Vilnius Conference on the Social Dimension of Globalization

International Labour Office
Office of the Director-General
Statements 2004
Opening address by Juan Somavia
Director-General of the International Labour Office
to the
<strong>Vilnius</strong> <strong>Conference</strong> on the Social Dimension of Globalization
(<strong>Vilnius</strong>, Lithuania, 14 May 2004)
Mr. Acting President,
Madame Minister,
Friends and representatives from government, workers and employers organizations,
I.
It is a real pleasure to be here in <strong>Vilnius</strong> to meet with Ministers, government officials, business
leaders and trade unionists of the Baltic and Nordic regions and Poland to discuss one of the most
pressing issues of our times: the social dimension of globalization. I welcome you all to this
conference.
Mr. President, through you, may I thank Lithuania, and our partners from the Ministry of Social
Security and Labour, for the invitation to be with you today and for the initiative in organizing
this <strong>Conference</strong>.
I am the first ILO Director-General to visit Lithuania. That is indeed an honour, especially
considering that you were amongst the earliest members of the ILO. There was, of course, an
involuntary interruption of some years! But as you know only too well, the struggle for freedom
has a way of ultimately imposing itself even when the odds appear insurmountable. So I am
happy to be speaking on the soil of independent Lithuania!
It is also a great privilege to be one of your first international visitors since Accession to the
European Union. Your country, and many of your neighbours have lived through a period of
extremely rapid transition. The recovery of independence and democracy as well as the swift
replacement of the old centrally-planned economy, have all happened within a little more than a
decade.
It is a great achievement. It brings a change of culture and values – but also new problems. But
you are coping with them. I am very proud that the ILO has accompanied the new EU member
countries in this transition.
I believe we were able to help, not only since your independence, but also through the support to
the efforts to organize free trade unions throughout the bad times; for example, the ILO’s diligent
pursuit of due process in the investigation of the complaint regarding the suppression of freedom
of association in Poland. It exposed at the time the contradictions at the heart of the old system of
Party/State control and had repercussions throughout Central and Eastern Europe.
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And of course change in this region is not over. I hope the ILO Commission of Inquiry that
recently visited Minsk can help Belarus to give full effect to its international obligations regarding
freedom of association and create the foundations for genuine and representative social dialogue.
In Lithuania your life is hopeful these days, but it is not easy. You have to deal simultaneously
with overcoming the inheritance of the past, the profound structural change of adopting a market
economy, the progressive consolidation of democratic practices, and the new challenges and
opportunities of membership in the European Union, NATO and WTO. You are also assuming
your own space in the multilateral system. I am very happy that you are a member of the
Governing Body of the ILO. All of this together is quite a task.
Today, strong representative and free trade unions and employers organizations are a social,
economic and political asset of increasing importance in our interdependent world to face these
challenges. And we should always remember that the demand for freedom of association for
workers and citizens in general was an essential element in getting change moving in all countries
under the old regime.
Without the voices of the social partners, our societies and economies cannot manage change
efficiently and equitably. Social dialogue helps to stabilize open economies and open societies. It
ensures that the benefits of development are fairly distributed, as well as dealing better with the
inevitable pains of structural change. This gives social dialogue and tripartism a key role in
economic and social-decision making.
Poland, the three Baltic states plus the Nordic group, have considerable economic, social and
political potential. I sense a community spirit amongst your countries that bodes well for
increased cooperation in many spheres, including I am sure, within the ILO.
In the three groups of our Governing Body, you currently have six members. A number of these
members are with us today. I know they will provide a strong connection between our discussions
here and the continuing debate on the implications of the World Commission report for the ILO
and its partnerships with other international agencies.
The countries participating in this <strong>Conference</strong> have a long history of trade and commercial
linkages. But I think we all realize that the accelerating pace of liberalization and technological
innovation has created a new force – globalization. It is qualitatively and quantitatively different
from anything we have experienced before.
In all of our countries globalization has provoked strong feelings both for and against.
II
The political problem has been that the different sides of the debate rarely met or listened to each
other. Breaking out of what I have called this “dialogue of the deaf” was the main reason the ILO
took the initiative to set up the World Commission on the Social Dimension of Globalization.
I invited two sitting Heads of State, President Halonen of Finland and President Mkapa of
Tanzania to lead a group of 26 renowned personalities from different parts of the world. The
Governing Body of the ILO requested an authoritative report on the facts and the policy options
to make the benefits of globalization reach more people and limit its costs and dangers.
And when I say different parts of the world, I do not mean simply geographically! The
Commission included a Nobel Economics laureate, parliamentarians, social and economic
experts, and representatives of business, organized labour, academia and civil society.
