Global Labor Strategies

A Letter from Europe: Labor at Malmo

The European Social Forum held in Malmo, Sweden from September 17-21 marked another step in the reappraisal by European trade unions of how to approach the neo-liberal policies of the European Union. The Forum featured a vigorous and productive debate on new directions for labor among traditional unions, the alternative labor movements, and allied social movements.

The debate could not come at a more opportune time. As the impact of the global economic crisis spreads throughout Europe, labor movements can not expect that the so-called European Social Model will protect workers from its consequences. That model, which emerged in the decades following WWII, was characterized—with national differences—by a generous welfare state, collective bargaining, and more or less full employment. It was the result of a tripartite “social partnership” between trade unions, employers, and the state.  But the reality is that, today, even before the crisis fully envelops the continent, you can barely recognize many of the model’s traditional elements. And yet while trade unions increasingly realize that the European Social Model has been undermined, they still tend to look back to the model as strategy for the future.

Neo-liberal Europe

But the good old days are gone. Today, the fundamental goals of the European Union are guided by the principles of neo-liberalism. Collective social programs such as health insurance, pensions, and educational systems have become partially privatized in some countries as politicians seek to open new markets to private capital. “Precarity” of work now extends to the entire life of an increasing number of workers. And collective bargaining is under direct attack by many European institutions. For instance, in the last two years, the European Court of Justice ruled on cases –filed by both corporations and the European Commission itself—which, while acknowledging that fundamental labor rights such as the right to strike and the right to collective bargaining exist in Europe, also ruled that they are less important than the right to freely compete by the employers. And the EU is just about to approve a new Directive (the term for European laws) which not only allows companies to increase working time to more than 60 hours per week, but also introduces individual bargaining in place of collective bargaining on this issue.

On migration there is a dual strategy: on the one hand, with the "Blue Card Directive”  the EU is promoting access to Europe by highly skilled and educated workers. On the other hand, policies toward undocumented workers are becoming increasingly xenophobic, legitimating current laws in some member states by “regulating” detention for up to 18 months as well as allowing repressive “deportation” policies.

Overall, conditions for workers in Europe are worsening. According to official EU statistics—which in many cases are underestimates—around 8% of all employees in the European Union are officially registered as unemployed. More than 16% of the EU population, that is 72 million EU citizens, are currently considered at the risk of poverty (with an income below 60% of the median income in their country). Furthermore, since the 1980s real wage increases are no longer in line with productivity growth and the wage share (the workers income in relation to the overall national income) has declined in almost all European countries. (see European Commission, European Economy, Statistical Annex, 2006. 

A developing discourse

Many trade unions are increasingly becoming open critics of neo-liberal Europe, and the European labor movement is trying to find ways to respond to the attacks that it is now under. This includes the European Trade Union Confederation (ETUC), which is the formal representative of trade unions within the EU’s tripartite structure and which is deeply enmeshed with the bureaucracy which runs the EU. They formally support both the Lisbon Treaty—the latest attempt to redesign the institutional and political framework of the EU along neo-liberal lines, and the aggressive free-trade agenda of the EU Commission (see Global Europe Competing in the World).

Briefing Paper: What’s Going On in the EU?

If it is difficult for even informed Europeans to fully understand what’s happening in the European Union—as many in Europe say it is—it is even more difficult for people in the rest of the world to follow events with any degree of understanding. For instance, the US press, when it bothers to report on EU events at all, usually does a very poor job, often parroting elite European opinion while paying little attention to the views of ordinary people. Yet what happens in the world’s biggest single market has profound implications for people around the world. And it is especially important that global justice activists everywhere have a basic grounding on key trends and issues.

With this comprehensive post by our European based colleague Bruno Ciccaglione we launch a new GLS project to promote transnational solidarity by making regional issues more understandable to a global audience. What better place to begin than by trying to untangle the web of issues and trends that make the European Union seem so opaque to outsiders, (and to many insiders as well)?

