Select Committee on International Development Appendices to the Minutes of Evidence


Memorandum submitted by the Trades Union Congress and the International Confederation of Free Trade Unions (ICFTU)


  1.  The TUC and ICFTU commend the UK Government's commitment to eliminating global poverty and to meeting the International Development Targets. The White Paper makes a number of commitments which we welcome. At the same time, we question the efficacy of the White Paper's approach to poverty elimination which is built on open markets and liberalisation. In addition, an effort is needed to integrate comprehensively, throughout the different policy areas, a greater emphasis on respect for freedom of association that could empower the poor and give them a say in the decisions that affect their development.


  2.  We are pleased that the White Paper recognises that ways need to be found to manage and structure globalisation so that it supports fundamental human rights and sustainable development, and generates prosperity for ordinary people, particularly the poorest. Left unchecked, globalisation would lead to their further marginalisation and impoverishment. The ICFTU and TUC have long advocated a social dimension to globalisation and argued, in particular, that the international trading and investment system must serve the interests of people by improving working and living conditions and by protecting their fundamental human rights.

  3.  We support the view that globalisation is not an irresistible force and that governments and international institutions are instrumental in determining its outcome.

  4.  We agree that strong and effective regulatory systems are needed at the national and international level to manage the systemic risks of globalisation such as financial volatility. The White Paper makes some helpful recommendations on regulating international financial markets. The trade union Movement has, over the past decade, consistently advocated that governments abandon the market deregulation approach to globalisation that has dominated the policies of the international institutions. Economies must be shaped and governed by public policy if they are to function effectively in meeting the expectation of societies. This is as true in a global environment as in national ones.

  5.  The Government's stated support for the ILO Declaration on Fundamental Principles and Rights at Work and for taking action against child labour is encouraging. In recognition of the key role of empowerment of the poor (as emphasised in the World Development Report 2000-01), the Government must go beyond the White Paper in emphasising the cross-cutting importance of freedom of association as a basic principle in tackling poverty. The key to empowerment of the poor is self-organisation and that requires independent and democratic trade unions, co-operatives, rural workers' organisations and other kinds of self-help associations like mutual societies which all depend for their existence on freedom of association. For women or others oppressed by society, the right to create and join organisations to advance and defend their interests can make all the difference. In all these cases, the right of the poor to organise into their own organisations and to have their freedom of association respected in general is essential. Accordingly, the importance of the core labour standards identified by the ILO Declaration needs to become a flagship element in the UK Government's development policy. Increased assistance is needed to those countries which demonstrate their genuine commitment to achieving full adherence to the ILO core labour standards.

  6.  We welcome the White Paper's commitments to increase development assistance; promote poverty reduction at the WTO; strengthen the trading capacities of developing countries; reduce corruption; ensure respect for human rights and a greater voice for poor people in developing countries; improve conflict prevention; improve health and education for poor people; enhance policy coherence at the national and international level; support sustainable development; and promulgate a new International Development Bill which would provide an opportunity to introduce new approaches to development and to weed out discredited practices such as tied aid.


  7.  However, we do not share the White Paper's conviction that open markets are always the best way to tackle poverty and that this formula can be applied across the board. We support fair and transparent world trade and back the removal of trade barriers while emphasising the primacy of social concerns. Because of their circumstances, there is a need for the special and differential treatment of developing countries to enable increased flexibility, including taking tariff-freezing, tariff-raising and import limiting measures when necessary. We welcome the White Paper's commitment to extend the Uruguay Round implementation deadlines for developing countries, where necessary. Countries should also be able to safeguard strategic service sectors, particularly in the case of publicly provided social services like education, health, water and other utilities—and this would also be consistent with the White Paper's own acknowledgement (para 57) that "Only the state can ensure the provision of key public services".

  8.  The White Paper claims that there is, on average, no relationship between openness and inequality or between growth and inequality. In other words, there is no link between globalisation and inequality. The White Paper also argues that inequality between countries is falling. However, its calculation does not address the growing inequality within countries caused by globalisation. The experience of the international trade union movement suggests that the reality for the majority of the world's population is continuing poverty. Take as an example, workers in East Asian countries who built the economic miracle. They and their families were later sacrificed to a financial crisis for which they were not responsible. It is a different matter for elites in such countries, who have been the main beneficiaries of globalisation, and whose wealth inflates their countries' Gross National Product figures.

