in an international
to South Wales because of lower wages an market dominated by cheap, heavily subsidised
average of 8,000-10,000 in South Wales US and EU exports of staples such as maize and
compared to 10,000- 12,000 in South wheat. The result is depressed prices and the loss
Korea.100 The South Korean government of markets to unfair competition from rising
announced plans to introduce labour reform in imports, reduced rural employment and
order to weaken job-security rights, in response incomes, and growing displacement from the
to what the South Korean president described land, thereby contributing to the already massive
as 'cut-throat global competition'.101 In the labour reserves of un- and under-employed.106
Dominican Republic, workers in garment Cheap imports are also threatening the liveli-
factories in the Free Trade Zones are under hoods of many small producers and entrepren-
constant threat that companies will relocate to eurs in cottage industries. In countries such as
Haiti, where wages are much lower, or to India and Bangladesh, more than 90 per cent of
Mexico, which has been granted preferential the economically active women operate in the
trade-access to US markets under NAFTA. In informal sector. Millions of these women, for
1996 an estimated 75,000 people lost their jobs example, in industries like hand-loom weaving,
in the FTZs in the Dominican Republic. are being pushed out of the informal economy.107
Oxfam has researched and documented the
negative effects of rapid trade liberalisation in
some developing countries implementing struc- 4.3 Job creation
tural adjustment programmes. When
combined with deflationary high-interest-rate According to free-market theory, the jobs lost
policies, the effect on jobs in potentially during the adjustment period are supposed to
competitive labour-intensive industries can be be replaced by growth in new efficient, export-
disastrous.102 Oxfam supports rural producers orientated industries in the longer term.
and workers in Nicaragua, which is one of the Whether sufficient jobs are created depends in
world's poorest and most indebted countries. the first instance on whether countries can
The rapid elimination of tariffs under a 1990 compete, attract foreign investment, and

31
The international dimensions of work

expand their economies. As we have seen, the industry and much of the high-tech industry in
distribution of trade and foreign investment is general, although overall job creation has been
very uneven, and almost completely bypasses impressive, it has been minimal in these sectors.
many countries. The outlook for a significant The combined grand total of employees in
minority of the world's population in the least software industries in the US, including
developed countries is bleak. A recent United Microsoft and Intel, is a mere 128,000 employ-
Nations report states that 'the economic ees, one-third fewer than those employed by a
situation for the 48 least developed countries single car-manufacturer such as Ford in the
was worse than in the 1980s, which was United States. This is despite their massive
regarded as a lost decade for these countries.'108 value on Wall Street. Microsoft and Intel alone
The creation of new jobs also depends on the are worth much more than General Motors, still
employment intensity of growth, which the world's largest manufacturer.112
determines whether sufficient new jobs will be According to the Financial Times, the strategic
generated to keep pace with population growth, questions facing banks in the UK is not whether
and replace those lost during restructuring. on-line banking is going to happen but when;
The 1996 ILO World Employment Report finds and how quickly they can wind down their
that there has been no generalised decline in the physical networks. This will cause thousands of
employment intensity of economic growth, in redundancies in a sector which is supposed to be
spite of rising unemployment. Moreover, it generating jobs.113
argues that predictions of jobless growth ignore
compensatory job-creation elsewhere in the Labour-intensive exports as a source of
economy. However, in contradiction to this new jobs in developing countries
view, a growing body of opinion predicts that we The challenge to create jobs is most extreme in
are indeed entering a new phase of jobless developing countries as a result of the massive
growth. While the more extreme predictions loss of traditional livelihoods, the vast and
are overstated, adequate job-creation is unlikely growing size of labour reserves, unequal world
to occur if left to free-market forces. The markets, and the limited job-creating capacity of
examples below suggest the need for active foreign investment, estimated to be responsible
government intervention to help to protect and for 12 million jobs in these countries.
create jobs. Free-trade theory predicts that in developing
countries trade liberalisation will provoke an
The service sector as a source of new jobs expansion of labour-intensive manufacturing
in developed countries industries, as occurred in the case of the Asian
According to the trade optimists, free trade will tigers. However, the Latin America experience
provoke richer countries to switch production suggests that this is not automatically translated
away from manufacturing industries to high- into new jobs, despite renewed growth in the
skill-intensive industries and the service sector. 1990s and some mixed success with expanding
Most of the new job growth in the OECD exports. According to the UN Economic
countries during the 1980s was in services, and Commission for Latin America, renewed growth
in the UK and US more than 70 per cent of jobs in Latin America has so far failed to generate
are now in services.109 However, the 'end of adequate new jobs to replace those lost during
work' theorists suggest that the potential for job the restructuring.114 One reason is that South
creation in the service sector is limited because America does not have comparative advantage
of the job-displacing effects of new technology. in labour-intensive manufacturing as the Asian
Drawing on evidence from the US, Jeremy tigers did, but in the production and processing
Rifkind has argued that 'human labour is being of agricultural and mineral products from the
systematically eliminated from the economic region's abundant natural resources, which is
process.'110 not particularly labour-intensive. As a result,
For example, whereas 422 additional jobs are while export volumes rose steadily in the 1980s
created downstream for every 100 jobs created in Latin America, this generated little employ-
in manufacturing, only 147 are created for ment.115 Africa has similar problems, com-
every 100 jobs in personal and business services, pounded by the fact that it does not have the
and 94 for every 100 jobs in the retail trade necessary skills to process the primary products
sector.111 This means that, even in the US, the to world standards and thus has to export them
homeland of most of the world's new software unprocessed.
The social impact

4.4 Changing employment for young women workers is a deliberate part of


patterns and conditions their anti-union policy, as women's cultural
conditioning is believed to make them less likely
A growing body of evidence suggests that in a to rebel. Workers are often forced to work very
number of countries, where new jobs are long hours, and working conditions can be
created in the modern formal sector, even poor, with lack of adequate child-care facilities a
though they may offer higher incomes than the frequently cited problem. Intimidation and
alternatives in the rural or informal sector, an abuse by employers also occurs. Environmental
increasing proportion are insecure and of poor standards may also be very poor.
quality. One of the reasons for this is that many There are seven Free Zones operating in the
companies and governments are increasingly UK which allow imported goods to be held
attempting to meet the challenge of intensified without payment of Customs duty or import
international competition by reducing labour VAT, and quantitative restrictions are also
costs (despite growing evidence that this is not suspended. They also offer 100 per cent write-
an effective route to long-term economic down capital allowances for Corporation Tax
expansion). Some of the easiest ways for purposes on investment in industrial and
companies to reduce costs, besides downsizing, commercial buildings, full exemption from
are relocating production to countries with local property taxes on industrial and com-
cheaper labour forces; repressing trade unions; mercial property, and simplified planning
ignoring labour legislation; and using 'flexible' procedures.
workers who are often not eligible for full
employment rights. These moves are increas- Labour market deregulation and flexible
ingly being 'legalised' by governments as they labour practices
compete to offer foreign investors the most As we have seen, in recent years many countries
favourable conditions. Such measures contri- have come under pressure to deregulate their
bute to the growth in the number of the working labour markets and dismantle trade unions.
poor and in wage inequality. The creation of This has meant that labour practices which were
poor quality, flexible jobs has also become an previously restricted to the FTZs are being
effective way for governments to transform generalised across whole economies. The aim
open unemployment into disguised unem- has been to facilitate the development of flexible
ployment. labour markets, which are seen as an important
way of helping companies to maintain compet-
Free trade zones itiveness, and cut labour costs in the face of
An increasingly common method for govern- intensified international competition and
ments to attract foreign capital is through the rapidly changing patterns of demand.
creation of free trade zones (FTZs), which are Although governments do not yet system-
now found in more than 60 countries, especially atically collect data on non-standard forms of
in South and South-East Asia and Central work, and although the issue is controversial,
America. The number of people working in information from surveys suggests that an
these zones increased from around 50,000 in increasing number of companies, in developed
1970 to more than four million in 1996. Around and developing countries alike, operate with a
80 per cent of the workforce in these zones are dwindling core of highly-skilled male workers,
women, working mainly in the textile, clothing, and a growing number of female flexible
toy, and electronics sectors.116 workers in insecure poorly-paid jobs. Flexible
Free trade zones offer foreign companies employment practices may include sub-
special tax breaks and freedom to invest without contracting from small businesses, sweatshops
government interference. Although wages may or homeworkers; or the use of casual labour and
be higher in these zones than in other jobs, they temporary contracts.
often do not adequately cover subsistence
needs. Moreover, labour rights, such as the Self-employment
right to join a union, are often denied. Small businesses are an increasingly important
According to an ICFTU report, Worlds Apart, source of new jobs in both the developed and
anti-union repression is an integral part of developing world. This growth often raises
FTZs. Potential investors see the absence of concerns about the emergence of parallel econ-
unions as an advantage, and their preference omies: a modern formal sector and an informal
The international dimensions of work

sector made up of small independent of a number of countries and in the construction


enterprises operating separately from each industry, and is growing in the services
other. However, while many small businesses industry.121
are genuinely independent, a growing number In an attempt to cut costs, governments have
are linked to the formal sector through sub- also begun to contract out public services to
contracting relations. Unfortunately, these small businesses. In the UK, for example, the
relations are generally not reflected in national introduction of Compulsory Competitive
statistics. Tendering (CCT) has extended sub-contracting
In the OECD, non-farm self-employment in to refuse collection, catering, cleaning, building
13 countries grew faster than overall maintenance, and even highly skilled occupa-
employment growth in the 1980s.117 The tions such as accountancy, legal and architect-
percentage of the manufacturing workforce ural work, and administration. It is estimated
employed in small enterprises ranges from 15 that the value of contracts won by the private
per cent of manufacturing employment in sector is as much as 356m, with a profit of
Germany, 24 per cent in France to 34 per cent in 92m per year.122
Italy. Small businesses employ an estimated 10 Household surveys from around the world
million workers in the UK. The percentage of show an increasing number of homeworkers
the workforce in small and medium-sized sub-contracted by large companies, in Asia,
enterprises in Asia varies from 32 per cent in the Europe, Latin America, parts of Africa, North
Philippines to 84 per cent in China. In Latin America, and Australia.123 In the UK, the
America, small enterprises are responsible for Quarterly Labour Force Survey indicates that
between 36 per cent (Colombia) to 79 per cent homeworking tripled between 1981 to 1994. It
(Brazil) of non-agricultural employment. In is estimated that there are some one million
Africa, an estimated 61 per cent of the labour homeworkers, two-thirds of whom are in the
force outside agriculture is employed in micro- clothing or footwear industries.
enterprises.118 However these figures often do
not include micro-enterprises located in the Temporary, casual, and part-time work
informal sector, many of which are unregis- In OECD countries part-time employment
tered. In Latin America, more than half the makes up an increasing proportion of total
urban workforce earns a living in the informal employment, with the majority of part-time
sector.119 Even with improved growth rates in workers being women. In many OECD
the 1990s, four out of every five new jobs were countries the share of temporary work within
still being generated in the informal, rather total employment remained relatively stable
than the formal, sector. over the 1980s, except in France and Spain
where it increased sharply due to the reform of
Sub-contracting legislation regulating employment contracts.
Surveys indicate that sub-contracting is growing The UK has seen a reduction in full-time male
in the manufacturing sector. According to the employment in manual occupations alongside a
ILO's 1995 Employment Report there was a growth in self-employed, temporary, and part-
pronounced growth of large firms sub- time working.124 A recent report by the Child
contracting from small firms in both the formal Poverty Action Group states that new jobs are
and informal sector in Latin America during the mostly part-time and the bulk taken by women.
1980s. A survey of over 3000 manufacturing Evidence is far more scanty in developing
firms in Malaysia showed that over a third of all countries, but the use of temporary and casual
electronics, textiles, and garment firms had sub- contracts does seem to be growing. Oxfam
contracted part of their production work.120 A supports a network of voluntary groups in Peru
similar trend has been reported in the forestry who are working on the impact of structural
industry, with contract labour accounting for a adjustment polices on employment. By 1993
significant share of the workforce in Chile over 50 per cent of all employment in the
(almost 100 per cent), Finland (80 per cent), private sector was casual compared to 11 per
France (60 per cent), Indonesia and Malaysia cent in 1985, as a result of trade liberalisation
(both over 50 per cent), Sweden (70 per cent), and labour-market deregulation.125 In Chile a
the UK (over 50 per cent), and the US (close to combination of trade liberalisation and strin-
80 per cent). Surveys also indicate that it is gent labour market deregulation has facilitated
utilised extensively in the extractive industries the spread of flexible working practices.

34
The social impact

Approximately two-thirds of wage labour in the of workers covered by basic employment rights
fast-growing agricultural export sector is has fallen from 91 per cent of all employees in
employed on a temporary basis, double the 1975 to 62 per cent in 1990. The figure climbed
proportion at the start of the 1980s. Many of the back up to 70 per cent in 1995, when the EU
workers are women.126 forced the inclusion of more-part-timers into
legal protection. Job insecurity has also
Labour rights and working conditions increased: median male tenure has declined by
Flexible working patterns can offer significant 25 per cent since 1975 and 43 per cent of the
benefit to workers; for example, flexible work- jobs people leave are full-time and permanent
ing hours allow women to combine work with compared with 27 per cent ofjobs taken on re-
child care. For skilled workers acting as entering the labour market.128
consultants or with other sources of income they In the case of homeworkers, research reveals
may provide certain advantages. However, for a similar catalogue of problems around the
the mass of unskilled workers, these employ- world. According to a recent ILO study these
ment practices are often used as a way of include 'very low wages, often below legal
denying them the rights enjoyed by permanent minima where they exist; anti-social working
workers; and flexible workers are therefore hours; health and safety problems, often
among the most vulnerable and most exploited. affecting the whole family of the homeworker;
Some of the clearest examples of this are sub- delays in payment, and on occasion, non-
contracted unskilled homeworkers and small payment of wages; misinformation from
businesses. As many of these units are classed as employers about homeworkers' legal rights and
self-employed or not registered at all, sub- status, and evasion of such regulations as may
contracting allows companies to cut labour costs exist; and the threat of withdrawal of work used
by bypassing existing labour regulations and as a means to intimidate homeworkers and
collective bargaining agreements. In the prevent them claiming their rights.' The typical
clothing industry in the UK, for example, sub- homeworker in the UK works 36 hours a week,
contracting allows employers to pay lower including eight hours at the weekend, for an
wages, and avoid paying national insurance average rate of pay of 1.28 an hour, or 46 per
contributions, benefits, and taxes. Companies week.129
can also reduce overheads because workers While the growth of genuinely independent
bear the costs of heating or equipment. Sub- or 'own account' small businesses offers a
contracting also allows companies to 'hire and dynamic source of new jobs, it is widely accepted
fire', and increase or decrease the intensity of in developing countries that average product-
work, easily. In short, many of the risks of ivity and incomes in the informal sector are
production are passed on to homeworkers. below those of the formal sector. Many owners
Flexible labour practices often mean poverty of small businesses rely on exploiting their own
wages, insecure jobs, long working-hours, and or their family's labour to survive, and working
health and safety problems. There is a disregard conditions can be atrocious. Many also suffer
for family responsibilities, as workers are the effects of deflationary and high-interest-rate
supposed to be available for work at short notice macro-economic policies, and have limited
or when there are no child-care facilities or sick- access to credit, technology, training, and
pay provision. Such practices also make trade markets. As a result, failure and bankruptcy
union organisation very difficult, and have rates tend to be very high.
contributed, along with regressive labour There is a need to ensure on the one hand,
reforms, to a generalised decline in trade union that flexible workers receive the same rights as
activity in many countries. permanent workers, and on the other, that
Temporary and part-time workers are also governments and voluntary organisations help
widely denied the rights and benefits enjoyed by to support community enterprises and small
permanent workers. In Chile, for example, businesses to gain better access to credit, and
between 40 and 50 per cent of temporary agri- market technology.
cultural workers have no contract, and are
denied basic employment rights, such as the The UK's record on labour rights
right to collective bargaining, and to sickness or The UK has not ratified ILO convention 111 on
maternity pay. Many work excessive hours and Freedom from Discrimination, nor ILO on 138
are paid piece-rates.127 In the UK, the number on Child labour. It has only ratified one of the