The June defeat in an Irish referendum of the Lisbon Treaty—designed to deepen and expand European Union institutions—has emboldened critics and spotlighted the growing uneasiness of Europeans with the direction of the EU.

The EU was always a project of European capital to expand markets and be more competitive globally.  However, it was initially felt that the idea could only be effectively sold to the European people if it included a vision of a "social and democratic Europe" that provided for the social and political rights and well-being of other social groups besides business.  EU institutions were opened to labor representation and labor organizations actively participated in them. 

Over several decades, European capital has moved to a much more aggressive neo-liberalism that has lost its willingness to treat labor as a "social partner" with its own agenda.  It is now trying to institutionalize what might be called an "anti-social Europe."  But as this post details, it has met stunning defeats in that effort.

These developments are important for the way labor everywhere deals with transborder economic forces.  For example, the European Court recently ruled that a Polish construction company doing work in Germany could pay its workers the Polish, rather than the German, minimum wage, because requiring the German minimum wage would keep foreign service providers from competing on the basis of lower wages.  Such a "logical" extension of neoliberalism, if universalized, would mean that Chinese companies could bid on construction jobs in the U.S. based on Chinese wages! (For a pdf file of this briefing paper, click on the menu on the left.)

GLS.

What are the European Constitutional Treaty and the Lisbon Treaty?

According to the leaders of key countries in Europe, and to the members of the European Commission, the EU institutions need to be modernised to function more effectively.  In the last few years, various attempts have been made to do this using the argument that it would increase and strengthen democracy, help the integration of the new member states, eventually help enlarge the Union, and in general create better conditions for its citizens. But the attempts seem to be again blocked, after the failure to introduce the European Constitutional Treaty (http://european-convention.eu.int/DraftTreaty.asp?lang=EN) in 2005 and the serious problems currently facing the Lisbon Treaty (LT) (http://europa.eu/lisbon_treaty/full_text/index_en.htm)  blocked by Ireland’s NO vote in a June referendum..

Proposed changes in the Lisbon Treaty aimed at changing the EU’s Institutions and the decision making process include:

• To give the EU a US-style President but without a direct election by the European citizens;
• To establish a “Foreign Minister” by  combining the positions of the existing foreign affairs supremo and the foreign affairs Commissioner;
• To reduce the number of members of the European Commission (currently each EU member state sends one person to the EU Commission);
• To redistribute the voting weights among the member states. This also includes the removal of national vetoes in several areas;
• To give new powers to the European Commission, the European Parliament and the European Court of Justice. For instance the EU Parliament would at last be part of the decision making process, although legislative initiatives would remain in the hands of the Commission. Currently the EU Parliament is heard only on proposals presented by the EU Commission;
• To create a European wide popular petition. One million EU Citizens could ask the EU Commission to deal with a matter they consider important.

While some of these proposals could be welcomed, given the democratic deficit within the EU, the real goal of both the European Constitutional Treaty (ECT) blocked in 2005 by referendums in France and the Netherlands, and the Lisbon Treaty (LT) of 2007 blocked by the Irish referendum, was not merely the proposal of a different and more effective and democratic architecture of the EU: the two treaties intended to give institutional legitimacy to the current economic and social policies. These policies favour liberalization processes, the privatisation of public services, and the redesign of the European social model in order to make it more functional to the needs of global competition for European companies. The European Constitution Treaty (ECT) aimed at giving juridical legitimacy to these policies of the European Union at a “constitutional” level. The Lisbon Treaty (LT) was needed basically to “save” the ECT after the failure of its ratification process in 2005.

