03 Oct 2005  What Do YOU Think?

What’s the Future of Globally Organized Labor?

There’s an ongoing story of fragmentation in the union movement in North America. Will the concept of cooperation and individual sacrifice for the common good work in a global labor market populated by large multinational employers?

 

Summing Up

Globalization could spur organized labor to rethink its premises, objectives, and strategies. But the prospect for that is not clear, according to respondents to this month's column. As Arun Joshi put it, "Now that the world is becoming a global village, it falls to labor's competency and its ability to move up the value chain that will allow it to share the positive gains. If labor tries the old tactic of strikes, management will just outsource the staff from somewhere else ... "

Globally organized labor may benefit from improved communication. But the obstacles it faces include differences in objectives of various work groups, a concentration on short-term goals, and a leadership gap. "Unionization will be achieved from increased interaction due to the ease of communication through electronic means, telephony, and the Internet. But unionization would only gain momentum once the labor groups' revolutionaries ensure the establishment of a work ethic and collective thinking rather than just focusing on short-term needs," according to Hujaj Ali Nawaz Khan. Deepak Alse points out that, "The real issue with unions around the world has always been and continues to be a lack of good leadership! . . . The politics of international labor interaction are extremely complex and will require tremendous leadership ability to negotiate win-win deals across countries so that employees of corporations in diverse nations are satisfied." Paul Jackson is doubtful that globally organized labor will be able to achieve the same purposes that have motivated unions on a national basis because "the purpose of most unions is 'the greater good' and generally not that of individual workers' immediate needs. . . . Without answering individual needs, labor organizations should be in their death throes."

The kind of thinking needed to meet these challenges for organized labor can be found, according to Walter Blass, in Japan. In his words, "I suggest you look at Japanese unions for a model of unions that understand business. The metaphor of 'we're all in the same lifeboat' is a useful one, both for management . . . and for unions . . . " Tim Pinel is more optimistic. He says "Perhaps the lack of legal and cultural uniformity on a global basis is what will ultimately limit this kind of action, but I suspect that out of this will emerge new kinds of collective actions that will address the contemporary issues of multinational workforces and globalized networks of trade and commerce."

These comments raise several questions: Just what new kinds of collective action might Pinel have in mind? What are the premises and objectives on which these kinds of actions should be based? Can organized labor form the necessary kinds of alliances with business and government that might be necessary to, in Pinel's words, "address the contemporary issues of multinational workforces"? Is the Japanese model a good one? What do you think?

Original Article

Two contrasting news stories caught my eye over the past couple of months. The first involved the strike, at least initially unsuccessful, by the mechanics' union at Northwest Airlines in an attempt to avoid pay cuts by, if necessary, shutting down the airline and forcing it into bankruptcy. Other unions at the airline decided not to support the strike in view of past differences they had had with the mechanics. As a result, the airline continued to operate with replacement labor.

It is perhaps one small vignette in a continuing story of fragmentation in the union movement in North America. On a larger scale, sizeable groups of workers primarily in service industries recently disengaged themselves from the AFL-CIO, which they perceived as being dominated by smaller, more traditional, industrial unions. The Northwest Airlines dispute is the latest in a series of labor-manager-owner conflicts—beginning with an air traffic controllers' strike in the United States in the 1980s—in which organized labor has suffered one defeat after another, often losing jobs in the process to more productive processes, technology substitution, or often-unorganized, lower-paid workers in other countries.

The second story, buried on the inside pages of the Wall Street Journal, concerned the announcement by the head of Union Network International, a federation of 900 unions in 150 countries, that UNI would "coordinate organizing efforts" at five multinational companies, including Wal-Mart Stores, Inc., Deutsche Post AG, Walt Disney Co., News Corp., and Ikea. These efforts would include work stoppages in countries where employees in these companies are unionized (in the case of Wal-Mart, Germany) in an effort to foster organization efforts in countries where their employees are not organized. Such organizing efforts were said to be aimed at South Korea, Argentina, Brazil, the United Kingdom, Mexico, and Puerto Rico.

In the past, labor has by organizing gained the power necessary to counteract that of large organizations operating within single, typically developed economies. The question is whether the concept of cooperation and individual sacrifice for the common good will work in a global labor market populated by large multinational employers.

Organized labor has gained a questionable reputation in global competition. Europe, where it is arguably the strongest these days, appears not to be competitive in many global industries in which labor costs are still important. Germany, in particular, where workers and union members routinely occupy seats on boards of the largest companies (through a process called "co-determination"), recently has lagged behind other European countries in its ability to increase its productivity, grow its economy, and compete globally.

