Economic and social change in the region and Australias increasing integration. What the international union movement, can do to assist each other in the face of rapid international change. Tim Harcourt, Research Officer, Australian Council of Trade Unions.

1. Introduction

First of all, thank you for the invitation to address this symposium here in the Republic of Singapore. It is important that the ACTU be involved in a forum such as this that will develop key strategies for the labour movement in dealing with economic and social change throughout the Asia Pacific region. Unions should be involved in international trade issues. For example in the Asia Pacific Economic Co-operation forum – the APEC forum – the business academics as well as governments are making their views known on important regional economic issues. In the same way, the representatives of working people – the trade union movement – should be involved in the APEC process – especially when decisions made in the APEC forum will have crucial impacts on working people and their families. The ACTU believes the international union movement should play an active role in APEC, the WTO and other international trade fora. So we welcome this ICFTU/APRO – JIL initiative.

 

In addition, on the personal level, I am very pleased to be in Singapore. When I studied economics at Adelaide University I was fortunate to have a large number of classmates from Singapore. In the honours year of 1985 (the year above me) there were eleven Singaporeans out of a class of eighteen. Eight of those fifteen lived on campus at Adelaide University and were on the same floor as myself (although I was a year younger). So I benefited in two ways – firstly, in terms of the educational stimulus and secondly in terms of invitations to late-night noodles when the days work was done! I did visit my friends here in Singapore in 1985 – so it is tremendous to return ten years later.

 

I want to discuss a number of issues here at the Symposium.

 

First, I will to discuss the rapid economic and social change here in the region and Australia’s increasing integration.

 

Second, I will discuss the economic and social change at home in Australia and the Australian trade union movements role in economic and social policy. The ACTU is an active player in the economic debate and has also contributed to economic and social reform over the past decade.

 

Third, I will outline the ACTU’s involvement in the Asia Pacific region and what we, collectively as an international union movement, can do to assist each other in the face of rapid international change.

2. Economic And Social Change In The Asia Pacific Region

One of the most exciting prospects of coming years is the growth of the Asia-Pacific economy. Already the Asia-Pacific region is the fastest growing region in the world. We hear much of ‘the Asian Tigers’ now and the emergence of ‘the Dragon’ (China) in the future.

 

The Asia-Pacific has quite clearly been the engine of the world’s economic growth in the last decade. For example just taking the economies of Thailand, Malaysia, Indonesia, Taiwan and the Republic of Korea alone, you have a market of 330 million people with a combined DGP of $US700 million – which is two and a half times bigger than Australia’s and is predicted to grow by 7% this year and the next. This comes against the background of a world economy where exports have grown faster than world GDP over the past two decades (see ICFTU-APRO Study on Australia , p18-19).

 

How has Australia responded to the emergence of the Asian Tigers (and increasingly the Dragon)? Australia has decided to get with the strength to become part of the region’s economic activity.

 

Just a simple look at Australia’s trade figures shows how much has changed in the past two decades with respect to our economic relationship with this region. Taking the ASEAN countries alone, in 1973/74 Australia exported 7.7% of its total exports to this group. In 1993-94 the total share had risen to 13.8%. Likewise, in terms of imports 3.2% of total imports came from this group in 1973/74 whilst in 1993/94 it had grown to 7.8%.

 

In North East Asia too, Australia’s trade share has strengthened. For example in 1973/74 only 0.9% of Australian exports were sold to the Republic of Korea, in 1993/94 this had risen to 7.3%. Even in the case of imports, only 0.5% came from Korea out of the Australian total in 1973/74 whilst 2.9% came in 1993/94. Japan, of course, has continued to be strong and China will no doubt be an important player in the future.

 

The changing direction of Australian trade also illustrates the importance of the Asia Pacific Economic Co-operation (APEC) region in world trade. The APEC region is increasing its share of world trade – the share grew from 37% in 1983 to 44% in 1993 (Bureau of Industry Economics, 1995). To a large extent this reflects the rapid growth in intra-APEC trade. This also explains dependence on the APEC region for its trade – in 1993/94 APEC bought 76.1% of Australian exports and sold 69.5% of total imports to Australia. [These figures are found at p.20-22 of the ICFTU-APRO Study on Australia].

 

Whilst it is important to know the facts of trade development and economic growth in the Asia Pacific – we need to know what is it all for?

 

Economists from the early 19th Century British theorist David Ricardo to the free trade gurus of the 1990s will tell you how free trade and ‘comparative advantage’ will ‘maximise economic welfare’ for all nations who trade. However, few of these economists have explained how the benefits of trade will be distributed to ordinary working men and women (rather than being captured by a elites in the nations who trade). All economists say it will make all nations better off but they have no answer as to who will benefit and who will lose within each nation.