The ECT and the LT are not easily understandable documents. Moreover their contents sometimes seem bizarre, given the intention to simplify the functioning of the EU institutions, and they are not comparable with normal national constitutions. For instance, on the one hand in the ECT  the term "bank" was mentioned 176 times, "market" 88 times, "liberalization" or "liberal" 9 times, "competition" or "competitive" 29 times, and "capital" 23 times: all this was very unusual for a “constitution”. On the other hand the LT, which is largely based on the same concepts, is composed of more than 250 pages with a list of about 300 amendments to the Rome Treaty—which in 1957 founded the European Community—and around 60 amendments to the 1992 Maastricht Treaty. The Maastricht Treaty fixed economic rules to be followed by the national states and was largely written to prevent an active role by national states in the economy thus leaving a free hand to the markets. It also laid the technical basis for the Euro. Additionally there are also 12 Protocols in the Lisbon Treaty and several “statements”.

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.

French Toast

(Fourth in a series)

The French employment law that sparked massive protests by students, workers, and in fact a broad swath of French society is toast. Indeed, given the depth and breadth of the opposition to the law it is a wonder that it took so long for the government to rescind it. But on second thought it’s actually not so difficult understand.

The hope of the French elite which strongly backed the government was that they could use the problem of youth unemployment highlighted by the riots in the immigrant suburbs of Paris last fall to undermine the Code du Travail, the French labor code, that gives workers protections against arbitrary firing.

France’s corporate elite—in fact, European corporate elites—have long looked with envy across the Atlantic to the US where workers can be hired and fired essentially at will.

But it was not to be this time. Students, workers, many in the middle class, and the immigrant youths that the bill was supposed help took to the streets to say no.

But it wasn’t just the desire of the corporate elite for “reforms” that prolonged the crisis. French politics also played a part. The elegant French Prime Minister Dominique de Villepin—well known to Americans for his resistance to Bush’s Iraq policy in the run-up to the war—gambled his political future on enacting the new law. He lost the gamble and probably his prospects to a candidate for the Presidency when his patron Jacque Chirac leaves office next year.

Meanwhile in the wings, de Villipin’s rival, the ominous and ambitious Interior Minister Nicolas Sarkozy, waits, baton in hand. Sarkozy managed to keep his distance from widely unpopular law and—just as important for his presidential ambitions—he managed to keep the police under his command from any particularly egregious acts of violence.

Sarkozy’s campaign for the French Presidency includes a pledge to make “a clean break” with the French economic model and to align France’s economy—including its labor markets--with prevailing global standards. Sarkozy claims that the French will accept change if it is “fair”. We will see what the response of French workers and young people will be should he become France’s next president. And if he is successful in enacting significant reforms, there is widespread belief that he will enforce them with the truncheons he now controls as interior minister.

There are a couple of important lessons to be learned from the French events. First, in France at least, there remains a desire to hold onto workplace protections that were won in a century of struggle. The idea that workers deserve legally mandated protections including an expectation of long term employment without fear of arbitrary lay-offs or firing is still a widely held belief in France and most of Europe. And the French unions and the French left can still mobilize the population to defend this right.

Second, while the French unions and the French left are good at resisting attempts to undermine social and legal standards, they—like unions and movements the world over—are less effective at creating viable alternatives to current social and economic problems. Social Democracy and its left-wing cousins have lost their way in the age of globalization. They were developed in a period in which nations and markets largely coincided. As globalization unfolds, national strategies are less viable, global strategies more necessary. Yet the exact nature of these strategies remains elusive.

Third, while American society seems de-mobilized and passive—even in the face of a widely unpopular war—the French protests show that a mass mobilization can happen in a modern industrial society. Passivity may be more a feature of contemporary American society and not some intrinsic part of late modernity. This is good news, since it means that re-energizing US democracy may yet be possible.

As if to prove this point, just as the French protests were successfully winding down, massive demonstrations for immigrant rights were flaring up across the US. While these demonstrations were largely conducted by immigrants, they may still be the harbinger on a new, more active, politics. The immigrants may bring more than their labor to the US. And the huge impact of both the French and immigrant demonstrations may re-teach cynical Americans that mobilized masses really can make a difference.

M.O.