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We deliberately convened a group of non-like-minded people coming from contrasting
backgrounds with different ideas and interests. Together, they reflected all sides of the debate.
From divergent voices a converging view emerged: the present path of globalization can and must
change.
You have copies of the report and the short synopsis so I will not go through all its many
recommendations. But by way of stimulating your discussions, let me highlight five major themes
of the report.
First, the Commission’s report, entitled A Fair Globalization: Creating Opportunities for All,
neither condones nor condemns globalization outright. It acknowledges globalization’s potential
for good – promoting open societies, open economies, more opportunities and a freer exchange of
goods, knowledge and ideas.
But the Commissioners also found deep-seated and persistent imbalances in the current workings
of the global economy that are “ethically unacceptable and politically unsustainable.”
These imbalances are reflected in today’s global economy.
• Since 1990 when globalization became most pronounced, global per capita growth has slowed
to around 1 per cent over the last decade compared to over 3.5 per cent in the 1960s.
• The gap between per capita incomes in the richest and poorest countries has never been wider,
rising from 50 to one in the 1960s to over 120 to one today. In 1962 average per capita
income in the poorest 20 countries was US$212 and has increased slightly to $267. The
comparable figure for the richest 20 countries in the early 1960s was $11,417 and has now
tripled to $32,339. But we also know that for far too many people their real incomes are well
below average per capita statistics.
• Globally, unemployment is at its highest level ever, and over one billion people are either
unemployed, underemployed or working poor.
The marginalization of far too many women, men and children from the advantages of
globalization poses growing global risks. Continuing with the current path of globalization does
not appear to be a sensible option. We must take into account the need for human security –
whether that means the concerns of the poor, the anxieties of the middle-income workers, the
uncertainties of business or everybody’s preoccupation with the growth of violence.
Second, making globalization fair and inclusive is difficult, but it is feasible and must become an
urgent world priority. There are no magic solutions or miracle theories that can alter the course of
globalization. Rather we have to make a series of interconnected shifts in economic and social
policy that aim to make globalization benefit more people.
The Commission therefore proposed a common sense agenda for action across a broad front
including fair rules for trade and finance, increased Official Development Assistance and debt
relief, increased accountability and coherence in the multilateral system, and a much stronger
focus on expanding opportunities for people.
Also, greater priority to local and community development, special treatment for the latecomers
in the game of global competition, and a recognition of disparities in national capacities to
compete under the same rules.
Third, most people agree that globalization can be either good or bad for them. They are not
against it in principle. The key issue is the governance systems and policies that can maximize the
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enefits and minimize the costs for them. People want to see the benefits of globalization in their
inside pocket and the real life of their families and communities.
This has to start at home. Fairness and opportunity begin at home. We need to reinforce local
markets and communities and support their capacity to handle the connections to the global
economy.
States and societies themselves are important actors in making globalization fair. Regional
groupings, of which the European Union is the pioneer, play a vital role in developing new forms
of governance that enable the costs and benefits of international economic integration to be
shared.
Countries with strong representative voices of workers, employers and citizens’ organizations are
more likely to expand the advantages and avoid many of the risks of globalization for their
people. This goes from increasing productivity and competitiveness, to providing support for
families and displaced workers.
Fourth, the Commission held 26 consultations all around the world with different groups. One
common message was that women and men everywhere, judge globalization by its impact on
their life at work. Decent work is a source of dignity, stability, peace and the credibility of
governments.
Since job creation goes hand in hand with enterprise development, it underpins private initiative
and investment. And it is key to reducing the tensions behind so many security threats, as well as
social challenges, such as migration, mass youth unemployment, gender inequality, poverty
reduction and achieving the UN Millennium Development Goals.
So the Commission strongly endorsed the ILO’s mission and proposes to make decent work for
all a global goal.
Fifth, we need fair rules for trade, finance, migration and commodity prices. Creating
opportunities for decent work depends on international as well as national action. In the
developing world, most foreign direct investment is concentrated in only 12 countries.
In the industrialized countries, many people see investments abroad as the export of jobs. And
labour, worldwide, feels that the rights of capital are better protected than the rights of workers.
Our global market economy needs a basic level of social protection and respect for core labour
standards if it is to generate more and better jobs.
The current model of globalization does not meet the needs of those who are weakest, be they
nations, enterprises or individuals. It is a model devised for the strong, for those who have already
been dealt the best cards, and can take advantage of the rules straightaway. That is not fair. It is
concentrated on the global dimension with little attention to local and community interests.