35
The international dimensions of work

23 new ILO conventions since 1979, the most internal affairs of trade unions and thereby
notable exclusion being the new Collective undermining their autonomy such as the
Bargaining Convention 1981 (No 154), because right of trade unions to indemnify members
the government at that time could not accept and officials.
the obligation to promote the extension of
collective bargaining by direct government Additionally, government policies which
intervention. As a result the UK is only covered have allowed the spread of casual, part-time,
by Convention 98, which does not impose a duty temporary and self-employment could also be
on employers to negotiate with trade unions said to have restricted the ability of people to
(due to the voluntary nature of collective organise or conduct internal ballots, and
bargaining). undermine their access to the rights enjoyed by
The UK government was also unwilling to permanent workers. For example, home-
ratify the Termination of Employment workers are not covered by basic employment
Convention 1982 (No 158) partly because it did rights, and until 1994 part-timers working less
not allow for the exclusion of part-time workers than 16 hours per week with less than 5 years
and because it narrowed the grounds for unfair continuous service were exempt from laws on
dismissal and included those dismissed in a strike unfair dismissal and redundancy. Recent laws
or other industrial action. The Thatcher govern- have also effectively diluted a range of rights by
ment also denounced several Conventions, denying people access to industrial tribunals. In
including the Minimum Wage Fixing 1989 the government repealed protective
Convention 1928 (no 126) which paved the way legislation regulating the hours of work of
for the eventual abolition of the Minimum Wage young people.130
Councils.
Moreover, the number of complaints for
alleged breaches of the ILO's conventions has 4.5 Incomes, poverty and
grown markedly since 1979, with the ILO's inequality
Supervisory Mechanisms expressing serious
concern about the UK government's record in The deteriorating employment trends outlined
several instances. Not all recommendations above have been an important contributing
were implemented or complaints upheld, factor to the growth in poverty and inequality in
though that was partly due to the weaknesses of many countries. This effect has been exacer-
the ILO supervisory and enforcement bated by the decreasing ability of governments
machinery. to compensate 'losers', as a consequence of the
Complaints include violation of: widespread adoption of restrictive monetary
policies, the collapse of the welfare state, and the
the right to collective bargaining (Convention political unwillingness of the 'winners' to
no 98) relating to the government's failure to compensate the losers via increased taxation.131
prevent blacklisting of trade unions by the While increasing inequality is an international
Economic League and the political vetting of trend, it has been particularly marked in the UK
building workers; the banning of unions at due to the extreme and regressive nature of the
GCHQ; and concerns about the termination free-market policies adopted. The curtailment
of collective bargaining agreements for of collective bargaining rights, and labour-
teachers, civil servants and journalists market deregulation, including the dismanding
the right to strike (no specific convention but of minimum-wage protection, the consequent
considered by the ILO to be essential for spread of flexible labour practices, and the
workers organisations to pursue their erosion of social-security benefits, have led to an
interests) relating to restrictions on trade increase in the number of individuals with low
union legal immunities; narrowing of trade incomes during the 1980s. The real incomes of
union disputes; restrictions on secondary those in the poorest 20-30 per cent of the
and sympathy action; and vulnerability of population stagnated over the 1980s, and even
workers after strikes (e.g. the sacking of fell, for the very poorest. In 1979, 9 per cent of
striking seafarers) the population lived on an income below the
the freedom of Association and Protection of poverty line (less than half the average income).
the Right to Organise (no 87) relating to laws By 1989 this had increased to 22 per cent of the
increasing government interference in the population. The number of children living in

36
The social impact

poverty tripled over the same period, from 1.4 precarious low-wage employment.135 Between
million to 4.1 million.132 Many of the low paid are 1990 and 1992 the share of national income
women. allocated to wages actually fell, while the share of
The combination of a flexible labour market national wealth enjoyed by the wealthiest 10 per
in the US and the harsh benefits system which cent has remained around 45 per cent. These
forces people to accept poorly-paid employ- trends have been associated with growing crime,
ment, meant that paid workers actually saw youth delinquency, drug abuse, depression, and
their real earnings declining, not only in relative family breakdown.
terms but also in absolute terms. According to a Growth in the numbers of working poor has
New York Times survey carried out in 1995, two- often gone hand-in-hand with a relative
thirds of all workers who found jobs after a lay- increase of salaries for the 'knowledge elite' and
off did so at lower levels of pay. As a result, the the directors and managers of newly privatised
proportion of people living with a family and other industries. The UNCTAD 1997 Trade
income below the poverty line increased from and Development Report states that capital has
15 per cent to 19 per cent between 1974 and gained in comparison with labour, and profit
1994.133 In 1992 a report by the National Centre shares have risen everywhere.
for Children in poverty estimated that the The UK has seen the widest inequalities in
number of American children under the age of pay since 1886,136 with the wages of the top 10
six living below the poverty line increased by per cent of earners rising by about 35 per cent
one million between 1987 and 1992 to a total of relative to the bottom 10 per cent. Corporate
six million, or slightly over one-quarter of the profits are now around 15-16 per cent of GDP,
population in that age group. Equally alarming while the share of GDP taken in salaries is
was the finding that 58 per cent of these around the lowest for 30 years.137
children came from families in which parents In the US, the wages of the top 10 per cent of
worked, at least part-time. male earners rose by 20 per cent relative to the
Widely touted as a free-market success story, bottom 10 per cent during the 1980s, contri-
Chile has been a laboratory for free-market buting to levels of inequality unprecedented in
reforms and labour market deregulation for the post-war period. One illustrative example is
over 20 years. Contrary to the predictions of that in 1960 the chief executive of one of
free-marketeers, its flexible labour market has America's largest non-financial corporations
failed to deliver growth with equity. Wage earned $190,000 or about 40 times the wage of
dispersion, inequality, and poverty increased his average factory-worker before tax, 12 times
significantly. Research for Oxfam134 shows that after tax. By the end of the 1980s, the chief
in 1992, despite an increase in jobs and wages executive earned more than $2m, 93 times the
achieved by the new civilian government, the wage of the average factory-worker before taxes
spread of flexible working practices left 43 per and about 70 times after taxes.138 The share of
cent of salaried workers earning less than the corporate profits in national income has
amount necessary to cover the basic needs of an doubled over the past decade, while the share of
average family. labour has fallen.139 In Latin America the
According to one UN study, the single major number of billionaires rose from six in 1987 to
cause of poverty in Chile is no longer open 42 in 1994, a trend associated with the increase
unemployment or informal sector work but in privatised industries.140

37
Section 5: Possible solutions at the local and
international levels

In this section we will look at the different ways alliance-building for achieving policy change.
Oxfam works on employment and livelihood In the past, much of Oxfam's work was
issues. Section 5.1 will focus on Oxfam's focused on small-scale peasant formers in rural
development work in support of people's own areas, because this was where most poor people
strategies to enhance their livelihoods. Section lived. This focus was also seen as a means of
5.2 looks at campaigning activities, and how counteracting the pressures which were forcing
consumers can exert pressure on companies to people to move to towns. The deterioration in
adopt good employment practices. Finally, in working conditions among formal-sector
section 5.3 we turn to the international context workers and the growth of the working poor
and look at the policy changes which could lead described in Section 3, combined with rapid
to improved employment opportunities and urbanisation and growing urban poverty, have
working conditions. As the Case Studies in the led to a partial refocusing of Oxfam's com-
Annexe show, Oxfam works with groups munity development work. First, more work is
attempting to link these different areas and being done with workers in the formal sector,
levels of activity, using a range of tools: grants, particularly the so-called 'flexible' workers
training, research, networking, campaigning, sub-contracted, home-based, temporary, and
and lobbying; and each project or programme casual who are often the most vulnerable and
may combine a different mix of approaches. badly paid. Second, the focus on urban centres
is increasing, for example, in Brazil and other
countries of South America, Egypt, West Africa,
5.1 Oxfam's community Kenya, India, and countries in East Asia.141 This
development experience refocusing increases the potential for exchang-
ing and comparing experiences with richer
The global trends outlined in this report affect industrialised countries. The case studies from
poor people in extremely diverse ways. This this section draw mainly on these aspects of
means that there is no single blueprint for Oxfam's work.
intervention and any response will vary accord-
ing to the context. Urbanisation
One of the assumptions underpinning com- Urbanisation is a growing phenomenon
munity development work is that the formal or throughout the less industrialised world, and is
modern sector in many developing countries is a process parallel and linked to the globalisation
not capable, at least in the short and medium of markets. Urban growth is pardy due to 'push
term, of providing sufficient employment for factors' relating to the displacement of peasant
their rapidly growing populations. Neverthe- farmers from the land, and pardy to 'pull
less, the promotion of community initiatives is factors' relating to the attractions of urban
seen as a complement, rather than an altern- areas. Opportunities for income generation and
ative, to government measures to expand employment in urban areas are usually more
employment. Full employment should remain diverse, as well as being more sensitive to
an important long-term goal of government external changes, than those in rural areas.
policy, and could be achievable given the right According to national statistics in Brazil,142
policy reforms in the national and international about half of its poorest inhabitants now live in
arenas. For this reason Oxfam has increased its urban centres. This influx is putting immense
research and advocacy work to promote full strain on limited health care and education
employment and protect working conditions. It services. Some would argue that we are seeing
has also recently launched a campaign aimed at an 'urbanisation of poverty', and we can no
improving working conditions in the clothing longer make assumptions about urban services
industry, recognising the importance of being better than those in rural areas.

38
Possible solutions

Employment, self-employment, and access to Financial services and income-generation


productive resources are obviously major projects
concerns for survival in urban areas. However, Oxfam is rarely involved in schemes to generate
poor people employ many different strategies to paid employment. It has much more exper-
meet their survival needs, which cannot be ience in supporting self-employment and
looked at in isolation. Some of the effects of income-generation activities. Some of the main
poverty and marginalisation, such as ill health, problems facing small-scale producers and
discrimination or homelessness, impede people's businesses in the informal and rural sector are
ability to be employed or generate income. lack of access to land, finance, markets, and
Threats of eviction, indebtedness, and other technology. Free-market policies have often
vulnerabilities also prevent poor women and exacerbated these problems by introducing
men from finding a job or generating revenue. high interest-rates and credit restrictions aimed
at reducing inflation. Much of the work in
Oxfam's approach relation to these groups has been support for
The diversity of survival strategies is reflected in credit and savings schemes to stimulate
the diversity of Oxfam's responses. Oxfam tries agricultural activities, petty trade, small-scale
to take a holistic approach to development work production, and housing improvements.
which recognises that people's livelihoods are A recent joint study undertaken by Oxfam
made up of several different and related com- and Action Aid143 examined work in the area of
ponents, of which paid employment or self- financial services and drew several conclusions
employment (including subsistence produc- of broader significance. Poor people require a
tion) are but one part. In addition, because wide variety of financial services and usually are
people differ in terms of their class, gender, and already using them particularly informal
ethnicity, the same global trends will have mechanisms such as rotating-loans clubs in
differing impacts on their lives. Oxfam there- many different ways. There is a need to shift the
fore endeavours to ensure that a basic social perception that such schemes are solely
analysis which differentiates between concerned with income generation; they also
different social groups and genders informs enhance other aspects of people's lives. This is
all its work. consistent with a view of poverty which looks
The outcome of this approach is a range of beyond low income to issues related to vulner-
practical and strategic interventions aimed at ability, discrimination, and powerlessness.
promoting different types of livelihoods in Because poor people's needs are many and
different circumstances. These may involve: varied, the more successful schemes have been
those that provide a range of flexible services
directly strengthening the capacity of small that can be adapted to changing demands. In
producers and businesses to gain better access addition, many of the more successful schemes
to resources and participate in markets; have been built on people's saving require-
indirectly enhancing employment opportun- ments and have developed lending based on
ities through health and informal education people's demonstrated ability and willingness to
projects; save; compulsory savings is a common feature
strengthening workers' abilities to claim their (see the Ladywood Credit Union Case Study 4
rights and secure employment by funding in the Annexe). These schemes, in order to'
support organisations, such as para-legal discourage the better-off, have tended to keep
bodies, and by national and international loan sizes small, encourage peer-group lending,
advocacy work derived from local-level insist on regular repayment and regular meet-
experience related to legislation, debt, trade, ings of the peer-group, and dispense with the
and issues of corporate conduct. need for physical collateral.
Poor people need access to financial services
This sections draws out some of the main issues on a long-term basis. The financial sustainability
related to Oxfam's work in urban areas, as well of these services is therefore important to them.
as relevant points from work in rural areas, Providing credit with interest fixed below
which is complemented by the case studies. We market rates has proved ineffective and led to
conclude with a section which attempts to relate the failure of many schemes. However, partic-
these issues to the UK. ularly at the initial stages when costs are high,
setting interest rates in line with costs can price

39
The international dimensions of work

services out of the market. Phasing-in oflevels of income is now recognised as crucial not only to
interest that would lead to sustainability as costs their ability to survive and improve their social
decline may be a better option. status, but also to their children's well-being.
However, financial services can harm poor Access to income and employment has several
people as well as benefit them: the other side of additional spin-offs. For example, research in
credit is debt. Financial relationships such as Bangladesh suggests that, as a result of credit,
debt are one of the ways in which people's women have managed 'to negotiate gender
powerlessness is exploited. Evidence suggests barriers within the household',145 and to acquire
that when women receive and repay loans, new skills and confidence. The case study from
relationships within the household may mean Mali illustrates that, while the additional cash
that they do not benefit from the use of the provided by the credit is essential in helping
money and may be further disempowered as a women to avoid falling prey to moneylenders,
result.144 It is therefore incumbent on those the groups in which they are organised also pe-
intervening in this area to attempt to under- form important social functions (see OMAFES in
stand existing power relations and how they Case Study 2). The local workers in an income-
affect livelihoods. The study suggests that generation and a health project in Cairo, and
schemes that are owned, and usually designed, other women of the Zabbaleen community,
by their users are less likely to be exploitative gained so much confidence over the past eight to
than those provided for them by others on a ten years that the projects are having a profound
'for-profit' basis. Evidence also suggests that effect on the public role of women (Case Study 1).
women are often more reliable managers of and These examples point to the important
participants in credit schemes than are men. relationships between the private, personal, and
However, in many cases the nature of power collective spheres. Opportunities for women to
relations may mean that other types of meet and discuss their problems with other
intervention (usually subsidised), such as basic women can play a vital role in building their self-
health and education services, the development confidence and esteem, thus allowing them to
of technical skills or group organisation, are increase their bargaining power at work and re-
necessary for very marginalised or oppressed negotiate relationships within the household.
groups if they are going to be able to participate (See Case Study 6 on Chile). This can in turn
effectively in credit and savings schemes. permit women to gain greater access to income-
Finally, the study makes the point that many generating or employment opportunities, which
NGOs do not have the necessary skills to under- further builds a degree of autonomy. However,
take successful savings and credit schemes, and a gender analysis which looks at both women
that an honest self-appraisal is required of and men and the relationships between them, as
them. For hinders of NGO credit work, this opposed to a women-only analysis, also leads to a
suggests a more rigorous assessment of their focus on men's self-esteem and self-respect and
capabilities. how this affects women's well-being. In some
cases this has led to broadening projects to
Understanding gender relations include men (see Case Study 2 on OMAFES).
Women work longer hours than men and have a In most parts of the world, women still
larger range of responsibilities, but much of the perform nearly all the unpaid work upon which
work they do is neither acknowledged nor paid the world of paid employment rests. Although
and is considered marginal and without econ- traditionally distinctions have been made
omic value. The sexual division of labour, both between these private and public spheres,
within the household and in the jobs market, women for many years have refused this
reflects social relations between men and distinction and pointed out that 'the personal is
women. Women's ability to make use of job political'. What happens in the private sphere is
opportunities is conditioned by those social determined by power, rules, and customs often
relations. established in the public sphere.146 However,
Historically, much of Oxfam's development what happens in the private sphere can perpet-
work was focused on men (see, for example, the uate the status quo or change it.
early work in the Zabbaleen community, Case The challenge remains to develop ways in
Study 1), but that has changed for several which getting a living can be related to caring
reasons, on grounds of equity and justice as well for people, and to transform the relationship
as efficiency. Women's access to independent between the 'care' and commodity economies.