A French Lesson

(Third in a series)

French students and unions are set to square off against the French government in a “day of action” tomorrow. “We have not yet reached the peak of the protest movement,” Bernard Thibault, head of the CGT said on Saturday, “This Tuesday could be a turning point. The only solution is the withdrawal of the CPE. We can achieve this.” 

Why the passion over this issue? That can be hard to understand if you have not been following what’s been happening in France and Europe over the past few years or are unfamiliar with the French industrial relations system.

Those of us of a certain age remember a slogan from 1968: the issue is not the issue—which is to say that the specific issue is actually part of a broader problem. In this case, the new law is simply the latest in a series of trends and events—indeed, the very drift of globalization—that worries the French as it does most people in the industrialized world.

In the name of global competition corporations and their political allies across Europe have abandoned the European Social Model and have demanded cut backs social benefits and changes in labor law.

In addition, outsourcing—“de-localization” as it is called in Europe—has hit some labor markets hard, just as it has in the US. French-based companies are moving jobs to the new states of the EU and beyond to South Asia and China raising serious questions in the minds of many about what to do to protect jobs, wages, working conditions, and the social welfare system they have built up over the years. The rejection of the European constitution by French voters last May was a striking indication of this unease.

For US observers, the dispute over the new law puts a spotlight on the differences between the French and US industrial relations systems and trade union structures.

In France, and in much of Europe, workers, unions, and their political allies insisted that basic worker rights and basic social benefits—such as just cause for discharge and vacations and heath insurance—be written into law rather than into collective bargaining agreements. This insured that all workers, whether they belong to a union or not, could enjoy these rights and benefits. In contrast, most workers in the US are “employees at will”.  That means that unless you are part of a narrowly prescribed group of protected workers fired because of race, gender, or age—and you can prove it—or unless you have either an individual contract or a union contract, you can be fired for “good reason, bad reason, or no reason at all.”  Similarly, benefits like vacations, sick leave, and health insurance are tied to a person’s job in the US and not a matter of right.

Unlike the Europeans, the US labor movement generally saw winning just cause rights and other benefits through collective bargaining as a way to recruit new members, and therefore often did not push to push to have them written into law. For brief few decades—when union membership was high—this strategy was able to win protections and benefits for union members, and even some non-members, but it left many out in the cold. As union membership fell the short-sightedness of the approach became evident.

The French dispute also highlights the difference in trade union strategy and structure. French unions are making a very credible threat to call a general strike—and yet union density in France is actually below that of the US. The threat is credible because unions operate within an industrial relations system that includes—by law—elected worker representation at the workplace. This allows unions to be elected to represent workers who are not actually members of the union. Because of this, unions are often able to mobilize workers—members and non-members, alike—around critical issues such as the changes in labor law.

Given the condition of global labor and the relentless attacks on worker rights and standards, you would think that US unions and US labor official would have some comment on such important events. After all here is a potentially successful revolt against the attempt by big business and its political allies to impose a US labor market model on France, to undermine hard won labor standards, to divide young and old, immigrant and native born, and those those in permanent jobs from those in precarious jobs.  And yet I have not seen any comments from US labor leaders in the press on the events. The sad truth is that US labor leaders too rarely speak out on the connections between US workers and those in the rest of the world, other than on trade issues that have an immediate impact on their memberships. If they were more engaged in substantive discussions and action on global issues, perhaps some reporters would have thought to ask them what they thought.

The resistance of the French workers and students to the attack on their hard won rights is a bit of spring sunshine at a bleak moment for the world’s labor movements. People all over the world face similar challenges posed by globalization. But it also points up the difficulties in fashioning a global labor movement: labor movements exist in all countries but they were organized within the legal, political, and cultural frameworks of individual nation-states. As a result it will take effort and creativity to build a global labor movement that can resist corporate led globalization.

But for now let’s hear it for the people the US Right calls the cheese eating surrender monkeys!! They are giving the world a good French lesson.