  9.  In justifying the need for openness, the White Paper argues that "No developed country is closed" and holds out the newly industrialising East Asian countries as examples of countries that have liberalised their way out of poverty. This is misleading as all developed countries have at some point in their history resorted to protecting their economies. Many developing countries argue rightly that protectionism is still alive in the industrialised world. The White Paper also glosses over the fact that the East Asian economies passed through a phase of sheltered development which contributed significantly to their economic success. Therefore, the White Paper is mistaken to argue (paras. 186-7) that world investment rules should be agreed upon that would prevent developing countries from providing support for their domestic infant industries, as that could impede fatally their prospects of development.


Core labour standards

  10.  The White Paper identifies the need for policy coherence and points out that all developed country policies towards the world's poorest countries should be consistent with a commitment to sustainable development and poverty reduction. The 1998 ILO Declaration on Fundamental Principles and Rights at Work was strongly supported not only by trade unions but also by employers and governments in developing and industrial countries alike. It is a powerful tool in addressing poverty. The Declaration needs an effective implementation mechanism in the ILO. Moreover, it embodies standards that must become "system-wide" and given effect in the programmes of all the international institutions. Core labour standards should be embodied in IMF criteria and World Bank development policies. To gain legitimacy, the WTO needs to incorporate rules requiring its members to observe these fundamental standards of the ILO.

  11.  However, as a promotional instrument, the ILO Declaration cannot replace the binding treaty obligations arising from ratification of the fundamental ILO Conventions themselves, nor provide for the same level of scrutiny as the supervisory mechanisms attached to ratified Conventions. While welcoming the White Paper's stated support for the ILO Declaration and for Convention 182 on the worst forms of child labour (in the development of which the Government and the TUC played key roles), the TUC would hope that the Government would also proclaim and pursue support for the ILO campaign for universal ratification and implementation of all the fundamental Conventions, and for the other priority Conventions on employment policy, labour inspection and tripartite consultation.

  12.  The White Paper argues that imposing trade sanctions on poor countries that do not fully comply with all labour standards would punish countries for their poverty and hurt the poorest most. There are several misconceptions in this statement. Firstly, of course, core labour standards are defined as "core" precisely because they are fundamental human rights that can be respected by any country, regardless of its level of poverty. Core labour standards are fundamental human rights for all workers - irrespective of their countries' development—that cover freedom of association and the right to collective bargaining; the elimination of discrimination in respect of occupation and employment; the elimination of all forms of compulsory labour and the effective abolition of child labour, including its worst forms.

  13.  Secondly, the trade union proposal to include core labour standards at the WTO is not aimed at protecting markets, but at protecting the rights of workers worldwide. All industrialised country governments should actively demonstrate their commitment to improve core labour standards through enhanced trade incentives for developing countries which respect such standards and increased development assistance to enable development in this area. Any complaint that arises must go through a transparent process which would enable countries to avail themselves of technical assistance to remedy the situation. Trade sanctions should not be used lightly and should only be a measure of the last resort when governments obdurately refuse to uphold their international obligations to respect core labour standards.

  14.  The common European Union (EU) policy, dating from the Seattle 3rd WTO Ministerial Conference, calls for "a joint ILO/WTO Standing Working Forum on trade, globalisation and labour issues". The UK Government must maintain its support for the proposal, and further clarify that the WTO General Council needs to agree as soon as possible to set up such a working or study group or similar body, with the participation of the ILO. That body should be asked to undertake analysis and to make recommendations about WTO statutes and procedures in order to ensure consistency with respect for core labour standards. It should also examine the social impact of trade more generally, including the impact of trade policies on women and children.

  15.  The OECD Report on Trade, Employment and Labour Standards, and subsequent work has found that observance of such rights is consistent with good trade performance and economic development. Observing core rights allows countries to follow the "high route" to development whereby the benefits are spread more fairly, accountability increased, and corruption reduced. Conversely, there is little point in improving trade access for developing countries, without at the same time ensuring that authoritarian governments are prevented from exploiting their own workers in order to take advantage of those improved export opportunities.

