Roots of Insecurity: Why Workers and Others Are Losing Out

...9 Neither international competition nor advances in production technology fully explain 74 n DISSENT / Winter 2007 the pressures on wages and benefits that American workers have been experiencing...

...Indeed, few impediments to "releasing" employees exist in the United States...

...In his State of the Union: A Century of American Labor, Nelson Lichtenstein points out, "Union labor's most significant difficulties first appeared not in manufacturing but in the construction industry...

...Part-time workers are excluded in determining the number of employees of a firm, thus "allowing more firms to remain below the size threshold for which protective rules apply...

...in Towards Social Adjustment, Guy Standing and Victor Tokman, eds...

...But this difficulty has been widely circumvented by the use of temporary help and of term contracts...

...Larger companies outsource work to small or semiindependent firms to whom conventional statutory regulations don't apply or don't fully apply...

...One in six countries covers only one half or fewer of these risks...

...The conditions under which masses of workers exist recall Alan Greenspan's words about the "reversion in thinking toward nineteenth century liberalism...

...The struggle for social justice will not cease, but, as yet, it cannot count on more than marginal success...

...With the end of colonialism and of Western dominance after the Second World War, this deDISSENT / Winter 2007 s 7 5 INSECURITY pendency relationship was no longer tolerable...

...It is the only advanced industrial country that does not legally constrain employers to hire or fire at will (except on grounds of race or gender...

...Furthermore, spokespersons for developing countries have opposed laborstandard clauses written into trade treaties, because such clauses would reduce the "comparative advantage" that plentiful cheap labor presumably bestows on them...

...5. Guy Standing, Global Labor Flexibility: Seeking Distributive Justice (St...

...1. Roger Plant, Labour Standards and Structural Adjustment...

...Similarly, they justify the nonenforcement of the core ILO standards (for example, the right to free association and union organization...

...For example, a Kodak company spokesperson explained why a planned layoff was raised from ten thousand to sixteen thousand persons because of Wall Street dissatisfaction with the previously announced lower number...

...Although workers in the lower tiers have a chance to work their way up, "the union mind set" of gaining annual increases doing minimally skilled jobs must be "shed," according to company officials...

...Only one in two pays unemployment benefits—and even then coverage is sparse, payouts low...

...Guy Standing writes that "(T)he current era has seen a regrowth of casualization...

...In Labor Standards and Development in the Global Economy (U.S...

...More important, government and employer efforts have DISSENT / Winter 2007 n 71 INSECURITY succeeded, if gradually and against much resistance, in making working conditions more "flexible...

...3. Raymond Hogler, Employment Relations in the United States: Law Policy and Practice...

...In his Global Labour Flexibility, Guy Standing, a senior economist with the ILO, writes, "In the 1980s . . . those favoring the cold bath approach were back in ascendancy, and it is no coincidence that in the latest era of insecurity no fewer than eight Nobel Prizes have been awarded to economists from the University of Chicago, where . . . the Chicago school of law and economics depicted regulations as impediments to growth . . . . In the 1980s and 1990s, security has been derided as the source of "rigidity" and dependency . . . ." This "neo-classical paradigm" is the very antithesis of what the ILO stands for—thus another ILO writer: "It essentially ignores the value of labor standards as instruments of social justice...

...This has been in large measure the result of an expanding world market—an expansion driven by capitalist enterprise, financial interests, reduction of trade barriers, and not least, since the 1960s, increasing pressures by developing countries...

...After years of strikes and job actions at the company, the United Auto Workers union was compelled to accept the two-tier wage and benefit arrangements that had become emblematic of collective bargaining since the early 1980s...

...It mandates notification of plant closing or mass layoff where fifty or more employees are affected...

...and as often as not they lack social protection, such as health insurance or old-age pensions...

...This probably reflects deeper trends, summarized by the labor historian Henry Phelps Brown in the early 1990s: "The dissolution of the labor movement is . . . the counter-revolution of our time...

...ALEJANDRO PORTES argues that "a high proportion of the informal labor force is in reality composed of 'disguised' wage workers who toil for modern firms" but have no status as "regular" employees...

...Without labor-management contracts restricting an employer's right, "workers have little entitlement to protections against loss of work...

...HORST BRAND writes on economics for Dissent...

...Nelson Lichtenstein notes the disdain with which this concern is viewed by top government representatives...

...The postwar boom was ending, an era of muchslowed growth and productivity began...

