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Salary takers’ position in a globalized world


Jan Kristian Balstad

Former Secretary, LO-N,

Ex- Minister of Foreign Trade and Shipping, Norway.

Senior Counsellor, FAFO, Norway

Already 20 years ago - at the entrance of a new century - it seemed obvious the traditional industries were losing ground as the most important industry in creating working places.

The value creation by the traditional industries continued to develop positively but with less and less wage or salary earners.

This development hit to start with traditional industrial labour, but hits today middle class functionaries and leaders equally hard.

Economic growth, however, continued and many enjoyed being part of this new wealth creation. The strongest growth was in the public and private service sectors.

Some countries, like my native Norway, with a strong oil and fish maritime sector, saw an increased demand for wage earners and kept a high employment, were among the winners of this development. An indirect result was an explosion in the service sectors and bigger employment opportunities for women.

One major consequence of this new development was that companies with low wages and a weak economy moved to low cost countries with loss of employment at home.

Countries which unlike Norway did not have opportunities for growth in new sectors, become the big losers struggling to keep their welfare systems and the employment.

This development which I have described and which primarily has taken place over the last 20-30 years was originally described as "internationalization". Today we use the term "globalization" which is not only semantics, but covers deep rooted realities concerning:

a) information technology,

b) the development of science and knowledge and

c) market liberalism.

In the confused period following these strong changes In the very structure of industries and in society in general, the capital forces have gained substantially both ideologically and economically.

Organized labor is the big looser!

A substantial part of labor, representing all groups of wage earners, has become a "toy" in the political establishments fight against inflation. The general buying power of the population is as a result reduced which hits back on lower employment.

Thereby millions of wage earners in Europe have to bear the burden for not reducing the value of ownership capital and for not diminishing the welfare growth for those with good and secured jobs.

This has as a result had a grave impact on the confidence in the existing political system or the representative democratic model as we know it today. The confidence in politicians which have lost control with this devilment is equally strongly reduced. One result is stronger support for extreme political movements with strong nationalistic attitudes.

An additional consequence is increased skepticism to over national organizations and institutions as EU, OECD, The World Bank, IMF and WTO which all prescribes a medicine which is hitting the trade unions and the labor movement especially hard.

The trade union movement had a strong position within the traditional nation states 20 - 30 years ago. But with the growth of over national institutions like the EU in Western Europe, the wage earners and the trade union movements lost out. The national power of these organizations was left behind in the national states.

The international structures were dramatically changed with the loss of powers for the labor and wage earners movements. This is most probably the strongest reason for the strong opposition to EU over whole Western Europe. New EU-members are accepted after referendums with slightly more than 50 % of the voters in favor f membership.

None of these over national organs and institutions do have a social dimension whereby the trade union movement has any role to play.

First and foremost the information technology has opened up for a substantial global structural change. The production is taking place where the costs are lowest while the profit is taken where the taxes are at a low. In some cases this might be a desirable development, but the motivation behind and the results of these policies are catastrophic.

Many countries try to adjust to this development by making themselves attractive for these new ideas and the new employment modern technology might be able to create. Focus and attention are on knowledge, education and digitalization in an effort to attract capital and highly qualified labor.

At the same time there is a need to continue to fight against inflation and increased costs. Focus are thereby shifted towards public expenses and costs. This means dramatic cuts in the public sector and in the public welfare costs. Privatization is one prescribed medicine. New technology is introduced instead of employing more people. The new technology which was intended to create new working places has instead become a tool for not making people necessary.

It is difficult to say what causes this development. But the development is taking place in a coordinated manner and the changes with accelerated speed. What seems to a be a fact is that the major capital forces behind this development have been very successful in taking way all hindrances and obstacles for a free flow of capital, products and services on a global scale.

What took the trade unions decades and a hundred years to build up of political influence and rights to have a say before vital decisions are taken inside the national state and national companies, have been totally undermined by decisions taken above trade unions and national governments, in closed boards abroad.

Local production has been substituted by international markets and where people shall live and work are dictated by far away decisions. As stated my home Norway has so far not been seriously hit by these developments. Other countries and regions are worse off. Southern Europe is in this context a disaster.

The above outlined developments constitute the outer framework trade unions and the labor movement are faced with today. For trade unions basically being built on the institutions of the national state, the regional and international developments have created enormous new challenges. At hindsight it might seem that one of the major reasons for regionalization, internationalization and globalization, is to get rid of a "troublesome" trade union movement. The development over the last 30 years seem to have left the trade unions standing behind at the national train platform with tickets in hand without any new trains passing by!

