Global Labor Strategies

Global Labor’s Forgotten Plan to Fight the Great Depression

In the early 1930s, as global unemployment tripled in two years and the world plunged into the Great Depression, the world’s labor movements developed a program for fighting the global crisis through international public works.  It’s a little-known historical might-have-been that could have helped halt the Great Depression, the rise of Adolph Hitler, and the Second World War.  And, as the efforts of world leaders to address today’s “Great Recession” threaten to break down in nationalist rivalry and petty political bickering, it bears lessons – and perhaps an alternative vision – for today.

Workers and organized labor have historically advocated government public works as a solution to unemployment.  Not only would they provide jobs and income for those directly employed, but they would raise overall purchasing power, thereby creating demand for the products of other workers and creating a virtuous circle of economic growth.  In the context of swelling unemployment in the early Depression, discussion of national public works programs developed in many countries.

The proposal for international public works originated with General German Trade Union Alliance (ADGB), which included most of Germany’s trade unions and represented the great majority of its workers.  The plan won the support first of the German union alliance, then of unions around the world, and finally of the League of Nations’ International Labor Organization. 

The plan was worked out by the head of the Alliance’s statistical department, W.S. Woytinsky.  Woytinsky was a Russian émigré who had been president of the St. Petersburg Council of the Unemployed during the 1905 revolution and had organized mass action to force the city to provide public works employment.  Observing Germany’s combination of spiraling deflation and spiraling unemployment in the early 1930s, he came up with the idea of using credit expansion to finance massive public works.

Taking a cue from recent League of Nations policy proposals, Woytinsky proposed an international agreement that would allow the lowering the gold reserve requirements for national currencies.  That would let central banks create new money that could finance international public works and thereby create the purchasing power needed to reflate the economy.

In a June, 1931, article, Woytinsky proposed an “Action Program for Reviving the Economy.”  It called for the labor movement to “assume the role of conveyor of the idea of an activist world economic policy.”  It was up to the labor movement to “force the state and all public institutions to implement measures to revive the economy.”

Labor’s policy “must be a global economic policy.  All nations are suffering because the world economy is sick, and therefore they must all concentrate their forces upon joint action to overcome the worldwide crisis.”  The international agreement would provide an alternative to the rise of economic nationalism, supporting “tariff reductions and European economic unification” as well as “internationalization of wage policy and social policy.”  The program would also support workers’ fight for higher wages, shorter hours, social rights, and regulation of business.

Labor Charts a New Course on China

Trade unions and labor organizations around the world are seeking to establish a presence in China. Initially, that means beginning a dialogue with the All China Federation of Trade Unions (AFCTU)—China’s only legal union. Last year, following its split from the AFL-CIO, the US Change to Win federation, comprised of 7 US unions, broke new ground when it opened talks with the ACFTU.  And in December, the Brussels based International Trade Union Confederation (ITUC), the global union umbrella organization comprised of 309 affiliated organizations in 156 countries, voted to begin a “critical dialogue” with the ACFTU. (The AFL-CIO is the largest affiliate of the ITUC, while Change to Win  is not a member.)

This is not simply a story of bureaucratic relationships. Trade unions are an especially important non-governmental interlocutor on labor and worker rights issues in China—a country with few civil society organizations but a significant formal trade union sector. The lack of civil society organizations means that rights oriented NGO’s have many fewer dialog partners in China than do trade unions. 

Today, one in four workers in the global economy is Chinese. Many are employed by the same global corporations or their contractors that employ union members in other countries. This employment relationship potentially gives foreign unions more standing to advocate for the labor rights for co-workers employed in China by those companies and for Chinese workers generally.   

We’ve written extensively about why the new engagement is a good thing and suggested topics for discussion. Labor’s opening to China represents a significant move away from its Cold War era shunning doctrine, long considered outmoded by many labor activists. Under that doctrine, most trade unions have had little contact with the ACFTU because they do not consider it a legitimate trade union but an arm of the Party/State apparatus. Chinese law does not recognize crucial international labor rights such as the right of workers to establish independent unions, to bargain collectively, to strike, or to elect union officials of their own choosing. 