40
Possible solutions

Diane Elson has suggested that this might mean areas throws up particular methodological and
redesigning paid employment, rather than practical challenges. This is because in such
paying for housework, not just in terms of hours locations populations are extremely mobile
but by making child-care experience a qualifica- (both physically and socially), and people often
tion for higher pay and promotion. In this way have become more distrustful of outsiders than
'male-biased norms of working would be over- in rural areas, sometimes because of their
turned and men would have a positive incentive experience of intense political manipulation.132
to change the division of unpaid labour'.147 As NGOs (and now most multilateral
development agencies) are fond of stating,
Environmental sustainability participation is a critical element in all stages of
Oxfam is also concerned about the effects of development projects, and is evident in most of
urbanisation from a perspective of 'human the project examples presented in this paper.
ecology', both in terms of the increasingly Yet it remains a crucial area for further learning
crowded and unhealthy conditions in which and debate. Different organisations have differ-
poor people live in many urban areas,148 and ing interpretations of the term. How can one
from a perspective of global sustainability and decide whether or not an action is based on
pollution. More affluent countries and popula- 'genuine participation'? Who is participating in
tion groups consume most of the world's what? Are we talking of external agencies
resources; they pollute locally and globally, participating in the agenda of the people, or
causing climate change which is a particular vice-versa?
threat to poorer countries, regions, and One of the problems that development
individuals.149 organisations need to confront is the develop-
Technologies and practices that support the ment of criteria to assess the 'quality' of
creation of employment and serve the environ- participation. This is particularly necessary if
mental goals of reduction of pollution and alternative development strategies are to
resource consumption exist, and need to be redress the balance between the qualitative and
further developed and applied, both locally and the quantitative dimensions of development
internationally. The example of Oxfam- impact.153 In addition, such criteria are also
supported work in Cairo shows how poor people going to have to deal more explicitly with issues
are helping a large city to cope with its enormous of difference, such as gender, race, ethnicity,
output of garbage through recycling, compos- and class, and the degree to which external
ting, and disposing of the rest (see Case Study agencies are enhancing the capacities of
1). The technologies for recycling have been particular groups.
adapted locally and have been used to create However, participatory methods and
employment. An important problem that the approaches cannot thrive if there are not
Zabbaleen150 and others face is that they do not significant changes in the way in which institu-
necessarily get the recognition and support they tions function. Development agencies, including
deserve for their service to the local economy large NGOs, are not immune from the problems,
and environment, but instead they are accused such as complacency, hierarchy, inertia, and
of spoiling the urban landscape, and are poor information flow, confronting other
threatened with eviction. bureaucracies. These problems can result in
As others have noted, sound environmental loops of self-deception as feedback from activities
policies do not necessarily have to cost jobs.151 is distorted or manipulated, as individuals seek to
Oxfam's experience suggests that with a protect themselves. Senior managers in the 'if it
different policy environment, where at least ain't broke, don'tfixit' mode will tend to go along
some of the environmental and social external- with the positive news and thus carry on regard-
ities are costed, and where incentives are given less until something breaks. As Robert Chambers
to groups such as the Zabbaleen, people can and has suggested, this kind of institutional blindness
will organise to take advantage of opportunities. has led to the most remarkable feature of
development efforts over the last few decades:
Promoting participation 'how wrong "we" were when "we" tfiought we
Oxfam has a long history of working with were so right'.154
people and supporting participatory processes One of die principal changes diat is therefore
in rural areas and, increasingly, in urban areas. required is a greater emphasis on learning within
Developing participatory processes in urban and between NGOs. This means focusing more

41
The international dimensions of work

on the 'front-line', and emphasising programme- Working in this way involves making strategic
level learning systems as a vital internal project alliances with a broad range of partners. One
activity. This approach to more decentralised example of this is Oxfam's work with fishing
and nimble learning needs to be based less on communities in the Philippines. Here, Oxfam
large one-off evaluations and more on smaller works with grassroots community-based organ-
regular assessments of programmes. This would isations in coastal areas, funding community
involve a step-by-step approach, with each step resource-management activities, such as
revealing small amounts of information which replanting mangroves and developing artificial
are useful to decision-makers, so that problems reefs for fish nurseries. At the same time, Oxfam
can be identified early and changes made. NGOs supports national organisations, such as the
need to seek more reliable guidance that things National Alliance of Fisherfolk, which support
are going well or badly from the people and staff community groups and represent their interests
themselves, who are already monitoring impact at the national level. Oxfam also encourages
in their own way. links between these organisations and more
It is increasingly clear that sustainable specialist lobbying organisations, in order to
changes in poor people's lives must be based change legislation at national level. Bringing
upon their values and priorities; projects cannot municipal waters under local government, as
be deemed successful or to have failed if the opposed to national government, control, so
perceptions of the beneficiaries diverge that community groups can lobby their own local
seriously from those of the objective external officials, is an example of change at a national
evaluator. Genuine participation in assessment level having significant impact on local
of projects often leads to surprises for livelihoods.
programme managers and other 'outsiders'. An The examples of coalition building outlined
example is the case of the Zabbaleen community in the account of the Hunger Campaign in
in Cairo (Case Study 1), where the central Brazil (Case Study 4), international alliances of
problem for the people involved was seen to be homeworkers (Case Study 7), and the tri-
their image as portrayed by the media, and national NAFTA coalition (Case Study 5), are all
harassment by government officials, while examples of how Oxfam tries to link broader
poverty and health issues were seen to be less advocacy objectives with improving the rights
fundamental. Being open to such surprises and access of local people to employment and
requires not only new methods for assessing services such as credit, health care, education,
impact but also the development of organisa- and housing. The most successful networks
tional cultures and reward systems, which usually combine concrete and achievable object-
encourage learning and adaptation rather than ives with long-term, more ambitious goals, in
conformity and deception. order to maintain commitment.156 Support may
Some of the experience of development take the form of funding, or building the
organisations, such as Oxfam and its partners, capacities or skills of organisations to advocate
in participatory approaches is now being shared for changes they would like to see.
with organisations in the UK, through various Some of the international alliances and
fora and meetings, with the aid of modest campaigns which Oxfam supports have an
amounts of funding from Oxfam's UK increasingly sophisticated analysis and advoc-
programme 153 acy strategies to reform global policies and
institutions. The case study on Chile outlined in
Building alliances for broader change Case Study 6 describes some of the advocacy
The case studies illustrate diverse ways to work aimed at influencing government and
respond to poor people's needs in different World Bank policies on employment and
contexts. What is common to them is a 'one- labour rights.
programme approach', which means removing
the often artificial distinction between relief, Relevance of Oxfam's programme
development, and advocacy. As such, all pro- experience to the UK context
grammes are becoming more integrated so that, Many of the lessons arising from work in the
for example, a development programme is developing world are relevant only to their own
strengthening the ability of a local organisation specific context. Indeed, one of the most
to lobby its own government to provide important learning points is that the mechanical
adequate relief to drought victims. transfer of 'lessons' can be unhelpful and even

42
Possible solutions

positively dangerous. This is why exchanges of changes at both the local and the wider policy
analysis and strategies are most effective when level, nationally and internationally.
they take place directly between the people
concerned. However, there are also certain
general principles that are of wider application: 5.2 Oxfam's campaigning
experience: consumer pressure
There are recognisable global trends which and corporate good practice
affect employment opportunities, although
there is great diversity both within and Pressing companies to adopt voluntary codes of
between countries as to the impact of those conduct has become an increasingly popular
trends on different groups. Thus, it can be strategy in recent years, in response to growing
useful and important to share ideas and international and consumer concern about
techniques for improving the situation, as unethical and exploitative corporate practices.
long as these are adapted to local circum- This has coincided with growing public disillu-
stances and grounded in local analysis. sionment about the ability of official govern-
A holistic approach to employment is mental or intergovernmental mechanisms to
required. Poverty has several inter-related protect labour standards. Official bodies are seen
components, of which material poverty is but as at best lacking political will and effective
one; powerlessness, exclusion, discrimina- enforcement capacity, or at worst corrupt. From
tion, marginalisation, and oppression are the perspective of many NGOs and workers'
others. An approach which seeks to under- organisations, voluntary codes appear to offer a
stand existing patterns and relationships quicker and more effective way of improving
between these different elements so as to use standards than official regulation, which is often
limited resources to bring about wider either weak or inadequately enforced.
change is preferable to expending more In response to the appalling conditions faced
resources on alleviating the symptoms of the by garment workers in countries such as
problem. At the heart of this analysis must be Bangladesh, India, Dominican Republic, Chile,
an understanding of social and gender and the UK, Oxfam recently launched the
relations which makes the links between paid Clothes Code Campaign, to put consumer
and unpaid work. pressure on major UK retailers to adopt volunt-
Work is not an end in itself but a means to a ary codes of conduct to ensure that they and
better quality of life. Poor people are not their suppliers abide by minimum labour
static objects waiting to be affected by standards based on core Conventions of the
employment schemes or other projects. They International Labour Organisation, a specialist
have developed, and continue to develop, agency of the United Nations.
their own strategies to enhance their well- Corporate codes of practice are not just
being. These can be combined with outside concerned with working conditions in develop-
interventions in positive or negative ways. ing countries. They apply to all a company's
Any assessment of the impact of an suppliers, including those in the UK;
intervention must be based on the views of 'sweatshop' conditions exist here as well.
those it is meant to support, and whether they Company codes of conduct should therefore be
believe that it has contributed to a better seen as a vital instrument in improving pay and
quality of life. conditions in the UK, as well as overseas.
People's employment opportunities are the There are many reasons why a company
result of a myriad of factors, both micro- and would want to have such a code. These were
macro-level. There is therefore a need to summarised by one British company, when
tackle long-term structural problems and asked why it was instituting a code of practice for
short-term needs simultaneously, and to its suppliers as follows:
work at several levels at the same time. NGOs
have limited influence and, like the Brazil the desire that the company should have a
Campaign against hunger and the campaign- 'responsible' image;
ing coalitions on NAFTA suggest, they need the recognition that the community now
to create new relationships not only among expected more ethical behaviour from
themselves, but also with the state and the companies, and the wish to be a leader in the
private sector, in order to develop sustained field;

43
The international dimensions of work

an anxiety to find the scandals and countries. At the same time there is a tendency
'sweatshops' first, before the media did, to for some UK and US companies to also contract
avoid damage to the company image; out production to sweatshop and home-based
staff would not be happy working for an workers in their home countries, which offers
unethical company; the 'advantage' of Third World wages with
customers would not be happy patronising minimal transport costs.
such a company.
The UK Ethical Trading Initiative
There is also growing awareness that valuing At the same time, other NGOs in the UK were
and investing in workers can be good for conducting their own campaigns. Christian Aid
business and help companies to gain a was targeting supermarkets, WDM was
competitive edge. Good employment practices targeting toy manufacturers, and CAFOD, shoe
improve staff morale, commitment, and makers. The effectiveness of these campaigns
productivity. However, while this is almost a and the high level of press coverage meant that
management truism among some companies, many of the companies were eager to talk to the
more evidence is needed to convince sceptics. various NGOs. In order to prevent duplication,
Such evidence is now beginning to emerge; for a group of around 15 major UK retailing com-
example, a recent survey of 100 German panies, and most of the major UK development
companies in ten industrial sectors showed that and human rights agencies, have recently come
companies which place workers at the core of together to form the UK Ethical Trading
their strategies also produce higher long-term Initiative.
returns to shareholders than their industry The idea of this initiative is to develop a
peers, outperform their competitors, and create common approach to codes of conduct and
more jobs. independent monitoring, based on pilot
projects between companies, workers, and
Oxfam Clothes Code Campaign NGOs, which can then be applied more widely.
Oxfam launched its Clothes Code Campaign in The initiative is backed by the Department for
May 1997. The aim is to improve labour International Development of the UK govern-
standards in the clothing industry both in ment, which is keen to promote ethical trading
poorer countries and in the UK. The initial and to engage the business sector in helping to
strategy was to galvanise the large number of alleviate poverty. There are also representatives
Oxfam supporters in the UK to put pressure on from the international section of the Trades
leading UK retailers to adopt voluntary codes of Union Congress, and the relevant section of the
conduct backed by independent monitoring. international trade secretariats.
The strategy combines media work and high-
street action by campaigners with face-to-face Other initiatives
dialogue with top managers of some of the Alongside the UK work there has also been fast-
major retailers. moving developments in the rest of Europe, the
The code which Oxfam promoted was based US and internationally. In Europe, there is an
on consultation with Northern and Southern important initiative by the Clean Clothes
trade unions and NGOs, particularly with Campaign, based in the Netherlands, drawing
partner organisations in Bangladesh and the on the ICFTU guidelines for codes of conduct
Dominican Republic. One of the main demands and independent monitoring, and seeking to
was that retailers should accept responsibility establish an independent International Monitor-
not just for conditions in their own outlets or ing Foundation. This would be contracted by
factories, but also for those along the sub- companies to monitor compliance with the code,
contracting chain in the UK and overseas. Part assist in implementing the code, and provide
of the rationale was that if UK retail companies consumers with information on labour practices
can guarantee quality control for products from in the clothing industry. The Foundation would
their overseas suppliers, they should also be be made up of representatives from companies,
able to ensure minimum labour standards. The trade unions and NGOs.
acceptance of this principle was critical, as most In the US, there has been the GAP campaign,
Northern clothing retailers do not manufacture which has been successful and well-publicised,
their own products but contract production out and, more recently, the Clinton Apparel
to large numbers of suppliers in developing Industry Partnership Initiative. This has

44
Possible solutions

involved corporations, unions, NGOs and implementation, and monitoring of codes of


government departments in developing an conduct. For example, that voluntary codes
agreed code and monitoring criteria. Standards should:
are similar to the European ones, and there is a
commitment to independent verification. The include an implementation and monitoring
NIKE code is a good example of the kind of agreement signed by the company and an
code emerging out of this initiative. appropriate trade union and any other
There are two major international initiatives organisations involved, such as NGOs;
of particular significance. First is the work of the be seen as minimum acceptable standards and
ICFTU in developing international guidelines not used by companies as maximum condi-
for codes of conduct and independent monitor- tions applicable to workers;
ing. These guidelines share much common be based on principles of positive long-term
ground with the NGO campaigns, and have engagement with suppliers and not be used
formed the basis for a recent agreement between by companies to end contracts with suppliers
the European Trade Union Federation of unless they are persistent abusers;
Textiles, Clothing and Leather workers (ETUF- not substitute for governmental and inter-
TCL) and EURATEX, the European Textile governmental regulation on labour stand-
Employers Organisation, to adopt a code of ards; codes can be one element in a long-term
conduct. According to ajoint press release by the strategy to achieve a comprehensive frame-
two organisations, the code 'illustrates the social work for international business activity;
partners' determination to comply with and not substitute for collective bargaining; their
protect basic human rights in the workplace (as main role is to promote collective bargaining
established by the) everywhere in the world'. and establish sound industrial relations;
The code is the first European-wide code of be backed by internal and independent
conduct, and covers 60-70 per cent of enter- monitoring;
prises in the sector.
The second major international initiative is Programmes must also be developed to help
one promoted by the US-based social auditing any workers who are negatively affected by the
NGO, the Council for Economic Priorities. It codes, for example displaced child or informal
has set up a new body, the Council on Economic sector workers. Companies based in the North
Priorities Accreditation Agency (CEPAA), to should absorb any short-term increases in costs
develop a new auditable common international by paying suppliers higher prices. (Although in
standard to guarantee the basic rights of the long term improved employment practices
workers. The initiative is called SA 8000 should pay for themselves through higher
Standard for Social Accountability. (The name productivity, in the short term there may be
mimics the international quality standards, ISO some increase in costs.)
9000, and environmental management systems,
ISO 140000, already developed by the ILO standards
International Standard Organisation.) The idea There is now also growing consensus about the
is that companies can submit to an independent kinds of labour standards which should be
audit to examine their compliance with these included in any company codes of conduct. This
standards. The auditing will be done by consensus has been built on discussions with-
respected international certification companies. companies, workers in the South and the North,
Trade unions and NGOs will be able to submit fair-trade organisations, and NGOs. There is
complaints if they think a company has been agreement that standards should be based on the
unfairly audited. The standards and principles core ILO Conventions outlined above, including
for auditing have been drafted with assistance Freedom of Association and Collective Bargain-
from trade unions (including the ICFTU), ing, Freedom from Discrimination, Equal
academics, and business. Remuneration, Forced Labour, and Child
Labour, together with additional provisions on
General principles of codes of conducts living wages, health and safety, security of
Despite the disparate initiatives outlined above, employment and working hours.
good communication and consultation have Of these Conventions, those relating to
meant that there is growing consensus about the freedom of association and collective bargain-
principles which should apply to the design, ing are the most important and yet the most