In whatever way it is viewed; it is also a tremendous challenge for trade unions to leave national power and influences to international trade union organizations. If the reason for a membership in an international organization is undermined the very reason for its existence is also put into doubt.

The challenges facing trade unions are complicated and tremendous. Ordinary trade union members are generally speaking in a privileged employment position mainly occupied by their own working conditions such as salary terms, execution of job functions and social rights.

But this group starts to belong to the privileged few with a job. The big challenge facing our societies are the big groups not being part of a working life; the job losers and the millions of young people knocking at the door of society without being permitted a chance to get in. Whether we like it or not, it is nevertheless a fact that human beings need a job and a salary to be full worthy members of society.

We are here faced with an inhibit conflict of interest; how strongly are trade unions willing to engage themselves in the fight for those who fall outside the system; before their own interests, jobs and security are put at risk?

For some years ago the Norwegian trade unions had a strong parole: when the unemployment was close to 8 %, "employment for all, was the number one priority"!

I wonder whether this still could be said: How strong is the engagement for those who fall outside the system and stands without a job in Europe today?

In the European Union we have for the last years seen a strong urge to move eastward. This is primarily politically dictated. Many of the countries in Eastern Europe have big unemployment. When the EU opens for membership for these countries as the situation seems to be with Ukraine, new borders are opened up for a free flow of capital, products and services mainly on the premises of the capital owners.

It goes without saying that such developments constitute a major threat for the national labor markets. The fight against social dumping that the trade unions in most European countries, thought was won on national levels years ago, is again up and kicking!

National rules and regulations against social diumping, are partly been removed and substituted by new international and global rules and regulations which work to the benefit of only one party in the market economy; the capital. The traditional balance between capital and labor, often described as the Scandinavian model of harmony in the market place, has disappeared long time ago.

In the Scandinavian countries salaries and working conditions have for years to a substantial degree been regulated by direct negotiations between labor and capital. This traditional model is disappearing and labor market conditions aremore andmore dictated byEU- bureaucrats and politicians.

Another serious disadvantage for the trade union movement is that the industrial ownership structure is radically changed. 50 years ago industrial companies were run by themselves. 25 years ago ownership was managed more by national and international corporations. Today ownership is concentrated to big trusts and funds.

The distance between labor and ownership which used to be small and tolerable, is today enormous. This reduces, of course, the trade unions ability to exercise any influence on decisions regarding their own future and fate. There is a complete lack of clears playing rules. The international trade union movement has been without success in establishing social dimension within the WTO. Inside EU the European trade union movement's influence is reduced to that of a consultative function without any real influence. ILO, the International Labor Organization, functions as an ineffective UN like institution where the market liberalists are doing their utmost to reduce any rights for labor and ordinary wage earners.

The development in the world goes in the direction of power elites being fewer and steadily richer. The poor remains poor without any other power than being able to demonstrate their own powerlessness. The traditional middle classis is as we see it in the very country of the middle class, the United States, reduced and doomed.

The upside mobility that for years characterized the American society; everybody is the master of its own future, seem in today's world to be a distant and unrealistic dream. The middle class which have many trade union members within its ranks, are caring about themselves and their own values. They might have sympathy for the struggling poor. But lacks any strategy for how to help those without anything.

Historically speaking, popular - like the labor - movements in many countries in Europe have the major movers for justice and major social changes. Today social injustice and dire need are at our very doorsteps. Trade unions, environmental groups, peace movements, women organizations have all the engagement necessary to create a better Europe and a more just world. What can we eventually do together?

When an organization as WPF puts the trade union movement and its challenges in today's world on its agenda, is this most welcomed, I think that the trade unions world wide have a positive role to play and much to contribute with. WPF's aim is to discuss and exchange views on important national and international questions to create better understanding and avoid conflicts. An active trade union movement would be an important contributor to this end.

Many have with prejudiced eyes seen as strong trade union movement as a "danger" for society. In Scandinavia we have always been proud of our strong trade union movement. t has contributed to wealth and the creation of he welfare state which today, unfortunately, is under threat. Have a strong trade union movement at any stage been an obstacle for Norway becoming one of the richest countries in the world; living in peace and harmony with its neighbors?

We have relatively high taxes, well functioning and good social and health services. The unemployment rate has always been low at present 3 %. This is a concrete result and a major contribution of the trade union movement's work through 150 years.

As a representative of the trade union movement I am looking forward to attract members of our movement to the important work WPF is doing. Together we can give each other important impulses and making the world a better place to love.

Moscow, 3rd September 2014