...It is also an argument criticizing the "liberalization context" of insecurity and the policies that have deliberately fostered it...

...Outsourcing, for example, affects a substantial part of the labor force...

...Newly hired workers would now receive lower rates of compensation and lower increases than their seniors...

...Deepening insecurity already lay ahead for large numbers of workers—an erosion of their rights, a recrudescence of commodification—for the supposed Golden Age, writes Standing, "was based on an inequitable and unsustainable international division of labor . . ." That was not the only reason why economic security crumbled...

...Nor did levels of the gross domestic product per hour worked differ significantly when figured in relation to the United States...

...International Labour Office: Geneva, 1994), p. 9. 2. Alan Greenspan, "Opening Remarks—Global Integration: Opportunities and Challenges," in a symposium sponsored by the Federal Reserve Bank of Kansas City (Jackson Hole, WY, August 24-26, 2000...

...Sage Publications, 2004), p. 162...

...They did not know when accident or sickness would hit them, and though they knew that sometime in middle age—perhaps in the forties for unskilled labourers, perhaps in the fifties for the more skilled—they would become incapable of doing a full measure of adult physical labour, they did not know what would happen to them between then and death . . . .There was no certainty of work even for the most skilled: during the slump of 1857 -58 the number of workers in the Berlin engineering industry fell by almost a third (Italics in original...

...The "regimes" in that last sentence, which we once thought needed taming, are the "unbridled forms of capitalism...

...no fixed workplace, such as a shop, factory, or office...

...The older division of labor was based, roughly speaking, on the manufacturing preeminence of the West and the agricultural and raw-materials economies of the South...

...But layoffs also occur for reasons other than technological changes that make workers redundant...

...For a number of EU countries (such as France and Germany), those levels exceeded that of the United States...

...As regards Greenspan's claim that rates of return on technologically advanced plants and equipment in the United States have exceeded comparable rates in the European Union (EU)—although pertinent data are not at hand, it is unlikely that this is related to the greater protection of European workers...

...This same world market, however, has been the arena of widespread deprivation of fundamental labor rights and standards...

...6 According to the ILO report, income insecurity linked to unemployment has "unquestionably increased...

...It might be relevant DISSENT / Winter 2007 n 73 INSECURITY to quote a passage from E.J...

...8. Guy Standing, "Structural adjustment and labour market policies: Towards social adjustment...

...The attitude of the G - 8 officials is more explicitly conveyed by Alan Greenspan, then chair of the Federal Reserve's Board of Governors, in words that go to the roots of job insecurity— though this was not their intent...

...They did not know how long their present work would last or, if they lost it, when they would get another job or under what conditions...

...6. Neil Gilbert, Transformation of the Welfare State: The Silent Surrender of Public Responsibility (Oxford University Press: New York, 2004), p. 66...

...Entry to social protection has been restricted, says Neil Gilbert, and exit has been accelerated...

...Deregulating Terms of Employment These European countries, however, have been plagued by very high rates of unemployment— which have been attributed largely to labor market "rigidities" and to the relatively generous income supports for unemployed workers...

...4. G. Bosch and W. Sengenherger, "Employment Policy, the State and the Unions in the Federal Republic of Germany," in The State and the Labor Market, Samuel Rosenberg, ed...

...But "unbridled" is now a good thing: Greenspan immediately proceeded to discuss the contrast between the lower level of high-tech capital investment in Europe and Japan relative to the United States...

...These efforts have probably perpetuated the "informalization" of much of the working-age population in developing countries— the more so as the privatizing of public services and enterprises has inevitably meant layoffs...

...Moreover, labor standards were similar among the industrial countries' major trading partners, hence were neutral in regard to international competition...

...Portes himself has shown that industrialization in a number of Latin American countries increased at one-third again the rate of the gross domestic product, which itself doubled between the 1950s and 1980s even while their informal work force did not decrease...

...THE INEQUALITY of the international division of labor that marked the nineteenth and much of the twentieth centuries has undoubtedly lessened...

...The average level of labor costs would thus decline as older workers quit or retired...

...Informalization" is perpetuated by chains of subcontractors reaching upward from street and garbage dump collectors to, say, paper, plastic, and glass buyers, who have the stuff cleaned and sorted, then sell it to wholesalers, who in turn sell it to a manufacturer who probably employs a formal work force...

...Martin's Press, 1999), p.107...

