Income-led growth has got to be the future, says Sharan Burrow, general secretary, International Trade Union Confederation.
As the head of the largest trade union federation, Sharan Burrow represents the face of the worker at the high-tables of the world. Ms Burrow is the general secretary of the International Trade Union Confederation (ITUC), which represents 175 million workers in 153 countries. Ahead of this week's G20 Summit in Cannes, Ms. Burrow has, in meetings with the International Monetary Fund (IMF) and European leaders, warned of the dangers of cutting back on social security amid an austerity push that has created an unprecedented public backlash across Europe. In an interview with Ananth Krishnan during a recent visit to Beijing, Ms Burrow spoke of the dangers to social stability from the austerity drive, the success of labour movements in emerging economies like India and China, and why the developing world must not repeat the mistakes of the West. Excerpts.
You took over the world's biggest trade union federation during the worst economic recession in recent memory. How difficult has it been keeping on the agenda the issue of labour rights when the world is preoccupied with cutting social spending?
The orthodoxy of the Washington Consensus was, basically, to make labour markets flexible, drive down wages, reduce benefits, and constrain collective bargaining. Now, in the United States, collective bargaining only covers seven per cent of people in the private sector. When you have a 50 year-low of a wages versus productivity share, then of course you are going to come to a grinding halt. You cannot fuel demand, or consumption-led demand, on credit, forever. Now we have come right up against the wall with people's capacity, and of course the greed of the financial sector.
You have described the drive to impose austerity measures and the outcomes of the previous G20 meeting as a “crazy” decision. What was your message to Christine Lagarde of the IMF and other leaders in your meetings with them ahead of the G20 summit [on November 3 in Cannes]?
If you put stimulus into an economy, you know there is a time lag in terms of depending where you invest it. If its family transfers, it might be quick. If its infrastructure, it might be two, three, five years.
But now we were not even two years into the process and suddenly the orthodox Finance Ministers [of the G20] said you have to cut your budgets by ‘X' per cent. Of course, it was going to slam the brakes on demand. It was going to mean that workers' income is attacked and their rights are reduced. Then you are going to see economies flag, and that's exactly what has happened. We know that fiscal consolidation at points in any cycle is important, but what is really important is to sit down and strategically plan how you are going to do it. For people who preach that there is no one size fits all, the orthodoxy that is driving through Europe about structural reform is in fact one size fits all, irrespective of the problem. And it has attacked workers' rights.
What have you made of ‘Occupy Wall Street' and the other movements it has spawned in the West? The profile of the protesters may be different, but in their demands and concerns do you see any connection with the larger workers' movement?
There is a great deal of sympathy amongst workers for the Occupy Wall Street movement. We understand their frustration. We share the anger that financial reform is going too slow, that it has not been transparent and you still have the same speculative practices going on, and that there is no will to take on the financial sector. That anger is being particularly expressed by the young generation who cannot see a secure future for themselves. The anger and the fear in the organised labour environment, both for themselves and their families, has a sympathy across the movement. Our job is to try and find a narrative that will demand of governments the responses that will give people hope.
You have mentioned Brazil and Argentina as good models in the developing world where social inclusion has been tied to growth and has a higher agenda. There is a concern in places like India and China, where there is rising inequality, that the same mistakes are being made.
In terms of emerging economies, we absolutely believe that the prescription is social protection and a minimum wage on which people can live. That will stabilise and give a demand base, as well as ensure social survivability for all workers and their families. Income-led growth has got to be the future. If people keep saying the disparity of growth is rising in every country, then that inequity will ultimately fuel more protests, more anger.
In India and other emerging countries, there are persistent calls for reforming labour laws. A point often made is that they have hindered growth and foreign investment, but you have warned of the dangers of going down that path.
It is a self-fulfilling prophecy for companies. What they have done is try to drive down labour rights so that they can drive up profits, and the results are in. The share of wages versus profits right around the world is at an all time low. Now where is the end? Where is the base at which the top five per cent understand that this is not sustainable for themselves?
I think if you look at India, it is making enormous progress. Its growth is unquestioned. It has a huge challenge, probably on a par with China, to create a socially inclusive society. Equity is a huge issue. Sustainability is a huge issue. But the rights-based laws that the Indian government has put in place is a great start.
Here in China, the workers' movement has had a mixed record. We are seeing more awareness of workers' rights and more strikes. On the other hand, unions, like the All China Federation of Trade Unions, are often seen by workers as not independent enough. There are still restrictions on migration. Where do you see the labour movement in China today?
China is still emerging into a society where people are mobile, where they do have social protection, a minimum wage and collective bargaining rights. This is a huge transition for China.
The growth in jobs has been extraordinary. The growth in wages is heartening. Ultimately China sees that much of its future will not be as a capital flight base of the world. It will be a high-skilled, high-wage society with inclusive development. It is a huge job for China, but no one can deny that there is huge progress here.