In this respect, the harsh reality is that our multilateral system of international organizations is
under performing. It has not developed the integrated policies necessary to lead us to a fair
globalization. Indeed, the multilateral system in many ways isn’t a really a ‘system’. Too often, it
is bits and pieces and compartments that respond haphazardly and sometimes in contradiction
with one another on basic policy issues. In particular, we are failing to reach the key balance
between economic policies on one side and social and environmental ones on the other.
We need to significantly improve the way global institutions talk to each other and adapt the post-
Second World War architecture to 21 st century priorities. The Commission calls on multilateral
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institutions to develop together balanced and coordinated proposals to achieve a fair and inclusive
globalization.
It also urges the relevant UN bodies, the IMF, World Bank, WTO and the ILO to work together at
forging coherent policies focused on sustainable global growth, investment and employment
creation. To succeed we need to critically re-examine the status quo with an open mind. If we
don’t it will be seen as an expression of multilateral incompetence in addressing together the
principal democratic demand of people for decent work and full employment.
Changing the course of globalization will require the construction of a broadly based consensus
within and between countries.
III
Europe must play a key leadership role in shaping a fair globalization. The blending of the
innovative power of the market with the security of social solidarity is a global project. The
European Union, led by the Nordic example, has shown that the blend can work and work well.
The secret of this success is recognition that societies are founded on a sense of fairness and that
our economic arrangements need to also operate fairly and yield outcomes that are widely
accepted as equitable.
The speed with which Ireland, Spain, Portugal and Greece are converging with the wealthier
European countries gives tremendous encouragement to the new member states. The combination
of market access, plus positive public policies to build the social and physical infrastructure, can
change the life chances of a whole people within one generation. We need this combination on a
world scale.
I believe a key part will be how Europe works together to create more and better jobs within its
region but also worldwide. Looking to the European Union’s Lisbon strategy for employment,
economic reform and social cohesion, I see a strong resemblance to the four pillars of the ILO’s
Decent Work Agenda.
Underlying both is the realization that productivity and competitiveness are an outcome of
measures aimed at simultaneously increasing the numbers of people in work and improving their
conditions at work.
Both treat employment as a central feature of integrated economic and social policies. It is
pursued as a policy objective, not hoped for as an automatic result just of sound macro-economic
policies. And both see social dialogue as a key mechanism for managing change and securing
social cohesion. In fact the Lisbon full employment strategy is in many ways the European
implementation of the ILO’s Decent Work Agenda.
As Anna Diamantopoulou reminded us at the Brussels consultation meeting on the social
dimension of globalization last year, the Europe of 25 countries with a population of 450 million
people is the world’s largest economy. Furthermore, it has “a model of development that has
combined liberal market economic tools … with a comprehensive range of social policies,
focussed on equality and opportunity, and built on two fundamental principles – democratic
accountability and the rule of law.”
Europe is an example, but it must also beware of the temptation to turn inward during this critical
period of internal reform following accession. The Europe of 25 may be the world’s biggest
economy but its future is intimately linked to prospects for peace and prosperity everywhere else.
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We need an outward looking Europe ready to take on the challenge of constructing a system of
global governance that can deliver a fair globalization that creates opportunities for all. History
has repeatedly taught us that when great powers lose sight of their responsibility for others, they
also rapidly lose legitimacy.
Lithuania and the new members of the EU are jumping on to a big and fast moving train! It is a
huge challenge, and how you do it is of great relevance to many other countries including those in
other continents.
The ILO continues to join you in this process, and increasingly I think we can be a vehicle for you
to share with others your very rich experience of political and structural change as well as of joint
action for common goals.
This conference is one of the first of what I hope will be many national and regional discussions
on the report of the World Commission on the Social Dimension of Globalization. The
Commission itself showed the creative power of genuine dialogue – explaining, listening,
learning, and agreeing.
In a few weeks time we will have our annual International Labour <strong>Conference</strong>. I will present a
short report outlining some ideas on the implications of the World Commission report for the
ILO. By recommending that the goal of decent work for all be a main building block of a social
dimension to globalization, the Commission challenges our Organization to play a major role in
the multilateral system.
I believe we are capable of playing that role because we can mobilize a global community of
work, represented by our tripartite constituents, to act for change from the local level up to the
institutions of our emerging system of global governance.
Thank you once more for offering me this opportunity to be the first ILO Director-General to visit
Lithuania. Thank you for organizing this <strong>Conference</strong>. I look forward to your views on the issues
raised by the Commission’s report.
This region has opened the door to a new direction. By doing so it has taken on the challenge of
building a fair Europe in a fair world. It is an inspiring opportunity for the community of work
represented by the ILO’s tripartite constituents.
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