(More in this series as events unfold.)

M.O.

Who’s Revolting in France?

(Second in a series)

What is remarkable about the events in France is the solidarity of the population in opposition to the changes in labor law pushed through parliament by the government. Indeed, the law has provoked a genuine class based upsurge that is drawing in many different parts of the working and middle classes. We will discuss some of the reasons for this in our next blog. But in this blog we take a look at the composition of the opposition—and the proponents of the law.

Poll figures indicate that 66% of all French people oppose the new law.

The mass protests began in the universities, where the law was quickly dubbed the “Kleenex law”, because it made young workers as disposable as tissue. Over the course of the past week more than half of all French universities were shut down, and last Thursday a quarter of a million students participated in demonstrations.

Much has been made of the comparison with 1968 but the differences are profound. In 1968, France and the industrial world generally were still in what the French call the “Glorious Thirty”—the growth decades that followed WWII. With an expanding economy and a large cohort of young people, the prospects and possibilities were quite different than they are today. But what is similar to 1968 is the surprising ability of students to initiate and organize massive protests that draw in many sectors of society and shake the French establishment.

Workers and their unions have joined the protests because they fear the chipping away of labor rights and standards won over a century of struggle. The labor new law would insure the institutionalization of a two-tier workforce by allowing different rights for different workers, and in the end would weaken protections for everyone.

When the unions turned out en masse to join students for last Saturday’s demonstrations, it marked the revival of a powerful alliance that shook France in 1968 and 1994. Now unions and the students are building toward a “day of action” on March 28 which will feature strikes and other protests and take alliance up a notch.

But it is not just students and traditional workers that are opposing the new law, so are the immigrants that the government argued—some would say cynically—would most benefit from the new law. Here is what the Financial Times reports about the immigrant opposition to the new law:

Hostility to the contract from the poor suburbs is a blow to Mr. de Villepin. He had seemed to be telling the student protesters in central Paris not to worry. As graduates of prestigious universities, such as the Sorbonne, they are not the intended recipients of the new contract. Instead, it is meant for the poorly educated immigrant children in les banlieues, who set fire to thousands of cars and buildings across France last year.

But this argument is being undermined by an increasing number in the suburbs repeating the criticisms of the student demonstrators. The important difference is that the poor of the outer-city ghettos have the added worry of racial discrimination.

Edilson Monteiro, an 18-year-old school drop-out from Montfermeil, says: "Before the 'first job contract' there were enough difficulties for people from the banlieues, with the difference in our clothes, our language and our culture, but now they are making things even more insecure.

Young people are very worried about entering the world of work. Now if I make a mistake or upset the boss, he can just get rid of me without any reason," says Edilson, whose mother brought him to the local job centre after he quit as a construction sales agent.

Why, given the overwhelming rejection of the new labor law by the French people is the government still pushing for its implementation? It no mystery: in France and throughout Europe, the big money is out to undermine the European social model of decent benefits and strong labor laws. They have seized on youth unemployment as a way to divide the great majority of people who want to retain the principle of economic security.  On Monday, these erstwhile defenders of the poor met with Villepin and most told him to stand tight. According to the International Herald Tribune:

.... Prime Minister Dominique de Villepin summoned 24 of France's most powerful executives to his office to seek ways of salvaging the new law…

Charles Beigbeder, chief executive of the French power company Poweo, said after attending the meeting that failure to win approval for the legislation could stall efforts to reform the labor market until after the presidential election next spring.

Another executive who attended the meeting and declined to be identified was less optimistic.

"There was a feeling among many of the participants that if the law is withdrawn you can kiss goodbye to reform for the next 10 years," he said, according to his spokesman. "It would send a terrible signal."

But he said that others present had argued that the legislation was "a political disaster" and that Villepin should withdraw it.

The businessmen's comments come against a backdrop of escalating social unrest over the First Employment Contract, an initiative known by its French initials as the CPE and closely associated with the prime minister, who drafted the new law in an effort to ease double-digit youth unemployment…….

