Impact of Globalisation

Impact Of Globalisation On Freedom Of Association And Rights Of Union

Introduction

The world economic situation has long changed and we are living in the era of globalisation, free market economies and multinational corporations. The new changed economic, political and social scenarios have ushered in with them high levels of development in the economies all around the world which has largely been appreciated by most for its capacity to bring about huge transformations in the economic sphere. The process of globalization has produced a profound impact on practically all spheres of life in the modern society in all countries of the world. But since all phenomena have a flip side to them, and globalisation is no exception to this principle either, we need to examine the negative implications that globalisation has produced in more detail. Among the many facets of globalisation, the most important aspect for our discussion is the effect of globalisation on the rights of the labour force around the world.

The labour force, from the point of view of the critics of globalisation, which constitutes the overwhelming majority of the population of the world is under a threat because the process of globalization increases the opportunities for large, multinational corporations to overcome safeguards, which are traditionally adopted by labour unions to protect their own interests, since the difference in legislation and the level of the development of the union movement in different countries of the world allows them avoiding a substantial impact of unions on their policy. At a time when the labour market is being transformed into a world market, with more and more the transnational organisations joining the fray, unity amongst the working classes of the world, has become an objective need.

In the present research paper, the primary objective of the researcher is to discuss how globalisation in general and free movement of capital in particular has affected the rights of labour unions and their freedom to association. The foremost challenge before the labour force as abovementioned, are the investors who while seeking to invest their capital in other countries try to circumvent rigid labour laws that exist in a particular country to protect the rights bestowed upon the labour unions and their members. If not that, the state machinery also accentuates the problem by curtailing labour rights as well as the rigidity of the laws to attract and ensure investment coming their way without taking into consideration the social repercussions. For example, back in 1998 in Africa, officials attending a three-day seminar on globalisation and its effect on Freedom of Association, blamed African governments for “blind complicity” with forces of globalization in developed countries, which they claimed has eroded the power of African governments to control and run their economies and improve the living standards of their people.

To look into these issues that fall within the scope of this paper, the researcher shall delve into various International Labour Organisation Declarations as well as international codes, conventions and treaties (if any) related to the subject of discussion. As a part of the conclusion, the researcher shall make a critical analysis of the situation at hand and also offer suggestions that may seem relevant to redress the rights of the workers.

For the purpose of writing this research paper, the researcher has referred to various books as well as online sources including articles, international documents as well as reports that helped to provide a valuable insight into the topic of discussion. The book “The Future of Labour Law”, helped immensely in understanding the evolution of collective bargaining rights of the unions and how globalisation has reformed these rights. N.K. Jetli’s book “India: Economic Reforms and Labour Policy” helped provide further information regarding the same. Moreover, the cited policy documents and resolutions gave the necessary information on policies as well as relevant provisions of law. Articles from the internet helped provide further understanding of the subject matter of discussion and thus proved beneficial to the researcher in compiling this research paper.

Globalisation And The Affect On Union Rights

Collective bargaining did not develop out of an economy in which workers enjoyed free wage contracts with their employees. An important early achievement of trade unions was to press successfully for legal structures that provided a basis of employment contracts around which collective bargaining could then take place. Workers’ rights are protected under national laws in many countries. They are also clearly stated in important international instruments, such as the Universal Declaration of Human Rights (hereinafter UDHR) of 1948. Article 23 of the Declaration says:

“Everyone has the right to form and to join trade unions for the protection of his interests.”

Trade unions have always had two facets attached to them- one, that of the ‘sword of justice’ and the other, that of ‘vested interests’. To its members, the union is the former, which helps them seek redressal to most, if not all of their grievances. For the employers generally, the union is a body of ‘vested interests’ concerned solely with forwarding its own demands and interests of its members. There has therefore, forever been a tussle between employers and the unions, for the recognition of rights of the union.

In today’s world, when profit is the driving force behind any business and rights are scarcely the primary concern of the employers, one hardly needs to elaborate upon how quintessential right to freedom of association is to the labour force. Rights such as collective bargaining provide the union with a due process and representative voice for their grievances. If one were to look at evolving trends, it is clear that union activities have definitely been on the decline in the 1990s, unlike the 1950s or even uptil the 1970s where they existed in full vigour. However, even though in the recent years, trade unions have become weaker, collective bargaining has still been upheld to be important right, since it is more respectful of employees that employers allow them their due exercise of rights.

