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Translated from the Russian

International Conference "Economic Globalisation and Regional Integration: Their Impact on Workers' Conditions in the CIS Countries",
Moscow, 7-8 February 2002

7 February 2002

Dear participants in the Conference, Dear Brothers and Sisters, Colleagues!

The world community has entered the 21st century under the banner of global processes and problems that have an increasingly strong impact on the destinies of the human race. The growing interdependence of countries and nations, so various in their levels of development, public life, economies, policies, social spheres, ecological conditions, cultures, security, etc., has reached a degree where it has come to be described as "globalisation".

It might look as if the scientific term "globalisation", still unclear to many, has emerged as a kind of surprise, though the whole history of humankind is actually nothing but a gradual rapprochement of countries and continents. However, over the last few decades, the development of productive forced has altered the life of people on this planet unprecedentedly. The emerging global society is changing the world more radically and swiftly than any discoveries and scientific breakthroughs of the previous centuries.

The rate and scope of this change present a challenge to the very ability of the human being, and the human race as a whole, to orient themselves in this new world, and adapt their consciousness accordingly. There has even appeared powerful opposition to globalisation known as the antiglobalist movement. All this calls for the necessity to understand what is going on and try to answer the questions: To what extent will globalisation affect the workers' conditions? What should trade unions do to prevent and remove its negative consequences? The search for proper decisions is a common concern. It must involve not only the trade unions, but also national authorities at all levels, CIS interstate bodies, political parties, all sections of society, and, the last, but not the least, science. That is the challenge of globalisation.

Globalisation can be defined in many different ways. To put it simply, globalisation is such a state of the world economy where most countries and regions of the planet are closely interlinked in the process of economic development, industrial co-operation and specialisation acquire global scales, and transnational corporations are the dominant pattern of ownership. Globalisation is a process actuated by new technologies in the spheres of electronic communications and transportation that enable information, people, capital and goods to cross national frontiers and reach the most distant places on this planet in the twinkling of an eye.

Attempts are being made to regulate this process. World institutions, such as the World Bank, IMF, WTO, etc., have been established for the purpose. Countries willing to fit in the new world system must follow the economic rules formulated based on the "Washington consensus" recommendations and the so called "golden corset" requirements. These include the openness, deregulation and privatisation of national economies, which, to a certain degree, means restricted sovereignty. What is missing here, is the social dimension of globalisation. Meanwhile, what the unions highlight is the social price to be paid for joining the global market.

Globalisation is multitier in nature, and it leads to the creation of a single economic mechanism at a global scale. What laws will regulate the work of such a mechanism? Will it be built on the principles of the United Nations where each country has one vote and each nation can influence the decision- making process concerning its own interests? Or will it be built on the principles of a joint-stock company where problem solution depends on the size of the participants' voting stock?

The international monetary institutions are actually pushing the world towards the second option. As for us, we believe it crucial that the UN and its specialised agencies, including the ILO, should have a stronger standing in a globalizing world. The body of ILO conventions and recommendations makes up an international legal basis that can serve as a world labour code and restrain arbitrary rule in the developing global market.

Like any other objective process, globalisation has both positive and negative sides. Let us try to analyse them in utmost objectivity, with the accent on the impact of globalisation on workers' conditions and on trade union activity, and on the eventual consequences it may have for social and economic development in the world and, particularly, in our vast region of the CIS.

It should be mentioned that CIS countries still "drop out" of the globalisation processes, which can be seen from the following facts.

Although it has been growing, the capitalisation of all the CIS countries, assessed, as is known, in terms of commissioning new production capacities, the scopes of stock markets, increases in production competitiveness, and introducing new know-how and recent developments, has totalled roughly the capitalisation volumes of a major company of a Johnson & Johnson type ($130 billion).

The financial markets in the CIS states are also quite weak; meanwhile, in developed countries they operate on-line round-the-clock, crossing national frontiers easily. Thus, the 300 currency markets in the CIS countries the total daily circulation equals $1.8 billion as compared with $2 trillion in the rest of the world.

Electronic trade is making the first uncertain steps in the Commonwealth. Out of the world's 130 Internet shopping centres, the CIS accounts only for two, both in Russia.

In this context, only a carefully built national policy can help the countries benefit from globalisation, and alleviate its negative social consequences.