45
The international dimensions of work

often neglected. These are fundamental human controlled by representative of companies,


rights, a precondition for workers to achieve appropriate trade union organisations, and
other rights, and should exist in any country NGOs) to verify the results of internal
irrespective of the level of development. Many monitoring.
Third World countries are already signatories Some British NGOs believe that the only
to these Conventions. feasible approach is for companies to pay for
commercial social audits on a par with
Implementation, monitoring and existing financial audits. Some social audit
verification firms already provide this service. They tend
Adopting a code of conduct may be a relatively to be either large accounting firms, or
easy option for a company if it is used mainly as companies whose expertise is environmental
a public relations exercise. It is much more auditing but who are now expanding their
difficult to ensure effective implementation. It is scope.
widely agreed that voluntary codes should not Another model suggested by the ICFTU is
just entail internal monitoring by the company that a code adopted by a framework agree-
itself but must also be backed by independent ment between a trade union and a company
verification by an external body, agreed to by could be monitored by the trade union.
the parties signing up to the code of conduct.
The rationale for external independent There are a series of questions which arise from
monitoring is based on the same principles as a consideration of these models:
financial audits: that an independent body
should verify the results of internal monitoring Who should conduct independent verifica-
through spot checks, interviews, and other tion: commercial companies, unions, human
methods. This body should in turn be certified rights groups, or NGOs?
by an internationally recognised institution Do such bodies have the capacity to carry out
such as the ILO. But while the principles of the task?
independent monitoring are reasonably well What would be the role of existing govern-
established, the scale of the task is daunting. ment inspectorates and the ILO? How can the
One US company sources from some 13,000 new forms of independent monitoring best
different suppliers, each of which uses an complement existing official mechanisms ?
average of five sub-contractors, making a total Who should pay for independent monitor-
of 65,000 suppliers to be regularly monitored. ing? This is traditionally the job of govern-
There are at least four experimental models ments; if companies pay for their own
for independent monitoring: independent monitoring, will this compro-
mise the independence of the monitoring?
The British Toy and Hobby Association has Would commercial social auditors be
adopted a minimalist approach. Given the sufficiently independent from the companies
huge size and complexity of the Asian toy which contract them ?
industry, it is not remotely feasible for the Who should verify the independent monitors
BTHAor any other non-government body to and train the inspectors? Could the ILO have
run a factory inspection system. They have a role?
therefore created a complaints committee to
assess the compliance of BTHA members Voluntary codes of conduct are an important
with the code of conduct. means of promoting good employment prac-
The model used by GAP involves establishing tices in the UK and overseas. However, they
a monitoring group in the countries where should not become a substitute for collective
goods are made, with members from outside bargaining by trade unions, and should seek to
the industry, including human rights groups. strengthen, rather than substitute for, govern-
This is effective, but costly in terms of time ment and ILO mechanisms for monitoring and
and resources; and depends on finding enforcing labour standards.
people trusted by all parties, and persuading They also have their limitations. They can
them to work together. The Clean Clothes result in an ad hoc approach because it is
campaign is proposing a similar approach, generally only companies with a brand name to
where companies would contract an indep- protect which respond to consumer pressure.
endent foundation (established and Moreover, because codes are voluntary, ethical

46
Possible solutions

companies still come under cost-cutting Consequently, there is an urgent need for co-
pressure from less scrupulous employers. ordinated international policies and action to
Finally, governments have ultimate responsi- assist workers and communities in both richer
bility for monitoring and enforcing human and poorer countries.
rights. Oxfam therefore believes that voluntary There is a widespread consensus between
codes need to be backed by supportive national neo-liberals and neo-Keynesians that import
and international regulation. This issue is barriers and controls over foreign investment
addressed in the following section. are neither feasible nor desirable. They increase
costs to consumers, generate black-markets, act
as a tax on export industries, raise the cost of
5.3 Oxfam's international inputs, drain resources away from more prod-
advocacy work uctive uses, and generate the threat of trade
retaliation of the kind seen during the 1930s
Globalisation cannot be held solely responsible recession.
for the employment trends outlined in earlier On the other side of the divide are the new
sections. The range of experiences of different protectionists, arguing for tariffs to protect
countries described in the paper suggests that Northern workers from cheap exports from
national policies still largely determine the developing countries. In developing countries,
terms on which national economies engage with there are also growing calls for trade protection
the international economy, and the consequent or complete delinking from global markets, on
distribution of jobs and income. Nevertheless, the part of organisations of peasants, NGOs,
in its current form, globalisation has contri- environmentalists, and informal sector groups
buted to the employment problems exper- who fear that globalisation will destroy their
ienced in both industrialised and developing livelihoods.
countries and is narrowing the policy options The alternative, which many NGOs and
open to governments. In richer countries, international trade unions are advocating, is a
including the UK, the impact has been relatively strategy of co-ordinated international action to
minor to date compared with the effect of allow more expansionary policies, to regulate
national policies. The main competition for the trade and investment, and to make internation-
UK comes from the EU and other developed al institutions more democratic and account-
countries, rather than from developing able. Such action will be difficult to achieve and
countries. However, competition from lower- may involve some loss of real GDP due to econ-
wage countries, especially the Asian economies, omic distortions, higher prices for consumers,
has negatively affected unskilled workers in and a rise in inflation. High prices for basic
certain sectors in recent years, and is contri- consumer goods will detrimentally affect poor
buting to growing income inequality. This effect people and will require mitigating policies.
is likely to increase in future years due to However, these costs must be matched against
growing competition from Asia, Latin America, the enormous human and social costs resulting
and the transition economies. from mass un- and under-employment which
In the case of developing countries, globalisa- the world now faces.
tion brought gains to a small group of Asian
countries, which represent a large proportion The institutional framework
of the world's population. However, the The WTO, IMF, and World Bank, are the most
distribution of trade and investment remains important economic international institutions
highly unequal and almost completely bypasses currently operating. Unfortunately, these
many of the poorest countries. Neither is institutions lack transparency and account-
globalisation creating sufficient new jobs to ability. The decision-making structures of the
compensate for the widespread destruction of IMF and World Bank are also dominated by
livelihoods in the rural and informal sector in Northern industrial powers, because votes are
the majority of developing countries. weighted according to financial share. In the
Denying these negative effects in order to case of the WTO, each country has an equal
counter protectionist arguments is dangerous, vote, but the GATT negotiations proved to be
because it ignores future prospects of simmer- highly susceptible to influence by Northern
ing social tensions and the disempowerment of governments and TNCs. For many Southern
workers through higher levels of joblessness. NGOs, reforming the institutional framework

47
The international dimensions of work

to allow a greater voice for Southern govern- abuse, rather than complete eradication of the
ments and voluntary organisations is as abuse itself. Mechanisms would also be devel-
important as lobbying for specific policy oped to provide technical and financial assist-
changes. The UK is also affected by the rulings ance to help countries to meet the desired
of the WTO, and indirectly affected by IMF and standards.
World Bank policies in developing countries The ILO conventions being proposed for
insofar as they exacerbate poverty and inclusion in a social clause relate to the basic
inequality and thereby reduce export markets human rights of workers', and make no attempt
and provoke greater migration. to equalise wages or establish a global minimum
wage. They include:
The social regulation of international
trade Convention 87: Freedom of Association and
The ILO is the most significant multilateral Protection of the Right to Organise
mechanism for establishing, monitoring, and Convention 98: Right to Organise and
improving labour standards internationally.157 Collective Bargaining
However, it has no legal powers of enforcement Convention 100: Right to Equal Remun-
and therefore has to work largely by moral eration for Men and Women Workers
persuasion. As a result, many argue that it has Convention 111: Freedom from Dis-
been unable to effectively prevent the down- crimination
ward pressure on workers' rights associated Conventions 29 and 105: The Abolition of
with globalisation. This has led many Southern Forced Labour
and Northern trade unions and NGOs to argue
for the development of international enforce- Some also add Convention 138: Minimum Age
ment mechanisms.158 of Admission to Employment.
One mechanism which has been proposed is However, there would be serious difficulties
the introduction of a social clause a core of in including such a wide range of Conventions.
minimum labour standards into the WTO. Child labour, for example, is a consequence of
This would combine the monitoring processes poverty, rather than trade pressures. A world-
of the ILO with the enforcement ability of the wide ban would make matters worse by making
WTO through trade sanctions or the with- poor families even poorer. It would not solve
holding of trade privileges. That is, WTO trade the problem of child labour in family businesses
privileges would be made conditional on a and farms where the majority of children work.
country's compliance with internationally Oxfam's support for the social clause is there-
agreed core labour standards. However, this fore focused on the inclusion of Conventions 87
proposal is regarded with suspicion by the vast and 98, in the first instance. These rights are
majority of Southern governments, who fear clearly trade-related and should exist in any
that a social clause will be abused by powerful country, irrespective of its level of development.
protectionist elements, particularly in the US, To a large extent they are a precondition for
and would undermine their comparative achieving other workers' rights. This is not to
advantage, which is based on cheap labour. question the importance of the other labour
Many NGOs are also fearful that trade barriers standards around which there is now inter-
would damage the very people they were national consensus, but merely to argue that
intended to help. their enforcement through trade mechanisms,
The ICFTU, and others, have suggested that which can be a very blunt instrument, may not
this problem could be partially solved if the ILO be appropriate.
is given a lead role in monitoring compliance If established effectively, a social clause of this
and judging infringements. It would also be kind should have little effect on jobs but would
essential to ensure that monitoring and provide a basis of workers' rights which no
enforcement procedures are transparent and country or company could flout, helping to
involve a strong representation of governments distribute the benefits of trade more equitably.
and NGOs from developing countries. Trade This would reduce the incentive to pursue
barriers should be used as a last resort only after competitive advantage based on the abuse of
an agreed period to allow voluntary incentives human rights, and encourage governments and
to work. Rulings would be based on a country's employers who wish to improve labour
willingness to take concrete steps to address the standards.

48
Possible solutions

Another important benefit of a social clause promote labour standards, because they believe
would be to provide a basis from which workers it is dominated by powerful Northern interests.
could organise internationally to put pressure Proposals for international enforcement mech-
on their own governments to protect labour anisms aimed at TNCs rather than govern-
rights. It is often assumed that Northern trade ments, are emerging. Some Southern NGOs
unions are interested in the social clause only in and unions are developing proposals for a
so far as it would help to prevent jobs being special international body able to impose
relocated to lower-wage economies; however, it financial penalties on companies which abuse
could also be used by marginalised workers to basic labour rights. Fining companies directly
exert pressure on their own governments to would also avoid the risks associated with trade
strengthen labour rights. It could, for example, sanctions. There are also attempts to ensure
be useful to workers in the UK who have that international investment agreements place
experienced a curtailment of basic labour rights binding obligations on companies to abide by
in areas relating to the Right to Collective certain internationally agreed standards.
Bargaining and the Freedom of Association and Because of political resistance from develop-
Right to Organise. ing countries, all that may be feasible in the
Despite trade union support and strong short term, is to pressure for closer coordination
backing by the US and Norway for the establish- between the ILO and WTO, perhaps with the
ment of a WTO working group to examine establishment of a working committee; and for
possible implementation of a social clause, the the WTO trade policy reviews to include an
proposal was defeated at the WTO Ministerial assessment of compliance with core labour
Meeting in Singapore in December 1996, as a standards. In the longer term, progress towards
result of widespread opposition, particularly introducing a social clause at the WTO will to a
from developing country governments. Never- large extent depend on industrialised countries
theless, the final declaration contained a removing unfair trade barriers to developing
reference to a renewed commitment to the core country exports, especially textiles and agricult-
ILO labour conventions and recommended ural products; and meeting the commitments
that the ILO find ways of strengthening its made in international fora such as the Social
supervisory mechanisms. But even if the ILO is Summit to debt relief, aid, and technology
strengthened, it will still lack enforcement transfer.
powers, so the need for an international enforce-
ment mechanism will remain. The growing use Social regulation of foreign investment
of bilateral trade sanctions by countries such as The growing mobility of capital and lack of
the US and Germany for goods produced using international regulation is making the case for
child labour will result in disputes being taken to an international code of conduct for foreign
the WTO. The growth of voluntary codes of investors ever more pressing. There have been
conduct may also eventually lead to trade a number of attempts to draw up international
disputes if they become trade diverting or if standards or codes of conduct for TNCs
they are backed by governments. through UN bodies, the most important being
It is vital that further detailed work is done on the 1992 UN Draft Code of Conduct which,
how a social clause could operate and the likely despite more than 12 years of negotiations, was
distribution of costs and benefits. Alternatives to abandoned in 1992 when developed countries
a sanction-based approach should be explored, claimed that it was superseded by the GATT.159
for example, the use of trade incentives to Unfortunately, the new international agree-
encourage compliance with labour standards. ments on investment contain measures increas-
However, the use of incentives appears to be ing the rights of foreign investors, without
ruled out by the GATT principle of Most corresponding social and environmental obliga-
Favoured Nation (which means that countries tions. Critics argue that governments should be
are obliged to extend their most favourable able to retain powers to control foreign invest-
trading preferences to all countries), and the ment in order to promote pro-poor growth, and
usefulness of such an approach will diminish as that the rights of foreign investors under these
countries move closer towards zero tariffs under agreements should be made conditional on their
successive rounds of liberalisation. compliance with internationally agreed stand-
Many Southern organisations are highly ards on social, environmental and consumer
distrustful of any attempts to use the WTO to protection. These issues are relevant to both

49
The international dimensions of work

richer countries and poorer countries, and may countries, including the UK, although its influ-
be particularly relevant to the UK, which is ence over investment policy is still contested. As
increasingly dependent on foreign investment. the world's largest trading bloc, and because it
The proposed OECD Multilateral Agreement offers an important market to developing
on Investment (MAI), currently under discus- country exports, its trading policies have an
sion, goes further than current WTO measures. important influence on employment patterns
The US is keen to see the MAI discussed and within the UK and other member countries. It is
implemented within the OECD, but the EU and therefore a vital sphere of influence for those in
others want to see a similar agreement in the the UK concerned about labour issues.
WTO. One reason given is that the WTO has a Externally, the EU has developed a variety of
wider membership. However, a number of trade agreements with different regions, the
developing country governments, including most significant in development terms being the
those of Pakistan and Malaysia, are highly critical Lome Convention, which offers preferential
of the initiative, as they see it as an abrogation of trade access to the poorest countries. There is
their sovereignty. They are also strongly opposed increasing pressure to dismantle this protocol
to its being discussed in the WTO, which they see because of high structural unemployment and
as dominated by Northern interests (although declining economic and trade performance in
they have recently softened this stance). They some EU member states compared with North
believe that investment issues should be America and East Asia, and because of criticisms
discussed in a neutral body, such as UNCTAD, of its effectiveness. The Lome Convention is also
whose mandate includes development. in conflict with new WTO rules with which all
The Third World Network, a campaign trade agreements must now comply. However,
network of Southern NGOs, is currendy camp- it is likely to continue in some form.
aigning to prevent the adoption of the MAI. The At the same time, the EU is putting consider-
Trade Union Advisory Committee of the OECD able emphasis on promoting and strengdiening
(TUAC) have taken a more pragmatic line, and inter-regional free-trade agreements in areas
are campaigning to incorporate a voluntary code where it has an economic interest, and recendy
of conduct for multinationals based on die OECD signed a landmark agreement committing itself
guidelines. They are also campaigning for a to a gradual establishment of a free trade zone
specific clause on labour rights akin to the with the South American Mercosur group of
NAFTA labour side-agreements. A coalition of countries. This will have profound implications
UK and European development and environ- for workers in EU member countries, yet it is
mentalist groups is emerging to campaign for being introduced with very little public debate.
substantive reform to the MAI, andfoilingthat, to Internally, the proposed moves to a single
block its ratification. It is also seeking to engage European currency will have significant impli-
with UK poverty-focused groups and local cations for employment patterns within the EU.
authorities. All these groups are concerned about On the plus side, the single currency may result
die secrecy and surrounding the discussions. in lower interest-rates and better access to
The negotiations were supposed to finish in European markets, both of which would be
May 1997, but will not be ready for agreement good for jobs. On the minus side, governments
until the next OECD Ministerial meeting in will have to adhere to strict convergence criteria
April 1998. This delay provides an opportunity relating tofiscalpolicy, and will also lose control
to stimulate public and parliamentary debate on over dieir own exchange rates, thereby limiting
the proposed code and to press for substantive dieir ability to pursue expansionary and
reforms to the agreement. redistributive policies. As part of an anti-
inflationary drive, the equivalent of 0.7 per cent
The EU's trade, investment, and of GDP will have to be trimmed from public
employment policies spending to meet the Maastricht criteria that
The European Single Market is based on the budget deficits should be no more than 3 per
most ambitious package of liberalisation cent of GDP. This seems excessively harsh in a
measures undertaken anywhere in the world, region where unemployment affects 11 per cent
with the removal of barriers to investment and of the population, while inflation averages less
trade in goods and services, including liberalisa- than 4 per cent.
tion of transport services. The EU largely The EU Social Chapter and Convention on
determines the trade policies of its member Human Rights provide an important framework