An abrupt but sharp change to collective bargaining occurred in the 1980s wherein, falling inflation, sharp recession in manufacturing and national self-sufficiency in petroleum, substantially strengthened the government’s position with regard to trade unions. The precipitating circumstances enabled the government to increase the cost of organising strikes as well as unions. The government changed its policies which was indicative of hostility towards collective bargaining. Added to the government attitude was the ever-increasing competitive pressure from the employers’ side. The net effect of this change was that some of the largest trade unions were reduced to almost nothing with membership of unions dropping as drastically as to one-third their original membership.

Then again, another change in the attitude towards union rights came about in the 1990s. With sharper product market competition, better technical know-how and advent of globalisation-privatisation era, closed economies began to open up and the producers sought to expand their area of production. This also led to free flow of labour from one territory to another. This was the advent of the multi-national corporations (MNCs) as well as the Transnational Corporations (TNCs). According to one study conducted in the 1990s, employers became aware that those producers who adopted union-friendly policies performed better than their counterparts who chose to follow union-exclusion strategies of production. In fact, unionised firms achieved changes in productivity and working practices that were no less effective than those of the union excluders. However, contrary to the trade unions’ expectations, this change did not precipitate into a revival of the union movement once again. Globalisation only led to further undermining of the rights of the unions.

This is a cause of concern among the sceptics of globalisation. The reason is as follows: with the growing number of foreign direct investments by TNCs, there is increased flow of capital, human resources and technologies worldwide. Now, this can either mean that the world economy will have more international cooperation and competition that shall lead MNCs and TNCs to expand their business and enter markets of developing countries, where they could introduce new infrastructure, technology and production facilities; or it could mean a situation wherein there is increased movement of capital (for our purpose, primarily labour) from one corner of the world to the other, with an increased need for the protection of their rights against huge companies, seeking to invest in foreign countries and looking for ways to dodge and get round the protective laws in place to protect the union and its already declining membership as well as members’ rights.

With the elimination of fiscal barriers between countries, which serve as incentives in development of international trade and with multinational corporations preventing unions from exercising a strict control over the corporation’s performance as well as their policy in relation to employees, the effectiveness of unions decreases consistently and employees feel dissatisfied with their membership in unions. Naturally, this leads to members deciding to quit their membership in unions. In fact, the employees’ dissatisfaction with unions is one of the major causes of the decline of union membership in the modern world.

Also, with changing economic patterns, the corporations bring about changes in their structures too. To evolve with the changing scenarios, on an international level, it becomes essential that unions bring about a restructuring in their organisation as well. However, it is not necessary that the unions are able to cope with the change in their structural organisation, as it may give way to bureaucratisation of the union and lead to further discontent among the employees. Therefore, even when an attempt is made by the union to adapt to the ongoing changes, for better protection of their employees and their bargaining rights, it does not exactly seem conducive to the union’s cause.

An added source of trouble is, as has been aforementioned, the fact that governments of developing countries in an effort to attract most amount of foreign investment by MNCs, further bring down their barriers, which leads to millions of workers seeing their hard-won rights under attack. Such acts are a commonplace occurrence in developing countries. For example, it has been seen in the case of Africa, says Andrew Kailembo of the Nairobi-based International Confederation of Free Trade Unions (ICFTU) that:

“The dangers of a globalised economy is that investors come into our countries, give conditionalities and governments accept them without consulting their social partners…”. “We know that globalisation was inevitable, but the way it has come, it is lacking a human face, and this is what we are fighting”.

Moreover, another aspect related to the effects of globalisation and labour unions to be taken into account is the question of claims that may be brought against multi-national corporations by labour unions. In the age of MNC’s where the parent company is located far away in one continent and a unit of the same functions in another, there are issues related to the ‘appropriate forum’, meaning thereby, question over where the claims of the labour union will lie- whether with the parent company or the subsidiary unit that employs the workers? This question has oft been raised but not much has been achieved in developing an independent forum for the dispute resolution. In the tussle for appropriate forum, the claims for redressal may get dragged for long and be either lost in due course or the union may not receive effective compensation.