Globalisation can promote wider spread of up-to-date technologies and job management techniques, freer and swifter circulation of capital, foreign investment growth, broader possibilities for infrastructure development, and easier communication between people.

Simultaneously, globalisation does not eliminate or reduce, but rather conserves and aggravates, the inequalities among countries and peoples, between the so called "golden billion" and the vast majority of the Earth's population, among various population sections in each separate country, and even among individuals. Over the last 30 years, the world economy has been growing by 2-3 per cent annually, while the gap between the rich and the poor countries has widened by 10 times over the same period.

According to UN statistics, there are 140 million totally unemployed people in today's world, almost one third of the planet's able-bodied population is partially employed, over a billion people live in misery, and about half the population of the Earth ranks among the poor who earn less than two US dollars a day. One and a half billion people are not expected to attain the age of 60, over 800 million have no access to normal health care, over 30 million are HIV-infected, 840 million are constantly undernourished, and 125 million children do not go to school.

Most citizens of CIS countries have also suffered a loss in their living standards and quality of life. The average rate of unemployment in the Commonwealth has reached almost 10 per cent, or 12 million people, over the last ten years.

The share of citizens in CIS countries living below the poverty line is 20 to 40 per cent. The monthly wages range from $10 in Tajikistan to $125 in Kazakhstan. The pensions are even lower.

According to estimates, for a country to be able to join the world of globalizing economies, its average per capita income must exceed $800 a month. This challenges us to get more vigorously involved in the struggle for higher pay and make this aim a focal point in the economic and social policies of our states for the near future.

There is another aspect to ponder over. Globalisation, with its advanced technologies and growing labour productivity, will inevitably involve cuts in the numbers of employees and, first of all, blue-collar workers. Already now, one can hear earnest debates about the so called "20-to-80" society" where only 20 per cent of the population will be active workers and consumers, while the remaining 80 per cent, coming mostly from backward and developing countries, including the CIS states, will have nothing else to do, but rely on charity. There is even talk about social reservations. Even if such things might not be the problems of today, we cannot help feeling indignation at the very fact of them being discussed.

Besides, the growth of unemployment and poverty has resulted in the massive migration from poor regions to regions with higher living standards. This movement can hardly be stopped, not even by the most severe immigration laws. Today, this tendency is distinctly universal. It is also present in CIS countries where migration gets an increasingly illegal character. Suffice it to say that in Russia alone, the number of illegal economic migrants from other CIS countries amounts, by different estimates, to almost three million. In some regions, the migrants have formed their ethnic diasporas.

Trade unions cannot close their eyes to the problem, and they must think of measures to protect the migrant workers, with due regard for the most complicated employment situation. The building of a common labour market for the Commonwealth could be largely instrumental in solving these contradictions. The GCTU has actively participated in formulating the concept of such a common market.

As the world of free competition creates high risks for stable business, trade unions must pay more attention to the social protection systems. Especially as the Constitutions of most CIS countries declare them social states and proclaim the priority of human and civil rights. What we see instead, is that some CIS countries tend to switch over to paid health care, introduce pension schemes based on the hundred-per- cent accumulation principle, make the population pay more for education, abandon the unemployment insurance systems, etc.

Such a situation is dangerous, because a sizeable portion of the population may disagree with the governments' course for globalisation and reject the ruthless competition, or even revolt against the alien values, against the enormous gap between wealth and misery, against the indifference towards the victims.

This is acknowledged by many leaders of states, international organisations, religious confessions, and nongovernmental organisations, including trade unions and women's and youth organisations, by prominent scientists, and even by representatives of transnational business.

That is the reason why now, as never before, trade unions must get more actively involved in the development of socioeconomic policies in the CIS countries with the aim of eliminating the negative phenomena accompanying the process.

The CIS countries could, in our view, build their policies based on national revival, without self-isolation or confrontation with the outside world, through building up their competitive advantages. We must have a better understanding of the role to be played by state regulation, and realise that the necessity to catch up with others in the process of development has no prospects. This can only be achieved if we formulate strategic policies in the spheres of structural adjustment, science, technology, industry and agriculture.

