Trade unionism in the face of the end of full employment

Blanca Alaníz, Presidente Alemán Urban Center series, Digital photography, Mexico City, 2018.


The unions do not contemplate that the financial crisis combines with the undercurrent of technological changes, pushing all of society towards a new economy

“If adequate labor standards are issued (…). If laws are effectively enforced. If workers' options are reinforced (…). If collective bargaining is rebuilt. All of these policies will not only restore economic equity, but will also revitalize civic participation and democracy and foster freedom in the workplace and beyond.”. (Lawrence Mishel, 2020)

Between 1973 and 1975, the golden cycle of post-war western capitalism and the corporate union pact entered a crisis. The indebtedness of the ruling economy, generated by the Vietnam War, caused widespread inflation in the capitalist states and the end of the Bretton Woods exchange system. New work organization formulas emerged, based on quality and teamwork[I], which information technology, with the collaboration of mass information management programs, facilitated; while the outsourcing of production units opened the labor market to global competition. State-planned economies disappeared with the dismantling of the Soviet bloc, and neoliberalism spread to all governments. National unions, put on the defensive, shifted from defending working conditions to concentrating on defending employment, and states competed to attract investment and mitigate the destruction of jobs, resorting to the dumping fiscal and social[ii]. Crises followed in Scandinavia, East Asia, Russia, Japan, which entered a secular recession, and Wall Street the international financial crisis of 2007 arose.

Alarmed by the 2007 financial crisis, the International Labor Organization and the Global Union Research Network organized a seminar on “Trade unionism and the economic crises of yesterday and today: lessons for a just and sustainable future”. The works, commissioned by close specialists, or collaborators of the main trade union centrals of the countries that had suffered with the crises at the end of the century, and of the USA, as the epicenter of the first great financial earthquake of the XNUMXst century, showed, one after another, how the Financial globalization has a “fundamental impact, not only on macroeconomic policies, but also on labor market institutions, and hence on wage determination”. But they also showed that the unions had not been able to identify the relationship between, on the one hand, the disappearance of full employment policies and, on the other hand, post-Fordism and globalization[iii].

Different experiences, similar problems

The 2010 meeting shows the different neoliberal responses given by governments, from Sweden to Korea, passing through Japan, to situations of unemployment and relocation of activities, generated by the different financial crises that occurred from 1989 to 2007[iv]. One of the most relevant conclusions of the seminar, although its implication remains unobserved after 10 years, is that “the cases analyzed underlined the need for trade unionism to have reliable political allies, in order to be able to present a new economic perspective”. They also show the need for union coalitions between nations, because solidarity and also medium-term interests suggest “programs governed by wages that are unlikely to be compatible with the impoverishment policies of the neighbor”. This issue is at odds with the austerity policies promoted by the European Union, without protest from the social democracy of the rich partners, against the poor partners in the south. “It is to be feared that nationally focused policies will produce imperfect results, which will be worse in all cases, and with serious and uncertain consequences for social cohesion”.

But the reports of the “Rede Sindical” are not limited only to the external, financial manifestations of the crisis in the productive system. The representative of the North American CIO[v] speaks of the generalization of Taylorism which, together with the regulatory measures of the New Deal and the progressive reform of corporate and personal income taxation meant the beginning of the longest phase of prosperity, and with greater social equality, of developed capitalism. Thus, the citizenship condition of workers was raised, through the extension of industrial, inclusive and negotiation unionism, agreed with the liberal wing of the Democratic Party, and with European social democracy, to promote a Keynesianism of state intervention in the economy of Marketplace. The example of the CIO indicates, as happened in Sweden[vi], that, in the face of major technological changes, the only effective response is to be proactive, accept the technology and negotiate its implementation. In short, to ensure that equality of opportunity, an essential condition for an advanced democracy, penetrates companies.

