DIRECTOR GENERAL OF INTERNATIONAL LABOUR ORGANIZATION DISCUSSES SOCIAL IMPLICATIONS OF GLOBALIZATION

Press Release
TAD/1909

DIRECTOR GENERAL OF INTERNATIONAL LABOUR ORGANIZATION DISCUSSES SOCIAL IMPLICATIONS OF GLOBALIZATION

Tells UNCTAD X Meeting in Bangkok that Policy Makers Should Have the Sensitivity to Be Aware of Effects Their Decisions Have on People

(Received from a UN Information Officer.)

BANGKOK, 15 February -- The social implications of globalization was the theme of this morning’s meeting of the Tenth United Nations Conference on Trade and Development (UNCTAD X), under way in Bangkok. The Conference heard a presentation on that subject from the Director General of the International Labour Organization (ILO), Juan Somavia, before continuing its general debate.

Even the middle classes characterize the globalized world today as insecure, Mr. Somavia observed. At present, the markets are producing uncertainties and globalization has produced a much wider level of anxiety. This is not inevitable, as the policies that accompanied the information revolution are man-made and so can be changed.

The solution is secure and decent employment -- not a revolutionary aspiration, he continued. Yet the global economy is currently not capable of delivering this to enough people, and thus the backlash is under way. Clearly what was previously believed -- that if we got the economy right the social concerns would fall into place -- is not true. An aim of policies in this globalized world should be to deliver some certainty, through secure and reasonable employment, and policy makers must have the sensitivity to look at the effect of policies on people, as this is the only way to get the policies right.

The interactive discussion that followed focused on labour issues, and marginalized participants of the global workforce -– women and children. Speakers from governments and international and non-governmental organizations noted that rapid employment growth was mostly initiated by short-term, “footloose” companies that gave little protection to women’s labour. The global economy must be more supportive of issues of women’s work, the Conference was told.

The Deputy Minister of Trade and Industry of South Africa told the Conference it was time for developed countries to make structural adjustments, as the Conference resumed its general debate. They must increase access to their domestic markets. Developing countries had made bold steps for integration, but structural imbalances were only more pronounced. Globalization was binding the destinies of societies closely and so development was more than ever a shared international responsibility.

In the general debate, the Minister for Foreign Trade of the Netherlands, the Minister for Trade of the Republic of Korea, the Minister of Industry, Commerce and Handicrafts of Morocco, the acting Deputy Minister of Industry and Trade of the Czech Republic, the Minister of External Relations of Mongolia and the representative of Chile also spoke. The Conference also heard from the Assistant Secretary-General of the Organization of African Unity/African Economic Community and the President of the Council of the Inter-Parliamentary Union.

The Conference will meet again at 3 p.m. today to continue its general debate.

Keynote Address by ILO Director-General

JUAN SOMAVIA, Director General of the International Labour Organization (ILO): To properly develop policies for the globalized world, we have to make an effort to try to understand problems through the eyes of people. Sometimes this approach is considered too hazy and not too analytically strong, but I have come to the conclusion that unless we follow it, we will make policy mistakes. This is because other, more analytical, mechanisms fail to adequately deal with the effect of policies on people, because they are based on aggregates. We seldom make the link that an unemployed person means an unhappy family, and therefore greater potential for violence and crime and so on.

Seen through the eyes of people, the world today can be characterized as insecure. Things are happening in ways people do not understand, and they ask who is in charge. They see governments as less powerful than previously, and other actors do not seem to have control or responsibility either. And thus uncertainty prevails. The obvious sources of insecurity -- poverty, unemployment and exclusion -- were there before globalization, but they have perhaps been exacerbated by it.

But now it is also the middle class that feel their children will probably not have the same chances as they did, and that life will probably be more difficult for them. A fifty-year-old middle class person knows today that if he or she loses their job, they are unlikely to gain an equivalent one. These are not marginalized people feeling insecure, but those in the mainstream. It is generally accepted that globalization is good for business, but even that is not entirely the case. It is a better world for those businesses that are engaged in activities related to globalization, but in traditional industries they actually face greater uncertainty. Thus insecurity extends beyond what has been called the “race to the bottom” of the poor.

At present the markets are producing uncertainties. Globalization has clearly produced a much wider level of anxiety. So we must ask how we can globalize but also deliver basic certainties to society.

We have talked much more over the last few decades about personal responsibility, and this is a good evolution. However it has a bad part, which is that in the rapidly changing global economy we have gone one step further, saying if you can’t adapt, that it is your problem. That is not obviously not true. Many changes require government support. But people feel it, and this is having a tremendous effect at the family level. There is now individual competition between 600 billion people in the world.