 

However, unionists have always known this – the opening up of world trade and removing international impediments to the flow of international commerce is only beneficial if it raises the living standards of working families. You need the means to distribute the benefits of trade. The free market won’t do it by itself. The ICFTU noted this, when it referred to the Havana Charter of 1948. It stated:

 

“The ‘trickle down’ theory of trade policy does not work. There are no automatic mechanisms by which increased exports lead to improved wages and conditions…

 

Increased exports do provide the resources for improvements but only trade unions through collective bargaining or governments through adequately enforced labour laws can ensure that increased trade does really lead to higher standards of living”.

 

This is as true a statement in 1995 as it was in 1948. Whilst the Australian union movement actively assists companies in developing competitive export-orientated industries we are doing so to ensure that the benefits are shared with the Australian workforce. Likewise the Australian union movement supports the efforts by our union counterparts in the region to ensure that the benefits of economic and trade expansion accrue to working people. Free and independent trade unions are the main democratic mechanism to see that free trade benefits the workforce.

 

The rapid economic growth of the region is well documented but what are the social implications of these changes? What is happening to our societies and our communities?

 

Just a few points come to mind:

 

 

• Urbanisation – the movement of population from rurally based-economic activity to the fast growing cities if evident. At least double the number of people live in cities than did 20 years ago. This has put pressure on urban infrastructure and indeed the urban labour market – forcing labour mobility across the region.

 

 

 

• Labour Mobility – this is a key issue across the region as the rights of guest workers are often ignored – the union movement needs to work together to ensure that labour mobility is managed so as not to cause problems for both guest workers and the rights of workers in host countries.

 

 

 

• Education/Literacy – education policies have assisted literacy, basic education and skills development in raising the human capital stock of the society and the resulting productivity benefits.

 

 

As I mentioned before, I have personally benefited indirectly from Singaporean educational policies (through my Singaporean classmates in Adelaide) but away from countries like Singapore and Australia the levels of illiteracy still exceed 50% in the most populated countries of Asia.

 

 

• Communications – the technological developments in communication of the past decade or so have been monumental and with the rapid economic growth of the region, more and more people are gaining access to it. This means a larger market for information and ideas. This has affected peoples’ aspirations in terms of economic comforts (consumer goods) and access to democratic expression and opinion. This has had important implications for the breakdown of authoritarian rule – whether it be in Eastern Europe now closer to our region, such as Burma. This goes hand in hand with the right to join unions – freedom of association will be demanded along with freedom of expression.

 

 

 

• Poverty – Finally, it must be remembered that despite economic growth, that one third of the total population of the South and East Asian region still survive in conditions of severe poverty. This causes problems for workers in poverty – particularly women workers and children.

 

 

Child labour is still rampant, as is child prostitution, ill treatment of young women (including girls) and terrible health deficiencies. This means a terrible burden is carried by women in the workforce and as carers for their families. And this occurs as women are gaining a greater share of employment growth in the region – meaning increased responsibility in terms of both work and family.

 

What do these economic and social changes mean for trade unions in the region?

 

First unions are needed to ensure that the benefits of economic growth and free trade are shared amongst the workforce. Free trade should not only bring increased wages but also non wage benefits (such as pensions, health care, child care), and ‘social wage’ benefits such as education, hospitals, and increased infrastructure for our bursting cities.

 

Second, unions are needed to campaign against the social problems of the region – child labour, child prostitution, forced labour, poverty, illiteracy and the devastation of communities.

 

Third, unions are a force against political authoritarianism and abuse of human rights. Trade unions are the main mechanism for democratic action – take Solidarity in Poland in 1981 that lead to the collapse of the Eastern bloc, or the efforts of non-racial trade unions in South Africa that led to the collapse of apartheid. These economic and social changes in the Asia Pacific bring challenges to government to meet the political needs of current and future generations.

 

In summary, independent trade unions are an important social mechanism to ensure that society benefits from economic growth in terms of employment, wages, health care, child care and health and safety standards. Equally, independent trade unions are an important force for building and sustaining a democratic society. It is no accident that throughout the world the growth of independent trade unions has been accompanied by pressure for democratic change. Commentators from the region have noted the demand for democratic rights by the population together with trade union rights.

 

The presence of free and independent trade unions means that governments will not be able to revert to authoritarian military solutions to repress trade unions and other forces for democracy (of course I am not saying they will not try, particularly the more despotic among them). This is important to our region and indeed throughout the world.

