The financial crisis, the Nordic model and the decent work agenda
Trade Union Conference, Sørmarka, 15 May 2012
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The Minister based his speech mainly on the following points:
- The crisis in the financial system, debt-crisis and crisis in the labour-markets are global but currently hitting Europe hard.
- The rise in unemployment, especially among youth is devastating for the individual, for families and for society at large; prospect of a lost generation, of great social unrest, migration (among others to Norway).
- Protests, popular movements, regimes change (Arabic Spring and Europe).
- We also see the political consequences (technocratic governments, new elections in Greece, change of governments (Spain and France).
- Dangerous for Europe: rise in extremism in our own region. The very fabric of society is strained and stretched; we are witnessing how the economic crisis is leading to a crisis of confidence, in institutions, government, politics, and civil society.
- The weaknesses in the international economic system have also been exposed. A global ”race to the bottom” with deteriorating working conditions, weakened social protection and an undermining of rights, in addition to increased unemployment, must be avoided.
- In Norway we benefit from an economic and social model emphasizing cooperation and trust between the government, the social partners and the population at large. The strength of this model is particularly evident in times of crisis.
- The Nordic model is the best answer to the crisis.
- The role of the trade unions is essential in restoring the economy – trade union important part of the Nordic model.
- During the crisis of the early 1990 the tripartite cooperation between the government and the social partners in Norway paved the way for wage restraint and active measures against unemployment and finally robust growth.
- The Nordic countries are characterized by a welfare state, high levels of employment (including female employment), and low inequality.
What are the characteristics of the Nordic model?
1. Tripartite cooperation
- We have a long and successful tradition of cooperation between the unions, employers and the Government. This is based on social cohesion and trust, which again reduce the cost of transactions and contribute to a common understanding of the problems we face.
- Consultation and dialogue with the trade unions has been vital for successful reform of welfare policies and institutions. The prime example in this regard is the recent pension reform. Unions and political parties across the political spectrum agreed after extensive consultations on a comprehensive reform of our pension system.
2. Mobilising labour
- All Nordic countries have been successful in mobilising their labour forces. In particular, the story of how Nordic women have migrated into the labour market over the last 30 years is a truly Scandinavian success story.
- In Norway, female labour force participation increased from 55 per cent in 1980 to 73 per cent in 2010 – more than 16 per cent higher than the OECD average.
- To many, Norwegian welfare is associated with our oil resources. Yes, we have the oil, but more important we are lucky to have Norwegian women!
- If the employment rate of Norwegian women would be reduced over night to the OECD-average, this would – all other things equal – reduce our national wealth by approximately the equivalent of our total petroleum wealth, including The Government Pension Fund.
- Ambitious welfare and family policies, developed in close cooperation between government, employers and employees, have been instrumental in supporting the participation of women into the labour market.
- All Norwegians have a statutory right to day care facilities for their children. In addition they are entitled to one year’s paid parental leave – divided between the mother and father.
- This is one of the reasons why we maintain one of the highest fertility rates in Europe, close to 2 per cent compared to the EU average of around 1½.
3. Openness and flexibility
- In addition to tripartite cooperation and high labour force participation, openness and flexibility are hallmarks of the Nordic economies. All Nordic countries are small open economies.
- Small economies have much to gain from foreign trade, and openness brings foreign competition and puts a premium on the ability to adapt and to learn from others. As much out of necessity as choice, we have had to work hard to make our markets work well.
- Capital and labour in the Nordic countries are by and large put to use where they offer the highest return. At the same time we have developed comprehensive income insurance schemes and ambitious active labour market policies that have supported reallocation of labour from declining low productivity industries to rising high productivity industries.
- All in all, I think you can say that risk-reducing welfare systems have been a prerequisite for the general acceptance of wide openness to trade and flexible markets in the Nordic economies.
What can be done?
- To restore confidence, creating quality jobs, decent work must be the core of any legitimate policy of economic and financial reform and any strategy for growth.
- Norway has a rights-based approach to the decent work; we believe this approach is even more vital in times of crisis. This means creating polices and institutions that are in line with international labour standards.
- We speak of recovery, not only of the economies, but in many cases of the political system and institutions. Participation and dialogue must be at the centre of the recovery.
- The decent work agenda has the elements to guide us in this process, with its four strategic and interconnected objectives: fundamental principles and rights at work and international labour standards; employment and income opportunities; social protection and social security; and social dialogue and tripartism. These fundamental rights and principles must be realized and promoted globally to improve business, governance and lives.
- The role of the labour unions is crucial. It is a demanding position. High expectations and important principles rests on you; Being reasonable in your demands, constructive in your dialogue with employers and government, secure legitimacy in representing your members, and creative in your policymaking.