Participants said Villepin still had no intention of suspending the legislation despite pressure from the streets, where hundreds of thousands have demonstrated in recent days and more protests are planned this week. A wide strike was scheduled Monday for March 28, student and union leaders said.

Villepin is "not in a spirit of moving back," Bruno van Ryb, the head of Middlenext, was quoted as saying by Reuters.

"The prime minister seems determined with a state of mind that is relatively easy to understand: You launch the CPE and after several months it is relatively easy to analyze whether it is a success or not," he said.

Claude Bébéar, chairman of the insurance giant Axa and one of France's leading entrepreneurs, said: "We're just in one of those psychodramas that the French love but that is not justified."……

The chairwoman of Medef, [the French Employers Association] Laurence Parisot, threw her support behind Villepin last week.

"We hope that finally we will have a debate on reforming the labor market," she said, "which functions badly and is getting worse."

There is a deep uneasiness in France and Europe about the direction of society and the economy so one never knows what could come next.

M.O.

(Next: What’s at stake in France and what can the rest of the world learn from the protests.)

      

The French Protests

Up to 1.5 million people—400,000 in Paris alone—took to the streets throughout France on Saturday to protest proposed changes in French labor law that would make it easier to fire workers under the age of 26. The demonstrations capped a week of intensifying protests which shut down the majority of French universities and brought out 250,000 students out to protests on Thursday. Saturday’s demonstrations drew students and workers from a broad cross section of the French workforce.

Saturday’s demonstrations revived the powerful alliance of workers and students that rocked France before in 1968 and 1994. All of the major unions and student organizations turned out for the demonstrations.

Bernard Thibault, the head of the CGT, France’s biggest union, said, “If they don’t listen to us, we are going to have to think about moving to a general strike across the entire country.” Student leaders vowed to continue their fight, as well, until the law is repealed. A major day of protest has been scheduled for March 28 if the government does not withdraw the law.

The immediate issue is a new law that was pushed through the French Parliament without debate by the conservative government of Prime Minister Dominique de Villepin. The law would change France’s Code du Travail, the labor law build up over the 20th century that essentially grants “just cause” rights to French workers in standard jobs after a brief probation period. That means that employers cannot simply fire workers for no reason.

The changes would allow employers to dump workers under 26 years of age for any reason during the first two years of employment.

The government claims that the new law would increase youth employment by encouraging employers to hire young workers since they could fire them easily if they didn’t work out or were not needed. According to the government, this would especially help minority youths in places like Paris’s suburbs where widespread rioting occurred in October.

According to official statistics, France’s youth unemployment rate is 22%, a figure regularly repeated in the press, compared with 11% in the UK and 13% in Germany.  But in an interesting article in the Financial Times (FT March 18, 2006), the paper’s statistician reports that these figures are misleading and that the actual rate of unemployment is closer to 7.8% in France, 7.4% in the UK, and 6.5% in Germany. That’s because the figures do not take into account the number of young people that go on to higher education and therefore stay out of the labor market longer. Since France has a very large number of workers in one form of higher education or another, the figures are skewed in a way that makes the youth unemployment rate seem much higher than it is. France does differ from the UK and Germany in that it takes longer for French students to get jobs after graduation.

The government has called the new law, the “First Job Contract” but students have dubbed it the “Kleenex contract” since it would allow employers to dump young workers like used tissue.

Protesters argue that the new law is another milestone in the growth of contingent and precarious work. Over the past decade there has been an enormous growth in temporary, part-time and precarious employment in France. Take a walk through many neighborhoods in Paris and you will see scores of offices for temp agencies—many like US-based Manpower and Swiss-based Adecco—are familiar to US workers. In fact, while US-based Manpower Inc. may be one of the biggest employers in the US, the company does even more business in France.