...About 40 percent of people in the developing world live in absolute poverty . . . obliged to take on the most rudimentary form of work or labor to ensure a basic subsistence...

...According to data published by the Economic Policy Institute in The State of Working America, 2004/ 2005, the growth rate of labor productivity (output per hour worked) averaged 1.7 percent annually between 1989 and 2000 for the United States, which is about the same as in France, Germany, Italy, and the United Kingdom...

...cit., p. 2.2 76 n DISSENT / Winter 2007...

...STANDING SIMILARLY holds that there was no "Golden Age...

...INSECURITY During the mid-twentieth century, labor in the industrial countries enjoyed rising real wages, a degree of job security, and an extension of its rights—tendencies that Scandinavian social democrats called decommodification—the distancing of labor, however gradual, from "the whip of the market...

...We're paying less than Wal-Mart,' acknowledged the president of a non-union construction group in Alabama...

...Estimates of the adequacy of risk protection or of eligibility allow an evaluation of effectiveness: Only 17 of the 102 countries examined meet ILO criteria satisfactorily...

...Considering that property and investment rights are stringently guarded under domestic and international laws, there should certainly be an effort to absorb informal workers in a modernizing economy based on a statutory conception of the labor market...

...You cannot ignore important constituencies like shareholders," he said, according to the New York Times...

...The steady reduction of tariffs and import restrictions that industrial countries negotiated with one another in the postwar period (but which applied universally under the most-favorednation principle) promised trading opportunities to some industrializing poorer countries...

...On a good day (that is, a very long day), she earns three dollars...

...The rights of labor and various labor standards are seen as "rigidities," to be modified or if possible re70 n DISSENT / Winter 2007 moved...

...Beginning with Taft-Hartley, labor was forced onto the political defensive...

...The "social plan that employers must negotiate in case of an economic downturn has been modified so that up to 20 percent of employees may be dismissed before a plan is worked out, rather than only 5 percent.' In general, protective statutes are evaded or circumvented...

...Mandatory private insurance schemes (such as the one in Chile) intensify income insecurity...

...It is in part this prospect that caused French youth to revolt against the law (eventually rescinded) that would have permitted employers to fire workers aged twenty-six and under without notice or explanation—thus invalidating part of the protective clauses of existing labor law...

...In Germany, for example, small and newly established firms have been relieved from certain worker protective rules...

...At a symposium in 2000, attended by high officials of international financial institutions and economists, Greenspan said that it was "reINSECURITY markable how far economic opinions . . . have shifted since the 1970s...

...Uchitelle doesn't say so, but that policy may in time make the union irrelevant...

...And the problems faced by municipal labor beginning in the 1970s were likewise "entirely homegrown," with the federal government refusing to relieve the fiscal crisis that older American cities underwent at the time owing to deindustrialization and a stagnant tax base...

...The long standing presumption that factory workers at successful companies can achieve a secure, relatively prosperous middle class life for themselves and their families," writes Uchitelle, "is evaporating...

...Even where such repressiveness has eased, labor cost differentials persist and keep attracting foreign capital—though, as product upgrading requires some skill improvement and as internal markets develop, such cost differentials will probably diminish to some degree...

...its proportion to the formal work force was unchanged...

...The fundamental difficulty in the application of protective legislation in Third World nations is the existence of a large mass of surplus labor," Portes writes...

...In the absence of reliable quantitative data, the ILO has developed a database derived from descriptive and budgetary information for 102 countries...

...He points to the steep barrier to organizing in the South erected by the 1947 Taft-Hartley legislation and to the bitter strikes that occurred during the 1950s and 1960s...

...But the fundamental event that brought about the end of the era of economic security was the transformation of the international division of labor...

...More generally, social protection in many, perhaps most, countries remains severely inadequate and is becoming even more inadequate under budgetary and privatization pressures...

...Moreover, there is a significant movement from defined benefits to defined contributions—a shift of investment risks to employees...

...income replacement ratios have declined...

...Temporary employment in France, Germany, and the Netherlands runs to near 15 percent of total employment and to some 30 percent in Spain...

...72 n DISSENT / Winter 2007 Degrading Unemployment Compensation In the advanced industrial countries, labormarket security—fundamentally assured by policies of full or near full employment—included the understanding, until the 1980s or 1990s, that income support would be available in case of job loss, and that such support would not be conditional on accepting the first job offered...

...Janoras sells her "goods" to a broker as feed for pigs...

...Worker demands for better conditions were resisted more strongly...

