Towards a healthy multilateral system

The globalisation of recent decades has been associated with worsening income inequality, increasing violations of fundamental workers’ rights, environmental degradation and enduring abject poverty. While the OECD Forum 2004 has as its theme the “Health of Nations”, for much of the world’s population, the global economy is not working.

The global economy is dangerously volatile: extreme currency swings and the risk of stock market collapse are a recurrent feature, bearing an extreme cost in terms of poverty and unemployment. According to the World Bank’s Global Economic Prospects 2004, the number of people surviving on less than US$2 a day has reached 2.7 billion.

Such problems are most keenly felt in the highly indebted countries of the developing and transition regions, particularly the least developed. Although all the world’s nations adopted the Millennium Development Goals (MDGs) in 2000, it is clear to everyone that, barring exceptional efforts, those goals – themselves only a step on the way towards the eradication of world poverty – will never be attained by the target year of 2015.

Another contemporary problem relates very directly to the globalisation of world trade, and to the unintended consequences of the trade liberalisation that has been agreed at the World Trade Organization (WTO). In 2004 and over coming years, tens of millions of jobs in developing countries will be lost as the barriers to textiles and clothing trade come down and world production gets increasingly concentrated in just one or two locations, particularly in China. In other words, a decision that was promoted as a means of helping developing countries to increase their exports and, by extension, their peoples’ standards of living is going to have quite contrary results in many of the world’s poorest countries.

These problems bespeak a fundamental incoherence in the world’s multilateral architecture. While leaders may make a genuine commitment in one forum to achieving a commendable policy goal, there has never been adequate interinstitutional dialogue to translate that commitment into actions elsewhere in the international system to achieve the intended results.

In February 2004, a remarkable document was published that seeks to address this undesirable status quo. The report of the Commission on the Social Dimension of Globalization, A fair globalisation: Creating opportunities for all, argues for all organisations in the multilateral system to deal with international economic and labour policies in a more integrated and consistent way as a foundation for economic development and social justice.

The report, which the international trade union movement has hailed as a major breakthrough, calls for a globalisation policy forum to be set up by international organisations (such as the IMF, the World Bank, the ILO, the WTO and the OECD) to achieve a fairer form of globalisation, and which would address and monitor the social impact of developments and policies in the global economy. This forum must bring about cohesion between the international institutions on social issues.

To tackle a particularly egregious aspect of globalisation, the World Commission report calls for better conditions for workers in Export Processing Zones (EPZs). These zones, which according to the World Commission employ in excess of 50 million workers worldwide in countries as varied as the Dominican Republic and the Philippines, are often a hotbed of anti-union activity. Fundamental trade union rights are denied to workers, most of whom are women, as the zones are often beyond the reach of national labour laws which may themselves be weak.

Policy coherence initiatives between relevant international organisations should be established, according to the World Commission, to tackle just such by-products of the processes of globalisation. Here, there is a clear role for the OECD in view of its established expertise in this area, as manifested in its current project to examine the impact of trade-related structural adjustment.

The World Commission report further underlines the essential role of collective bargaining in promoting productivity and higher living standards, ensuring equality and giving workers a voice at the workplace. However, to achieve that function, it is key that the role of trade unions be supported by international organisations of real influence. The report targets the responsibilities of the international institutions and stresses the role they must play in ensuring that fair labour standards are not undermined.

Altogether, the implementation of the many recommendations of the World Commission would go a long way towards developing a more inclusive form of globalisation, one that might stand a chance of tackling poverty and falling living standards, and help make a move towards the realisation of the MDGs.

This will require that significant international meetings this year, such as the OECD Ministerial Council in May and the G8 Summit in June, give the report their full backing and start examining how to implement its findings. The OECD Forum 2004 needs to give those imminent meetings a clear indication of the level of support that the World Commission’s report enjoys among the OECD’s constituencies and, indeed, the public at large.


  • ILO (2004), For A fair globalization: Creating opportunities for all, Report of the World Commission on the Social Dimension of Globalization, Geneva, please click here
  • For further information on the OECD’s work on trade-related structural adjustment, click here

©OECD Observer No 243, May 2004

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