Up to 70% of young people currently work under some kind of precarious or short-term agreement. And the growth of precarious work generally is a major issue in France. Unions, immigrant organizations, and youth groups, have mounted protests against the trend for years. But the move to essentially codify precarious work across the board could wipe out any chance that young people have of finding steady employment and that has galvanized the entire workforce.

M.O.

(First of a series on the French situation, coming blogs: The failure of the French Government’s attempt to divide workers;what lessons can US and other workers learn from the protests; and more)

Of Polish Plumbers

A case brought by Swedish unions before the European Court of Justice may alter the shape of European labor markets. At issue is whether a Latvian construction company doing work in Sweden can hire Latvian construction workers under terms and conditions that violate Swedish union agreements for construction workers.

In a related action, later this month the European Parliament is scheduled to act on a new “trade in services” law—know as a “directive” in the argot of the EU—that will make it easier for EU companies providing services—consultants, retailers, accountants, construction companies, etc.,--to set up shop anywhere in the EU and do business under the rules and regulations of their “country of origin.” While wages and some standards are exempted from country of origin rules, foreign firms are only required to meet minimum wages and standards—not what is known in the US as “prevailing wages” or negotiated standards. Firms can thus avoid agreements negotiated between unions and employer associations.

The new directive is similar to one introduced last year—known as the Bolkestein Directive after its drafter—and withdrawn after massive protests by unions and some governments. Many think that the French rejection of the European Constitution last May was in part due to a feeling that legislation like the Bolkestein Directive was a threat to working and living standards.

In Europe the trade in services issue is known as the “Polish plumber problem”, since it raises this question: if your sink breaks in Paris should you be able to call a Polish company with an office in Paris operating under Polish regulations and have them dispatch a Polish plumber working for minimum wages to fix it?

The European Trade Union Confederation [ETCU] argues that the proposed trade in services directive will lead companies to locate their headquarters in countries with the least regulations, the lowest taxes, and the worst enforcement of labor laws. This would create a race to the bottom since it would force countries with high standards to reduce regulations to maintain their job and tax bases. The result will inevitably be lower wages and fewer services and social protections. The unions have dubbed this downward spiral “social dumping”.

The problem of social dumping took on added importance with the entry of 10 Eastern European countries into the EU in 2004. Since wages were much lower in Eastern Europe than in Western Europe many in the West feared that large numbers of East European workers would move west to in search of work, potentially driving down wages. To avoid this, current EU members were allowed to impose restrictions on workers coming from the East for a transition period of seven years. All but 3 countries took advantage of this clause and imposed restrictions.

The service directive, to be acted on in the European Parliament this month, threatens to make an end run around the transition period by allowing the posting of service workers in other countries. More importantly, it highlights a critical problem with the entire process of globalization as it is now unfolding, even in highly regulated environments like the EU: instead of pushing standards up, the process pushes standards down. Thus, in the case brought to court by Swedish unions, the higher Swedish standards are pitted against the lower Latvian standards and everybody loses, except employers.

It is worth noting that Sweden was one of the three older EU countries that did not take impose restrictions on workers from the newer member states because it assumed that its strong industrial relations system would be able to maintain standards.

This whole issue (coupled with the fear of the outsourcing of jobs to Eastern Europe) raises concern among many in Europe about the entire direction of the EU. As John Monks the head of ETCU says, “Europe is not just a single market, it is also a community that shares strong social values. This [Swedish] case is of great political importance, because if Europe’s unions lose, there is a real risk of working people turning against free movement, the single market, and the EU itself.”

European Unions increasingly understand that the answer lies in aggressive trade union action across Europe, particularly in Eastern Europe, to raise the wages and working conditions so that Polish plumbers receive the same wages and working conditions as their peers in the West. The unions also know that aggressive political action is needed to prevent downward leveling and promote the upward leveling of standards by enacting laws requiring adherence to prevailing wages and standards in local labor markets.