50
Possible solutions

for the protection of workers' rights within well-developed set of social policies which are
Europe. However, as we have seen, this frame- crucial for maintaining social cohesion. It
work is in danger of being significantly weakened therefore offers a useful model to other emerg-
due to intensified competition. Much of the ing regional groupings.
pressure for deregulation comes from within the Finally, the sheer size of its market gives it an
EU, notably from the UK in the recent past. incomparable influence on international trade
Unlike NAFTA, the EU has been, until issues, particularly within the WTO. This power
recently, an agreement between relatively equal and influence means it has a particular respons-
trading partners, thereby reducing some of the ibility to ensure that its policies promote, rather
distributional problems of free trade. Also, than damage, livelihoods in both poorer and
unlike any other regional or international richer countries.
trading bloc, it has a parliament, and a relatively

51
Section 6: Conclusions and recommendations

6.1 Summary of implications for This is not to underestimate the wide


the UK differences and conflicts of interest which
remain between workers in rich and poor
The combined impact of globalisation and free- countries, and the difficulties entailed in
market policies has contributed to great creating a common understanding. Nor is it to
changes to people's lives in the UK over the last suggest a mass international mobilisation in
15 years. Positive changes include rising opposition to free trade. It is also important that
average wages, growing consumer choice, and a focus on common North-South interests in
lower prices. Negative changes are growing reforming international policies does not
unemployment and job insecurity; the growth undermine the urgent and continued need for
in the numbers of working poor; rising traditional forms of assistance to poorer
inequality; social and environmental problems; countries. The unequal nature of the global
and the growing influence of the global econ- economic system, and the far greater levels of
omy and unaccountable international institu- poverty in developing countries, mean that
tions over people's lives. These negative effects there is still an ethical imperative for Northern
are similar in form, if not degree, to the governments to assist developing countries
problems experienced in developing countries, through aid, debt relief, and their trade and
and this shared experience could create the investment policies. Continued support and
basis for joint advocacy for reform of inter- campaigns by Northern groups in those areas
national policies and institutions. would be an important pre-condition for
Although in the short term unskilled workers developing a common advocacy platform. It
in richer and poorer countries appear to be in would be in the long-term interests of richer
competition with each other, potentially diere is a countries to provide such support, as the effects
long-term common interest in fighting job of Third World poverty increasingly rebound
insecurity, the global downward spiral of wages on developed countries in the form of shrinking
and conditions, and the social and environ- export markets, increased incentives for drug
mental problems associated with globalisation. production, and greater flows of economic
Some studies suggest that for some groups of migrants.
people, the negative effects of social and environ-
mental problems are beginning to outweigh the
gains from rising incomes and consumption. 6.2 An agenda for reform
This suggests that the assumptions underlying
orthodox economic policy-making, which equate This analysis of the international context
consumption with well-being, may have to be suggests a number of areas where policy
revised. It also suggests that some groups in the reforms could make a significant contribution
UK, as much as in developing countries, could to improving employment opportunities and
benefit from the social regulation of international the quality and conditions of work. (In the list of
trade and investment flows. recommendations below, the relevant sections
A positive example of this common agenda is of this paper are indicated.)
illustrated by the tri-national campaigning
platform between Mexican, Canadian, and US National policy reform
coalitions which came together in the early The analysis in this report shows that globa-
1990s to reform NAFTA (see Case Study 5). lisation has contributed to growing income
Another example is the international campaign inequality within and between countries, which
by homeworkers for a new ILO convention on has been particularly acute in the UK because of
homework which won approval at the ILO the regressive policies which have been pursued
Conference in June 1996 (see Case Study 7). here. Consequently, even within the constraints

52
Conclusions and recommendations

on domestic policy imposed by globalisation, that there is no violation of the international


there is much a UK government could do to labour standards oudined by the ILO
ensure greater equity and social cohesion conventions, the European Convention on
without losing competitiveness. Useful lessons Human Rights, and the European Social
could be drawn from other national exper- Charter, and the International Covenant on
iences, in particular the early experience of the Economic, Social and Cultural Rights
East Asian countries. The UK government (sections 4.4 and 5.3).
could be urged to promote a more inclusive Publishing an annual report on how labour
pattern of growth by: standards in the UK match up to inter-
national standards; holding regular parlia-
The adoption of a more expansionary mentary debates on the issue; and incorpor-
economic environment with higher public ating international labour standards directly
investment and low and stable interest rates into UK law (section 4.4 and 5.3).
(section 4.2). Adopting legislation to ensure that these rights
A move from a strategy based on a cheap and cover all categories of workers, including part-
flexible labour force to one based on higher time, temporary, and home-based workers, as
value-added production, including public originally intended. In particular, ratifying
support for R&D in new technologies, and implementing the new ILO Convention
increased investment in education and train- on Homework, and supporting future moves
ing targeted at disadvantaged groups, and within the ILO to develop conventions
active government policies to attract invest- covering sub-contracted work (section 4.4).
ment in high-quality and labour-intensive
enterprises (section 2.3). International policy reform
The provision of adequate and flexible forms The ability of die UK government to
of income support for the unemployed and significandy improve employment opportun-
low paid; adequate child-care, particularly ities and conditions would be gready enhanced
for single parents; and a role for government by reforms to international policies. In addition,
as employer-of-last-resort in providing die UK government should do more to ensure
socially useful work for the unemployed. diat international policies and agreements
Financial support for community-based enter- support, rather than damage, livelihoods in
prises, including provision of credit, training, developing countries. This is important not just
and technical assistance (section 5.1). for ethical reasons, but because Third-World
Exploring ways of financing the measures poverty exacerbates unemployment in die UK
outlined above through increases in by reducing markets for exports. Advocacy
progressive income tax, corporate taxation, work aimed at reforming international policies
or taxes on natural resource use. (The is therefore vital, but while UK poverty-focused
Financial Times, for example, has recendy NGOs recognise the constraints imposed by
pointed out that a rise in the UK corporation globalisation, few, if any, are actively campaign-
tax rate from 33 per cent to 35 per cent would ing on this issue. The UK government could be
raise 1.7bn a year and would still be low by urged to:
historical standards)(section 4.1).
Establishing a supportive environment for Work within the OECD negotiations on the
workers' organisations, and ratifying and MAI to move discussions on trade and invest-
implementing the core ILO conventions, ment issues to a more inclusive international
including Convention 111 on Freedom from forum, where developing countries can have
Discrimination, and the ancillary Convention an input. Failing that, to develop more
154 on Collective Bargaining which flexible accession terms for developing
promotes the extension of collective bargain- countries allowing them to sign on sector by
ing by direct government intervention, and sector; broaden the consultation on the
Convention 138 on Child Labour (soon to be proposed OECD Multilateral Agreement on
supplemented by a new Convention seeking Investment in member countries to include
to prohibit the most abusive forms of child other government ministries, local audior-
labour)(sections 4.4 and 5.3). ities and NGOs and promote public debate;
Establishing an Independent Human Rights include a broader list of general exceptions
Commission to vet UK legislation to ensure from MAI rules based on discussions widi

53
The international dimensions of work

developing as well as OECD countries for 6.3 Research


sectors such as social services or policies
aimed at protecting natural resources and There appears to be little detailed analysis of the
human and animal health and safety (similar social impact of recent international trade and
to the general GATT exception); incorporate investment agreements on UK/EU policy, or
binding social and environmental obligations the economic and social impact of foreign trade
on corporations; press for the removal of the and investment flows on poverty and inequality
investor-state dispute mechanism or failing in the UK. There also appears to be little
that the provision of citizens' rights to bring systemised information about the UK's existing
claims against investors, and present their regulations on foreign investors at regional and
case to tribunals considering state-state or local level. Further research and dissemination
investor-state disputes; common rules on of information on these issues would be useful,
financial incentives including ceilings on including:
financial subsidies and restrictive business
competition such as transfer pricing (section Detailed research on the likely impact of the
5.3). (See Oxfam briefing paper on this issue.) proposed OECD Multilateral Agreement on
Work within Europe to ensure less restrictive Investment (MAI), and WTO policies on
convergence criteria on budget deficits for first, the UK/EU's present foreign trade and
the single European currency, and introduce investment policies, for example the use of
targets for poverty reduction and employ- performance requirements on TNCs
ment creation (section 5.3). especially in Assisted Regions or specific
Work within the G7 and IMF to develop co- sectors; second, inward foreign investment
ordinated policies to allow more expan- and its impact on the level and quality of
sionary policies and the regulation of inter- employment in the UK; and third, outward
national financial flows, for example through investment and its impact on employment
a small tax on speculative currency levels in the UK. The research on the MAI is
transactions to raise development finance urgently required and the process of drawing
(the 'Tobin tax')(section 1.1). up, discussing and disseminating the
Work to maintain commitments in the Social research could be used as a means of encour-
Chapter and other EU directives to ensure aging other UK voluntary organisations to
adequate labour protection based on ILO become involved in advocacy on the issue
standards (section 5.3). (section 5.3).
Work within the ILO and other international Research into the employment policy and
fora to support the international commit- practice of foreign-based multinationals
ment for governments to promote and ratify operating in the UK, and the effect of these
core ILO conventions, to strengthen the on the workforce and community, including
existing ILO supervisory mechanisms on the likelihood of relocation, and the social
these conventions, and to introduce new and cultural impact (section 3.2).
conventions ensuring that 'flexible' workers Research and seminars to explore the lessons
have rights equivalent to those of permanent from different economic models, to feed into
workers (section 5.3). advocacy work in the UK; and to compare the
Renew calls for a joint ILO/WTO working EU's social chapter and NAFTA's Labour
committee to consider the relationship Side Accord (sections 2.3 and 5.3).
between trade and labour rights and to Research into the trade-off between meas-
explore the options for the introduction of a ures to improve workers' rights and condi-
social clause at the WTO. The Working tions (whether through legislation or volunt-
Committee should provide observer status ary codes of conduct) on the one hand, and
to, and draw evidence from, experts, NGOs, employment levels and patterns, product-
and grassroots organisations, including those ivity and shareholder performance on the
representing marginalised groups and other. Both theory and evidence suggest that
women (section 5.3). a minimum wage set at the right level can
raise employment levels, but the impact of
other measures, such as the right to collective
bargaining, wage benefits, and health and
safety measures, is not clear (section 2.1).

54
Conclusions and recommendations

Research on the extent and nature of sub- voluntary organisations, to develop research
contracting by private companies and its and advocacy on the international dimen-
implications for pay and working conditions sions of work.
(section 2.1 and 4.4). Sponsoring visits by national and inter-
Research on the gender constraints imposed national coalitions and networks, for
on women's employment by the low status example the Brazilian Hunger Campaign,
ascribed to child care, the lack of child-care the tri-national NAFTA coalition, and repres-
provision, and the household division of entatives from the International Network of
labour between men and women; and on the Homeworkers to meet with sister groups in
legal implications of the UK's signing up to the UK to share their experiences of
the ILO Convention 111 on Discrimination strengthening organisations, alliance
in Employment and Occupation (sections 4.4 building, and advocacy.
and 5.3). Sponsoring visits by workers' organisations
Participatory research to improve under- and community-based groups to exchange
standing of informal-sector initiatives in the experiences of work at the local and national
UK, their potential for job and income level especially with women.
creation, and how government policies can Organising workshops and commissioning
promote them; and the setting up of pilot research to promote learning from inte-
projects to assess which community economic national experiences in relation to com-
initiatives work best in different contexts munity development, gender analysis,
(section 5.1 and Annexe). confidence-building, and skills-training.
Organising workshops with UK-based and
overseas voluntary groups, to share inter-
national learning on techniques of best
6.4 Networking practice in income-generation schemes,
(Sections 5.1, 5.2 and Annexe.) microfinance, and participatory methodol-
ogies for appraising and evaluating the social
International alliance-building is vital to ensure
and gender impact of community develop-
that international policies benefit marginalised
ment initiatives.
groups in richer and poorer countries. Poverty-
focused organisations in the UK could learn Developing training workshops for com-
much from the experience of similar organisa- munity-based groups in the UK to improve
tions in developing countries, and from closer their understanding of globalisation and
contact with UK-based development agencies, other economic issues, to strengthen their
and vice versa. Some activities might be: campaigning and advocacy work.
Encouraging dialogue between consumers
Encouraging alliances across the voluntary and companies, and between companies, on
sector and setting up a working group the social responsibilities of the corporate
consisting of national and international sector.

55
Annexe: Case studies from Oxfam's Programme

Introduction Cairo governorate) and end the exploitation of


the Zabbaleen by the Wahiya. EQI also ran an
These case studies have been selected to show a income-generation programme, the Zabbaleen
variety of programme experience and ways of Small Industries Project (ZSIP), to give loans to
working. Case Studies 1 to 3 give examples of individuals for the purchase of recycling
community-level work. Case Study 4 deals with machines. Processing would add value to sorted
networking and campaigning at national level. materials, and exploitation by traders would be
The organisations involved in the Hunger reduced.
Campaign in Brazil include a multitude of A review of the ZSIP in 1986 found that the
community groups not dissimilar to those in work was fundamentally flawed because it did
Case Studies 1 and 2. The final three Case not address the needs of the most vulnerable.
Studies show how groups with shared concerns None of the beneficiaries of the ZSIP were
or similar experiences working at the local and women, and only few (men) were actually
national level can link up to network, inform, garbage collectors and pig breeders, while 51
campaign, and influence at an international per cent of the money had gone to Gameyya
level. board members. Not only were the objectives of
the ZSIP not being attained, the project was
having some negative effects. Repayment rates
Case Study 1 Employment were extremely low, hence the funds were not
generation in the Zabbaleen 160 revolving. Contrary to claims that the ZSIP
'industrialised a whole community', in fact some
migrant community in Cairo recycling machines were in use before the
project began, and their rapid spread was
The people mainly a consequence of the arrival of elect-
'Zabbaleen' means 'waste collector'. The ricity. The market for recycled goods was now
Zabbaleen of present-day Cairo are migrants saturated, limiting future possibilities and
who have taken over the collection of Cairo's transforming the ZSIP into a general loan fund.
waste from the earlier collectors, the Wahiya, The industries had increased the accumulation
who started controlling the business and extract- of sorted waste materials rather than improved
ing payment for the service. The Zabbaleen the physical environment.
benefited by being able to feed their pigs on The most fundamental criticism was of the
organic materials in the waste; later, they began overall approach. The interveners had seen the
to sort, resell, and recycle materials, such as rags, Zabbaleen as a homogeneous group struggling
plastic, and tin. The Zabbaleen were seen as a with the Wahiya, whereas in fact the benefits of
disadvantaged, minority group who lived in the Oxfam/EQI intervention were being very
appalling physical conditions, and were unevenly spread throughout a heterogeneous
exploited by outsiders such as pig-dealers and community. The evaluation found 'an absence
the Wahiya. of genuine understanding of community social
fabrics and dynamics... channelling money
Oxfam's early interventions without practical commitment to equity and
Oxfam began working with the Zabbaleen in maintaining a paternalistic attitude toward the
1979. A local consultancy organisation, EQI, beneficiaries'.
was contracted to carry out the work. They
developed a local organisation, the Zabbaleen A new phase of support
Gameyya, in order to implement changes in the Oxfam then tried to remedy the situation. It
waste collection system (replacement of donkey- dispensed with EQI's services, hiring individ-
carts by motor vehicles had been ordered by the uals to run the nascent Zabbaleen Health Team