There have been some previous attempts to create a dialogue with the ACFTU, particularly in the 1980s when China adopted a market economy and opened up to foreign investment. While some individual unions and Global Labor Federations have maintained contact over the years through various joint projects, most unions severed formal relations following the suppression of the pro-democracy movement in 1989.

Meanwhile global corporations and investors flocked to China to take advantage of China’s low wage labor force and business friendly environment.  The consequences of labor’s absence from China were graphically illustrated last year during the debate over the Labor Contract Law which extended new rights to workers. Foreign corporations and their business associations in China actively lobbied the Chinese government to weaken some of the law’s key provisions. But global labor—with no organization or influence on the ground in China—could only comment from afar. Many realized that this asymmetry needed to be addressed.

The Smithfield and Wackenhut RICO Suits: Forward into the Past

(second in a series)

In our last post we described how the RICO suits filed by Smithfield Packing and Wackenhut Corporation represent a sharp escalation in the long standing corporate assault on human and labor rights. Not content with stripping workers and their organizations of fundamental labor rights, big corporations are now going after basic constitutional rights. We argued that these suits threaten the civil rights not just of unions but of everyone.

There is a back story to these suits that stretches to the birth of the US labor movement over 200 years ago when conspiracy laws were first used to prevent workers from forming unions.

Unions as conspiracies

In 1806, members of the Federal Society of Journeyman Cordwainers—an association of Philadelphia shoemakers--— went on strike to demand higher wages.  In response, the Commonwealth of Pennsylvania went to court charging that the action by the 12 year old union was a “criminal conspiracy” since, according to prosecutors, the union used unlawful coercion to achieve its economic goals—for instance, union shoemakers refused to do business or associate with bosses or workers who did not abide by its wage rates and standards.  In a sign of the anti-labor legal bias that would inform much of US history, the prosecution was instigated and paid for by the employers. The government won. The union was broken and its leaders fined. 

In those bad old days, courts defined the effort of workers to organize  as a purely economic question. According to prevailing elite views, unions interfered with the  smooth functioning of the labor market, making them a restraint of trade.  The labor market was viewed like any other market with labor as a commodity like any other commodity.  For most of the 19th century and part of 20th century courts with few exceptions ruled that whenever workers banded together “in combinations” they were engaged in illegal conspiracies. Injunctions generally followed.

Beyond China's New Labor Contract Law

China’s new labor code went into effect on January 1. It could have important consequences for workers in China and in the rest of the world.

The Financial Times on January 2 reports that,

Employers in China fear that a new labour contract law that took effect on Tuesday will intensify growing pressures on manufacturing costs by enhancing the bargaining power of workers.

We estimate that, added together, labour costs [in mainland China] will be close to 40 per cent higher for this year [2008],” said Willy Lin, Hong Kong-based managing director of Milo’s Knitwear (International) Group.

Mr Lin says the new labour contract law, which will make it harder to dismiss workers, could increase costs by about 8 per cent this year, with the rest of the increase caused by higher minimum wages, social security payments and the renminbi’s steady appreciation against the US dollar.

The new law was designed to address some of the rampant abuses in Chinese industry including long hours, dangerous working conditions, and employers that cheat workers out of wages or delay payments.  But like all laws everywhere, the new law will be worth little if it is not interpreted broadly and enforced strictly. If the past is any guide, this could be a problem. China has been notoriously lax in enforcing labor laws. Absent vigorous enforcement, the new law could lead to workers being squeezed even harder in an effort to keep labor costs down. 

Fair Globalization

In the days following November’s elections, New York Times columnist Thomas Friedman—an apologist for some of the worst aspects of corporate globalization and someone with whom we rarely agree—wrote this from China:

“Now that we've had an election that clarified which country is most important in shaping U.S. politics in 2006 -- Iraq -- I've come to visit the country that's most likely to shape U.S. politics in 2008: China.

“The civil war in the Republican Party, which you are about to see, will be all about Iraq -- whom to blame and how to withdraw before the issue wipes out more Republican candidates in 2008. But the coming civil war among the Democrats will be all about China.”

Although Friedman may be overly optimistic that US involvement in Iraq will be over and done with by 2008, he is right that China will be a central issue in the next election and that it could divide the Democratic Party.