 

Whilst the change of the region is widespread let me outline how unions have coped with economic and social change in Australia.

3. Economic And Social Policy In Australia

Australia is undergoing great changes – not only in terms of its relationships with the region but also domestically in terms of its economic and social indicators. Australia has undergone significant economic restructuring whilst ensuring that the accompanying social adjustments are minimised through provision of safety nets.

 

Fortunately, Australian trade unions have been part of the reform process and in many instances initiators of economic and social policy reform.

3.1 The Accord and Economic Policy

The Australian trade union movement has been able to participate in economic policy making through the ACTU-Federal Government Accord. The Accord is essentially a consultative process on economic and social policy that the Accord parties – the ACTU and the Federal Labor Government engage in to bring a negotiated agreement. The Accord is one of the longest running incomes policies int eh world – it has endured since Labor returned to power under Bob Hawke in 1983.

 

The original Accord was forged by the ACTU and the Australian Labor Party (ALP) as an alternative economic strategy to the conservative economic dogma of the day. Despite its conservative opponent’s claim that it would be short lived it has lasted 12 years and still going strong.

 

The current Accord agreement “Accord Mark VIII” (each time the Accord is re-negotiated it is given a label Mark1…2 …3.etc) commits the ACTU and the Labor Government to:

 

 

• Sustainable economic growth and a substantial reduction in unemployment – [a commitment to create in excess of 600,000 jobs – building on the employment success of Accord Mark VII – to enable the economy to generate an unemployment rate of 5% by 2000/01].

 

 

 

• Low Inflation – [wage claims consistent with an underlying rate of inflation of 2% to 3% on average over the cycle maintaining our competitive position and the real income of workers].

 

 

 

• Continued Micro Economic and Workplace Reform – [to lift industry competitiveness, productivity, effective workplace bargaining, skills development and a competitive framework of minimum standards provided principally by awards].

 

 

 

• Enhancing National Savings – [through superannuation with Government, employer and employee contributions].

 

 

 

• Maintenance and Improvement of Living Standards – [commitment to an equitable system of wage fixing and sustainable real wages growth].

 

 

Accord Mark VIII continues the trade union commitment to jobs. Indeed the evidence shows that the wage earners of Australia have made a significant contribution to Australia’s employment growth, low inflation rate and improvement in international competitiveness since 1983.

 

 

• For example Australia now has an inflation rate comparable with our trading partners compared to the late 1970’s and early 1980’s (see ICFTU-APRO Study, p.32, Section 6.3).

 

 

 

• Australia has had a significant fall in real unit labour costs, improvement in profit share and improvement in international competitiveness. (See ICFTU-APRO Project, p.76, Section 11.1).

 

 

 

• Australia has had a significant reduction in industrial disputation which was an original Accord commitment (see ICFTU-APRO Project, p.11, Section 3.5).

 

3.2 The Social Wage

The Accord is not just a tool of economic management. It is about a means of meeting social goals. The Accord, through the ‘social wage’ has delivered benefits that were out of the reach of working Australians twelve years ago. For example:

 

1. Health Care – the original Accord provided for Medicare (introduced in 1984) a universal and fair health insurance system – providing all Australians with access to excellent hospital care and local physician treatment. The system is financed by an income tax levy. This has increased access to health care for working families.

 

2. Superannuation – twelve years ago the presence of superannuation was for executives and the well off. The rest of the workforce had to rely on the old age pension. The Accord provides a levy on employers to make contributions to workers superannuation accounts. This has spread retirement plans to most of the workforce. (From 40% in 1983 to over 90% today).

 

3. Child Care – In 1983 child care for working families was barely available. This burdened working mothers in particular with only 46,000 subsidised child care places. In February 1993, the Government committed itself to the creation of 104,500 subsidised places made up of:

 

 

• Family day care
• Community based long day care
• Occasional care
• Private long day care
• Non-profit and employer sponsored long day care
• Multi-functional centres
• Outside school hours care.

 

 

With this commitment, there will be 299,500 child care places in total by 1996/97.

 

Income tested child care assistance is available to parents who use both government established centres and commercial child care centres. Subsidies range up to about $100 per week per child.

 

In addition a Family Payments Package (eg Dependent Spouse Rebate) has been introduced to assist working families with children.