56
Case studies

(ZHT) and the successor to the Small Industries hundreds benefit from the credit scheme,
Project, the Women-Headed Households although the whole community is being affected
Income Generation Programme (WHHIGP). by vaccinations through the health project).
Women had been identified as the most Another important achievement was that
disadvantaged in the community, particularly women's confidence increased (the projects
those who were household heads. work with part-time employees from the
Only women heads of households, formed community), and their participation in public
into credit groups of three to five women, were life is becoming accepted by many male leaders.
eligible for the WHHIGP; the groups were self- The main concern expressed by local men and
selecting; the maximum loan size was very low; women was to improve their image among the
repayment rates were flexible; and the default rest of the population of Cairo. They believe
of one group member would result in with- that they are seen in a negative way, and as
drawal of credit from the whole group. Thus, parasites; this would largely explain the
the project encouraged co-operation rather harassment and lack of development support
than rivalry, and the sense of responsibility of from government officials.162
members to the group resulted in a 100 per cent
repayment rate. The very small loans were only
of interest to the very poor. The demand for Case Study 2 OMAFES: Credit
loans from the WHHIGP remains high, for Women in Bamako163
suggesting that those who have received loans
have benefited; and women in the community
are visibly more confident as a result of training Introduction
of the local health and credit-scheme workers. Mali is the largest country in West Africa, but it
The Zabbaleen Health Team started its work has a population of fewer than 9 million
slowly, by carrying out a health survey which inhabitants. While most people live in rural
identified priorities. With experience, and areas, its cities are growing rapidly. Mali is
training in health care and communication heavily dependent on international financial
skills, the local health workers gradually institutions and on bilateral donors, and began
expanded their role to include home visits, and a Structural Adjustment Programme in the
carried out a sanitation survey. Tangible imp- early 1980s.
rovements include a reported drop in infant The population of the capital, Bamako, has
mortality from 230 to 160 per 1000 live births.161 multiplied more than tenfold in the last 30
years, mainly due to in-migration from rural
Conclusions areas. Urbanisation has been accompanied by
There were revolutionary changes in the high rates of unemployment of unskilled
Zabbaleen settlement during the 1980s. The workers. What has been glorified by many
overall physical environment improved im- World Bank experts as the 'miracle of the
measurably in the eyes of those who knew the informal sector' represents precarious, and ill-
settlement (although first-time visitors still find paid work.
it shocking). Brick-built and multi-storey
houses replaced wooden shacks where people Oxfam's involvement
and livestock lived together, and a large Oxfam has supported projects in Mali since the
measure of industrialisation occurred. 1960s, and has been involved in credit schemes in
These changes cannot simply be attributed to the country since 1984. In addition to its rural
the Oxfam-funded projects, as many factors, programme, it supports urban-based initiatives,
external and internal, were affecting the com- an important one being in Sabalibougou, in
munity during this period, such as infrastructure Bamako, one of the most densely populated
development. The case shows that security and districts of the capital. In 1993 Oxfam made a
empowerment of vulnerable and poor people small grant to an NGO, Oeuvres Maliennes
are crucial factors in development, and also that d'Aide a la Femme et a l'Enfant au Sahel
the wider environment must be taken into (OMAFES), to widen the base of a credit and
account in development interventions. savings scheme with poor women in
A participatory assessment of the impact of Sabalibougou. The programme had been initia-
the more recent work suggests that the scale of ted by women in Sabalibougou, with funds from
both projects has remained very limited (only a Canadian agency, Solidarity Canada-Sahel.

57
The international dimensions of work

Women make up more than 51 per cent of unemployment and dependence on state
the population in the district and many are benefits. The LCU is staffed by one full-time
originally from rural areas. A feature of this development worker and a number of
diverse population is that informal groups and volunteers, who are mostly from the community
associations have formed, especially women's itself. The staff are supporting an element of
groups, often based on geographic origins. social interaction which is central to the project's
These usually fulfil a social function, in response way of working. This demonstrates the
to a need for mutual help and support. limitations of evaluating financial sustainability
Informal credit schemes which operate within on the basis of a narrow financial calculation,
these groups have enabled members to carry especially in cases where it is possible to sustain
out income-generating activities or to pay for voluntary inputs in the long term.
medical care or for their children's education.
LCU financial services and more
Conclusions LCU offers a voluntary savings facility.
The chief benefit of the OMAFES urban credit Members can deposit as little as they like.
scheme has been to provide additional cash to Withdrawals of up to 10 can be made at the
women petty traders, thereby enabling them to main or at one of the various satellite collection
circumvent money lenders who provide credit points which operate on a part-time basis.
at extremely high rates of interest. Oxfam's Larger amounts may take longer, but for those
contribution not only extended this existing who suffer mobility problems, these rules are
credit scheme to a larger group of women, but implemented very flexibly.
also permitted the women to diversify their Quick-access loans in emergencies are also
trading activities and start up new ones. available. The profile of membership and
Activities include buying products, such as lending, in which better-off customers are able
vegetables, firewood, and cereals in bulk or to take larger loans which involve lower risks for
directly from the producers for resale in the LCU, suggests that to some extent these clients
market. are helping to ensure the availability of LCU's
Recently OMAFES's work has expanded services to its poorer clients.
from a focus on women and children to The role of LCU goes beyond financial
incorporate men. Other modifications to the service provision, although many members use
scheme are changes to the way loans are repaid it solely for that purpose. Its role is more
(allowing for a longer repayment period), and broadly supportive of members in financial
the opening of a second office, which will difficulties, and its history and flexible way of
facilitate closer contact between project staff and working distinguish it from commercial
beneficiaries. Other agencies working in the providers of financial services. It provides a
district of Sabalibougou include UNICEF means of building self-esteem, of being in
(installing solar pumps and training young control of one's own life, of being valued and
people) and Enda-Tiers-Monde (setting up a able to contribute and develop personal skills.
training centre for young people). A recent assessment of the project revealed
that the credit union membership did not
generally include the very poorest Ladywood
Case Study 3 Ladywood 164
Credit residents, i.e. people living in debt. The study
Union, Birmingham UK demonstrated that some members see LCU as a
preventive measure to keep themselves out of a
downward spiral of indebtedness to private
Introduction credit-companies. In Ladywood, indebtedness
Ladywood Credit Union (LCU) was set up in to private loan companies is common and
1987, as part of the Ladywood Project, which mostly affects those people whose income is
includes a range of initiatives, such as a drop-in derived from benefits and various forms of
centre for parents and small children, a casual labour.
women's group, a domestic violence forum, and One of the clear advantages of the private
a furniture exchange, where poor families can credit-companies was the immediate nature of
obtain second-hand donated furniture. their loans, given without collateral (against
Ladywood is an inner-city area of rates of about 50 per cent interest on an annual
Birmingham, with a very high incidence of basis). There is thus a philosophical difference

58
Case studies

between the credit union and the private loan- staff member paid with council funds. However,
companies. While the former promotes an ethic it is clearly not the only valid criteria for the
of thrift, providing people with a means of being project's assessment.
in control of their own finances, and living
within their income, the latter tempt people to
spend, live beyond their means, and count the Case Study 4 Brazil's Campaign
cost tomorrow. Against Hunger, Misery and for
LCU users who live on benefits or very low Life
incomes tend to save in irregular small
amounts. They reported using loans to help to
pay for items such as TV licences, utility bills, Introduction
and life insurance. Such members felt they The objective of Brazil's campaign against
could not use banks due to embarrassment at hunger, misery and for life is to raise awareness
the small amounts they deposited. Some who in Brazilian society about the situation of the
had tried to save in the credit union found poorest 20 per cent of the population (some 32
themselves unable to keep up with their initial million people), who are unable to meet even
expectations of their own savings capacity. their basic food needs. It aims to involve people
Those people on benefits are very positive about in practical action, such as the donation of
the credit union, stressing in particular the foodstuffs or employment creation schemes at
understanding approach of staff, the flexibility, the local level, through local committees. It also
the chance it provides to save in small amounts, aims to increase pressure on the authorities
the low rate of interest on loans, and the greater (municipal, state and federal) for effective short
sense of control it offers them in difficult and long-term policy measures to eliminate
circumstances. extreme poverty. It addresses both short-term
However, the majority of LCU members fall welfare responses and longer-term structural
into another category: they are people who have changes, and links poverty and misery to a
a regular income, including some professionals. denial of rights.
All of these people have bank or building- The campaign, formed in 1993 and led by
society accounts into which their salaries are Brazilian NGOs, followed on from the
paid, and make contributions to LCU by means Campaign for Ethics in Politics, which was
of automatic transfers. instrumental in the impeachment of the then
President Fernando Collor. It has achieved
Conclusions government support, and a governmental
The case of LCU illustrates a number of points, National Food Security Council, which includes
in addition to underlining the importance of representatives of NGOs among its members,
voluntary workers to the sustainability of these has been created. The private sector and banks
initiatives. First, it shows the difficulties of have also given their support, as well as trade
reaching those who are already highly indebted unions, church groups, students, teachers, and
and unable to make even small but regular other professionals. There are thousands of
savings which might eventually qualify them for local committees and volunteer workers
a loan. Second, the importance of the involved. It is an unusual example of large-scale
combination of a financial service with a strong public response to the erosion of social and
social-support structure which encourages economic rights and of co-operation between
people to take control of their finances. Third, civil society and the state.
the role that other members of the local
community can and do make in providing the Jobs
service. These better-off people contribute by The campaign encompasses thousands of local
investing their capital and hence providing the initiatives, and in March 1994 launched its
funds for on-lending, taking and repaying objective for jobs. This phase of the campaign
loans, so providing LCU an income, and also by aimed to ensure that any policy of development
volunteering their time to assist in the running must affirm that work for all and a just wage are
of the union. conditions of citizenship. In a country with 2.4
The financial sustainability of the project is million unemployed and some 12 million who
still questionable. Despite a modest profit from receive less than the minimum wage this is
1995, the project is still run by volunteers and a optimistic. Some of the citizens' action

59
The international dimensions of work

committees are rinding creative ways of safeguard labour rights, or any structural funds
developing community work for local to redistribute income within the area.
unemployed people. Although the Campaign is Campaigners predicted that the agreement
said to be losing some of its earlier momentum, would destroy jobs, and foster poverty and
successful examples are still being reported. For inequality within and between the member
example, the Comite de Fonte in Campo countries.
Grande has facilitated self-help in building 74 Strong and active campaigning coalitions
houses by a local tailoring co-operative, whilst built up in Mexico, Canada, and the US initially
members of the same co-operative are being to oppose the introduction of NAFTA and
trained in industrial sewing by a textile promote an alternative 'development pact'
company. The Comite de Fonte is now looking between the three countries. When this batde
for donations of sewing machines.165 In Belo was lost and NAFTA was introduced these
Horizonte a locally-funded project brings 500 groups continued campaigning to reform it.
children back to school through paying school The coalitions formed together in a tri-national
fees and is organising skills training for their coalition to coordinate their campaigning
unemployed parents.166 objectives, analysis, and strategies. This was
crucial because the free trade agreement
Conclusions appeared to be pitching US, Canadian, and
The Campaign is a good example of an Mexican workers into even more intense
approach that recognises the need to tackle competition with each other. (Oxfam helped to
long-term structural problems and short-term fund some of the advocacy work of the Mexican
needs like employment, education, and also coalition and published a book to publicise their
food provision simultaneously, as they are work in Europe.167) Enough pressure was
mutually determined. It is recognised that there generated, also by right-wing populist elements
is a need to work on several levels at the same in the US, to persuade the member govern-
time. The Campaign also illustrates that NGOs ments to introduce side agreements aimed at
are only one actor amongst several, and that safeguarding labour and environmental
rather than substituting for the state or the standards.
private sector, the participating organisations There are many important lessons from the
have sought to create new relationships national and tri-national coalitions which could
between them in order to develop sustained usefully be transferred to the British and
changes. European scene, especially as Europe moves
towards the introduction of a single currency,
which will have far-reaching social implications.
Case Study 5 The Tri-National This case study focuses on the lessons from the
Campaigning Coalition Against Canadian coalition, the Action Canada Network
NAFTA (ACN), which are of more immediate relevance
to the UK.
In January 1994, the North American Free Although the ACN failed in its main
Trade Agreement came into effect, linking objective, which initially was to halt the
Mexico, the United States, and Canada in a pact introduction of NAFTA, it achieved some
to promote the free movement of trade and significant successes. It provided the missing
investment. The agreement was of special link between fragmented and largely powerless
importance because it was the first of its kind to community or single-issue groups, and national
link countries from the developed and develop- political parties which were unwilling or unable
ing worlds. to challenge the business elite. It was able to
Campaigners saw the agreement as essen- exert a strong pressure on the government and
tially anti-democratic, as it cemented into place political parties, providing an important
unpopular free-market reforms into an counterbalance to the influence of the business
international agreement which would be very interests which had successfully lobbied in
difficult for national governments to abrogate. favour of NAFTA. It also helped to galvanise
Unlike the European Union, there were no public opinion behind a reforming agenda,
political structures to ensure the accountability shifting the terms of the debate and forcing
of the tri-national trade commission. Nor were politicians and the media to respond to some of
there initially any social policies or provisions to its concerns. Enough pressure was generated to

60
Case studies

persuade the member governments to intro- issues within their organisations, encourage
duce side agreements aimed at safeguarding their members not to break picket lines, and to
labour and environmental standards. support their picket lines;
A key factor contributing to the success of the The coalition was also able to draw on the
ACN is its membership which is organised on a expertise of policy-makers and academics,
multi-sectoral and provincial basis, and consists which helped to ensure that the quality of their
of over 50 national organisations and networks analysis, which included assessments of the
including trade unions, and 9 provincial impact of NAFTA on a sectoral basis, was
coalitions made up of aboriginal, anti-poverty, sophisticated and rigorous.
church, cultural, development, environmental, Crucially, this experience was repeated at the
farmers, labour, tenants' rights groups, peace, international level between the Canadian,
senior citizens, women's centres, and others. Mexican, and US coalitions. The tri-national
The strong local and grass roots involvement coalition was able to develop and agree a
ensures the coalition's relevance to the lives of common platform despite the fact that NAFTA
ordinary people and provides a voice to those would affect each economy and different social
normally excluded from policy making. By sectors in such diverse ways. There was a shared
bringing together these groups the coalition understanding that although some groups may
also helps transform what would otherwise be a gain in the short run, especially Mexican
broad variety of relatively powerless single issue workers who were likely to gain jobs as
and community based groups into a powerful companies relocated to take advantage of their
coalition for broad social change. Even so, these cheaper labour, in the long term all would
groups would not have been able to mount suffer the effects of mobile investment, and the
effective opposition to neo-conservative policies ensuing job insecurity and fierce competition to
without the support of the more powerful lower wages and standards. In the case of
national organisations, such as trade unions. Mexico, it was also the case that, vast numbers of
The coalition meant that difficult decisions peasants were likely to suffer due to the
about policy trade-offs between different liberalisation of grain markets.
groups were debated and decided directly by
the participating groups, rather than distant Conclusions
policy-makers. This in turn forced the partici- One of the preconditions for establishing a
pating organisations to learn from each other. common policy platform between the Mexican,
The Canadian labour movement was, for US, and Canadian networks was the
example, strongly influenced by its interaction commitment of the latter two groups to
with the women's movement, and came to campaign for debt relief and improved human
strongly support its demands. Anti-poverty rights in Mexico, in recognition of the
groups gained a greater understanding and inequalities faced by Mexico.
support of labour's concerns, and unions were A principal factors contributing to the success
able to broaden their links with other groups of the campaign was the fact that there was a
and to see themselves not just as workers but as concrete yet far-reaching issue which bound the
members of communities concerned about the coalitions together. This is not necessarily
environment, housing, education, health etc. replicable in the UK because the EU experience
One striking example of how the unions is more positive than the NAFTA one, and
became more sensitive to other groups was the positions are more mixed. However, the wider
introduction of 'solidarity pacts' by the issue which held the NAFTA coalitions
Canadian Union of Postal Workers, an initiative together, and which has a greater possibility for
which reflected their concern about how replication among progressive groups in the
vulnerable groups were affected by public UK and Europe, was opposition to the regres-
sector strikes. During their 1991 strike the sive elements of neo-conservative policies. The
union agreed to continue to deliver pension ACN, for example, is engaged in a wide range of
cheques and social assistance to pensioners, campaigns aimed at changing government
students, poor people, people with disabilities policy and public opinion, particularly in
and rural groups. It also made a commitment to defense of jobs and social services. Its most
try to stop the closure of rural post offices. In recent popular campaign involves the
return each of these groups made a promotion of an 'Alternatives Federal Budget'
commitment to the Union to talk about their aimed at pressurising the government to

