Workers in the new economy

What will be the role of unions in the new global economy? 

The rapid technological changes affecting economies and societies around the globe may have transformed firm-to-firm transactions, generated new forms of production and exchange, and created new forms of work, but the new economy has not begun to remove the old economy’s social problems.

The changes underway are being superimposed on a very unequal world. The gap between “” and the Amazon is growing. The past decades of globalisation have increased, not decreased, inequality in the global economy. Per capita incomes in the richest fifth of countries in the world was 30 times greater than in the poorest fifth in 1960, soaring to 60 times greater in 1990 and 74 times greater in 1995. Increased global access to mobile phones or computing will not be translated into development, unless people in poorer countries have access to clean drinking water and basic education.

Within the industrialised countries of the OECD, there is a continuing growth in inequality, with many countries having a disturbing number of workers below the poverty line. In the United States, the ratio of average chief executive officers’ pay in Fortune 500 companies to that of the average production worker rose from 42 to 1 in 1980 to 419 to 1 in 1998. A growing number of the young unemployed in OECD countries are concentrated in households where no one works – they are detached from the labour market and excluded from society. The challenge now is to stop this growing social divide being reinforced by a “digital divide” between those who have access to the new technologies and those who do not.

In some OECD countries the increase in casualisation or itinerant work has contributed to a sense of growing insecurity for many workers, rather than wellbeing. But even in countries where there has not been a significant change in job tenure, there is evidence, recorded in past OECD work, of an increasing sense of insecurity. The accelerating pace of change and increasing work pressure are leading to more anxiety. This is bad in itself, but is also economically inefficient – growing insecurity and fear do not make a good foundation on which to build a high performance economy.

Meeting all these challenges will call for an effective public policy response. First and foremost, governments must restore the objective of achieving full employment by ensuring that their economic policies translate potential productivity increases into real social and economic gains. Updated regulatory mechanisms, on areas ranging from tax and consumer policy to the enforcement of competition and anti-trust policy, are also required.

In the area of labour market regulation, we have to step beyond the simplistic notion of “flexibility”, where workers are expected to give up social protection, decent wages, or job security. In the knowledge-based economy, competitive advantage will lie with those countries that have strong social cohesion built on investment in education and training as well as solid industrial relations that give workers an effective voice and the tools to influence change. In other words, the most successful countries of the new age will be those with institutions that are able to balance the market pressures of adaptation and dynamism with social concerns of security and dignity.

A key priority for governments must be to invest in education and training and to adapt them both to the needs of a changing (and volatile) economy and society and to the objective of raising the level and quality of employment. That means widening access to education and creating a general entitlement to lifelong learning, rather in the same way as entitlement to retirement pensions was established in the past.

Unions are institutions which counterbalance the centrifugal forces created by globalisation and technological change. They can play a crucial role both in redressing imbalances of power in the process of change and in ensuring that productivity increases are used to raise living standards in an equitable way.

In today’s brave new, though uncertain, world, it should come as no surprise to learn that new groups of workers are looking to unions to represent them. In 1999, the membership of affliliates to the OECD’s Trade Union Advisory Committee in North America and the United Kingdom went up for the first time in two decades. This reflects employment growth, but also the priority now given to organising new categories of workers into unions. A significant initiative was taken in November 1999 when Union Network International (UNI), the new international secretariat for “new economy” employees, launched a world-wide day of action to draw attention to the worsening conditions of workers in international call centres. UNI has followed this up by also launching a campaign for “on-line rights for on-line workers”.

The provision of computers and low cost internet access is one way of avoiding a “digital divide”. It is also a means of stepping up communication between union members. Several Nordic unions have provided computers for members for some years and, in the United States, the AFL-CIO has launched “working”, which provides low cost computers and internet access. Unions have established internet gateway sites offering a mixture of access to general news and specific union information.

Unions have also stepped up their efforts to negotiate with employers to help manage change in organisations. A central feature of these negotiations has been the need to train and retrain workers and so give “lifelong learning” some practical meaning. Research by the OECD and others confirms that unions tend to raise the amount of training done by firms and spread that training more widely. Significantly, OECD research has also found that firms which have a union or works’ council are often characterised by innovative forms of work organisation that raise productivity.

But beyond their role as negotiators and campaigners for “lifelong learning”, unions also have a role as providers. In the United Kingdom, a public sector union, UNISON, has forty education officers, offering union members the chance to return to education and study up to postgraduate level. For those workers who had dropped out of formal education and may be wary of training institutions and employers, the union movement provides a source of confidence and support to return to a learning environment. Such approaches are not new – unions played a key role in the foundation of the adult education movement a century ago in many OECD countries. With change driving the need for wider access to recurring education and training, they now represent a pillar in approaches to lifelong learning.

OECD work on the knowledge economy and growth process interestingly points to the fact that current changes in productivity growth cannot be explained on a “business as usual” basis in several OECD countries. It also shows that economic policy, through its impact on investment, is key to growth in today’s world and that decisions on corporate governance, as well as labour markets, matter to productivity outcomes. Clearly, unions are very much part of the solution to re-linking growth and the social progress. Only with them will social problems of the old economy begin to be solved.

©OECD Observer No 219, December 1999

Economic data

GDP growth: +0.6% Q1 2019 year-on-year
Consumer price inflation: 2.3% May 2019 annual
Trade: +0.4% exp, -1.2% imp, Q1 2019
Unemployment: 5.2% July 2019
Last update: 8 July 2019

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