In the light of such circumstances, it is important to evolve guidelines to regulate the actions of corporations vis-à-vis labour rights. Scholar John Ruggie has stated that the framework for business and human rights proposed by him rests on three pillars: the state duty to protect against human rights abuses by third parties, including business, through appropriate policies, regulation, and adjudication; the corporate responsibility to respect human rights, which in essence means to act with due diligence to avoid infringing on the rights of others; and greater access for victims to effective remedy, judicial and non-judicial. He has raised concerns in his writings about the existence of measures and institutions to protect labour rights but the lack of “vertical coherence” in terms of law and policy to regulate the same. He further states that even more widespread is “horizontal incoherence”, where economic or business-focused departments and agencies that directly shape business practices-including trade, investment, export credit and insurance, corporate law and securities regulation-conduct their work in isolation from, and largely uninformed by, their government’s human rights agencies and obligations.

Talking specifically about the second pillar in this setup, Ruggie states that corporations claim that that they respect human rights but do not have any concrete systems in place “to demonstrate the claim with any degree of confidence”. Therefore, to remedy the situation at hand, there needs to be, as Ruggie says “an ongoing human rights due diligence process”, that can not only help redress but prevent and mitigate violation of labour rights by MNCs and TNCs. This is important because corporations in today’s era have the power to affect the entire spectrum of internationally recognised rights.

Some International Codes And Principles As Safeguards

It should be kept in mind, that even though globalisation has brought about much disgruntlement among supporters of rights of labour unions, that it serves the interest of the large corporations, it is not as if there have been no initiatives to protect the rights of the union. Following Ruggie’s proposal one can inculcate structural, institutional and policy changes needed to safeguard union rights, but there are initiatives also by international bodies such as the United Nations as well as ILO in the form of various resolutions and codes to lay down certain principles which protect labourers against violations by TNCs. There are a multitude of transnational codes and principles in the area of corporations and human rights but the most important ones are as follows:

1. International Labour Organisation’s Declaration of Fundamental Principles and Rights at Work – Adopted in 1998, this ILO Declaration covers four fundamental principles and rights at work and the first one is the ‘Freedom of association and the effective recognition of the right to collective bargaining.’
2. The Organization for Economic Cooperation and Development’s Guidelines for Multinational Enterprises – The OECD Guidelines for Multinational Enterprises is the most comprehensive instrument in existence today for corporate responsibility multilaterally agreed by governments. Adhering governments – representing all regions of the world and accounting for 85% of foreign direct investment – are committed to encouraging enterprises operating in their territory to observe a set of widely recognised principles and standards for responsible business conduct wherever they operate. The guidelines however, are not legally binding and apply only to multinational enterprises from member States of the OECD, plus a few other State parties.
3. The International Labour Organization’s Tripartite Declaration of Principles concerning Multinational Enterprises – Paragraph 58 of the Tripartite Declaration Of Principles Concerning Multinational Enterprises And Social Policy clearly states that multinational as well as national enterprises should respect the right of the workers whom they employ to have all their grievances processed in a manner consistent with the following provision:

“…any worker who, acting individually or jointly with other workers, considers that he has grounds for a grievance should have the right to submit such grievance without suffering any prejudice whatsoever as a result, and to have such grievance examined pursuant to an appropriate procedure.”

This is particularly important whenever the multinational enterprises operate in countries, which do not abide by the principles of ILO Conventions pertaining to freedom of association, to the right to organize and bargain collectively and to forced labour.

4. The Draft Norms on the Responsibilities of Transnational Corporations and Other Business Enterprises with Regard to Human Rights – At its 49th plenary meeting, on 22 July 2004, the Economic and Social Council took note of Commission on Human Rights decision 2004/116 of 20 April 2004 and:
   1. 1. Confirmed the importance and priority it accords to the question of the responsibilities of transnational corporations and related business enterprises with regard to human rights;
      2. Requested the Office of the United Nations High Commissioner for Human Rights to compile a report setting out the scope and legal status of existing initiatives and standards relating to the responsibility of transnational corporations and related business enterprises with regard to human rights, inter alia the draft norms contained in Subcommission on the Promotion and Protection of Human Rights document E/CN.4/Sub.2/2003/12/Rev.2, and identifying outstanding issues, to consult with all relevant stakeholders in compiling the report, including States, transnational corporations, employers’ and employees’ associations, relevant international organizations and agencies, treaty monitoring bodies and nongovernmental organizations, and to submit the report to the Commission at its sixtyfirst session in order for it to identify options for strengthening standards on the responsibilities of transnational corporations and related business enterprises with regard to human rights, and possible means of implementation;
5. The United Nations Global Compact – The UN Global Compact are a set of ten principles in the areas of human rights, labour, the environment and anti-corruption enjoy universal consensus and are derived from international legal documents such as the UDHR, the Rio Declaration United Nation Convention against Corruption and ILO’s Declaration of Fundamental Principles and Rights at Work, which has already been discussed above. Out of the ten principles, the principle of most relevance to us is Principle 3 which states that – “Businesses should uphold the freedom of association and the effective recognition of the right to collective bargaining.”