Such a policy must rest on four pillars. First, decent work with all its requirements concerning the job itself, wages, health and safety, ecology, etc. Second, social security based completely or partially on the principle of social solidarity. Third, social dialogue. And, finally, fourth, human rights. Health care, education, and culture must be accessible to everyone.

Let me dwell on education. We know that a well-educated population adds to the competitive advantages of any country, and attracts investment. Therefore, all CIS countries should ensure free access to education.

The education system in the USSR was among the best in the world. Now that education reform is underway in many countries, it is essential not only to keep the advantages of the former system, but also improve it with regard for today's realities.

Information and communication technologies have an important role to play here, as they open tremendous new opportunities in education. Unfortunately, they are not yet sufficiently spread in the CIS countries where only 2 per cent of the families have a computer. In Russia, for example, 75 per cent of the population have never used a computer. Incidentally, buying a computer will cost you an average of eight months' pay in Russia and Kazakhstan, and eight years' pay in Tajikistan. Meanwhile, the citizen of a developed country will only need a month's pay for the same purpose. Not to mention the Internet, as 91 per cent of its users are to be found among the "golden billion" of the Earth's well-to-do inhabitants.

All this has created two parallel worlds. Those who have a high income, education and communications, have free and lightning-fast access to information. For the others, it is a hard, slow-going and expensive way. Whenever people from those two worlds have to compete with each other, the lack of access to information leaves no chance for the poor.

The CIS countries have to master advanced information technologies in full. It should be mentioned in all fairness that some Commonwealth countries are already taking steps in this direction, and Russia has even adopted a special state programme to this effect.

While taking account of this new situation, we must see its social dimension. The introduction of new information technologies will not only provide new opportunities for manifold growth of production efficiency, but also open the way to more intensive exploitation of workers because it leads to the individualisation of the labour process, wider spread of distance labour (a kind of "Internet-based home work"), and delegating decision-making to lower levels. This changes basically the traditional approaches to labour safety, environment protection, legal guarantees, social security, work remuneration, and, of course, motivation for organising and trade union activity at all levels.

By the way, trade unions could make a better use of information and communication technologies, or ICTs, in their work. They could be helpful in conducting polls, disseminating information, co-ordinating positions, organising actions of solidarity or protest, and holding virtual sessions of their executive bodies.

Economic globalisation and ICTs are gradually changing the organisational structure of production and the very structure of society. As they do so, two tendencies become prominent. The process of transforming large-scale enterprises into transnational corporations has accelerated, simultaneously with the broad use by the latter of small and medium-size businesses. Let me remind you that, according to some data, small enterprises provide jobs for half the employed people in the world. However, the intensity of exploitation at such enterprises is usually much higher. Already today, trade unions must pay more attention to the situation in small businesses, and, in this connection, discuss the future union structure. I believe the problem will be discussed in more detail by the workshops.

In today's world, the basic productive forces belong to major producer companies, i.e. those transnational corporations whose sphere of activity covers the entire planet. There are approximately 40 thousand transnational corporations in the world now. Five hundred out of them account jointly for 60 per cent of the gross world product. They employ almost 85 million people, and 93 per cent of their headquarters are located in the USA, Western Europe and Japan. Twenty-seven out of the 50 largest transnationals originate from the USA.

Transnational corporations bring their own social ideology and labour relation standards to where they invest. It is known that, for instance, in the USA, with its low degree of union organisation, weak social and labour legislation, and insufficiently developed system of collective bargaining, employers make no secret they would prefer "a union-free environment" in their enterprises.

US-based transnationals are trying to apply the same principles in CIS countries, and some Western European companies follow suit. We know of quite a few cases when they tried to keep the unions out of their enterprises or restrict their activities, impose the practice of signing fixed-term individual labour contracts instead of collective agreements, and disregard the national social and labour legislation. Many of you will probably remember the battle for setting up a trade union organisation at the notorious McDonald's in Moscow.

As the wages at transnational enterprises are usually higher than at domestic enterprises (although not as high as in the USA or West Europe), the employees often choose to keep silent about infringements of their rights.

Therefore, it is important to build strong trade union organisations at all transnational enterprises operating in the CIS countries. They must jointly establish an information exchange system that will help them agree on collective bargaining demands and organise common actions of solidarity. We believe we can achieve the aim if we pool the efforts by all the national trade union centres and industrial trade union internationals. It will not be an easy task, since we should keep in mind that 100 major transnationals have established more than two thousand affiliated or subsidiary companies in our countries.