We must ask how we can reduce that uncertainty. If you ask people, they say the solution is employment. The problems are poverty and social exclusion, and the solutions involve health and education and so on, but without employment these other parts of the solution will not work. People want decent work, and this is the same in developed and developing countries. With decent and reasonably secure work, the uncertainties almost disappear.

“Decent work” means work which provides the ability to educate children, have a stable family life, a reasonable level of security and health care, adequate working and, at the end of a certain number of years, a pension. Decent work is not a revolutionary but a reasonable aspiration. Yet the global economy is currently not capable of delivering this for enough people. Thus the backlash comes into play. The promise was enormous in the 1980s, but at the end of the century things are worse. Rather, the knowledge economy and the informal economy are growing in concert, creating a new divide. It is the absence of a social dimension that will bring the whole house down, and the new technology will encourage people to act out the backlash.

Putting the social pillar in place is the only answer. In policy formulation, this means that economic and social policy must be considered in conjunction. Clearly what was believed -- that if we got the economy right, the social would fall into place -- is not true. Only the information technology revolution aspect of globalization is irreversible. The policies that have accompanied globalization were made by people and can be changed by people if they are not successful. And it is not enough to say that in the short term there will be big social costs but in the long term we will get it right. Is it technically essential that the costs of structural adjustment must fall on the weak?

If the aim of policy is to deliver to people, then the aim of policies in the globalized world would be to deliver some certainty, and this is deeply affected by the availability of secure and reasonable employment. We must have the sensitivity to look at the way policies affect people, as this is the only way to get the policies right.

Views in Interactive Debate

During the interactive debate this morning, which focused on labour issues, a large part of the discussion was directed at the marginalized participants of the global workforce -– women and children.

Speakers, including representatives from international, non-governmental and governmental organizations, noted that industrialization had contributed to more participation by women in the manufacturing, services and financial sectors. They cited the expanded export sectors in many countries as contributing to that change. However, it was noted that the overall process of expansion and participation had not been managed properly.

“Gains and advances” in women’s employment must be balanced against negative effects such as sweatshop conditions, for example, it was stated. It was also observed that most of the rapid employment growth was initiated by short-term, “footloose” companies which gave very little protection to women’s labour. All of those negative factors contributed to the unsustainable nature of the boom. It was stressed that the global economy must be more supportive of issues pertaining to women’s work, particularly the quality of such work.

Participants advocated implementing action programmes for women to gain access to and bargain effectively in the marketplace. Others called for research and data to document and research the contribution of women and their impact on future policy-making. Another recommendation stressed increasing the visibility of workers by collecting and using more and better quality information on women’s contributions to the economy.

Other representatives drew attention to the link between debt relief and child labour and the divorce between economy and society. The question raised was why had this happened and what needed to be done. One reason advanced was that poverty was always considered as a consequence of economic development and never focused on directly or independently. The world was caught in an economic trap and poverty was always advanced as a consequence.

Noting that child labour amounted to some 50 million children and was linked to national debt burdens, it was suggested that poor families be paid to send their children to school. In some Latin American countries, families were being paid $40 per month in similar schemes. A related global undertaking would cost the world around $40 billion. It was also felt that UNCTAD and the ILO should be involved more directly in poverty and related issues.

Other speakers drew attention to the export of children for sex industries, stressing that such labour that was harmful to minors, as it deprived them of their health and education.

It was also pointed out, however, that international organizations could do little to help with their available budgets if there was no political commitment to assist the developing countries. Other participants wanted to know what resources were available to international organizations. Some suggested that it would be useful to have a world solidarity fund to deal with developmental problems. Others referred to the rejected idea of a multilateral fund for sustainable development.

In addressing the question of the relationship of labour rights, the political economy and regulation of the globalized world economy, a systematic dialogue on the fate and condition of working people was urged. It was suggested that such a dialogue would be best conducted by the ILO, which was well positioned to address the issues based on its experience and legitimacy as a regulatory global forum on the conditions of work of the world’s employees.

The “northern” initiative to include labour rights and environmental issues as items for negotiations in the World Trade Organization (WTO) was felt to be flawed because the WTO was ill equipped to deal with issues of sociology and social change. Also, bringing such issues to the WTO and demanding that action be taken on them reflected insensitivity to the varying levels of development, histories and complexities of the development challenges confronting the developing world.

At most, it was felt that the WTO could only contribute to the debate on labour rights. The organization was a forum for enforcing enforceable and sanctionable multilateral rules and should not be allowed to take action on labour standards. The regulation of those standards was best left to the ILO.