61
The international dimensions of work

introduce less deflationary and more equitable poverty in employment, inequality, and social
fiscal policy, and preventing further cuts in disintegration.
social programmes. Because of the dramatic increase in poverty
From a reformist position, an important during the implementation of structural
criticism of the campaign was that its initial adjustment programmes, women became very
campaigning objectives, which opposed the active in the community, running soup-kitchens
introduction of NAFTA, were not achievable. or providing health care and advice. These
Had they concentrated on specific proposals to activities often involved women in negotiations
reform NAFTA they might have gained even with the authorities. Many of the women were
more. In contrast, critics from a more radical also involved in human rights work. Oxfam
position have argued that what was lacking was supported community groups by providing
a broader longer-term vision and strategy for an training in confidence-building and leadership
alternative society. skills to help women to run these organisations
Other suggestions to improve the campaign effectively, speak at meetings, and negotiate
have included the need to broaden the with government officials.
membership of the coalition even further, not Because of the high levels of male
just to make it stronger but in order to learn unemployment and falling wages during the
from the insights and experiences of disabled adjustment period, women also had to become
groups, equality-seeking groups, ethnic groups, breadwinners and began entering the labour
and others. market in increasing numbers. As in Britain,
many of the women took up low paid "flexible"
jobs. Because the political situation was so
Case Study 6 Research and repressive, Oxfam provided support to some of
advocacy on the impact of these workers in their communities, rather than
structural adjustment policies at their place of work. This included training in
on employment confidence building, leadership skills, trade
union organisation, workers rights relating to
Oxfam has a global research and advocacy child care, pay, working conditions, sanitation,
programme aimed at influencing the design of health and safety, and legal advice.
Structural Adjustment Programme to help to One long-standing project is in the Patronato
reduce poverty and inequality. The research district of Santiago, a centre for the clothing
seeks to examine the impact of these policies on industry. A large proportion of garment
people's lives in three main areas: employment, production is contracted out to thousands of
health, and food security. The main institutions garment sweatshops and homeworkers, gener-
which it seeks to influence are national govern- ally women. Labour laws are often flouted and
ments, the World Bank, and the IMF. The work the women often have no written contracts or
involves the joint development with other are hired on a temporary or casual basis. Pay
groups and networks of influencing strategies at and conditions are often poor. Because of the
the national, regional, and international level. fragmented and dispersed nature of the
Chile was selected as one of the main focuses production system it is difficult to organised
for the research because it is has faithfully workers into unions; and unions tend to be
applied free-market structural adjustment male-dominated and not always sympathetic
policies for over two decades, and is widely towards the problems of women workers.
viewed as a successful model which other Following a needs assessment Oxfam
countries should seek to emulate. provided funds for a local canteen which
Oxfam worked in Chile throughout the consisted of a couple of rooms with chairs, tables
Pinochet dictatorship's implementation of the and a stove, in the heart of the garment-
structural adjustment programme, supporting producing area, where women could take their
community groups and women workers, own food at lunchtime. The idea was essentially
including sweatshop and home-based workers to provide the women with a much needed
in the garment and shoe industries, and 'space' to meet, discuss their problems, and seek
temporary workers in the agricultural exports advice on their rights and legal issues. Slowly,
sector. In contrast to the impressive macro- women began to develop the strength and
economic indicators, the experience of these courage to speak out about abuses of labour
groups has been one of growing insecurity, rights. One example of this was when a woman

62
Case studies

who was beaten up her employer decided to networks. National and international groups
speak to the media even though this meant she and networks have devised informal methods of
lost her job. A more recent example was a media liaising and coordinating their advocacy work in
campaign to publicise the role of factory recent years. This usually entails targeting the
inspectors with the aim of tightening up on Annual and Spring meetings of the IMF and
labour laws and reducing corruption. World Bank in Washington.
In the early 1990s one of the main concerns The NGOs lobby government delegations
of Oxfam's local staff and counterpart (Executive Directors and Finance Ministers)
organisations was to explore the link between and this is complemented by high-profile media
flexible labour practices and the growth of work through individual briefings and press
poverty and social disintegration following the conferences. A great deal of critical press
implementation of extreme labour-market coverage has been generated in recent years,
deregulation under Pinochet in the 1980s. which has put pressure on the World Bank, if
Despite the concern of the subsequent civilian not the IMF, to modify some of its policies.
governments elected in 1990 and 1994 to Media work is particularly effective during the
promote growth with equity, they had main- tri-annual replenishment period, when the
tained the essential elements of the deregulated World Bank has to seek new funding from
and flexible labour market. member governments. Both the IMF and
A reference group was set up in Chile World Bank have decided to hold their own
comprised of Oxfam staff, grassroots groups, press conferences at different times, to counter
and researchers to help to develop the research the effects of NGO criticism.
and devise a capacity-building, dissemination, The groups and networks campaigning on
and influencing strategy. The group wanted to structural adjustment programmes have
ensure that the research was relevant to local developed a relatively sophisticated analysis of
needs and could be used by local groups. The the impact of these policies, as well as positive
selection of researchers who combined sound and coherent proposals for policy alternatives.
academic skills with community activism meant
that they played an active role in the subsequent
dissemination and advocacy strategies. Case Study 7 A common agenda:
At the local level the strategy included three homeworkers organising
national seminars, bringing together grassroots internationally
groups, trade unions, academics, government
officials, and representatives from international Oxfam supports organisations of homeworkers
institutions. It also involved capacity-building in various countries: the National Homework
sessions with local organisations across the Group in the UK; SEWA (the Self Employed
country. The research findings are now being Women's Association) in India; SEWU (the Self-
incorporated into an advocacy strategy designed Employed Women's Union) in South Africa;
to influence the national government, which is sweatshop workers and homeworkers in the
the most important actor now that the IMF and garment and shoe industries in Chile; and
World Bank has largely withdrawn from the NGOs researching the issue in Peru.
country. This is a particularly opportune time as The low pay and often abysmal working
the government is currently considering intro- conditions of homeworkers are a central
ducing a package of labour reforms ostensibly to concern of Oxfam's Clothes Campaign, which is
improve labour rights. aimed at improving working conditions in the
At the regional level, a series of seminars have garment industry, where homeworking is
been held with relevant networks in Colombia, widespread. As part of this campaign, Oxfam is
Mexico, and Peru to exchange analysis and trying to ensure that voluntary codes of conduct
strategies on employment issues. Oxfam also adopted by companies are extended to
organised a seminar for the Chilean researchers homeworkers as well as factory workers. Oxfam
to present their evidence to the World Bank also supported the international campaign for
with the aim of modifying the Bank's approach the new ILO Convention on homework. The
in other countries. sub-contracting of homeworkers, along with
At the international level the research other forms of flexible work, is also an
findings have fed into the wider influencing important focus of Oxfam's advocacy with
strategies of Oxfam in coordination with other governments, the IMF, and World Bank to

63
The international dimensions of work

improve employment protection for vulnerable Led by SEWA, the network recently
and marginalised groups of low-paid workers. organised a successful international campaign
Homeworkers rank among some of the least to persuade the ILO to introduce a new
protected, most vulnerable, and badly-paid Convention on homework, which was approved
groups of workers. They are frequently denied at the ILO Conference in June 1996. Although
the rights enjoyed by permanent workers, and the success of the campaign relied on winning
have often been inadequately represented by the support of national and international trade
trade unions. Over the last 15 years they have unions, the homeworkers maintained their
begun to organise themselves independently, organisational independence throughout. The
either as associations, NGOs or cooperatives in Convention was unusual for the ILO;
different countries around the world. SEWA is Conventions for the protection of'unorganised'
one of the oldest groups and has been workers have been rare.
organising homeworkers since the early 1970s. Approving the Convention is, of course, only
It has a two-fold strategy aimed at helping sub- the first step. It will then need to be ratified by
contracted piece-workers to achieve equivalent governments and translated into national
rights to permanent workers; and helping own- legislation, according to local social and
account workers establish themselves as economic conditions. But the Convention offers
independent cooperatives and gain access to an important political tool for homeworkers to
credit, markets, and technology. exert pressure on governments and employers
One of the reasons for their campaigning to ensure that they receive a living wage and just
success has been the recognition that in an era of employment conditions. The Indian govern-
mobile investment, action at the international ment has already agreed to ratify and
level was essential to improve the conditions for implement the Convention. Governments in
homeworkers. As a result, in the last six years the richer world should follow suit.
there have been growing contacts and exchanges
between groups in different countries. SEWA has Conclusions
played a particularly active role in this, and has This example shows how workers in different
visited the UK National Group on Homeworking contexts can come together on the basis of
(NGH) to share analysis and organising similar experiences and shared concerns. It
strategies. In 1994 an international meeting was shows how work at the local level can be
held to set up the international network, reinforced and strengthened by international
HomeNet, to coordinate work with home-based networking and lobbying.
workers in different parts of the world.

64
Notes

1 Adrian Wood, 1995, 'How trade hurts Environment.


unskilled workers', Journal of Economic 23 David Harvey, 1989, The Condition of
Perspectives, Volume 9, Number 3. PostModernity, Blackwell.
2 Financial Times, 30.6.95 24 UNCTAD, 1995, Commission on International
3 Independent on Sunday ,7.5.95. Investment and Transnational Corporations,
4 Economist \. 10.94. Incentives and Foreign Direct Investment,
5 International Trade 1992-1993 GATT Geneva, Geneva.
1993. 25 CCBI, 1997, Unemployment and the Future of
6 Financial Times, 24.7.95. Work: An enquiry for the Churches.
7 Economist \. 10.94. 26 Arjan de Haan, 1977, 'Urban poverty and its
8 Certain industries such as clothing and alleviation', IDS Bulletin, Vol 28 No 2.
footwear where labour costs account for 27 ILO, 1996, World Employment Report, Geneva.
about one-third of total production costs as 28 World Bank, 1996 Workers in an Integrating
opposed to around 3 per cent in semi- World, World Development Report.
conductors are particularly affected. About 29 ILO, 1996, World Employment Report.
30 per cent of all clothes bought in America 30 Economic Commission for Latin America
come from the Third World; and 22 per cent Chronicle, April 1997, Reports to First Regional
of those in Western Europe. Conference in Follow-up to the World Summit for
9 Paul Hirst and Grahame Thompson, 1996, Social Development.
Globalisation in Question, Polity Press. 31 Various sources elaborated in the later text.
10 ILO 1996 World Employment Report. 32 IDB, April 1997, Demographic Suprises.
11 P Krugman, 1995, Growing World Trade: 33 ILO, Child Labour: What is to be done? ILO
causes and consequences, Brookings Papers on Publications, Geneva.
Economic Activity, Brookings Institute. 34 Anti Slavery Reporter Child Labour in the
12 World Bank, Global Economic Prospects and the UK: A Call for Action.
developing countries, Washington. 35 ILO, 1995 World Employment Report.
13 Paul Hirst and Grahame Thompson, 1996, 36 Report by the International Confederation of
Globalisation in Question, Polity Press. Free Trade Unions quoted in the Financial
14 GATT, 1993, International Trade, 1992-1993, Times, 14.6.95.
Geneva. 37 Unless otherwise stated evidence from this
15 UNCTAD, 1996, The Least Developed section is taken from the 1995 and 1996 ILO
Countries, Geneva. World Employment Reports.
16 World Bank-OECD study, quoted in 38 Employment Policy Institute, 1996,
Financial Times, 12.4.94 and 5.10.94. Employment Audit.
17 World Bank Debt Tables. 39 The OECD Jobs Study, Facts Analysis, Strategy,
18 Paul Hirst and Grahame Thompson, 1996, 1994.
Globalisation in Question, Polity Press. 40 UNDP, 1996, Human Development Report.
19 Carillo J, 1995, 'Flexible production in the 41 World Bank, 1993, Latin America and the
auto sector: industrial reorganisation at Caribbean: A decade after the Debt Crisis.
Ford-Mexico', World Development 23. 42 UNDP 1996 Human Development Report.
20 United Nations World Investment Report 1993, 43 UNCTAD, 1997, Trade and Development
Transnationals and integrated international Report, Globalisation Distribution and Growth.
production, New York. 44 Economic Commission for Latin America
21 Kevin Watkins, 1995, Oxfam Poverty Report, and the Caribbean, 18th April 1997, ECLAC
Oxfam. reports to First Regional Conference in Follow-up
22 Women's Environment and Development to the World Summit for Social Development.
Organisation, WEDO, Understanding the 45 Herman E Daly and John B Cobb J r , 1990,
Impact of the Global Economy on Women and the For the Common Good, Green Print.

65
The international dimensions of work

46 Jeremy Rifkind, 'The end of work', New work and sub-contracting, reduced incent-
Statesman and Society, 09.6.95. ives for companies to train workers, to invest
47 World Bank, 1995, Workers in an Integrating in new technologies, or to improve product
World, World Bank World Development quality. See Fernando I Leiva and Rafael
Report. Agacino, 1994, Flexible Labour Markets, Poverty
48 They also tend to stress the effects of and Social Disintegration in Chile: the limitations
exogenous, rather than endogenous, supply of World Bank Policies, U p d a t e d English
shocks in reducing growth and exacerbating version also available, March 1996.
unemployment, such as the two oil price 57 1996, OECD Employment Outlook.
increases in the 1970s which hit oil-importing 58 See Oxfam Briefing Paper on Employment,
countries, and falling international commod- June 1996.
ity prices and the US hike in interest rates in 59 World Bank, 1993, Implementing the World
the early 1980s which greatly exacerbated the Bank's Strategy to Reduce Poverty, Washington.
debts of many developing countries. 60 See for example the OECD report on Trade
49 Financial Times, 10.2.97. and Labour Standards, quoted in The
50 In the case of minimum wages the critical Financial Times 21.5.96.
variable is their relation to average wages. 61 Economist, 1.10.94.
The employment effects will also be influ- 62 Paul R Krugman and Robert Z Lawrence,
enced by such factors as the ease of 'Trade, jobs and wages', Scientific American,
substitution between different groups of April 1994.
workers and/or new technology; and the 63 Berry, Horton and Mazumdar, 1997,
extent to which increased wages costs are Globalisation, Adjustment, Inequality and
absorbed by increases in productivity, profits Poverty, Background paper for UNDP
or prices; and the exposure to international Human Development Report, 1997.
competition. 64 Adrian Wood, 1995, 'How trade hurts
51 See for example Jared Bernstein, 1995, The unskilled workers', Journal of Economic
US minimum wage: Current issues in the debate, Perspectives, Volume 9, Number 3.
Economic Policy Institute, Washington DC; 65 Letter to the Financial Times, 15.5.97.
Ralph Hoeven and Francis Stewart, 1993, 66 UNCTAD Trade and Development Report,
Social development during periods of structural Globalisation, Distribution and Growth, 1997.
adjustment in Latin America; ILO occasional 67 For a critical discussion of these policies see
paper, 18; Research commissioned by Oxfam, Kevin Watkins, 1995, Oxfam Poverty Report,
Fernando Leiva and Rafael Ignacio, 1995, Oxfam Publications, and 'Economic Reform
Flexible Labour Markets, Poverty and Social and Inequality in Latin America: An Oxfam
Disintegration in Chile: the limitations of World Report', Ruth Mayne, Oxfam, February
Bank policies, updated summary English 1995.
version 1996. 68 World Bank, 1995, World Development Report,
52 ILO, 1996, World Employment Report. Workers in an Integrating World.
53 See for example R Rackman, R Layard and S 69 Financial Times, 3.12.96.
Nickell, Combating unemployments flexibility 70 Guasch J and Rajapatirina J, December 1994,
enough?, Paper for the OECD Conference on The Interface of Trade Investment and
Interactions between Structural Reform, Competition Policies: Issues and Challenges for
Macroeconomic Policies and Economic Latin America, World Bank.
Performance, Paris, January 1996. 71 Stein H, 1992, 'Deindustrialisation, adjust-
54 Susan Horton, Ravi Kanbur, Dipak ment, the World Bank and IMF in Africa', ,
Maxumdar, 1994, Labour Markets in an Era of World Development 20.
Adjustment, Volume 1 and 2, EDI 72 Layard Richard, 1997, What Labour Can Do,
Development Studies. Warner Books.
55 See for example Thomas I Palley, 'The forces 73 1993/4 Government White Paper on
making for an economic collapse', Atlantic Competitiveness.
Monthly, October 1996. 74 Layard Richard, 1997, What Labour Can Do,
56 Various ILO Publications. Also, Oxfam Warner Books.
research on Chile shows that government 75 World Bank, 1995, The East Asian miracle,
policy which facilitated cheap and flexible Policy Research Report OUP.
working arrangements, such as temporary 76 Denis MacShane, Britain and the International