Once upon the global expanses, capital is vitally interested to build such a world system that would aggravate the differences between workers of different countries. TNCs are looking for places and countries where wages could be minimal, taxes insignificant, and state interference imperceptible.

Trade unions must meet such challenges of globalisation with globalizing the trade union movement. We said it almost ten years ago. The world trade union movement has not yet worked out any integral programme of action to face the challenges of globalisation. However, a survey of the documents adopted by the recent congresses of all the three world trade union centres will show that their treatment of globalisation and its social implications is identical. This inspires the hope that a common position could be developed, and the GCTU will be ready to make a contribution towards this end.

As recently as 1977, the International Labour Organisation adopted a Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy. Together with the Code of Conduct for Transnational Corporations approved by the United Nations in 1973, this document is still very important to trade unions as they organise actions to protect their countries' national interests and the legal rights of workers employed by TNCs. It says distinctly that TNCs must take full account of the aims of development and social objectives of the countries where they operate.

Our unions can and must use these, and other international documents in their relations with TNCs, but they must clearly realise that the implementation of the documents will not be automatic. In each specific case, the workers' interests will have to be protected through negotiation and struggle.

For example, today it would be unrealistic to try and bridge the tremendous pay gap dividing the workers employed by the one and the same TNC at its enterprises in CIS countries and in the country where the TNC is based. But why not take gradual steps to make the wages of our workers equal to the company average? Or take the subsistence minimum in the home country of the TNC as a goal?

Speaking of transnationals, I cannot help mentioning the structures of domestic producers in the CIS countries. Most of the large production associations that had been built in the USSR were broken up during privatisation, although, given an adequate degree of transformation and investment, many of them could have survived and been efficient participants in the competition with world TNCs.

The creation of finance-industrial groups, both national and international, has not brought the expected return. However, some major companies, which are in actual fact transnational corporations, have been successful, e.g. RAO "EES of Russia", Gazprom, Lukoil, and others.

There are trade unions in those companies. To provide them with collective bargaining guarantees, the GCTU proposed that the heads of government of CIS countries sign a special interstate agreement, which they did. The future will show if the trade union organisations in those companies are efficient. However, we cannot, for example, dismiss the fact that the collective agreement now in force at Lukoil protects the company's workers in 16 countries of the world.

Let me stress another characteristic feature of transnational capital. When it comes to the CIS countries, it is invested mostly in raw-material branches of the economy, and never, or very seldom, in the manufacturing industries that service the population's final demand.

Equipped with this economic outfit, the CIS countries are entering the world market, and the question of their future role in the new world becomes increasingly topical. Apparently, the countries of the Commonwealth have small chances for a quick adaptation to the conditions of globalisation. We are fully aware, however, that our countries will not be able to ensure a better life for their citizens, if isolated from the outside world.

According to the rules prevailing in today's world economy, any country wishing to take a befitting place therein, must constantly build up its export potential and do its business in the world market on the terms and conditions dictated by the World Trade Organisation known as a champion of international trade liberalisation and maximum competition in the commodity and services market.

While not denying the advantages the WTO gives its members in the sphere of foreign trade, we must know exactly what price our countries will have to pay for joining this Organisation, and whether or not we should make haste to do so. You know that three CIS countries, Kyrgyzstan, Georgia and Moldova, are already members of the WTO, and their representatives here may wish to share their experience with us.

Should we look through the statistics concerning the 14 countries that have joined the WTO over the last five years, we could easily spot one tendency: the weaker the countries and the less their per capita GDP, the more tariff concessions they had to make at the negotiations (among the above 14 countries, Kyrgyzstan with its $300, Mongolia with $350, Moldova with $370, and Georgia with $620 have the lowest gross domestic product per capita).

As for their competitiveness, CIS countries can hardly be rated among the most advanced world nations, as many of them lack sufficient technological and financial resources to formulate and, what is more important, to follow efficiently the regulations and standards relating to most of the WTO-prescribed parameters for the products they make. If all enterprises in the CIS were now to change over to European standards, then, according to expert estimates, 80 per cent of them would be ruined, and their markets would be seized by Western firms. Today, only half the number of European standards and regulations have been adopted as CIS standards. Exports will have to be re-attested at a large scale, particularly in what concerns engineering, chemical, textile, and food products, which will put up another barrier before the CIS countries.

