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Editorial Last Updated: Oct 18, 2012 - 12:36:13 PM

Trade Union Globalisation
By Dr. Gary K. Busch 18/10/12
Oct 18, 2012 - 12:30:14 PM

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Over the past decade there has been a dramatic shift in the way in which international corporations have configured their businesses.  They have evolved beyond the stage of multinational or transnational corporations into the realm of global corporations. The trade unions’ response to the challenges of representing workers in these companies has not kept pace with the change. There are no lack of international union organisations, both on the level of global internationals like the International Trade Union Confederation (ITUC) which unite the national union centres (like the AFL-CIO, the DGB and the TUC) into one international body as well as the global union structures which link national sectoral unions with their overseas counterparts (as in the IndustriaLL, the Public Service International, the International Transport Workers, inter alia).

These global union structures have developed a system of mutual aid which assist its affiliates in collective bargaining; promoting health, safety and welfare; organising and by creating global framework agreements which interact with the global employer on behalf of all those employed by the same company. However, despite the successes and assistance given, the companies are still able to carry on their business by fractioning the work content among various countries and effectively playing off the interests of one group of workers against another in what has become a competitive devaluation of living standards.

One of the corporate methods of achieving this disproportionate power in the industrial relations setting has been achieved by treating each national sectoral union as a discrete entity in terms of the wages paid to the workers. In many cases these organised workers make up the elite of the national workforce. They have steady employment with a financially-sound employer and often have specialist skills which makes them much better paid than their national counterparts. This is an effective brake on the ambitions of the unions as the ‘wage drift’ of these workers frequently alienates other workers not employed by the same employer or industrial sector.

This is a hurdle which cannot be addressed solely by using union pressure to increase wages as there are often other workers employed on a temporary or contract basis by subcontractors to the global corporation who are effectively not included in the collective agreement made between the national sectoral union and the global corporation. The recent examples of the wildcat strike at Marikana (and now at additional sites) and the strike settled between the workers in the Grasberg copper plant of Freeport-McMoran in Papua, Indonesia are two prime examples of the dissonance of negotiating contracts which are institutionally ignored by a large slice of the employed workers.

There is, however, a solution to developing a trade union response to the global reach of these global companies.  The key lies in the fact that there should be a linkage between the world price of the goods they produce and the remuneration of the workers who produce these same goods.  Although the workers’ wages are linked to domestic labour rates and their local economies the goods they produce are bought and sold at world market prices; almost invariably in U.S. dollars. This is especially true in the broad range of extractive industries.

The copper produced in Chile, the Democratic Republic of the Congo, Kazakhstan, Mongolia and Zambia are all produced to the same international specification and priced in dollars.  They are traded on international exchanges like the London Metal Exchange and their prices are openly quoted in almost every newspaper. This is true of almost every metal and its ores, coal, oil and gas. There may be grades of quality (such as a premium or discount between Arabian Light, Brent and West Texas Overland) but these are already built into the market price and are equally transparent. All are produced to an international standard and in a transparent price structure. In most cases the ores and intermediates are also priced and traded in dollars on an international transparent basis. There may be some deflators as to variations in storage and shipping but these are trivial. It is easy to reference a change in the base price of the commodity on a very regular (daily or hourly if needed)) basis.

What is important about using the international market price for the ores, concentrates, finished metals, barrels of oil, cubic centimetres of gas produced by the global corporations is that the workers can use the value of their production to demand a bonus, in dollars, to be paid, for their input into the international price of the goods they produce. Their domestic wage may be negotiated on the basis of national constraints but in addition, the contract will specify a premium per unit production of these internationally-traded commodities which will be paid in addition to the wages paid in national currency.

So, if one establishes an index for the change in the international price of a market-traded commodity on a three-monthly basis, one can calculate what the percentage change in price of the commodity during that period will be due and owing to the workforce. For example if the price of a lot of twenty-five tons of Grade A copper cathodes conforming to BSEN 1978:1998 rises by an average of US$15 per ton during that three months then some part of that $15.00 will be set aside for a bonus to the workers multiplied by the actual production volumes. After all, the company has done nothing to earn that additional $15; that is a function of supply and demand in the market. The company is sharing the rise in the market price with those who produced the copper. Of course, if copper goes into backwardation (where the market estimates that the forward price of copper will be less than the current spot price) the index will reflect this and no bonus will be paid. As long as copper is in contango and the index reflects this then a portion of the increase will be due and payable to the workers.

This bonus is not wage-linked or based on seniority. It is a lump sum owing to each of the unionised workers on the cycle the union has agreed (quarterly, annually) with the company. It is paid in dollars (or the local equivalent at current exchange rates) to the account of each member of the bargaining unit or units. In practice it would be easier to make the transfer to a credit union owned by the workers and paid to the workers as a credit to their individual accounts. The union may wish to agree with the workers that a part of this bonus is paid as part of the workers’ contribution to a pension fund or a fund for benefits during layoffs.

The most important part of the plan is that there is an accurate index kept on the basis of changes in the international commodity price. The information is readily available in “Metal Bulletin” or ‘Platt’s. This a service best handled by a global international, like IndustriAll which represents many of the workers in the extractive industries. This is a valuable service it can provide to its affiliates.

While the economic benefits are obvious for the workers, they are also advantageous to the company. The workers have a stake in producing as much as possible as their bonus depends on output. There is likely to be a more efficient workforce as absenteeism and wildcat strikes or slowdowns are mutually disadvantageous. The national tax and treasury authorities will, no doubt, benefit from this influx of dollars into the country.

There are also political benefits. Trades unions are competitive entities. They compete with each other for members and the national, regional and nationalist political parties vie for their allegiance. If the legitimate, recognised, union is able to negotiate a production bonus as described it will be a powerful incentive for the workers to express their allegiance to the union which has negotiated this agreement. The immediate impact will likely be a series of conflicts between the workers employed by the sub-contractors and their employers, seeking parity. As these sub-contracted workers seek to join the recognised union they will then qualify for many of the benefits and services guaranteed by the national labour laws and will reduce the disparities between regular and contracted workers.

This is a process that can begin slowly or as an adjunct to current negotiations. There is every reason to assume that the national authorities will support such a plan as it is additional revenue for the state and access for them to the kind of information which is crucial to their national industrial strategies.

The time is ripe for such a plan.

Source:Ocnus.net 2012

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