  16.  Respect for core labour standards is vital to poverty alleviation. Trade union membership provided the point of departure in achieving the widespread elimination of the grinding poverty in which today's industrialised countries used to exist. One century ago, many workers lived lives of desperation in trades and industries where poverty and exploitation were the norm. Trade unions were the instruments used by those workers to escape from poverty and live lives of dignity. Just as that was true for the UK then so it remains true for the developing world today. For example in Brazil, CONTAG represents landless farm labourers and has a membership of 15 million (and is also affiliated to the CUT, a national trade union centre). The role of CONTAG has been recognised even by the World Bank as crucial in ensuring that land reforms benefited the real poor and not local elite. That example illustrates why defending freedom of association and trade union action across the whole society is so important, and why the UK Government needs to devote greater attention to the promotion of core labour standards.

Taxation policies

  17.  Governments must maintain a sound tax base for public finances against the background of globalisation. The growth of offshore tax havens and international tax competition have eroded the tax base and disproportionately shifted the burden onto labour. We support the White Paper's commitment to acting against such tax havens, while at the same time recalling the importance of implementing a Capital Transactions Tax to impede financial speculation and provide increased tax revenue.

Child labour

  18.  The Government has expressed its strong support for ILO Convention 182 on the Elimination of the Worst Forms of Child Labour. The Convention requires the removal from work and into education of all children in the worst forms of child labour and recognises the central importance of education provision to prevention. A greater commitment is required from governments, particularly those of industrialised countries to provide resources to meet these goals. Furthermore, the Government must provide resources to promote the universal ratification and implementation of the ILO's over-arching Convention on child labour, Convention 138 on the Minimum Age for Employment. There is no evidence to support the view that children can work themselves and their families out of poverty. The most productive approach would be to educate them out of poverty and to replace child workers with adults from extended families who should be paid adult wages and ensured basic rights at work. Where this is not possible, families should be subsidised for the loss of income from the child and for the cost of schooling. The elimination of child labour should be viewed as not just a moral imperative but also an investment in the future of developing countries. Promoting the transition from work-to-school for child labourers needs to be integrated fully into the extensive UK Government work on education promotion in developing countries, documented in Chapter III of the White Paper. Convention 182 requires tripartite involvement in the development and implementation of national programmes of action to eliminate the worst forms of child labour. That is essential in all ratifying states. The TUC awaits the Government's proposals for such consultations in the UK.

Regulation of international financial markets

  19.  We welcome the White Paper's acceptance of the need to regulate international financial markets. The cost of financial crises such as the Asian crisis in 1997 has been borne by working people in terms of lost livelihoods, unemployment and poverty. Any discussions on the reform of the financial architecture must involve trade unions if they are to have legitimacy and credibility.

  20.  Governments and international financial institutions must establish a consultative mechanism with the international labour movement, open a broader public consultation on the financial architecture and introduce policies to: reduce instability of the G3 currencies, through effective policy co-ordination between Europe, North America and Japan; recognise the right of governments to control short-term foreign capital flows; tax foreign exchange transactions to reduce speculative currency flows and to raise resources for poverty alleviation; establish binding international standards for the prudent regulation of financial markets covering capital reserve standards, limits to short-term foreign currency exposure, controls and certification on derivatives trading and other forms of leveraged investment; and develop an effective early warning system based in improved information systems concerning currency flows, private debts and reserves.

Resolving the Debt Crisis

  21.  The TUC and ICFTU welcome the UK Government's actions to cancel official debt for the poorest countries. Such measures must now be followed by other OECD countries and the HIPC debt reduction process must be accelerated to provide far-reaching debt relief in the shortest possible time. The UK Government must support measures by the international financial institutions, which should likewise write off debts to the poorest, and allow them to raise adequate finance to do so. The resources freed up by debt relief must be used to promote poverty eradication specifically through investment in basic health and education. Beneficiaries must be obliged to observe basic workers' rights and other human rights as a condition for debt relief.

  22.  We welcome the White Paper's endorsement of the new poverty reduction strategy paper (PRSP) approach adopted by the IMF and World Bank, which puts the responsibility on governments to produce a coherent national programme for reducing poverty. At the same time, we regret the lack of more than token consultation with civil society on those programmes. For the PRSPs to match up to the hopes vested in them by the White Paper, they will need to be prepared on the basis of genuine consultations with representative civil society organisations, including free trade unions. The UK Government should, both bilaterally and through its weight at the IMF and World Bank, make it clear that it expects governments to conduct the PRSP process in full transparency and including genuine civil society consultations.

