The Hindu Business Line : ILO report on Social Dimension of Globalisation

The ILO, through its World Commission on Social Dimension of Globalisation, has joined the public discourse on ameliorating the lot of the poor and reducing the imbalances of globalisation. While its report does well in putting the problems in perspective, it falls short in offering concrete solutions.

POLICY coherence is the current buzzword in international economic discourse. The recent report by the ILO's World Commission on Social Dimension of Globalisation (February 2004) has added another chapter to the public discourse on how to save the world, with fractional reference to the UN's Millennium Declaration (September 2000).

The latter came out with the Millennium Development Goals, which has in fact laid out a roadmap to ameliorate the lot of the poor. Both inescapably speak about the ills and opportunities arising out of globalisation, but has the International Labour Organisation added any value to the discourse? Or has it succeeded in reminding us of the problems of the poor, which need to be addressed more holistically. If that was the limited purpose, then the cost of the same is quite disproportional.

Globalisation has made developing economies vulnerable to external shocks, as these countries do not have the right mechanisms to deal with international imbalances. The Asian Financial Crisis of 1997 is proof enough of the havoc that sudden capital market liberalisation had on South-East Asia and the East Asian economies.

These economies did not have institutions in place and could not deal with the demands of the developed countries. This crisis also affected the countries socially, leading to loss of jobs and increase in poverty.

No wonder, Prof Jagdish Bhagwati, in his latest book, In Defence of Globalisation, says that capital controls should not be eased unless a country is ready for it. In writing this book Prof Bhagwati was responding to Discontents of Globalisation, written by his Columbia University colleague Prof Joseph Stiglitz. We have not yet heard the last word on both these seminal works.

It has indeed become fashionable that every institution engages in the debate on globalisation, and its social consequences. The report by the World Commission on Social Dimension of Globalisation is also a similar effort to make "fair and inclusive globalisation" a worldwide priority.

To that extent, it has been able to bring together some of the best brains from all over the world (under the leadership of the Presidents of Tanzania and Finland) to analyse the mal-effects of globalisation and formulate proposals on how to reduce the imbalances.

But what it does not, is to tell feasible ways of ensuring the gains from globalisation. Whether it is Prof Bhagwati or Prof Stiglitz or even Prof Amartya Sen, all recognise that globalisation has its positives, while governments need to regulate the negativities and provide support to the weak.

However, rather than highlight the developmental and regulatory role of governments, it produces a wish-list that lays out a number of prerequisites that have to be in place for countries to benefit. But how the countries can go about fulfilling these prerequisites has not been elaborated. The term "fair and inclusive" is in itself ambiguous and indistinct.

The social aspect of globalisation is essentially concerned with the living standards, income, employment, culture as well as identity of a nation.

Socially, people should not feel that their culture is being encroached upon. For instance, the report states that a common concern among people on the impact of globalisation is the threat to their traditional institutions such as family and schools.

The report also speaks about "decent work", a term added to the discourse by Juan Somavia, former prime minister of Chile and now chief of the ILO, in his first year of office. How does one define `decent' work? What may be decent work in one country may not be so in another.

In India, child labour is more of a matter of survival than a decision by choice. Does that mean that the global rules put in place by the ILO are not followed in India?

The raging debate in the WTO on the linkage between trade and labour standards was one of the triggers for setting up the Commission. To some extent, it has been able to deflect or capture the steam being generated outside and contain it.

Thus, it is evident that the report has little to offer in terms of concrete solutions and hard facts. In fact, some of the prerequisites mentioned in the report are open to debate.

For instance, the report states that democracy is a prerequisite for ensuring that a country attains economic growth and prosperity. But it is common knowledge that South-East Asia and China had nowhere near a democratic set-up when they began their journey towards development. Today, without doubt, these countries are much more developed than their neighbours in South Asia.

The report also talks about informal markets in developing countries but does not give concrete information about how these markets, with a sea of unemployed and unskilled labour, function.

While the Commission talks about improving labour standards and creating opportunities for workers, the unemployment trends tell a different story. The ILO puts the number of unemployed in the world at 185.9 million in 2003.

If there is no solution to this massive problem, then many countries will fail to cut poverty by half as targeted by the Millennium Development Goals (MDGs) for 2015. This goes to show that while the Commission has been stressing on the need for ensuring employment opportunities, it has not really suggested anything substantial to improve the situation. One can almost see a stark similarity between the MDGs and the goals set by the Commission, which gives the impression that the latter is singing the same tune.

The international community adopted the Millennium Declaration in September 2000 with the resolve of dispensing the benefits of globalisation equitably amongst nations and to accelerate the process of economic growth and development.

The Millennium Declaration lays emphasis on promoting human rights, peace, justice and puts the onus for attaining these goals on the governments of the developing world.

The World Commission on the Social Dimension of Globalisation was also formed on similar lines in 2002. However, in the report, not much relation has been drawn between the two except on Goal 8 that talks about Overseas Development Assistance (ODA).

The report focusses on ODA as a major source of aid for developing countries. It is known that the debate of raising the ODA from the current 0.23 per cent to the agreed 0.7 per cent of GNP is a dead horse. Trade, not aid, is the buzzword. Rich countries, save a few, will never bother to increase their aid budgets.

On the issue of trade, the report presents another disconnect. It advocates multilateral investment as well as a competition policy, without bearing in mind the strident opposition to these issues at the WTO by almost the entire developing world.

However, the report does take up the demand of cross-border movement of people, stating that more than 10 million people cross borders annually and that such movements need to be facilitated through an international accord.

The report also emphasises on the role of state in the development of a country. Over the decades, the state's role has shifted from that of supreme power to one of paramount impediment in the way of growth. However, there is need to strike a balance between the market and state as both are complementary, and this has been well recognised by the Commission.

The report also underlines the need for transparency in the functioning of organisations such as the IMF and the World Bank

The message that comes across from the report is that one knows the problems that plague our world (these have always been known) and that inequalities will always exist as far as distribution of wealth and benefits of globalisation is concerned.

The reasons for this are that countries are at different stages of development with comparative advantage in different sectors, and, in every habitat there are the rich and the poor, with the former dominating the latter. What needs to be answered is why even after knowing the problems and forming think-tanks by the dozen, the process of globalisation has passed so many countries by. Efforts must be directed towards finding feasible solutions to mitigate these differences as far as possible.

The report is a noble effort on the part of a 26-member group of intelligentsia. But it is more of a hackneyed attempt at reinventing the wheel rather than suggesting concrete solutions.

(The author is Secretary-General of CUTS International and can be reached at pradeep.mehta@cuts-international.org)

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