For those of us outside of the EU, the problem of downward leveling may be even more of a challenge because we usually do not have the legal, political, and institutional standing that European unions have to help shape labor market policy. But the solution is the same: building a strong global labor movement based on solidarity and mutual support and engaging in aggressive political action to promote fair globalization.

German Unions Face Tough Times

A “hidden revolution” is rapidly changing German labor markets and German unions. That’s the conclusion of three important articles in the Financial Times. (Comment and Analysis, January 6, 2006. www.ft.com  subscription required)

The German system has been based on industry wide bargaining between powerful unions and broad based employer organizations. Negotiated agreements are made standard throughout an entire industrial sector. Elected works councils-- heavily influenced by the unions-- represent workers at the workplace level. Strong labor laws, including employee representatives on the boards of corporations support this structure. As a result of industry wage agreements the classic trade union strategy of taking wages out to competition was largely achieved and destructive competition between firms to cut wages was reduced or eliminated.

Now that has changed. The industry wide agreements are giving way to concessionary bargaining at the firm level often by works councils operating on their own.  Two years ago IG Metal signed an industry agreement with an “opt out” clause that opened the way for “flexibility” agreements at more than 500 companies. According to the FT a survey of works council members revealed that flexibility agreements exist in up to ¾ of all German firms. They are especially common in the Mittelstand sector—the thousands of small to medium size family owned firms that play an important part in the German economy.

Just as it is in the US, concessionary bargaining has become standard and for the same reasons—globalization and the threat of job migration, in Germany’s case especially to Eastern Europe. While there has been a steady drumbeat of attacks in recent years on the “inflexibility” of the German labor market, and the public policies that regulate the labor market, according to the FT, the changes brought by the “hidden revolution”  have been so extensive that “[e]ven proposals on wage bargaining by Chancellor Angela Merkel ….are seen as largely superfluous by many executives.”

A Siemens executive says about this “hidden revolution”: “There is far greater labor flexibility at German companies than people think. It is just that nobody has any interest in talking about it.” Union officials echo this view.

Meanwhile German unions have lost 40% of their membership since 1990. Today only about 20% of the workforce is unionized. Although-- because of sectoral bargaining-- about 68% of the workforce in the West and 53% of the workforce in the East  is covered by a collective bargaining agreement. Of course, it’s important to note, that German unions still have considerable political clout and derive power from their mandated seats on corporate Boards of Directors.

Unions are beginning to adapt.  “We have been slow to recognize this trend, but now we are trying to control the processes, ” says one IG Metal official. Another adds that with the shift away from sectoral to company level bargaining, “We have to activate our members and make them realize that the union [headquarters]  cannot always come to the rescue.”  IG Metal has launched membership consultation campaigns to help workers cope with the changing bargaining environment. According the FT these campaigns have resulted in some recent membership gains.

Has the concessionary bargaining worked? According to the FT, “Increased flexibility has done little to stem the decline in Germans employed in industry…. Companies involved in commodity products—such as Ina Schaeffler, a bearing manufacturer and Continental in tires—argue that no matter what level of flexibility is achieved, it is difficult to fight against lower-cost countries.”

Last year Continental asked and got a concessionary agreement with its workers that added 3 hours to the work week with no additional pay. A few months later the firm shut down one of its plants. The action caused a furor which may put a brake on some concessionary agreements. An official from the IG BCE union which represents Continental workers says “If this is allowed to set an example, then co-operation in Germany will not be possible any more between workers and companies.”

There is another angle to the Continental story: “More is at stake for Conti than just its operations in Germany. It is also trying to force through deep a restructuring of its US tire factory in Charlotte, North Carolina. ‘The unions in Charlotte are looking very carefully at what we do here and will pounce if we back down [over the closure plan], [a company] official says.”

On January 9, 2006, three days after the stories appeared in the Financial Times, Continental announced plans for the restructuring of its Charlotte plant. In our next post we will take a look at what the company has in mind for its unionized Charlotte workforce.