Foreign direct investment and multinational enterprises

  23.  The role of foreign direct investment (FDI) in development should not be overestimated. Multinational enterprises (MNEs), widely seen as the key forces behind globalisation, are primarily responsible for foreign direct investment. However, not all MNE investment creates jobs and opportunities. Increasingly, foreign investment takes the form of cross-border mergers and acquisitions (M & As) in which MNEs take over or merge with existing companies. In the case of FDI flows to developing countries, M & As represent a very high proportion. M & As can lead to some job creation but they can also lead to job losses through "rationalisation" where the MNE seeks to reduce its workforce to cut out duplication between existing and new employees. In addition, MNEs will frequently outsource existing production processes to other countries if this enables them to cut costs.

  24.  Another key area for policy coherence is the effective regulation of the global activities of multinational enterprises to ensure that they observe the labour rights of their employees and also contribute to the "high route" to economic development in poorer countries. The OECD Guidelines for Multinational Enterprises, which are mentioned in the White Paper, have the potential to contribute to the realisation of this goal. We urge the UK Government to set up a transparent and effective implementation mechanism, in co-operation with the TUC. It should also support an adequately resourced outreach programme by the OECD to enable countries beyond the OECD area to benefit from the Guidelines' implementation. Just as the White Paper calls for international co-operation to avoid a "race to the bottom" on taxation policy (para. 191), so is co-operation needed to avoid a race to the bottom by denial of core labour standards.

  25.  The TUC welcomes the Government's continuing support for the Ethical Trading Initiative, in which the TUC, its affiliates, and the international trade union organisations play a key role. While corporate codes of labour practice or voluntary social initiatives like the ETI cannot be a substitute for good law properly applied and enforced, or for the sustainable improvement in workers' incomes and conditions which can be reached through collective bargaining, they can promote, among employers, a culture of compliance with good law and a recognition of the importance of respect for core labour standards in the achievement of sustainable and equitable development. The ETI has become one of the most significant initiatives of its type in the world, largely due to its tripartite structure and governance and its experimental approach to exploring good practice in the implementation of a code of labour practice based on ILO standards, including monitoring and independent verification. The present and growing plethora of initiatives, however, threatens to develop into a competitive free-for-all in which private institutions promote competing and conflicting "standards" for monitoring supply chains. Such a development is a barrier to establishing internationally-agreed benchmarks for social auditing competence, which companies and their stakeholders need if monitoring is to be done credibly. The tripartite ILO, as the repository of the standards on which any credible code of labour practice must be based and of the greatest concentration of knowledge and expertise on labour inspection and workplace conditions, is the correct place for such authoritative and international benchmarks to be developed. The TUC would welcome further active government support in pursuit of this aim.

  26.  The White Paper takes a blithely optimistic view of the effects of foreign investment that does not explain the accelerating expansion in the number of export processing zones (EPZs) around the world, where basic workers' rights are violated in order to increase countries' attractiveness to multinational companies. World-wide, 80 per cent of the workers in the zones are women, who suffer routinely from sexual harassment, poor working conditions, fertility tests and, on a virtually universal basis, denial of their rights to organise. The White Paper fails to address this situation, indeed it even extols the virtues of Bangladesh's huge female employment expansion in export processing zones. Indeed sectors in which freedom of association is most commonly denied-EPZs, the public services, agriculture, and the informal sector-are those sectors in which the majority of workers are women. This omission sits uneasily with the White Paper's recognition (para. 72) that "Development requires the empowerment of women". The denial of the right to organise to women workers is the surest means of denying them their opportunity for self-empowerment, which would provide them a means for asserting their rights.

  27.  The UK Government should condemn and curb the activities of British companies behaving unethically or fraudulently in developing countries. Accordingly, in the spirit of the ILO Conference Article 33 Resolution on forced labour in Burma, the Government should also require British companies to disinvest and should ban all imports from Burma until the Burmese regime puts an end to forced labour in that country.


  Employment promotion and improved social protection systems are essential elements of an integrated strategy to eliminate poverty. Decent work is the most fundamental counter to poverty. Strong and independent trade union organisations provide a firm foundation for democracy and economic stability, which are necessary if living standards are to improve in developing countries. We urge the Government to commit itself to working with trade unions, including building their capacity in developing countries where necessary, to achieve the goals set out in the White Paper. Promotion of the core labour standards identified in the ILO Declaration needs to become a flagship element in the UK Government's development policy.

Trades Union Congress and the International Confederation of Free Trade Unions (ICFTU)

January 2001

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