Statements Made in General Debate

VIJAY S. MAKHAN, Assistant Secretary-General of the Organization of African Unity/African Economic Community (OAU/AEC): All development partners should not only increasingly respect the principle of ownership but also support, with the requisite resources, the elaboration of development policies which also take full account of broader development goals designed to overcome the negative effects of economic and financial globalization. In this respect, UNCTAD should contribute to the achievement of a new international consensus on trade, finance (including debt), technology, investment and sustained development.

In the case of Africa, dependence, especially commodity dependence, rather than interdependence, has been the common experience. The various initiatives designed by the international community to addresses this problem have floundered because the political will to muster the resources to address the generic problems have not been forthcoming. For almost two decades, investment and financial flows to the region have been either stagnant or declining. Meanwhile, the implementation of policy reform in most of the 53 member countries of the OAU/AEC have improved underlying resource allocation, but the required financial resources to support the improved conditions for strong growth are yet to be seen.

In Seattle, the OAU/AEC observed existing and potential imbalances that could adversely affect the industrialization and economic stability of late developing African countries. It was in recognition of what was at stake that OAU/AEC member States took exception to the flaws in the decision-making process that had excluded many African countries. Notwithstanding the debacle at Seattle, issues relating to the implementation of WTO agreements -– the package of measures designed to support least developed countries (LDCs) and to expand the scope of the WTO’s technical cooperation, remain priorities of OAU/AEC member States as attempts get under way to establish a viable work programme for the WTO. Strong, dynamic, robust and sustainable growth in Africa will benefit the rest of the world in terms of increasing levels of demand, consumption, investment, output, trade and new and expanding markets. These are the key dimensions of interdependence in today’s world of globalization.

GERRIT YBEMA, Minister for Foreign Trade of the Netherlands: Developing countries should not be obliged to bear the sole responsibility for their development. Developed countries and multilateral institutions have to respond adequately to the needs of the developing countries that want to integrate into the globalizing world economy. They have to support the developing countries in their efforts to improve governance, economic policies and domestic institutions and to alleviate their debt.

Improved market access by the developing countries is an essential factor in maintaining a sound external financial position. In addition, coherence between the international organizations active in the field of development is of utmost importance. The WTO is not equipped to address the different aspects of liberalization, globalization and sustainable development in an integrated manner. That is where UNCTAD comes in, as this organization is uniquely capable of viewing development in an integrated way. The Netherlands appreciates UNCTAD’s work in support of integration of developing countries in the multilateral trade system and in implementing a sound investment climate.

UNCTAD offers industrial and developed countries alike the opportunity to make up what we lost in Seattle: the chance to ensure that the “ownership” of the WTO will be universal; the chance to start a development round, bringing trade liberalization to pace with sustainable development. Tariffs on processed goods should be brought in line with tariffs on the underlying commodities, thus stimulating the processing industries of the developing countries.

KERK CHOO TING, Deputy Minister of International Trade and Industry of Malaysia: Developing countries have voiced the need for more time to fully and comprehensively implement their Uruguay Round commitments. In addition, more time to study the implications of these rules was requested. There is a need to be better educated to fully understand these rules, their implications and the benefits that can be derived from them. In particular, the development dimension of such rules and regulations must be properly identified and factored into new rules to ensure their wider acceptance. There is a need to take cognizance of the fact that small companies are unable to compete effectively in the current multilateral trading environment. A review of existing rules and the formulation of new ones must take into account the developmental and trade interests of the developing countries. For this reason, special and differential treatment for these countries must remain an integral part of WTO agreements.

UNCTAD’s unique challenge is to promote sustainable development in order to reduce inequity among nations and to contribute to the advancement of a knowledge-based economy. The organization’s capabilities in research and analysis, and in promoting an understanding of the various trends and emerging issues in development, must be utilized. The recent Asian financial crisis -- its causes and effects -- is an area where UNCTAD’s capabilities can be brought to bear, to promote understanding on how future crises can be avoided. Its core activity in assisting developing countries in identifying emerging trade issues, in understanding the implications of these new areas and in analysing policy options, is especially important in any forthcoming trade negotiations. Developing countries lack the resources and expertise to negotiate rules that are to their benefit.

