Moving forward – TUAC elects General Secretary, welcomes CUT Chile, challenges OECD thinking on the Future of Work and the Future of the Firm

On 15 December, the TUAC Plenary elected Pierre Habbard as General Secretary for a four-year term. Habbard thanked the Plenary members for their trust and committed to continue strengthening TUAC’s advocacy function towards influencing OECD policy outcomes, but also to deepen the “support functions” for trade unions. Building on the legacy of John Evans, the previous General Secretary, the TUAC is a central forum for discussion, a centre for trade union expertise on key OECD instruments and a “first mover” on emerging issues such as digitalisation. TUAC will continue the strong and effective cooperation with other international trade union partners, including the ITUC, on economic policy and the G20/G7, as well as the Global Union Federations, the ETUC and the NFS.

The TUAC Plenary also adopted the affiliation of the CUT Chile, the first South-American trade union centre to join the TUAC. The affiliation of CUT Chile is a major step forward for TUAC in the region. The Plenary expressed its gratitude for the work of TUAC staff members leaving: Anabella Rosemberg – who has been a leading trade union expert and voice on climate change in the past ten years – and Matt Simonds – policy coordinator and one of the co-founders of the Trade Union Development Cooperation Network.

Liaison Committee: Highlights

Following the plenary, the annual Liaison Committee Meeting (LCM) allowed for an exchange between the TUAC Leadership and the OECD Member state ambassadors and the OECD General Secretary and Directorates on today’s and tomorrow’s employment challenges – the Future of Work – and the broader implications for the regulation of the private sector to help support and sustain better labour outcomes – the Future of the Firm. The discussion was framed by a TUAC dedicated paper (download on the right).

In his introductory remarks Richard Trumka, president of the TUAC, and of the AFL-CIO, said “Quality jobs require quality businesses, quality CEOs, quality corporate governance, long term business models that shift away from financial short termism”. He further questioned whether the benefits of technological change are being shared: “Who owns technology, who gets the benefits of change — the people or a handful of billionaires? (…) technological change is the product of working peoples’ inventiveness and working peoples’ money”. Trumka stated that “the erosion of the bargaining power of the working people is the root cause for productivity not being shared and for rising inequalities. (…) The implications for the OECD are this: stop with recommendations that weaken collective bargaining, lower the minimum wage and weaken unemployment insurance, and stop with the double standard where the OECD refers to the employer community and the investor community, but then talks about solutions for workers as if we can make it on our own as isolated individuals”.

Looking at the broader policy context of the OECD, the President of the TUAC emphasised that we need “not more global rules, but better ones, if we want to avoid the political collapse of multilateralism. [The labour movement’s] support is for a system that addresses both today’s topic – the world of work, and the world of businesses – and to fill in the regulatory gaps between jurisdictions. We are not there”. He reinstated the labour movements’ commitment “in the face of rising anti-democratic forces and after a generation of neo-liberalism has left ordinary people believing democracy means inequality, poverty, and rising economic insecurity.” Such commitment is also expected from the OECD when it comes to membership standards and accession criteria.

The Future of Work

In anticipating change and transition to more digitalised economies, Naoto Ohmi, Vice-president of TUAC and vice president of RENGO, said “technological change should come with a strong social dimension, responsible business conduct and quality jobs should not be side-lined in the digital economy.”

Sharan Burrow, General Secretary of the ITUC, called on the OECD to make jobs and just transition central to OECD policies: “If you consider the climate imperative, there are less than five countries with an exit plan from coal or even discussion with workers about just transition. An exit from fossil fuels must be hard on coal’s heels and the impact of technology is already being felt but it’s nothing on the production shifts we face”.

ETUC’s General Secretary Luca Vinsentini made a strong plea for a successful review of the ODECD Jobs Strategy. The OECD has to move away from saying that ultra-flexible labour markets are the way to go and endorse a much better way based on social dialogue, social partnership and collective bargaining: “After decades of weakening of the bargaining position of labour, the OECD should advocate for a rebalancing of the worker-employer relationship. A strengthening of collective bargaining and minimum wages is urgently necessary.” This would ensure both, “workers finally getting their fair share of productivity” and a recovery that is stronger and more sustainable as it is based on demand (a wage led recovery) and not on debt bubbles.

Cristina Faciaben from the Comisiones Obreras took the example of Spain to challenge the “insider versus outsider” employment protection reform agenda: job protection for standard contracts is slashed in the hope that employers would start offering open-ended instead of fixed-term contracts. The post-crisis reform in Spain “turned out to be false hope. Yes, for a short period, there was a small increase in the number of open-ended contracts – from 8% in 2011 to 10% in 2012”. But the share declined again and is now back at the low level of 8%”. Christina stressed that other countries have similar experiences. In Italy, where a similar reform was done in 2014, the pace of increase in fixed-term work even accelerated. In Poland, almost all new jobs created from 2002 to 2014 are temporary contracts.

The Future of the Firm

In the second round of discussion on the Future of the Firm, Tuur Elzinga of the Dutch FNV, warned against the rise of more “regulatory arbitrage” by businesses “to the detriment of shared prosperity and often times working conditions” in a context of a cross-border, data-driven digital economy. “The boundaries of the firm are further shifting – in the wrong direction. Ownership and value creation within digital eco-systems needs to be discussed across OECD policy areas. Data-driven profits not only generate enormous market shares but wealth concentration and thus do not lead to re-distributive effects inherent to competitive markets and put down-ward pressures on wages. Within the top 100 largest corporate capitalisations, the eight most valued technology companies account for 30 per cent of the combined market capitalisation with next to zero economic and employment footprint”.

For Damon Silvers (AFL-CIO) “the future of work will depend as much on which model of the firm prevails as it does on what happens in the labour markets. […] States have been effectively subsidizing the financialization of firms through tax policy, financial deregulation and subsidies to the financial sector, and allowed for executive compensation and corporate governance structures that encourage short termism and discourage investment”.

Jorunn Berland, Vice-President of the TUAC and president of the Norwegian YS, said the OECD Guidelines for Multinational Enterprises and its NCP system, the flagship instrument of the OECD on Responsible Business Conduct, “can improve the lives of workers around the world. But we have also had many failures due to non-functioning or poorly functioning NCPs. Despite their binding commitments, all too many governments are failing to meet their obligations to have adequately-resourced and effective NCPs. This comes down to a lack of political will”. She urged the OECD to complete its General Due Diligence Guidance in 2018, a much needed common reference – based on the authoritative international instruments and backed by governments.

Wrapping-up the trade union inputs to the LCM, Pierre Habbard (TUAC) shared three key messages for the OECD to move forward: (1) managing change through the lens of a just transition framework, (2) the need to revisit long term business models, including their governance aspects, and (3) deepening international cooperation to account for the “new boundaries” of the firms’ responsibilities. “Inclusive labour markets do not boil down to better access to skills, it is also about strong collective bargaining coverage, robust minimum wage floors and moving away from a zero-sum game vision that would oppose “insiders” against “outsiders”. In addressing the new boundaries of the firm, he stressed that small but decisive changes can be obtained by improving the OECD instruments on responsible business conduct and due diligence. He urged the OECD to apply the same spirit that prevailed during the formulation of the tax avoidance Base Erosion and Profit Shifting action plan. “The OECD can deliver a new “BEPS”, a plan against Bargaining Erosion and Productivity Slowdown”. Finally, he reminded that OECD membership criteria are not limited market economy principles: “OECD membership also requires effective rule of law, effective observance of labour and human rights and effective and independent judiciary system. That matters for both member countries and for accession countries”.