Korean trade unionism, however, coming from a patriarchal and authoritarian social and political order, was aware of the correlation between the financial crisis, IMF revenues, financial globalization and revolutionary changes in the technological model.[vii]. After the V-shaped recovery of 1993, its efforts were concentrated on the implementation of collective bargaining systems, which avoided the islands of advanced technology, and left behind an environment of companies with insecure and poorly paid work. They were not able to prevent the advance of flexible work in conglomerates where paternalism reigned, but they built a more general unionism, with the capacity to negotiate with governments. In 2003, unions in the metallurgical, hospital and financial sectors won centralized sectoral agreements. But “the most important questions are decided in a negotiation within the company”. The reason, as in Sweden and Germany, is that the highest paid workers don't want to be dragged into negotiations aimed at downgrading.

A very different case is Japan, where the stagnation crisis is the result of the country's export success. The first union move was its involvement in company bankruptcies.[viii]. Between 1985 and 1995, Japanese trade unionists suffered the ordeal of learning in legislative committees, where they had to protect themselves by abandoning their positions, so as not to be absorbed by the avalanche of data and paperwork from government experts and associated employers, against what they considered an intrusion of workers in the armored terrain of administration and finance professionals. During this period, Japan incorporated subcontracted temporary work, layoffs resulting from technological advances and unions, until then by company, discovered that, in the country of lifetime employment, half of wage earners, those who did not belong to the large monopoly conglomerates, did not enjoy of regular and stable jobs. RENGO was faced with the task of building a union structure by industry and abandoning, as far as possible, the traditional structure of unions by company. In the year 2000, the rate of stable workers had decreased by 5%, and between 2000 and 2005, the decrease was 9%. Temporary workers had grown from 8,9 million in 1991 to 17 million in 2007. It should be noted that casual workers in Japan do not enjoy a significant percentage of the social security benefits enjoyed by regular workers. The changes resulted in a significant increase in economic inequality. While the stagnation of the housing market has made housing significantly cheaper (more than 50% drop in price), this only resonates in the pockets of workers who were not caught in the nets of the 1985-94 bubble. As in all real estate and financial crises, there was a 3 percentage point increase in unemployment and job uncertainty. In addition, the government's debt, close to 200%, extremely limited the unions' possibilities to negotiate social policies.[ix].

A global union program, in every nation-state, to tackle the crisis

As Frank Hoffer, director of research at the ILO office, puts it, “To date, the failure of the old economic regime has not translated into any fundamental policy change”. The unions are driven, by the immediate needs of the workers, to make wage concessions, in the hope of saving jobs, but they do not prevent the loss of jobs and the workers demobilize. “In such an environment, it is more likely that there will be a decrease in union membership and therefore influence”[X]. Hoffer emphasizes that the 2007 crisis is different from those experienced by Sweden, Korea or Japan, because it is global. As in 1929, it requires energetic and concerted intervention by the states. But states bail out banks and don't help workers. The very financial institutions, which, in one week, ran to the US Congress to ask for 700 billion dollars, speculated against the governments, which went into debt to help not their populations, but the banks. The crisis, instead of paralyzing ongoing processes, aggravates the financialization of the productive economy. “The high rate of profit in the financial industry demands that the real economy produce similar results for shareholders. The financial profits of the bubble economy become the benchmark of the real economy”, stimulating inequality and shifting the tax burden to workers and consumers. Consumption is sustained by household indebtedness. Real investment is displaced by competition from foreign exchange earnings, which create a virtual turnover of investments in financial products. A credit bubble in circulation, until the next crisis[xi].

The unions do not contemplate that the financial crisis combines with the undercurrent of technological changes, which, under neoclassical concepts and the Keynesianism of effective aggregate demand, is pushing all of society towards a new economy. An unprecedented capitalism that will have great difficulty in achieving the social cohesion necessary to build a society in which democracy works. They recognize that “the business world is freeing itself from national regulations and projecting itself on a global scale, reaching a comfortable position that allows it to put pressure on governments and workers with a view to obtaining even more advantages”[xii]. Under our eyes, combined changes are taking place in the organization of work and in the production chains themselves. These paved the way for automation, which, under the hegemony of finance capital, became an instrument (weapon of mass destruction) of jobs, against which the old corporate unionism is powerless. Faced with capital, which has a political strategy of suppressing regulations and rules and managed to shift labor negotiation to the company level, the logic of competition is imposed in union negotiations on the logic of solidarity. Because, due to globalization, Keynesianism ceases to work and unions, without attracting the will of governments, without global power, transform collective bargaining into an exercise of besieged resistance, which ends up looking for a place for the company's survival in global competition.