- In search for viable solutions, we see growing recognition that job creation and decent work must be at the heart of the economic recovery. This much credit to the labour unions on national level, and International Labour Organisations strong presence with its message of decent work, on the international scene.
- Norway strongly supports these efforts. We support the ILO politically and through a programme cooperation agreement that support technical assistance to constituents through decent work country programmes. The Labour unions must assume its rightful positions in the work of the ILO and other international agencies on country level, Norway will stay in dialogue with you to see how we best can support this.
- Recovery demands economic growth driven by jobs – decent jobs. Recovery resting on job-driven growth demands greater coherence in the trade, finance, economic, labour and social policies on national and international level. Greater coherence among the multilateral institutions is the key. Important work is being done by the ILO, IMF, OECD, WB and others.
- We see The ILO declaration on “Social justice for fair globalisation” as an excellent clarification and point of departure for the difficult trade and labour discussion. It is adopted by all its members and states: “The violation of fundamental principles and rights at work cannot be invoked or otherwise used as a legitimate comparative advantage and that labour standards should not be used for protectionist trade purposes.”
- Our government has established a 7 point government’s strategy on decent work.
- promote workers’ rights on a global level, develop our ILO-policy further,
- integrate decent work into foreign policy, development cooperation, and trade policies.
- Securing that worker’s right in other countries is part of our business policies and efforts to encourage CRS.
- to improve policy coherence, in cooperation with the Norwegian Social Partners. Promoting decent work is an integral part of our bilateral dialogue and cooperation with many countries.
- be a driver in reaching better coherence and cooperation internationally, also between international institutions.
- To this end we have had a series of “coherence and accountability” forums. The latest was held in Oslo in 2010, and was an ILO/IMF joint conference on the recovery from the economic crisis.
- As a result of this Conference, the ILO and the IMF have agreed to work together on two specific areas; exploring the idea of a minimum social protection floor for the most vulnerable in all countries, and policies to create employment-rich growth.
- The social protection floor advisory board led by Michelle Bachelet presented its report with UN-wide support and the cooperation of the IMF and the World Bank. The World Bank has chosen Jobs as its topic for the world development report 2013.
- The ILO has asked Norway to host its 9th European regional meeting in April 2013. Coherence on national, regional and global level will be a running theme, when ministers, social partners and global leaders convene in Oslo to discuss: creating job-rich growth, promoting quality jobs through social dialog, tackling youth unemployment and demographic challenges, and policy coherence.
- We urge and invite the labour unions in central Asia and Europe to take active part in the preparations and discussions.
- Norway has been part of a process within the EFTA to see how labour-standards can be better integrated in free trade agreements. The social partners were involved in this process.
- From 2010 a chapter on labour standards is always presented in the negotiations. Our goal is to have labour standards included in the post-Doha negotiations in the WTO.
- You know this is one of the most controversial issues.
- Currently, labour standards are not subject to WTO rules and disciplines, nor are they part of any active negotiating process within the WTO framework.
- We believe, however, that integrating core labour standards in the multilateral trading system will – most importantly – provide incentives for WTO member governments to improve conditions for workers around the world, and – secondly – strengthen public confidence in the WTO and the global trading system.
- And you know the argument against labour standards. It is said that it will undermine the comparative advantage of lower-wage developing countries. Developing countries argue that better working conditions and improved labour rights arise through economic growth. They say that if the issue of core labour standards became enforceable under WTO rules, any sanctions imposed against countries with lower labour standards would merely perpetuate poverty and delay improvements in workplace standards.
- More than 10 years after Doha, labour standards are still anathema around WTO tables. Any attempt to raise this issue within the context of the current mandate will most certainly be rejected out of hand. Realistically, this situation is not likely to change in the near future.
- Consequently, Norway has consistently argued that the issue of labour rights belongs on the WTO agenda, while at the same time admitting that this will only by possible after the conclusion of the current round of negotiations.
- This does not mean that there is no development related to trade and core labour standards:
- Firstly, collaboration between the WTO and the ILO has developed through regular participation in each other bodies, exchange of documentation, as well as joint reporting and analysis.
- Secondly, and most importantly, labour standards are finding its way into bilateral and regional trade agreements. I mentioned that Norway and EFTA have now integrated labour standards into the mandate of bilateral and regional trade negotiations. Globally, we see a growing number of free trade agreements containing social and labour provisions.
- Bilateral and regional agreements have the potential of paving the way for developments at the global level. By demonstrating that the integration of core labour standards in trade agreements does not represent any disguised protectionism, the atmosphere will hopefully change so that we may ultimately achieve our objective of integrating core labour standards into the multilateral trading regime.