Brussels, 28/09/2006
Countries that require advance notice for dismissal, establish a working week of less than 66 hours or set minimum wages above a certain very low level are considered investment-unfriendly, according to the World Bank's logic. By the same absurd reasoning, a tiny country like the Marshall Islands is declared ‘best performer' because of having no labour code at all.
The ETUC rejects such a simplistic approach and insists that workers' rights should instead be seen by business as ‘beneficial constraints'. Setting standards for wages, working hours, work contracts and dismissal notification prevents employers from taking ‘the easy way out' and simply exploiting their workforce to address problems of competitiveness. It encourages business strategies to focus on the agenda of innovation, productivity, and boosting workers' skills.
Says John Monks, ETUC General Secretary: “The World Bank wants us to compete with China on the basis of low labour costs and bad working conditions. It is an illusion to think that Europe could build a modern labour market by returning to the sweatshop-style work practices of the 19th century.”
Experiences in several EU Member States point to the fact that there is no automatic trade-off between competitiveness and the European social dimension:
- The UK in 1999 and Ireland in 2000 introduced a statutory minimum wage. The UK minimum wage (€7.36 an hour) is now very close to the level of the French minimum wage (€8.03). Despite claims to the contrary, both the UK and Ireland have continued to enjoy a growing economy and a booming jobs market. In the UK in particular, one fifth of business responded to the minimum wage by improving work organisation and making it more productive.
- Workers in Sweden and Denmark enjoy advance notification periods that are amongst the longest in Europe. This, in turn, encourages firms to enter into collective agreements aimed at increasing workers' skills and abilities to switch between jobs (see attachment describing Swedish career transition agreement and Danish agreements on flexicurity). It is no coincidence that both countries are seen as being ‘open to change' and systematically located among the top ten most competitive nations in the world.
- Already, in the early nineties, the Netherlands did what the World Bank is condemning by giving part-time and other atypical workers equivalent rights and access to social protection (by, for example, extending statutory minimum wages to part-time workers). The Netherlands now enjoys an unemployment rate lower than the US, while inequalities and social exclusion have been kept in check.
There are also several cases in Europe vividly illustrating the disastrous results of the deregulatory approach the World Bank's report is advocating:
- Germany has undergone one reform after another, thereby substantially weakening workers' rights. The result? Corporate profits, but workers' insecurity is at a historical high. Meanwhile, domestic demand remains weak and the economy is dragging itself from one slump in growth to the next.
- Labour market liberalisation in Italy and the high abuse of fixed-term work contracts in Spain have created a situation in which one third of workers are on atypical contracts. The result? A collapse in productivity growth leading to a continuing worsening of competitive positions.
Attachment: ETUC collective bargaining bulletin 2006/3 ‘Protecting the worker and not the job? The real lessons from collective bargaining practice in Denmark and Sweden.