66
Notes

Economy, For Richer and Poorer. Secretary John Monks, on inward investment,
77 The WTO came into existence in early 1995 n.d.
as a result of a decision taken by the world's 85 Financial Times 30.12.96.
trading nations at the end of the Uruguay 86 Financial Times, 13.10.97.
Round of negotiations of the General 87 UNCTAD, 1995, UNCTAD Commission on
Agreement on Tariffs and Trade (GATT). It International Investment and Transnational
is a forum in which member governments Corporations, Incentives and Foreign investment,
negotiate international trade agreements, set Geneva.
the rules for international trade and settle 88 ibid
trading disputes. When it was established the 89 The EU has complete responsibility for our
WTO was given unusual enforcement power trade policy subject to the provisions of
in the form of the ability to use the withdrawal GATT. All protective duties between EU
of trade privileges or the imposition of trade states have been abolished, except for certain
sanctions to force non-cooperative govern- goods from the Canary Islands and Portugal.
ments to meet their obligations. The EU has a common trade policy for goods
78 The principles which this agreement will entering from outside the EU. Most raw
establish will include the following; foreign materials enter die EU duty free or at a rate
investors have the right to free entry and seldom above 4.5 per cent but there is an
establishment in host countries without escalating rate for semi-finished and finished
restriction; they should be treated in the same goods, from 2 per cent to 14 per cent, and
way as domestic investors with no special from 3 per cent to 20 per cent respectively.
treatment for the latter; prohibition of Under the Lome Convention with African,
government performance requirements on Caribbean and Pacific states, and EU's
TNCs; no further regulation of investment Generalised System of Preferences (GSP) a
should be introduced and existing regulation wide range of goods meeting die rules of
should be rolled back; foreign investors origin may be imported from developing
should have the right to freely transfer funds countries mosdy at a reduced or zero rate of
overseas; there should be strong and effective duty. The Lome convention will expire in the
protection for investors against nationalisa- year 2000 and discussions are under way to
tion or expropriation; and if such actions do see whether it will continue to receive an
occur, there should be guarantees of prompt exemption from the WTO. The EU has
and adequate compensation at market price, removed most quantitive restrictions from
rather than the purchase price; a dispute most imports except for controls on bananas,
mechanisms which provides for state-state certain textiles and clothing (B) UK
disputes but also gives corporations the right Investment Policy: unlike trade policy the UK
to sue governments over any breach of MAI retains 90 percent of die responsibility for
provisions; and withdrawal clauses which lock investment policy subject to the relevant
in contracting countries for a 20-year period. provisions in GATT. Although die UK has a
For a more in-depth discussion see Oxfam relatively liberal investment regime, it can
briefing paper on the MAI; and Third World and does put some performance require-
Network Briefing Paper: the Multilateral ments on foreign investors in the Assisted
Agreement on Investment (MAI): Policy Regions. For example financial subsidies to-
Implications for Developing Countries, foreign investors are conditional on the
1997). number of jobs created. This may change
under the IGC because some EU states and
79 OECD, Paris 1995, Agricultural policies,
the Commission have proposed diat certain
markets and trade in OECD countries: monitoring
powers pass to the European level. The
and outlook.
proposed OECD MAI will also reduce the
80 FCO, DTI, Free Trade and Foreign Policy: A government's regulatory powers. The EU
Global Vision. also imposes certain requirements, for
81 J. Dunning, 1993, Multinational Enterprises example that domestic and foreign car
and the Global Economy. manufactures must source 70 per cent of dieir
82 Invest in Britain Bureau, Britain the Preferred content widiin the EU.
Location.
83 Financial Times, 1.5.97. 90 Job loss in the UK has also been associated
84 TUC bribing notes for speech by General with widening wage gaps, with male manual

67
The international dimensions of work

workers in the rest of the manufacturing Government began to phase out import
sector, and a shift away from relatively better controls on US maize which is good news for
conditions offered by large and medium- US cereal companies but it poses an
scale employers to more intensive exploitation imminent threat to the livelihoods of over
(sweat-shops and homeworkers). Sub- two million peasant households. US maize
contracting of this sort at home offers the producers receive around $5bn annually in
advantage of low wages combined with con- subsidies amounting to around $14,000 per
sistent quality, flexibility, and fast response. farmer, equivalent to around 30 times the
However, countries closer to home like average income in the Philippines.
Morocco and some Eastern European In Mexico the North American Free Trade
countries can now offer these advantages with Agreement has accelerated the liberalisation
wage rates around 25 per cent of those in the of US maize imports threatening the liveli-
UK. hoods of an estimated 2.4 million of Mexican
91 GMB figures. small holders. Average yields in Mexico are
92 See for example V.N Balasubramanyam and less than a quarter of those in the US.
M A Salisu, November 1992, International 107 Angela Hale, 1996, World Trade is a Women's
Trade and Employment in the UK Textiles and Issue, Women Working Worldwide Briefing
Clothing Sector, Lancaster University Paper.
Discussion Paper EC 108 ibid
93 Financial Times 8.12.96. 109 OECD, 1994, The OECD Jobs Study Facts,
94 Financial Times 13.12.96. Analysis, Strategy.
95 Edward Luttwark, London Review of Books, 110 Jeremy Rifkind, 'The end of work', New
8.12.96. Statesman and Society, June 1995.
96 Economist 1.10.94. 111 Economic Policy Institute, 1993,
97 UNCTAD, 1996, World Investment Report, Washington DC
New York 112 'Buchanan has it right', Edward Luttwak on
98 Rowthorn B, 1992, 'Corporatism and labour the merits of protectionism
performance' in Rowthorn B et al (ed) Social 113 Financial Times 30.12.96.
corporatism, Oxford University Press. 114 Economic Commission for Latin America,
99 de Jonquieres G 'The tigers face a challenge' 1995 Economic Overview of Latin America
Financial Times 24.9.93. 115 Adrian Wood, April 1995, Trade and
100 Guardian 25.4.96. Employment Creation: Possibilities and Limitations,
101 Financial Times, 13.12.96. Development Research Insights, ODI
102 See for example Ruth Mayne, Oxfam, March 116 Investor Responsibility Research Centre
1996, New Economic Policies and Employment in (ICCR), 1996, Human Rights and Labour Issues
Latin America: The Case for Reform; and Kevin 117 OECD 1994, The OECD Jobs Study Facts,
Watkins, Oxfam 1996, Oxfam Poverty Report; Analysis, Strategy
and Ruth Mayne, Oxfam in Ireland, 1996, 118 ILO, 1997, General Conditions to Stimulate job
Economic Reform and Inequality in Latin America creation in small and medium-sized enterprises,
103 ILO, 1995, World Employment Report, Geneva. Report V(l)
104 Trevor Evans et al, 1995, Structural Adjustment 119 I L O , 1994, Labour Review for Latin America
and the Public Sector in Central America and the and the Caribbean and Social Panorama of Latin
Caribbean, CRIES. America, United Nations Commission for
105 Central Bank of Nicaragua and Ministry of Latin America, Santiago
Employment. 120 HomeNet International Newsletter
106 As a result of trade liberalisation food imports 121 IL0.1991, General Report I, Forestry and
into Sub-Saharan Africa which were Wood Industries Committee, Second
insignificant in the 1960s now account for Session, Geneva.
almost 20 per cent of the region's total 122 P E Leighton, May 1995, Contract Labour in
foreign exchange earnings. The group of UK: Law andpractice, report submitted for the
countries classified as 'low-income food- ILO research project on contract labour.
deficit' are now spending about their foreign 123 See Oxfam UKI briefing paper on
exchange earnings on food imports, double Homeworkers, May 1996 for a summary of
the proportion they spent 30 years ago. the research
Over the last year the Philippines 124 Social Policy Summary 7, February 1996, The

68
Notes

Future of Work: Contributions to the Debate. 132 Child Poverty Action Group, 1993, Poverty:
125 IDB, April 1995, Challenges for Peace: Towards the Facts
Sustainable Development in Peru, Reportfor Pilot 133 ILO, 1996, World Employment Report
Mission on Social Issues. 134 Research commissioned by Oxfam Fernando
126 Research conducted for Oxfam. Estrella I Leiva and Rafael Agacino, March 1996,
Diaz, June 1994, 'Impact of the Export 'Flexible Labour Markets, Poverty and Social
Model on Workers and the Environment: Disintegration in Chile: The limitations of
Analysis of the fruit and fishing sectors', World Bank Policies'. Updated English
Santiago, Chile. version
127 idem. 135 Alvaro Diaz, October 1993, Restructuring and
128 John Philpott and Nick Isles, Guardian the New Working Classes in Chile,, UNRISD
11.11.96. 136 Frank Wilkinson, 1992, Why Britain needs a
129 National Group on Homeworking, quoted in Minimum Wage, Institute for Public Policy
Drapers Record, August 1996, page v. Research.
130 For further details see Human Rights, Human 137 Mr Richard Kersley, UK strategist at Barclays
Wrongs, The Alternative Report to the United de Zoete Wedd, quoted in Financial Times,
Nations Human Rights Committee, Conor Foley 14.1.97.
with Liberty, River Oram Press, London 138 Robert B Reich, 1993, The Work of Nations,
1995. Vintage Books.
131 Clearly, rises in inequality and poverty can 139 The Economist, 28.9.96.
not be solely attributed to employment 140 Latin America Weekly Report, 14.7.94, 'The rich
trends. In Sub-Saharan Africa formal sector have indeed got richer'.
employment is not a significant source of 141 See for example Oxfam, 1996, Exchanging
livelihood for the majority of people. Livelihoods urban edition, and Neefjes et al
Conversely, in the OECD and other regions 1996, Examples of urban development work from
such as Latin America it plays a much more Senegal and Egypt in: Hall, Hart and Mitlin,
important role. According to the United 1996, The Urban Opportunity, IT Publications.
Nations Economic Commission for Latin 142 Oxfam, 1996, The Brazil Office Strategic Plan
America (ECLAC) the main cause of 1996-2000. Internal report.
increasing poverty and inequality in the 143 See Susan Johnson and Ben Rogaly, 1996,
1980s was the 'massive decline in real wages, Microfinance and Poverty Reduction, ActionAid,
the rise in unemployment, and the growth in Oxfam Development Guideline. Their
low productivityjobs, as well as the significant analysis is based on literature and case studies
increase in the number of retired people from countries in the South but includes also
most of whom live in poverty'. Other sources experience from Birmingham in the UK.
of income, the generosity of social safety nets, 144 A M Goetz and R Sen Gupta (1996) 'Who
progressivity of the tax system, the takes the credit? Gender, power and control
distribution of unearned income, taxes, over loan use in rural credit programmes in
benefits also contribute to poverty and Bangladesh', World Development, 24 (1) 45-63
inequality. Even where wage inequality or 145 Research by Hashemi et al, 1996, referred to
unemployment has grown governments can in Johnson and Rogaly, 1996, op. cit.
redistribute income to soften the effects. The 146 See Nancy Folbre, 1994, Who paysfor the Kids?-
significantly lower poverty and inequality 147 Diane Elson, 1991, Male Bias in the
rates in Canada, for example, are attributed Development Process, Manchester University
to the effects of a more generous social safety Press.
net. Similarly income inequality fell or
148 See, for example, Oxfam, 1995, The Oxfam
remained flat in several European countries
Handbook of Development and Relief, vol.1
including France, Germany and Sweden
section 3.5.2 on pp 111-117 on urban
despite high unemployment in some of these
livelihoods
countries. This has not happened in the US
149 It is a threat for example because sea-level
and UK where the decline in the effectiveness
rise will cause problems in the deltas of
of the safety net, the lessened progressivity of
Bangladesh and Egypt, and because patterns
the tax systems, combined with a sharp rise in
of rainfall will change, especially in areas
the inequality of wealth, during the 1980s to
where they are already erratic such as the
reinforce rising wage inequality.
drylands of Africa. On the relationships

69
The international dimensions of work

between affluence and poverty, expressed slavery, servitude or forced labour; and
through the principle of Ecological Space or receive a living wage, health and safety
'Foot Prints': see chapter 5, written by protection and social security coverage. Such
Caroline LeQuesne, in Kevin Watkins commitments were recendy reinforced by the
(1996), The Oxfam Poverty Report UN Social Summit in Copenhagen, and the
150 see Neefjes and Sabri, 1996, Community and UN Conference on Women in Beijing, bodi of
environmental health in the Moqattamreport on which were held in 1995 (Note: The Social
a training in Participatory Learning and Action, Summit Declaration in committed states to
and assessment of environmental health and project promote die goal of full employment as a basic
impact, Oxfam report: the negative portrayal priority, and to enable all men and women to
of the Zabbaleen in the media was seen by attain secure sustainable livelihoods through
many men and women in the community as freely chosen productive employment and
the central problem that inhibited their work. The Beijing Declaration in November
progress out of poverty. 1995 called on governments to enact and
151 Ed Mayo 'Dreaming of work' in Meadows, P, enforce laws to prohibit discriminatory
1996, Work out or work in ? practice on the grounds of sex and to adopt
152 See Neefjes and Sabri, 1996: for example, policies to ensure the appropriate protection
tools from PRA such as map making and the of labour laws and social security benefits for
use of seasonal diagrams serves different part time, temporary, seasonal and home
purposes in urban areas as compared to based workers).
urban settlements (the latter are actually less 158 Calls for a social clause are often seen to
relevant), and well-being ranking was reflect Northern protectionist interests.
possible only for small sample parts of However, a recent survey of 82 NGOs and
neighbourhoods. See also several recent trade unions of the North and South
publications by IIED, London. (including 65 from the South) voted over-
153 Jules Pretty of IIED, building on the work of whelmingly in favour of the introduction of a
Guba and Lincoln, 1989, has adapted the social clause at the WTO but only if jointly
criteria used to assess the quality of administered by the ILO. See Social Clause,
conventional research in order to find equiv- Survey among NGOs and trade unions of the
alent, but alternative criteria for participatory South, Michel Egger and Catherine
processes of inquiry. He has developed certain Schumperli, Declaration de Berne, Pain
components of inquiry processes based on the Pour Le Prochain.
criteria of credibility, transferability, depend- 159 There is also a 1977 ILO Tripartite Declara-
ability and conformability (Pretty, 1994). tion of Principles concerning Multinational
154 Chambers, 1994. Enterprises and Social Policy
155 Oxfam has funded the Community Council 160 This is a summary from the text in Hall, Hart
for Berkshire for some village appraisals and and Midin, 1996.
assists the organising of some meetings on 161 See Neefjes and Sabri, 1996.
PLA, Participatory Learning and Action, a 162 See Neefjes and Sabri, 1996; this assessment
toolkit and approach that encompasses other also brought up some interesting methodol-
methodologies such PRA, Participatory ogical lessons about how to work in a partici-
Rural Appraisal. patory manner in a context where people are
156 K. Neefjes, 1995, 'A short note on networking extremely distrustful of outsiders, have hardly
in development'. Draft internal Oxfam any time available for meetings, etc.
paper, and V Nelson, 1996, 'The South- 163 This is a summary from an internal Oxfam
South Environment Linking Programme'. evaluation.
Draft Oxfam internal paper. 164 Much of the analysis of the impact of LCU's
157 The ILO is unique among international work was written by Helen Derbyshire, and is
organisations because of its tripartite reproduced in Johnson and Rogaly, 1996 op.
structure, which allows governments, comp- cit.
anies and trade unions to meet together on an 165 Jomalda Cidadania (IBASE) 1-15 April 1996.
equal footing and develop international 166 Jomalda Cidadania (IBASE) 16-30 November
labour standards. Its conventions enshrine 1996.
among other things the right to organise, join 167 Coote Belinda, 1995, NAFTA: Poverty and
trade unions, and engage in collective Free Trade in Mexico, Oxfam Insight.
bargaining; be free from discrimination

70

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