Indeed, China has become the focal point of all of the insecurities that people feel about globalization. That insecurity played a major role in November’s election. Democrats’ running on economic populist platforms were able to sidestep dicey and divisive social issues and score significant gains among all sectors of a population increasingly worried its economic future.
In the dumbed-down world of public discourse and punditry there are two sides to the globalization debate: “free trade” and “protectionism.” This division, according to Friedman and others, is likely to split the Democratic Party, and we might add, organized labor, the Democrats’ key financial backer.

New Labor Standards Adopted by World Bank

Back in 1997, during the Asian financial crisis, one of us at GLS who was working on the staff of the House Banking Committee drafted federal legislation to force the International Monetary Fund and World Bank to make respect for the core ILO labor standards a condition of all future loans.  At the time, under intense pressure from the Clinton Administration, the AFL-CIO public policy department actually lobbied against the legislation.  Almost a decade later much has changed, with the US labor movement now in wide agreement with the rest of the working world that IMF and WB policies hurt workers and grease the wheels for the race to the bottom.

There are signs that that the global labor movement's new ability to speak with one voice on international funding and reform is having an effect. A few weeks ago, the International Confederation of Free Trade Unions (ICFTU) announced that the World Bank directors had agreed  that all private sector, International Funding Corporation (IFC), loans must pass a core labor rights screening.  After the new standard is implemented in April, all companies that borrow from the IFC will be required to abide by the core labor standards (CLS) as defined by the International Labor Organization (ILO). This commitment stands to affect a wide range of private investment in the developing world since during its 2004-2005 fiscal year the IFC initiated 236 new projects in 67 countries totaling $6.45 billion.

The new policy represents two major advances. First, it applies to private corporations—not just governments—and is thus a good precedent for creating labor rights rules that target global corporations. Second, it contradicts the general neoliberal/WTO principle that the processes and working conditions under which products are produced cannot be regarded as a factor in allowing them "free trade".  (This is an extension of the "free trade" principle that it is each individual government, not the corporation/vendor, that is responsible for setting and enforcing standards.)

But take it from few wounded warriors who have battled the international funding institutions for many years: The World Bank has a long history of talking social movements to death while in practice they continue to foster a race to the bottom. Only time will tell if the Bank has had a change of heart.  But don't hold your breath.

Below is a copy of the ICTFU press release announcing the deal. Once the new standard is implemented, ICTFU's  Washington office (Contact: Peter Bakvis, pbakvis@earthlink.net ) will send periodic reports advising the relevant Global Union Federations and national organizations of upcoming IFC investments in their sectors or country. 

ICFTU Communiqué, 22 February 2006
Action by World Bank's IFC on Workers' Rights a Major Step Forward

The ICFTU has applauded yesterday's adoption by the International Finance Corporation (the private sector lending arm of the World Bank) of a new loan performance standard on labour rights and working conditions.  After the new standard is implemented in the coming weeks, all companies that borrow from the IFC will be required to abide by the core labour standards (CLS) as defined by the International Labour Organization (ILO).  The CLS prohibit the use of forced labour, child labour and discriminatory practices, and require recognition of freedom of association and the right to collective bargaining.  The new standard also obliges IFC clients to observe some other basic conditions, including health and safety standards, protection for contract workers, and a policy for managing reductions in employment.

'"Thousands of workers in IFC-financed projects stand to benefit from this decision, which we believe should be a precedent for international lending in both the private and public sectors", said ICFTU General Secretary Guy Ryder.  "The World Bank funds billions of dollars of development projects each year, and we will be working to ensure that this landmark decision is extended across the entire scope of its activities.  In the meantime, we have offered to work with the IFC to implement this new standard", he added.

The IFC decision demonstrates what can be achieved when the World Bank engages in serious consultation with trade unions.  "In the two years during which the standard has been developed, the IFC sought input from trade unions and the ILO as well as IFC's traditional partners, governments and business.  As a result, the IFC corrected several problems and weaknesses in earlier drafts that we helped them identify," said Ryder.

At the ICFTU's suggestion the IFC accepted two years ago, on a pilot basis, to include a CLS condition in a loan to a clothing manufacturer, Grupo M, which opened new production facilities in Haiti.  The firm initially dismissed hundreds of workers when they attempted to create a union, and it took several months of pressure by the Haitian union, along with international support from trade unions and other organizations, before the workers were rehired and the company recognized the union.  In December 2005 Grupo M and the Haitian union signed the first collective agreement aimed at improving wages and working conditions.

