Siglinde Hessler

A new instrument of international labour regulation

International Framework Agreements (IFA) are important in international labour regulation. As the globalization of production and markets is increasing, an international regulation of labour is strongly needed. Existing instruments such as the OECD Guidelines for Multinational Enterprises, the ILO Tripartite Declaration of Principles Concerning Multinational Enterprises and Social Policy and the great number of ILO conventions among others have set important marks in the debate, but still lack recognizable success as they lack the power of sanctions. Furthermore, the growing number of voluntary and unilateral declarations on social standards, which are part of the Corporate Social Responsibility strategy of companies, have not attained concrete results as they lack binding force.

IFAs are a relatively new in international labour regulation, operating at company level. They are agreed to between companies and workers’ representatives, such as Global Union Federations and/or works councils, and they define fundamental labour standards – primarily, the ILO core conventions – for a company’s plants worldwide. Furthermore, they recommend the standards to the suppliers of the enterprises which have concluded the IFA. In contrast to other instruments of international labour regulation, IFAs have a strong binding character: As they refer to international norms such as the ILO core conventions and as they are agreed by company and workers’ representatives, they involve workers’ representation in the implementation and monitoring of the IFA. Furthermore, since IFAs are to some extent a reaction by companies to public pressure to respect labour rights, companies try to avoid the negative publicity arising from cases where labour rights are disrespected.

Bernadette Ségol

The unanimous political response to the crisis across Europe today is that of austerity and budgetary discipline. Cutting pay and social welfare, attacking bargaining mechanisms and making employment contracts ultra-flexible: that is the current paradigm, the Berlin/Brussels consensus, offered as the only way forward.

This solution is not working and will not work. It stifles growth and blocks the way to job creation. We can no longer ignore its disastrous social consequences and the rise of nationalism in many European countries bringing into question our essential values based on solidarity.

We need to change the narrative.

Official voices are increasingly being raised against austerity, but mainly from outside Europe. The Organisation for Economic Co-operation and Development (OECD) and the International Labour Organisation (ILO) say that austerity without growth is a dangerous dead-end. International Monetary Fund (IMF) managing director Christine Lagarde has expressed concerns on behalf of the IMF. Even credit rating agencies – self-serving oligopolies that they are - have joined in the chorus.

But the message isn’t getting through to the finance ministers. While lip service is being paid in the European Council to the need to foster growth and employment, concrete proposals commensurate with the disaster we are facing are missing, in stark contrast to the sharp minutiae of the fiscal plans before us. The ETUC is for sound budgets. But the fiscal compact calls for a balancing social contract.

Malte Luebker [1]

Inequality is a top issue in the public agenda, partly as a result of the financial crisis that helped draw attention to this topic. As banks relied on the support of taxpayers and millions of workers had lost their jobs, people began to see the compensation of bank CEOs – with an average 2010 pay package of $9.7 million in Europe and the US[2] – as obscene.

Those at the top of society have long captured the gains from economic growth. From 1970 to 2008, the annual incomes of the top 1% of US taxpayers rose threefold in real terms from $380,000 to $1,140,000. By contrast, the incomes of the bottom 90% remained where they were in 1970 – at $31,500 per year (in real 2008 dollars).[3]

Wages and labour markets

The top of the distribution is only part of a broader trend towards greater inequality. In the advanced countries, average wages grew by merely 5.2% in real terms over the 2000s and fell short of productivity gains. The subsequent redistribution from labour to capital income can be witnessed in dramatic declines in the labour share in countries such as Germany, where it fell by 3.9 percentage points per decade since 1991.[4] Since capital incomes are more concentrated than labour incomes, these shifts in the functional distribution of incomes have negative repercussions for income inequality between individuals.

Lars Vande Keybus

In numerous countries such as Ireland, Greece, Portugal, Hungary, and others, the European Commission (EC) - in cooperation with the International Monetary Fund (IMF) and European Central Bank (ECB) - has imposed a dramatic policy mix that consists of blind austerity, privatisation and wage cuts. Following the adoption of the notorious ‘six-pack’ in December 2011, it is clear that such policies will become a general rule all over Europe. The ‘six-pack’ sets up a structure in which the EC is granted a role as budgetary supervisor and punisher. The commission has the opportunity to almost automatically punish European Union (EU) members who do not follow recommendations to correct ‘excessive budgetary deficits’. The recommendations can range from adjustments in public sector pay, pension systems, indexation systems, unemployment benefits or privatisation schemes. Furthermore the ‘six-pack’ creates a new system of ‘macro-economic surveillance’. On the basis of a scoreboard consisting of a set of ten indicators covering the major sources of macro-economic imbalances, the EC can decide whether a member state suffers from an excessive imbalance. The commission can then provide recommendations and, if these are not thoroughly followed, it can prescribe sanctions. This strategy will ultimately lead to wage devaluation. In the absence of the possibility to devalue currencies, the EC is pushing for a strategy to devalue wages. This strategy is wrong and foolish for several economic and social reasons. But I would like to focus on the strategies to counter this policy.