Globalisation and public sector trade unions

Globalisation is an issue for all public sector workers. See the list of publications below that expand on what we say here.

At its most simplistic level, globalisation is no more than the expression of a natural progression of business organisation which started at the household level, moved historically to the village or town level, spread into a larger province or region and then became national in organisation and outlook. That it has spread to a global level and global thinking, as far as strategy is concerned, is neither surprising nor an indication of globalisation’s inherent ‘goodness’ or ‘badness’.

The problem with globalisation is that it is not just a natural progression. As with the earlier forms of business organisation, it stands to benefit some and make losers of others; the unequal power relationships within and between nation states and between other groups in society mean that the judgement about whether globalisation is good or bad depends on the nature of those power relationships. A progressive government (and its people), operating in an international environment where equity was a valued political objective would see sustainable, free and fair trade as a positive human creation.

Essentially, globalisation is the potential for a company, in this case a multinational enterprise (MNE), to look at the whole world as its market and to search the whole world for its suppliers and purchasers. For example, it will consider its competitive advantage with wages, raw materials costs and labour legislation if it uses country X rather than country Y, especially if it can beat other MNEs that are not able to get market entry into countries that offer such advantages. What marks an MNE’s operations as different from a national company is that, in many countries, an MNE can ‘pick’ the level of wages it is prepared to pay or the taxes it can convince the host government to levy or the price it is prepared to pay for raw materials. Globalisation is characterised by the fact that the most powerful companies – the MNEs - think of the whole planet as their sphere of operation. They are able to shape national and global politics and policies to suit that end by making offers to many countries that governments cannot refuse and by their lobbying. Other companies, which may not be MNEs, which wish or are forced to compete nationally with an MNE will have to behave as if they are operating in a global market, whether they want to or not. See also:

• Privatisation in Transition Economies
• Public Services and Private Interests 
• The Roots of Privatisation 
• Transnationals in Public Services 
• A Public Sector Alternative Strategy: The PSI vision 

MNEs do not just influence national governments. They have a very close relationship with many intergovernmental organisations. Sometimes this is simply a project relationship – they get the contract for a World Bank dam or power station and they ‘bargain’ on how they will do the job. In a more sinister way, however, they are often involved in setting Bank or IMF policy on attitudes to privatisation, for example. At the World Trade Organization (WTO) – see below for more WTO comment - some MNEs influence the bodies that establish WTO rules, criteria and deal with trade disputes. In many cases this is a result of the fact that business is represented on some governments’ delegations to a WTO meeting or is asked what it wants out of WTO negotiations. (See the International Financial Institutions page on this site for more information on our positions on these bodies.)

From the outset, we should be clear about one thing: the globalising behaviour of MNEs and the influence they bring to bear are not restricted to the private sector. There are, more and more each day, MNEs infiltrating what have been seen as public sector operations and there are virtually no public sector workers who can say that globalisation will not be something they have to put on their agenda.

Apart from the MNEs that are the driving force behind it, the main problem with globalisation relates to the driving idea behind globalisation, unbridled free market capitalism. Corporate globalisation embraces an ideology that says the more you let free markets rule, and open your economy to free trade and competition, the more efficient and flourishing your economy will be. For many countries and for many people inside many countries, this is not true.

Corporate globalisation has its own set of economic rules - which revolve around opening, deregulating, and privatising your economy. Thousands of people have been brutalised or left behind by this new system. That’s why some have called globalisation the re-incarnation of 19th century bandit capitalism.

Many people cheered when ‘communism’ collapsed. The problem was that when this happened, it only left one alternative ideology, capitalism. Some people felt that because communism had failed, we had to go the whole hog in the other direction - that a sort of extreme “free market” system was our only available choice. What is often neglected in this thinking is that there are several “capitalisms” and the neo-liberal US brand is not an inevitable endpoint.

Today’s era of globalisation is built around falling telecommunications and information technology costs - thanks to microchips, satellites, fibre optics and the Internet. These new technologies are able to weave the world more tightly together. Among other things, these technologies have allowed companies to locate different parts of their operations in different parts of the world, but to tie them together as if they were in one place.

As a result of all this, the impact on local communities no longer figures as much as it did in corporate decision-making. Capital can be transferred from one place to another, often at the push of a button. If factories get closed and jobs are lost as a by-product, well, too bad.

See some of PSI’s publications on these issues:

• Public Services in a Globalised Economy: The PSI Alternative Strategy Revisited 
• PSI Policy and Strategy on the Role of the Public sector
• Stop the World? No. Shape it!
• The Public-Private Problem: Some trade unions questions and practical issues

The World Trade Organization (WTO) sets the rules for the world trading system and settles trade disputes. Many nations, NGOs and trade unions find its whole philosophy completely unacceptable. Trade unions have been trying to get the texts and rules of the WTO treaties changed so that disputes procedures can be established, with the involvement of the ILO, requiring countries to respect the core labour standards of the ILO. The PSI paper Stop the World? No. Shape It! outlines the other main issues on which trade unions have campaigned at each of the WTO Ministerial Conferences held since 1996, including the Ministerial in Cancún, Mexico in September 2003:

• Democracy, Transparency, Consultation and Reform of the WTO
• GATS and Safeguarding Services
• Advancing Development Priorities
• Making Progress on Workers’ Rights at the WTO
• Investment at the WTO
• Trade and Competition Policy
• Government Procurement
• Trade Facilitation
• Sustainable Development at the WTO
• Agriculture

The General Agreement on Trade in Services (GATS) is more fully described in the paper mentioned above but also in Great Expectations: The future of trade in services. GATS is important for public sector unions because of the danger that education, water and health services could be declared tradable services to an extent not yet seen, subject to WTO rules.

Government/public procurement. Changes here could allow MNEs to make inroads into more public services and reduce the ability of governments to support the growth of small domestic suppliers. Unions also want core labour standards built into procurement rules. The paper mentioned above deals with this somewhat but a more extended treatment is found in Public Procurement.