...When firms cannot "really implement" such reductions— that is, "release" workers—rates of return will be lower...

...it does not bar the discharge of employees...

...Hobsbawm's The Age of Capital, 1848-1875, bearing upon labor market conditions in that century: If any single factor dominated the lives of nineteenthcentury workers it was insecurity...

...Shareholder value" has motivated some large-scale discharges...

...Liberalization, says the ILO, is the objective of policies formulated by international financial institutions in concert with the U.S...

...Now decommodification has turned into its opposite...

...At a 1998 meeting of the G-8 industrial nations in Cologne, a delegation of trade unionists, representing virtually all the big labor confederations in the developed world, found themselves completely stymied when they tried to put international labor standards, financial market regulation, and compensatory help to displaced workers on the agenda...

...Contractors hired more and more non-union labor, and "the great exurban construction boom of the late 1980s and mid-1990s has been largely union-free...

...The relationship between her and the broker is not uncommon...

...They did not know in the beginning of the week how much they would bring home at the end...

...These ideas were now "considered anathema . . . to the principles of free trade . . . and even to political parties—like those then running Great Britain, Germany, and the United States—that relied on the labor vote for their very survival...

...At the risk of some oversimplification, there has been a noticeable reversion in thinking toward nineteenth century liberalism, with the consequence that deregulation and privatization have become policies central to much government reform...

...The Curse of "Informal Labor" "Labour relations are being informalized," says the report...

...Regarding construction labor, the big companies using such labor acted in concert to resist wage demands...

...In China such policies have not abated...

...AMORE RECENT example of labor-cost cutbacks unrelated to international competition is the policy of Caterpillar, an otherwise "healthy and profitable company," according to Louis Uchitelle, in the New York Times of February 6, 2006...

...they have no status as wage workers...

...This is clearly a political issue...

...Income maintenance programs have been designed to "activate beneficiaries," and the criteria for "suitable work"—which an unemployed person must accept—have been broadened well beyond the occupational status of previous employment...

...Informal workers maintain work or market exchange relationships with semiformal or, indirectly, with formal enterprises...

...The New York Times of May 23, 2006, tells about Teresa Janoras, who scavenges for discarded food from hotels and restaurants in a Manila dump (where 150,000 people rummage through the daily delivery of 6,700 tons of garbage to find articles for recycling...

...The difference between Europe and Japan on the one hand and the United States on the other is all the more important, he averred, inasmuch as the return (profit margin) from newer technologies results chiefly from a reduction of labor costs...

...Low labor costs were enforced by repressive wage and worker association policies, as in Korea, until the late 1980s and other Southeast Asian countries...

...The ILO defines liberalization in terms of certain "key policy commitments," all of which affect the situation of workers, though at times only indirectly...

...International Labour Office: Geneva, 1991), p. 36...

...34 countries, mostly in Africa and Latin America, meet none of the criteria...

...7. Alejandro Portes, "When More Can be Less: Labor Standards, Development, and the Informal Economy...

...As a result, income security in old age is in jeopardy...

...Contribution rates have risen in half the countries surveyed by the ILO...

...DESPITE ITS subsequent rescission, the law exemplifies legislative tendencies in European countries seeking to deregulate or destandardize existing terms of employment and dismissal, thus facilitating a more "flexible" labor market...

...Yet, Lichtenstein rejects the notion that a "social contract" between labor and management existed during the mid-twentieth century, which was presumably abrogated in the 1980s...

...It was part of a range of income supports to promote "the decommodification of labor...

...Protective labor legislation, often modeled on the laws of industrially advanced countries, will not or cannot be enforced...

...That the "constituency" of property owners should take precedence over the interests of productive working people and their livelihood—and this case is by no means unusual—betrays a corruption of some fundamental moral values...

...Treasury—policies that are based on the "Washington Consensus...

...This is in fact a treatise about the economic insecurity that has been afflicting the world's working people for the past several decades...

...Other key commitments include unobstructed capital mobility, regardless of the effects on the value of a country's exchange rate and ability to finance domestic business (hence to sustain employment levels), and labor market "flexibility," a euphemism for removing (or restricting) such labor market "distortions" as trade unions and minimum wage laws and, in brief, subjecting workers to the dictates of supply and demand...

...8 Attacking Organized Labor Widespread hostility to unions has further impaired the capacity of workers to improve their conditions...

...It was a social right, if somewhat encumbered bureaucratically...

