World Bank policies and labour rights

Asbjørn Wahl

There are a lot of heated discussions on the World Bank. However, there is, as I understand, no argument about the fact that the World Bank is promoting deregulation, liberalisation, privatisation, the free movement of capital, so-called free trade and labour flexibility. Actually, the Bank is not only promoting this policy, it demands countries to pursue this kind of policies as conditionalities for receiving loans. The disagreement is about whether or not this policy benefits workers and society as a whole. This will be the main focus of my contribution.

The struggle for trade union and labour rights is, of course, decisive if we are to develop a civilised society. However, in order to achieve better labour standards, we will have to analyse why trade union rights are being undermined and why we experience a brutalisation of work in most parts of the world today. Which are the driving forces behind the attacks on trade union rights and labour standards? There are causes and effects, and we will have to identify and attack the causes if we are going to improve working conditions and by that, the quality of life for working people.

A great part of the international trade union movement, the International Labour Organisation (ILO) and many of the governments of the North are demanding minimum labour standards in international agreements and as an integrated part of the policies of the international financial institutions. Minimum standards are concretely defined as a collection of ILO Conventions – regarding the right for workers to organise and to bargain, ban on child and forced labour and on discrimination based on gender – in other words very basic rules and rights.

The international trade union movement has actually invested a lot of resources and energy in campaigning for these demands, not only in relation to the World Bank, but also the International Monetary Fund (IMF) and the World Trade Organisation (WTO). The results have so far been scarce. In fact, according to annual reports from the ILO as well as from the International Confederation of Free Trade Unions (ICFTU) over the last 10-15 years, violations of trade union and labour rights have been increasing.

Even in the developed world, trade union and labour rights are being weakened and undermined these days – and this is not happening because there is a lack of formal labour standards. It is happening in spite of relatively strict labour laws and regulations. A serious brutalisation of work is going on in most of the developed world. Physical and in particular mental pressure and stress are increasing phenomena at work, and a rapidly growing number of workers are being expelled from the labour market altogether. Here in Norway, almost 15 per cent of the total population between the ages of 16 and 67 – the latter being the age of retirement – are now on early retirement, disablement benefit or some kind of rehabilitation. The figure has doubled over the last 20 years.

So why do we experience this rather dramatic development in the labour market in a country which is wealthier than most other countries in this world, and wealthier than at any time previously in its history? It is not a lack of labour standards, laws and regulations. Norway has probably one of the best labour regulations in the world. The fact is that the laws and agreements which regulate the Norwegian labour market, are being violated and undermined in practice at workplaces every day. Working conditions and labour rights are, in other words, not primarily an effect of formal labour standards. How is it, then, that we can improve working conditions and labour and trade union rights?

Let me go 100 years or so back in history, to the end of the 19 century. That was the time when workers started to organise in Norway – in trade unions and in political parties. Working conditions were miserable and there were no labour regulations. However, by means of trade union and political struggle, labour and trade union rights were gradually improved and were formally institutionalised through labour laws and through agreements between trade unions and employers. What took place was a gradual shift of the balance of forces between labour and capital – in favour of labour. Labour market regulation was introduced and enforced as a result of the increasing power of organised labour.

However, the strength of labour was not only reflected in labour laws and regulations. Probably more important was the general taming of market forces. The power of capital was reduced in favour of politically elected bodies. Competition was dampened through political interventions in the market. Capital control was introduced and financial capital was strictly regulated. Through a strong expansion of the public sector and the welfare state, a great part of the economy was taken out of the market altogether and made subject to political decisions. A considerable reduction of the physical and mental pressure on workers was an important consequence of this development.

It culminated in the 1970s. For reasons on which I am not going to elaborate further in this contribution, the labour movement lost momentum, capitalist forces went on the offensive and the current era of neoliberalism started. What we have been facing over the last twenty years, is the abolition of capital control and fixed exchange rates, the deregulation and liberalisation of markets, the privatisation of public services, the increased use of competitive tendering and outsourcing, the downsizing of the workforce to the absolute minimum, and the consequent increasing labour intensity, and the flexibilisation of labour. In short, an immense shift in the balance of forces between labour and capital has taken place, and this time in favour of capital. This is the main reason for the brutalisation of work and the undermining of trade union and labour rights that we are now facing in the developed as well as in the developing world. It is first and foremost a question of power, and it cannot be changed only by formally introducing labour standards.

A couple of months ago, my organisation, the Campaign for the Welfare State, held a huge conference in Oslo on the ongoing brutalisation of work. At that conference, Professor Michael Quinlan of the University of New South Wales in Australia gave an important speech, in which he reported his findings from a detailed investigation of more than 150 studies of health and safety effects of precarious work, or work as it is being influenced by neoliberal labour market reforms. His conclusion was overwhelmingly clear. More contingent work and more flexible work, as promoted under neoliberalism, proved to have adverse effects on health and safety.

So what does all this have to do with the World Bank? Well, the neoliberal policy which has contributed so strongly to the brutalisation of work and to the attacks on labour rights, is also the policy of the World Bank. It is, actually, as simple as that.

In response to its critiques, the World Bank insists that it has now strengthened its dialogue with the international trade union movement – and that is true. It also insists that consultation with trade unions at the national level is the order of the day when introducing new projects – and I have no reason to doubt that this is true. Finally, it insists that it supports the ILO core labour standards. Even though the trade union movement claims that this can hardly be seen in practice, let us be big-hearted and accept the Bank’s insistence.

Then, what is the problem? The problem is that all these so-called pro-labour policies only become cosmetic changes on the surface while the Bank, through its neoliberal policy, strengthen those economic interests in society which are the driving forces behind the brutalisation of work and the undermining of labour and trade union rights. I often use the following picture to illustrate this problem. To liberalise and deregulate the markets and then think that you can protect the workers by introducing formal labour standards, is like opening the floodgates of the regulated waterfall and then forbid the water to fall. Truly, it is not a very productive exercise.

In other words, The World Bank alleged intentions regarding labour standards and trade union rights, become impossible or contradictory. The World Bank’s aims and the World Bank’s means do not simply fit together – and labour rights are on the loosing side. Good intentions, I am sorry to say, represent too little power when they crash with the economic iron laws of market liberalism.

This also leeds me to some self-criticism on behalf of the international trade union movement, in which I have been a bit involved over the last 10 years. The narrow focus on the demand of formal labour standards in WTO agreements and in World Bank and IMF conditionalities seems to be based on the conception that formal rules themselves will improve working conditions. Very often we can hear international trade union leaders say that they cannot accept a further liberalisation of this or that unless they get labour standards included. This is an illusion, it is wrong and it is dangerous. It contributes to leading the struggle astray, and the result will be a further deterioration of working conditions.

If the trade union movement of the North really wants to support trade union and labour rights in the South, we should rather struggle to limit the power of our own multinational companies and to regain the control of financial capital. If successful, this will have much more positive effects on working conditions and labour rights than the so far very unproductive and narrowly run campaign and bureaucratic dialogue for formal labour standards.

Do not misunderstand me, the struggle for labour standards, for trade union and labour rights is of course important – not only important, it is decisive – but only as a part of a real struggle – a struggle to empower workers and to strengthen trade unions, a struggle which is aimed at shifting the balance of forces between labour and capital. That means fighting market liberalism, not accepting it in exchange for formal minimum labour standards.

Market liberalism is a health hazard and a threat against trade union and labour rights – and the World Bank neoliberal policy is not a part of the solution. It is a part of the problem.

(Speech given at a counter-conference during the World Bank ABCDE conference in Oslo at the end of june 2002.)