Conclusion

John Ruggie has stated and stated rightly so, that-

“There is no single bullet solution to the challenge of reducing the incidence of business-related human rights harm, and punishing those who violate legal and social norms.”

No doubt, globalisation is more favourable to the corporations and has to a large extent led to violation of unions’ rights. What is required is a comprehensive approach to the problem wherein the state, the corporations as well as society together find a solution for safeguarding the rights of the unions. While it would be erroneous to propose that a rigid pro-labour stand be taken in this regard, when deciding on policy matters it would be appropriate to find a middle path between the demands of the union as well as the business needs of the MNCs and the TNCs. It should be kept in mind that in seeking to provide safeguards for the labour unions, policies and statutes should not create impediments in the path of progress, a problem that is perhaps rather realistic already.

Perhaps, John Ruggie’s three step model that has been referred to before, for corporate human rights responsibility will serve useful in addressing this conflict of interest. The three principles which his model follows are ‘protect, respect and remedy’. In other words, this setup is explained in the following three steps:

• Protect – It is the task of the state to protect people within its frontiers against human rights infringements by non-state players.
• Respect – It is the duty of companies to respect human rights and to put in place the necessary management to this end.
• Remedy – It is essential to develop and strengthen judicial and non-judicial complaint mechanisms in order to improve remedies for human rights infringements committed by companies.

Clearly, this model provides for the comprehensive measures that we have spoken about before. The final word on the matter is that a change in the union’s right is inevitable in the changing economic scenario. There will be some demands that will be fulfilled and some that will not be met with. However, with collective action and collective policy-making, one can work towards facilitating a harmonious existence of the corporate interests and the labour rights to move towards development in the globalisation era.

Bibliography

Books:

Barnard, Catherine, et al. (ed.), 2004, ‘The Future of Labour Law’, Hart Publishing, Oregon.

Humblet, M. et al., 2002, ‘International Labour Standards: A Global Approach’, International Labour Office, Malta, 1st Editon.

Jetli, N.K., 2004, ‘India: Economic Reforms and Labour Policy’, New Century Publications, New Delhi.

Online Sources:

Achieng, Judith, 1998, ‘Who’s To Blame For Negative Impacts Of Globalisation?’, available online at www.hartford-hwp.com/archives/30/068.html, last visited on February 2, 2010

BDA- Association of German Employers’ Federation, 2010, ‘“Protect, respect and remedy” – fleshing out John Ruggie’s concept concerning corporate responsibility for human rights. Input from German employers.’ available online at http://198.170.85.29/BDA-paper-re-Protect-Respect-Remedy-Feb-2010.pdf, last visited on March 30, 2010

International Labour Organisation, 2010, ‘Programme for the Promotion of the ILO Declaration on Fundamental Principles and Rights at Work’, available online at http://www.ilo.org/declaration/lang–en/index.htm, last visited on April 3, 2010

Irish Congress of Trade Unions, 2010, ‘Trade unions and globalisation’, available online at http://www.ictu.ie/globalsolidarity/workersrights/tradeunionsandglob.html, last visited on March 31, 2010

Legal Service India.com, 2008, ‘International Human Rights and Transnational Corporations’, available online at http://www.legalserviceindia.com/article/l161-International-Human-Rights-&-Transnational-Corporation.html, last visited on March 30, 2010

Organisation for Economic Co-operation and Development, ‘Text of the OECD Guidelines for Multinational Enterprises’, available online at http://www.oecd.org/document/18/0,3343,en_2649_34889_2397532_1_1_1_1,00.html, last visited on April 4, 2010

Ruggie, John, 2009, ‘Prepared Remarks by SRSG John G. Ruggie Public Hearings on Business and Human Rights Sub-Committee on Human Rights European Parliament, Brussels, 16 April 2009′, available online at www.corporatejustice.org/IMG/pdf/EP_April 2009Ruggie.pdf, last visited on April 2, 2010

United Nations Global Compact, ‘The Ten Principles’, available online at http://www.unglobalcompact.org/AbouttheGC/TheTENPrinciples/index.html, last visited on April 4, 2010