UNCTAD’s major role in providing technical assistance to strengthen the capacity-building of developing countries must also be maintained. Poor funding must not derail these programmes. The Conference should also assume a positive role in promoting economic cooperation among developing countries and economies in transition. Cooperation among the former is one avenue that would further advance the development prospects of such countries, as the development experiences of States with similar levels of development are useful and pertinent. UNCTAD should assist organizations in developing nations to advance programmes to promote economic integration among the developing nations. LINDIWE HENDRICKS, Deputy Minister of Trade and Industry of South Africa: As a new democracy, South Africa’s aspirations are focused on a better life and the relief from oppression. It has chosen a balance between globalization, with economic and monetary reform, and increased efficiency in the use of resources invested in human resources and infrastructure. Structural change is costly and many suffer. Workers lose jobs and no matter how politically conscious people are, without progress they despair, and seek expedient solutions, further entrenching poverty. Many developing countries have faced similar threats as a result of structural adjustment.

Globalization is binding our societies and destinies even more closely and this is relevant to the principle, established by the founders of multilateralism, that development is a shared international responsibility. The forces shaping development are complex and governments can no longer address them alone. We must collectively manage our interdependence. Bold trade integration measures have been taken by developing countries but structural imbalances are more pronounced. Developed countries must now make structural adjustments to allow products in which developing countries have a competitive advantaged into their markets.

The objective of the new round of trade negotiations must be to address the imbalances, and time is of the essence. The WTO Seattle meeting saw a new assertiveness among developing countries, but also revealed the flaws in the management of decision-making in the WTO. Greater transparency in the decision- making processes will help. It would be integral to a new development paradigm if developed countries provided full market access to least developed countries.

HAN DUCK-SOO, Minister of Trade for the Republic of Korea: Despite the burdens and cost, the new global high-tech economy offers significant opportunities for all regardless of the level of development. The new factors of production -– such as creativity, information and knowledge –- can be widely shared. In fact, knowledge and information products can be reproduced and used by more users without significant additional costs. Critics have pointed out that the rise of the information economy may widen the gap between the poor and the rich because of unequal access to computers and the Internet. Governments cannot buy personal computers for every home, but they can offer access and training in schools and other public organizations. My Government is doing just that.

UNCTAD should continue to focus its resources and future efforts on addressing trade and development issues. It should also focus on promoting openness in the global market. To do that, it should work closely with the WTO. To sustain and further promote open world trade, we need a comprehensive new round of liberalization talks at the WTO as well. Fast converging international markets call for our attention not to just traditional market access issues but also to a wide range of others. For example, the current WTO agreement on anti- dumping leaves room for abuse. Developing countries have a keen interest in addressing this concern. The list of similar issues is long, and we cannot simply overlook the challenge. UNCTAD should steer the international discussion on development more towards capacity-building as well.

UNCTAD could generate more active discussions on how developing countries should continue to carry out market-friendly reforms. The Conference should also strengthen its connections with NGOs, an unmatched important resource. The Republic of Korea would like to share its development experiences with others, particularly how it overcame the recent financial crisis. We would also like to increase our international support for the closing of information and knowledge gaps between the developed and developing worlds. In addition to our bilateral actions, we would like to continue our active participation in multilateral efforts to assist developing economies. Finally, we are committed to working with developing countries to address broad global issues and concerns such as population, women and the environment.

ALAMI TAZI, Ministry of Industry, Commerce and Handicrafts of Morocco: Global economic integration is still an objective that has to be reached. In the area of development financing, we note a decrease in official development assistance (ODA). This will affect the efforts at adaptation currently being undertaken by lesser developed and developing countries. Lasting solutions to the debt problem should be linked to trade flows and investments as well.

Access to markets is still a major concern to the developing countries and it is necessary for the forthcoming WTO negotiations on agriculture and services to implement solutions to the related problems of developing countries. Efforts must be continued to address capacity strengthening and better management of the internal constraints to national and international development. While UNCTAD must be proud of its achievements, it is still necessary for its processes to keep adapting to changes in the international economic environment which no one challenges. There is need for a forum where it will always be possible to lay the foundations of a world economic system that is foreseeable, equitable and has a human face.

UNCTAD also has to satisfy the need for quality analysis and the relevant information to strengthen negotiating powers. Better cooperation between UNCTAD, the WTO, the International Monetary Fund (IMF) and the World Bank has to be pursued. The recent Ministerial Conference in Seattle did not succeed in creating the impetus to send international trade in other directions and efforts to address the issues of multilateral trade have not succeeded. We need to go back to the free trade dynamics on the basis of consensus.

VLASTIMIL LORENZ, Acting Deputy Minister of Trade of the Czech Republic: UNCTAD has an important role to play in facilitating the participation of the developing countries in the pre- and post-negotiation phases of work within the WTO. A clear understanding of the relationship between sustainable development and globalization and the clarification of their fundamental instruments, consisting of trade and investment liberalization, are essential for the work of UNCTAD.