...Since the 1980s, these supports and the conditions of their availability have become increasingly restrictive (see below...

...These developments have intensified employment and labor-market insecurity in the EU, particularly in France...

...Department of Labor: Washington, 1990), p. 28...

...And this will blunt incentives to invest and result in lower productivity gains—gains that are "clearly evident in the United States and other countries with fewer impediments to implementation...

...Although Greenspan and others may deny that the passage reflects the "vision" of nineteenthcentury liberalism they have in mind, a large literature, including papers by World Bank staffers and the "Eurosclerosis" school, have argued for years, and with some success, about the adverse consequences of protective labor regulations...

...And he attributed Europe's lower level of such investment to legislative protection of its workers against the "presumed harsher aspects of free-market competition...

...Export- or trade-based economic growth, urged by the International Monetary Fund and the World Bank, spelled intensified global competition based on low labor costs...

...Often the majority of working people, or a large minority of them, lack secure employment...

...it is linked to powerful political forces that have material and ideological interests in privatizing public assets and services, and whose influence extends worldwide...

...It has been argued that the hiring of workers was impeded in the EU by legal and administrative difficulties and attendant expense of dismissal...

...Qualifying periods for benefit eligibility have been lengthened in many countries and the duration of benefits reduced...

...Plenum Press, 1989), p. 96...

...The "liberalization context of insecurity" described in the ILO report has embraced efforts by international financial institutions to break down the collective bargaining power of labor as part of their deregulation project...

...It concludes that only one in three countries offers schemes covering the conventional social risks—among them, sickness, maternity, old-age disabilities, the plight of survivors, injury, and unemployment...

...In addition, current earnings of workers bear a greater and greater burden of pension costs...

...Pensions have been under strong INSECURITY privatization pressure...

...Nor does a party of social democracy exist that appears capable of producing or enforcing a new vision of social justice—or, more particularly, of eliminating global poverty...

...The ILO estimates that 50 percent to 70 percent of those countries' labor force engages in informal activities—they are self-employed or casual workers or they work with or for their families...

...the legal retirement age is being steadily increased...

...The economic security of the few decades following the Second World War could not last...

...9. Quoted in Global Labour Flexibility, op...

...Standing writes that "there has been a considerable erosion of protective labor regulation in industrial, industrializing and low-income countries, in response to the growing openness to international trade and the changing international division of labor, under pressure from governments pursuing explicit and implicit protective deregulation or as a consequence of enterprise-level restructuring of employment relations towards 'external' labor flexibility...

...One of the crucial commitments is a reduction in the size and role of the public sector of given countries, which usually results in cutbacks in public employment and productive public assets and the elimination of much of the state's regulatory capacity...

...Welfare-state budgets became harder to finance and met increasing opposition...

...The 1988 Worker Adjustment and Retraining Notification Act hardly provides even a modicum of job security...

...The American employment-at-will doctrine is not acceptable there and could not be enforced...

...Liberalization" doesn't refer only to a pattern of regressive social policies...

...There is little likelihood that these regressive forces will be overcome any time soon...

...In any national context, such initiatives would have been long-standing elements of mainstream politics...

...The Washington Consensus does not, in fact, govern the economies of the leading industrial countries, but its doctrines are broadly shared by their leading economists...

...Moreover, there is a tendency to replace permanent employees, as these quit or retire, with temporary workers...

...the number of years in which workers must contribute before they are entitled to state pensions is also being increased...

...It was in line with the ILO's 1944 dictum that "labor is not a commodity"— an idea that had originated with John R. Commons and the Wisconsin school of labor relations...

...The ILO report, in an unusually acerbic statement, says, "As income inequality grows, social policy is likely to become regressive . . . . The reality is that in the early years of the 21st century powerful interests are pressing governments all over the world to cut public social spending, and in doing so reduce the income security provided by the State...

...The conditions for unemployment compensation have become stringent and exacting...

...Caterpillar imposed what it termed a "marketcompetitive payscale" in the localities or regions where it operates...

...Greenspan further remarked that although "the value standards of our societies that developed out of the Great Depression" have given rise to "some government regulations practiced virtually everywhere," it is now well understood that "government actions often hinder incentives to investments by increasing uncertainties, boosting risk premiums, and raising costs . . . Many attempts to tame such regimes are not without cost in terms of economic growth and the average living standards of a nation...

...Non-enforcement of such legislation, however, is also part of a deliberate policy...