Are we about to see the rise of labor organized on a global basis? If so, will such a movement be able to achieve the same purposes that have motivated large unions on a national basis? By what means will this be achieved? Or are these proposed efforts typical of those of a movement in its death throes? If it is the latter, how will labor extract its share of the gains of an expanding global economy in the future? What do you think?

To learn more:

Kris Maher, "Labor Leaders Say Multination Effort Targets Wal-Mart," Wall Street Journal, August 23, 2005, p. B2.

Comments

    • Tim Pinel
    • Project Officer, Pinebula Pty Ltd

    There is a tendency to automatically associate "unions" with the organizations of the past, yet we continually reexamine and restate the characteristics and roles of corporations from a distinctive, forward-looking perspective. Where there is sufficient incentive for individuals to cooperate within some collective model to counter the perceived or real market failures of information and influence imbalance, then they will do so to the extent that the legal and cultural frameworks they exist in allow.

    Perhaps the lack of legal and cultural uniformity on a global basis is what will ultimately limit this kind of action, but I suspect that out of this will emerge new kinds of collective actions that will address the contemporary issues of multinational workforces and globalized networks of trade and commerce.

     
     
     
    • Anonymous

    I think that it will be impossible to build a labor organization that would be global both in strength and outlook because of differences in culture and expectations in various countries. However, since it is important for labor to share equitably in its fruits and because without this there can be no world consumer market, no middle class to buy the goods, no peace and tranquility for the common good, governments will step in and proceed to balance the scales.

    Reagan brought government in on the side of capital and management, creating the decline of the labor movement in the United States. But it is inevitable that the pendulum will change, mostly because governments will see that the advantages of a stable and growing economy based on a large consuming public are preferable to having periods of boom and bust.

     
     
     
    • Fernando das Neves Gomes
    • Independent consultant

    To the emerging economies like China, for example, labor strength would be a good thing, but to economies in Europe it is not, and we are facing some serious growing problems. In contrast to the American economy, we in Europe are not supported by a consumption economy; we are supported by social and political issues. Market theories about consumption are new for many Europeans.

     
     
     
    • Vanitha
    • Malaysia

    Organized labor already has enough obstacles. The globalization of such an endeavor would have to consider a multitude of aspects, and in a constantly converging marketplace you would have to look at culture, mindsets, and a host of other globally-acknowledged differences. Who would take ownership for setting up a "global union"? Who would govern the union? Where would the union reside? It could work, but should it be forced to work? I don't think so.

    Countries still face crises just maintaining the effects of globalization in both production and marketing. To have the potential onslaught of another crisis might be a tad too adventurous.

     
     
     
    • Hujaj Ali Nawaz Khan
    • System Implementer, Pakistan International Airlines

    Unionization will be achieved from increased interaction due to the ease of communication through electronic means, telephony, and the Internet. But unionization will only gain momentum once the labor groups' revolutionaries ensure the establishment of a work ethic rather than focusing on short-term needs.

    Labor will extract its share from the expansion of global economies through jobs and through continuous improvement of the skill sets that will be required in future markets.

    In developing countries in particular, strong, informal leadership is required from the CEO of each organization. Employees at risk of losing their jobs should develop specialties without fear of pay cuts or forced retirement. Organizations also need to "go the extra mile" by appreciating the experience of their older workers despite changing global trends in a given industry.

     
     
     
    • Deepak Alse
    • System Design Engineer, Wipro Technologies

    The real issue with unions around the world has always been and continues to be a lack of good leadership! Unions have rarely used the logical fulcrum of collective bargaining and instead have worked on short-term, emotional issues.

    The knowledge economy is ruthless to anyone who refuses to understand the role played by labor information and the strategic assessment of the global dynamics of business.

    Labor unions may use deterrents and emotional collective bargaining in a closed economy of limited options. But in a global economy, these unions will fail unless their leaders can build on a multinational vision. The politics of international labor interaction is extremely complex. It will require tremendous leadership ability to negotiate win-win deals across countries so that employees of corporations in diverse nations are satisfied.

    Contrary to conventional thinking, the best way for unions to move forward may be to actually encourage nations to set up legislation for the free flow of labor, both physical and intellectual. The economics of such a system will ensure labor protection in a very effective manner.

     
     
     
    • Arun Joshi
    • Market Analyst, IDC

    I believe that organized labor is in its death throes and will soon be a thing of the past.