 

4. Tax Reform – In 1983 the taxation system was riddled with tax avoidance and evasion and burdening the low to middle income earner. The tax system has been reformed to ensure that non-PAYE tax payers pay the fair share. The main elements of tax reform have been:

 

 

• substantial personal income tax easing;
• reductions of poverty traps;
• taxation of fringe benefits, payable by employers;
• removal of tax deductibility for entertainment expenses;
• introduction of substantiation requirements for employment related expense accounts;
• introduction of capital gains tax on real capital gains;
• rationalisation of the wholesale sales tax;
• new foreign tax credit system;
• imputation system for company dividends.

 

 

5. Other Social Wage Benefits – In addition other social wage benefits have included: termination change and redundancy, education and training reform, family assistance, social welfare reform and labour market programs. The ACTU has also ensured that disadvantaged groups in the labour market, e.g. women, migrants (of non-English speaking (NESB) background), Aboriginal and Torres Strait Islanders, and workers with disabilities are not adversely affected by economic restructuring. Labour market programs and associated industrial arrangements (such as traineeships and supported wage policies) are in place to maximise the employment opportunities of these disadvantaged groups.

 

In summary, the social wage has been initiated by the ACTU to ensure that workers share in the benefits of economic growth and are not disproportionately carrying the burden of economic adjustments. This is an important role for unions to minimise the social pain of rapid economic change and make sure workers share in the benefits. (For details on social wage see ICFTU-APRO Project, p.10, Section 3.4 and attachment 3.4).

3.3 Trade and Industry Policy

The past decade has seen a rapid internationalisation of the Australian economy with:

 

 

• gradual reductions in tariffs (by 1996, the nominal tariff level applying to goods outside auto and textile clothing and footwear (TCF) will be 5%);
• liberalisation of non-tariff barriers (eg. quotas and local content measures);
• liberalisation of outward and inward foreign direct investment (FDI).

 

 

The Australian Government has undertaken these measures unilaterally and in addition has supported multilateral trade liberalisation through support of the Uruguay Round (GATT) leading to the establishment of the World Trade Organisation (WTO).

 

The ACTU has not always agreed with these measures but has urged consultation with the workforce, and has demanded appropriate labour market adjustment and training measures to lessen the burden of change on workers in the industries suffering employment loss.

 

However, in addition the trade union movement has worked with Government on a number of positive industry policy measures which include:

 

 

• Incentives designed to enhance the international competitiveness of domestic firms such as:

 

 

Export Manufacturing Development Grants (EDMG);

Pooled Development Fund (PDF);

Australian Technology Group (ATG).

 

 

• Tax Concessions for Research and Development (R&D);
• Best Practice programs – including project assistance and information dissemination;
• Management Programs – to make sure that gains provided by the workforce’s productivity improvement are not squandered by poor management.
• Product Development
• Sectorally-based industry plans – eg. steel, auto, TCF, Ship building.
• Support Australian cities as Regional Headquarters (RHQs) – through tax incentives, and streamlined immigration procedures.

 

 

Accord Mark VIII places a strong emphasis on trade and industry policy especially in areas of innovation, training and skill development, and the facilitation of world best infrastructure including the information superhighway.

 

The ACTU has always seen trade and industry policy as union business – the workforce must be involved in strategic decisions affecting Australian industry fortunes in the international economy.

4. Australian Trade Unions And The Asia Pacific Region

In terms of Australia’s integration with the region, I want to say at the outset that the ACTU recognises the great diversity amongst nations in the Asia-Pacific.

 

The ACTU respects each nations’ different culture, tradition, history and values. (Personally, I learnt from my experience with my classmates from South East Asia at Adelaide University of the need for mutual respect for cultural differences).

 

Similarly, there is no way that the ACTU would advocate imposing our Australian practices or cultural traditions on to nations in the region.

 

However, having said that, the ACTU is part of the international workers’ movement and is actively engaged in the regions’ international trade union structures such as the ICFTU-APRO and the South Pacific and Oceanic Council of Trade Unions (SPOCTU). We have a commitment to these bodies to help ensure that workers rights are protected in the region. We will stand up for Workers rights, anywhere, anytime.

 

I do not have to tell a distinguished group such as this of the many changes that inflict trade unionists in the region. The ICFTU report on violations of trade union rights and various APRO reports horrify us in Australia on a regular basis. It is clear that being a unionist is a dangerous occupation in many countries in the region.

 

I note the recent ICFTU report on violations of trade union rights around the world. In the Asia Pacific region in 1992-94 there were:

 

 

• 51 murders of trade unionists
• 1,790 injuries to trade unionists
• 5,388 arrests and detentions
• 55,061 dismissals
• 225 incidents of Government interference in trade union’s collective rights.