A key task of the international trade community is the full integration of developing and least developed countries into the world trading system. Market access for their goods and services has to be improved on the basis of higher transparency and non-discrimination. Other important aspects that should be respected in the process of trade liberalization are the environment, cultural diversity, health and the social situation of the societies concerned.

The Czech Republic has an undercapitalized economy, with its industry requiring particularly deep restructuring. Obviously, foreign direct investment is crucial and the Government appreciates the work being done by UNCTAD in the field of investment, the results of which were used by Czech policy makers and by the Czech Agency for Foreign Investment. UNCTAD has also assisted the Government in the areas of export of goods, services, the use of new methods of trade and electronic commerce.

NYANISIR TUYA, Minister of External Relations of Mongolia: The United Nations General Assembly has accurately observed that the lack of territorial access to the sea, aggravated by the remoteness and isolation from world markets and prohibitive transport costs and risks, impose serious constraints on the overall socio-economic development of land-locked developing countries. In the case of Mongolia, transportation and insurance payments amount to as much as 20 per cent of its total export figures. This poses a major impediment to the country’s efforts to integrate itself fully into the multilateral trading system and take advantage of the opportunities offered by it. Mongolia, therefore, welcomes the efforts of UNCTAD to address the particular needs and concerns of the least developed land-locked countries and supports the strengthening of its activities in the field.

Dependence on a few commodities for export earnings and income continues to be a major impediment to growth in developing countries, contributing to their vulnerability to price instability. Diversifying the sources of economic growth continues to be a priority through investment and export capacity- building. The role of foreign direct investment is instrumental in developing human resources and skills in transferring knowledge and technology.

Transparent and accountable government, better public administration, gender equality, robust civil society and environmental sustainability are crucial elements in an integrated government strategy. It is important to strengthen the institutions of democracy, implement anti-corruption policies and build partnerships between government, the private sector and non-governmental organizations in order to encourage responsible attitudes in society towards the country’s development goals. In pursuing its development strategy, Mongolia pays particular attention to social dimensions, namely the reduction of poverty and unemployment and the protection of the vulnerable sectors of the population.

CARMEN LUZ GUARDA (Chile): Globalization gives rise to uncertainty. New and better international cooperation is required to provide an environment whereby developing countries can take full advantage of all their potential. The reform of the international financial architecture is particularly important, and it must especially correct the problems that arise from the volatility of international capital flows.

A proper balance between a multilateral trading system that is nondiscriminatory, predictable and open and an environment conducive to sustainable development must be found. UNCTAD X is held in circumstances less favourable than the last UNCTAD because of the recent financial crisis, but the economic prospects for this year are promising. Chile has suffered and has also carried out major monetary and fiscal changes, with the resulting temporarily lower growth rate and higher unemployment. These have not undermined Chile’s sustainable development strategy. Chile has free trade with many countries and is seeking agreements with others. Its level customs tariff has been reduced to 9 per cent and will be further reduced to 6 per cent by 2003. Rather than causing problems, it has created fresh opportunities for many Chileans, and was run in conjunction with a successful programme to alleviate extreme poverty. The failure of the Seattle WTO conference was cause for sorrow, but Chile hopes the negotiations that have already started will be more ambitious and cover additional areas. Farming and land negotiations are fundamental, as international agricultural trade currently serves to increase poverty. It is a moral imperative to reverse this.

NAJMA A. HEPTULLA, President of the Council of the Inter-Parliamentary Union (IPU): The IPU recognizes that globalization creates many new opportunities for economic advancement, but that there is also widespread disenchantment about it, particularly from developing countries. After Seattle and the recent meeting of the World Economic Forum in Davos, Switzerland, the message that we must guard against a backlash by building mechanisms to ensure the benefits of globalization is widely shared.

The IPU calls on parliaments and their members to become more closely involved in international processes relating to trade, financing and development. Another important concern is that there are too many hidden agendas in international relations; there must be more transparency. The time when there is a clear distinction between domestic and foreign policies has passed. External issues have domestic consequence and good governance and democracy is essential in the rule-making process. Trade can make a major contribution to economic and social advancement, but this does not happen in a vacuum and mechanisms must be established for this purpose. Most problems with trade liberalization have come from the rush to liberalize, and we have to be more flexible. The issue of agricultural trade is particularly vital in this.

Trade is still not free. Under no circumstances should we allow improvements in labour and environmental standards and respect for human rights to penalize developing countries and restrict their access to markets. Confidence-building to address the apprehensions of developing countries must be undertaken by the industrial countries. There is also great concern about actions in the world of finance, in developing countries.

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