    The two major objectives of any manufacturing organization today are increased productivity and cost cutting. All labor unions are against these two things because they ultimately mean a loss of jobs for the workers. Another reason global labor unions will not thrive is that there is a mismatch of labor expectations in different countries. In the United States, a salary of $1,000 is considered exploitative, while in India or China a worker would be ready to work happily for half that salary, and will not strike.

    Now that the world is becoming a global village, it falls to labor's competency and its ability to move up the value chain that will allow it to share the positive gains. If labor tries the old tactic of strikes, management will just outsource the staff from somewhere else so they can get the same quality, only cheaper.

     
     
     
    • Walter Blass
    • Professor of Management, Grenoble Graduate School of Management, Grenoble, France

    I have serious doubts that this will work except that there may be some transfer of financing.

    I am familiar with the declining power of unions both in Europe and in the United States. As I recall, the labor force comprises only about 14 to 16 percent on both continents, much of it in public service unions. Furthermore, union leadership has seemingly learned nothing from the failures that you mentioned in your column.

    In New Jersey, where I live, the embroidery unions eviscerated the industry in the '50s and '60s by driving up wages, only to be replaced by immigrants—such that the industry is back up and running, non-unionized, with Latin American immigrants working on Bergenfield Avenue. The hat industry in Connecticut is a parallel story.

    It is only when union leaders grasp the thistle that their constituency will be favored. That's exactly what the union leader at Bridgestone in La Vergne, Tennessee, told me when I interviewed him for a case study back in 1987. Co-determination in principle recognizes that fact, but as you hint, it has resulted in too many giveaways by management in Germany just to keep labor peace.

    I suggest you look at Japanese unions as a model for unions that understand business. The metaphor of "we're all in the same lifeboat" is a useful one, both for management (e.g., Boeing vs. Caterpillar) and for unions (UAW vs. Northwest Airlines).

     
     
     
    • Paul T. Jackson
    • Owner/consultant, Trescott Research

    A lot of questions . . .

    Q: "Will the concept of cooperation and individual sacrifice for the common good work in a global labor market populated by large multinational employers?"

    A: It will not work. Most people discover that unions work for themselves, not for individual workers. Often many workers lose, rather than the corporations, since the corporations just give up workers, but nothing else—so there is no extracted cost to the corporations.

    Q: "Are we about to see the rise of labor organized on a global basis?"

    A: Maybe, maybe not. I'd like to see how two months' vacation in France would work here in the United States.

    Q: "If so, will such a movement be able to achieve the same purposes that have motivated large unions on a national basis?"

    A: It is doubtful. The purpose of most unions is "the greater good" and generally not that of individual workers' immediate needs. Unions will not address individuals who might be having difficulties.

    Q: "By what means will this be achieved?"

    A: Even if it is initially successful, it will eventually fail because of the structure that is failing now. For the most part, lead workers cannot supervise anyone they are in charge of.

    Q: "Or are these proposed efforts typical of those of a movement in its death throes?"

    A: Without answering individual needs, labor organizations should be in their death throes.

    Q: "If it is the latter, how will labor extract its share of the gains of an expanding global economy in the future?"

    A: Labor probably won't, but voters in the United States will eventually extract legislation to let people get something back from those who think they are above the law.

     
     
     
    • Anonymous

    Wal-Mart decided to close a store in Quebec because employees tried to unionize. Of course the store closed, so they say, because it wasn't profitable.

     
     
     
    • Anonymous

    Current economic trends are pushing toward the globalization of production. There is some development toward the regulation of this globalization through agreements made at the World Trade Organization concerning a level playing field in the areas of competition, intellectual property, and subsidies, among others.

    No such constraints are being placed on labor. The risk is that a race to the bottom will be engaged in the use of labor. Setting aside the value judgments that can be made about exploitative labor practices, there are real economic advantages in setting standards in the use of labor as is done on subsidies and intellectual property.

    Regulation is required when there are market failures and the labor market exhibits numerous market failures, principally the absence of labor mobility. Such regulation, however, depends not only on market forces but also on the political pressure that can be exerted on public authorities to adopt such regulations.

    In this case, unions play a critical role. They represent one component of the checks and balances required to maintain a healthy accord within society. When jobs can move but workers cannot, unions must go where the new jobs are to ensure equitable conditions of work. This protects workers—and enterprises—in job-sending economies as well as workers and enterprises in job-receiving economies.

    Lopsided economic growth leads to widening social divisions that are inimical to the consensus required for healthy, productive growth as shown by the Nordic European economies. Both strong employers' and workers' organizations can construct social consensus leading to sustainable, economically viable social welfare.