 

 

These infringements in the region are of grave concern to the ACTU and if Australia wants to be integrated in the region in terms of economic fortunes then we will increasingly have something to say about how workers are treated. The violations of trade union and worker rights are symptomatic of other anti-democratic elements.

 

In fact, the encouragement of free, independent and representative trade unions in the region is the cornerstone of the ACTU’s Asia strategy.

 

The other elements are:

 

 

• to strengthen relations with the trade union movement in the Asia region;
• to participate in enhancing Australia’s social and economic integration in the region;
• to encourage affiliates to participate on industry specific regional initiatives.

 

 

The strategy is to be achieved by a number of ways including:

 

1. Support for practical project work between Australian unions and their regional counterparts or for example, training and health and safety.

 

[Examples of project work include:

 

• the CPSU in Vietnam and the Philippines;
• the CFMEU in Vietnam;
• training for Nurses from Malaysia for the ANF;
• APHEDA project work in Vietnam, Philippines, Cambodia].

 

 

2. Support for the ICFTU-APRO’s Social Charter for Democratic Development;

 

3. Support for workers rights protections (based on standard ILO Conventions) in trade and investment agreements;

 

4. Support for trade union involvement in international fora such as APEC;

 

5. Support for Australian Government diplomatic initiatives on labour rights.

 

Much has been said about trade and labour standards (the debate over ‘the social clause’). This issue has certainly dominated a lot of my work over the past year and no doubt this gathering has spent a lot of time on the issue too. I just want to make a few basic points on ‘the social clause’.

 

The Social Clause:

 

• is about protecting workers not markets;

 

 

 

• is about protecting workers from authoritarian regimes, dangerous factories, child labour, whether the goods are for export or for domestic consumption;

 

 

 

• is an insurance policy against a return to protectionism.

 

 

 

• It is our view that a social clause will enable countries to compete internationally on grounds other than causing a downward spiral in labour standards. This will maintain support for trade liberalisation in all countries, rather than returning to the protectionist measures of the 1930’s.

 

 

 

• will prevent employers from denying workers basic rights, and prevent governments assisting employers in the denial of labour rights. Instead, countries will have a common interest in the achievement of fair labour standards related to improved productivity and expanded trade and economic growth;

 

 

 

 

• protects workers in poor countries being played off against each other by rich country employers;

 

 

 

• is not imposing first world wages on developing world labour markets. It is about universal, minimal labour standards based on the following ILO Conventions:

 

 

No.87 & 98: Freedom of Association: Right to Organise and Collective Bargain

No.100 & 111: Equity and non-discrimination

No.29 & 105: Forced Labour

No.138: Child Labour and the right to work in a safe environment.

 

International trade expansion and economic growth have not stopped these violations of labour rights – there is ‘no trickle down’ – these rights need to be fought for and this is the most challenging task for us as trade unionists in the region. This is not a theoretical exercise for us, nor a self-serving Australian position. It is important to remember that many Asian born trade unionists in Australia have brothers and sisters trying to survive those conditions in their countries of origin. They want Australian unions to speak up for their brothers and sisters whom have not one to represent them because they live under authoritarian rule. The ACTU must stand up for workers in Australia and their brothers and sisters throughout the region. The ACTU supports the efforts of ICFTU-APRO in identifying these strategies.

5. Summary

In summary, thank you for your invitation to represent the ACTU at this important forum. Its been a great chance to meet my fellow unionists in the region personally and as I have said, a great opportunity to return to Singapore.

 

Australia is undergoing great change and is becoming ‘part of Asia’. It is important that Australian unionists participate actively this change.

 

The time when an Australian trade unionist only went overseas to Europe (or perhaps the USA) twice in a working life time for a “recreational/cultural visit” has gone.

 

In the 1990’s our regional international links are practical and industrial – we are more likely to go to Tokyo (than London) for an industrial negotiation.

 

Furthermore, there are a new generation of unionists coming through who have had close contact with Asia in their lifetime and who may in fact be of Asian or Pacific Islander origin. In addition, more Australians, whatever their age, are more aware of Asian culture nowadays to our national benefit and I hope to the benefit of our neighbours.

 

I have been the beneficiary of close ties with Asia and I hope that will assist me as a trade unionist in the work of this forum and in the future.

 

Thank you.

 

Tim Harcourt, Research Officer Australian Council of Trade Unions to the ICFTU-APRO/JIL Regional Symposium on International Competitiveness in Trade and Investment – Challenges and Opportunities for Trade Unions, Singapore, 1 – 5 August, 1995.