The Haitian example demonstrates both the challenges and opportunities created by the new IFC standard, especially the need for an effective implementation mechanism.  An effective mechanism, coupled with the CLS standard, can have a tremendous positive impact on workers' living standards and working conditions. This is particularly significant in a country such as Haiti, where workers' rights have been ignored and the poor disenfranchised for so long.

Ryder believes that the onus is now on the other branches of the World Bank, namely those that lend to the public sector, to follow the positive step taken by the IFC: "This is not a matter of asking the Bank to do the job of the ILO, governments or anyone else.  It is a matter of asking the Bank to ensure that all of the its operations abide by internationally-recognized workers' rights' standards."

In 2004, a coalition of Indonesian trade unions and researchers published a report showing that child labour, discrimination against women workers and denial of freedom of association were taking place in public infrastructure projects financed by the World Bank.  The Bank's spokesperson in Indonesia acknowledged at the time that the practices were inconsistent with Bank policy and promised corrective action.  However, except for this IFC standard, the Bank has not taken measures to ensure respect for CLS in its projects.

ILO Complaint Filed by US Union

Here’s a new global labor strategy: US unions filing ILO complaints against the US government for violation of international labor law.

In December, the UE (the United Electrical, Radio and Machine Workers of America) and Mexico’s FAT (Authentic Labor Front) “formed part of a delegation of labor leaders from six states and three countries who delivered an ILO complaint to North Carolina Governor Mike Easley.”  The delegation included labor leaders from Quebec, Mexico, and Japan, as well as from North Carolina, Virginia, Iowa, Connecticut, Vermont, and Pennsylvania.  According to the UE International’s Mexican Labor News & Analysis:

“At the heart of the complaint is North Carolina General Statute 95-98, which makes it illegal for the state, counties, cities, or any other political subdivisions of the state to enter into contracts or agreements with any labor union or other bargaining agent. While public-sector workers in North Carolina have technically been free to join labor organizations since 1969, the prohibition of collective bargaining agreements has largely undermined workers' main objective in exercising their freedom to associate in the workplace. UE contends that this violates ILO Conventions 87 (Freedom of Association and the Right to Organize), 98 (the Right to Organize and Bargain Collectively), and 151 (the Right of Public Workers to Organize and Procedures to Determine Conditions of Employment in the Public Sector)…

"International law is clear: workers have a right to organize and to bargain collectively to protect and improve their wages and working conditions," said Robin Alexander, UE Director of International Labor Affairs. "General Statute 95-98 flies in the face of that, specifically denying those basic rights to the people who provide services to North Carolina taxpayers. The governments of the United States and the State of North Carolina owe workers the protections of international law and have failed to deliver. UE wants them to answer for their failures."

Other US labor activists have been discussing similar strategies, including filing an ILO complaint on behalf of US contingent workers. For workers interested in viewing an example of an ILO complaint, a copy of a 1998 Korean Federation of Trade Unions filing against the Korean government on behalf of Hyundia workers is available here.

One final note: the UE’s international innovations didn’t come out of thin air. The UE has been at the forefront of building bridges with their Mexican counterparts for more than a decade.  In the early 1990s, faced with the passage of NAFTA, the UE entered into what it called a “Strategic Organizing Alliance” with the Mexican FAT.  Together the two unions instituted regular worker-to-worker exchanges, published a monthly electronic periodical, built worker centers and joint organizing teams, and regularly informed their members about what they were doing and why it mattered to them.

The UE/FAT alliance has worked to ensure that workers on both sides of the border benefited from coordinated activities.  FAT members, for example, traveled to Milwaukee to provided support for the UE organizing campaign at a local foundry, where they allayed Mexican immigrant workers’ concerns that the UE might be similar to “company” unions they knew all too well in Mexico.  On behalf of FAT members, the UE filed the first complaint under the Mexico-US labor rights “side agreement” that accompanied NAFTA – charging General Electric and Honeywell with labor rights violations.  It has also built a tri-national alliance between unions in the US, Canada, and Mexico to enforce the organizing rights of Mexican workers at the Echlin auto parts company.

Unions need to build more of these long-term strategic alliances.  Why? Because solidarity isn’t built overnight.