Even in the relatively distant future, our countries can hardly count on success in the stiff competition. On the other hand, the adverse consequences, such as reduced volumes of production in vital industries and great numbers of redundancies, will not probably take long to come.

Trade unions are convinced that any decisions on the entry to the WTO must be taken, based on economic and social expediency rather than on political motives. Apart from insisting that our governments follow this line, we must also look for other ways to influence the decision-making process.

Simultaneously, workers in the CIS countries can profit by the high labour standards that exist in some of the WTO member states. The cheap workforce, the non- payment of wages, the absence of trade unions, the use of child labour, and the low health and safety standards and environment protection requirements at some enterprises in CIS countries - all this helps reduce production costs, i.e. creates advantages over competitors in the world markets. Consequently, developed countries can demand that international trade agreements should incorporate special clauses about labour tariffs and higher standards for work conditions and workers' rights.

On the whole, a decision to join the WTO must be well-grounded and faultlessly verified, both from the positive and the negative perspective. All of us must understand that our countries will finally enter the WTO. The question is how to minimise losses and protect our national interests. How soon and how quickly should our countries join the WTO, and on what terms?

We must choose the right policy with respect to the negative consequences of our membership in the WTO. China, for example, had put forward dozens of conditions before it entered the WTO. We must also specify our priorities. For instance, will it be really necessary for us to subscribe to the WTO civil aviation agreement or any other optional documents of this kind? We must think together how we can protect the most vulnerable sector, agriculture, unless we want our countries to be a world dump of low-quality foodstuffs. Japan and the Republic of Korea, for example, refuse to open their agrarian markets. Incidentally, today's Russia produces less livestock products that it buys, whereas ecologically safe meat could be easily "made" in the CIS. In other words, it would be quite logical to investigate into the rates and trends of liberalisation of global commodity flows.

The entrance of CIS countries into the global market could be considerably alleviated by their regional grouping. It is no coincidence that the General Confederation of Trade Unions affiliating trade unions in almost all CIS countries has been supporting and promoting this process in many ways.

According to available data, the most developed CIS countries possess, among them, almost a dozen macrotechnologies whose employment excludes, in principle, any possibility of competition with the developer. Combined with the remnant production, personnel, raw-material, scientific and technological capacities, they form the basis for the Commonwealth potential. The CIS countries are simply obliged to make use of them, and it will not be overstatement to say that this is crucial for the future of the new nations.

We believe it extremely important for the Commonwealth to reconstruct cardinally the production machinery, and use the internal factors of globalisation, particularly in what concerns the transportation, power, agro-industrial, and information and communication components of the economy.

As concerns transport, the situation looks on the whole favourable for the CIS: out of the nine transportation corridors to be developed by the world community three will run through the territory of the CIS. The countries of the Commonwealth can get a real chance to increase manifold their transport services to the world community already in the near future. And this goes for all transportation means.

The CIS states are the fourth biggest energy producer in the world, accounting for about 10 per cent of the world volume of electric energy, with almost two million workers employed in the industry. As practically all CIS states operate their power systems in parallel, they have actually started to form a common energy market. This brings an annual return of $1.5-2.0 billion, virtually without involving any additional expenses.

The Commonwealth is gradually building a common agrarian market, which may result in reduced annual imports of foodstuffs from the outside world by $2-3 billion and enhanced food security of the CIS states. Today, the share of imported goods in the food resources of retail trade amounts to 40 per cent in Kazakhstan, 36 per cent in Russia, and 33 per cent in Tajikistan, (80 per cent in consumer goods).

All potential capacities of the CIS should be looked upon as ready-made reserves that can be utilised specifically for increasing the volumes of production and commerce, and, consequently, for economic and social growth.

Now that it has become common knowledge that the place the Commonwealth occupies in the world processes of economic, cultural and moral globalisation does not correspond with its potential, there appears a possibility to turn the centrifugal forces into centripetal ones, and do our utmost to make the Commonwealth an influential regional alliance, a centre of the globalizing world, and give the citizens of our countries a chance to take full advantage of the fruits of globalisation.

Thank you for your attention.