Cornered, they can only negotiate agreements for their withdrawal. The past struggles of coal, steel or shipbuilding are examples enough to illustrate the need to look for another trading strategy. Because “the logic of survival of companies means that without regulation at the macro level, it will be impossible to maintain salary levels”, which are only viable “if aggregate demand levels can also be maintained”. Everything indicates that the unions must politicize the situation if they want to have a future for the workers' standard of living.[xiii]. If they accept the government's invitation to the agreement, without their own policy, they risk certifying with their presence the successive cuts in welfare; because their hope of alleviating greater damage, hoping for a way out of the crisis that will revive employment and allow them to negotiate from better positions, is illusory. Because this is not just a financial crisis. Investment creates less employment than it destroys, because we are entering a new era of technological relationship with employment.

After forty years of rising inequality and shifting the tax burden from states to wage incomes, advanced societies have allowed the states to weaken, which are increasingly unable to guarantee welfare unless they change their tax systems in global level and restore progressivity and wealth taxation. For the same reason, industrial investment cannot compete with global casino finance, as already mentioned, which raises profit expectations for the funds accumulated by the great fortunes. As Frank Hoffer says, “the world of work and progressive forces in society face the fundamental challenge of proposing a comprehensive program for realistic change”, and that change must be underpinned by an increase in the proportion of wages in social income, control of banks and the return to progressive taxation, “or accept that the cost of this crisis will be borne by ordinary citizens”[xiv].

In 2009, the International Labor Organization proposed a Global Jobs Pact. For advanced countries, it sought guarantees to replace the share of wages in GDP and to remedy imperfections in social security systems. For developing countries, the creation and expansion of social security and pension systems. But, as Hoffer argues, such an agenda is illusory without undertaking a profound reform of the global financial system. To do this, unions must be designed to be the hinge of a global political alliance of progressive forces for democratic change. Starting with the necessary alliances in the countries themselves, and in the European Union, as a global center from which the expansion of a culture of human rights and social cohesion is possible. The objective is to democratize the economy, starting with its central institution, the capitalist enterprise, for which legislation is needed to encourage the co-management of workers and shareholders.

* Jose Candela, Economist and PhD in Economics, he is a member of Economistas Frente a la Crisis.

Translation: Fernando Lima das Neves

Originally posted on the blog Economists facing the crisis.


[I] Toyota for the quality applied to the chain, and Volvo for the group work. See Jessop, B. (1993) Towards a Schumpeterian Workface State? Review Studies in Political Economy, no. 40, Spring, pp. 41-72.

[ii] Lawrence Mishel (2020) Rebuilding Workers Power, IMF FINANCE & DEVELOPMENT, December 2020.

[iii] Dan Cunniah, (2010: p. 5) Director of the ILO Workers' Activities Office, International Bulletin of Union Research, vol. 2, no. 1 Genèvre.

[iv] See also the Global Jobs Pact, promoted by the ILO in 2009—ed_norm/—relconf/documents/meetingdocument/wcms_115078.pdf.

[v] Steve Fraser (2010: p. 9) Contributor, New Labor Forum, Joseph Murphy Center. Bulletin… ILO…

[vi] I Lindberg and M Ryner (2010; p. 27) Councilors of the Swedish Trade Union Confederation (LO), Bulletin, …, ILO.

[vii] Jin Hoo Yoon (2010: p. 47) Inha University. Bulletin, …, ILO.

[viii] Naoto Ohmi (2010: p. 67) Undersecretary of the Japan Trade Union Confederation (RENGO) Bulletin,..ILO.

[ix] Hansjörg Herr and Milka Kazandziska (2010: p. 87) Berlin School of Economics…, Bulletin, …, ILO.

[X] Frank Hoffer (2010: p. 109) Bulletin, …, ILO …

[xi] Hoffer (2010: p. 114) Bulletin, …, ILO, …

[xii] Hoffer (2010: p. 119) Bulletin, …, ILO, …

[xiii] Hoffer (2010: p. 122)…

[xiv] Hoffer (2010: p. 123)…

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