Re-examining the role of labor suppression in economic development

Labor is Not a Commodity

Re-examining the role of labor suppression in economic development

By Rebecca Cassler, ILRF Intern

This post is the first in a series about the relationship between organized labor and economic growth.

Over the last few decades, policy makers, analysts and pundits have often posited that the suppression of labor, be it in the form of restrictions on freedom of association, limitations placed on unions in politics and decision-making, anti-union legislation, or even anti-labor violence, is a necessary precondition for growth in developing economies. Economist Paul Krugman argues that transnational corporations with manufacturing facilities abroad do poorer nations a favor by supplying them with ‘awful’ working conditions for very little pay, since these jobs are better than the alternative - no jobs at all and rural poverty. Nicholas Kristof echoes Krugman’s arguments when he claims that denouncing sweatshops hurts the poorest more than helps them.

These arguments are based on outdated assumptions and broad generalizations about the role of labor in economic development. In fact, organized labor often plays a positive role in economic growth, undergirding greater political stability, workshop discipline, and smart growth policy contributions. Governments need to reexamine economic policies that assume a relationship between economic development and labor repression, and adjust policies to reflect current reality.

One oft-cited example supporting the argument that weak, suppressed labor is necessary for economic growth is that of the Asian Tigers (Singapore, Taiwan, Hong Kong, Korea), where GDP sky-rocketed in the 1980s and 1990s and rapid industrialization occurred, earning them the title of NICs (newly-industrialized countries). Using the Asian Tigers as their main example, writers like Chalmers Johnson, Hagen Koo and Frederic Deyo argue that weak unions are a comparative advantage in the global capitalist system. Foreign investors shy away from countries where labor is strong, and export-led growth needs the cheapest labor possible to succeed.

This theory isn’t strictly limited to academia; it has leaked into news media and is accepted by many mainstream journalists. For example, this Foreign Policy article attributes economic growth in Asia to, among other things, the lack of a strong labor movement. Similarly, this New York Times article encourages the idea that higher demands from workers are the main reason that companies relocate production facilities to areas with weaker labor organization in the “race to the bottom.”

These arguments have major repercussions for policy and public opinion, and should be critically examined. The Asian Tigers are often grouped together because of their geographic proximity to one another and their rapid industrialization during the second half of the 20th century, but the fact that they all experienced growth in conditions of labor suppression does not mean that labor suppression was the cause of this growth. The table below for example compares GDP from the mid-1980s (when the Asian Tigers were on the rise), and social freedoms across a completely different set of developing countries. Within this group there is no correlation between GDP and social freedoms. In fact, there seems to be a slightly negative relationship between social repressions and GDP.

As the Asian Tigers were experiencing rapid economic growth, there were many other countries that treated domestic labor groups similarly, and many of them experienced decline or very little growth. While looking only at the four Asian Tigers might lead people to believe that there is a relationship between labor suppression and economic growth, expanding this analysis to include other countries definitively shows that there is no relationship, and that many countries that suppress labor often have horrible economic track records. To put it simply, choosing examples for an argument based on the outcome to be examined (in this case, economic growth) leads to skewed results.

Many factors contributed to the rapid economic growth of the Asian Tigers, not least of which was access to US markets and their role as key US allies during the Cold War. If labor repression is such an important factor in economic growth, than why do the overwhelming majority of countries that maintain repressive labor policies continue to experience low growth rates?

Trade unionists all over the world, including garment workers in Bangladesh, shoe factory workers in Vietnam, and electronics factory workers in India face imprisonment when they form unions to fight for a living wage and better working conditions. Sustainable economic development isn’t possible when these workers do not have a dignified and safe way to earn a living, yet in the name of growth, governments and TNCs the world over deny workers the basic right to organize. Governments often argue that the time just isn’t right for their workers to be given the freedom to organize, as it might hurt economic development, yet this logic is built on a faulty foundation.

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Technorati Tags: Asian Tigers, economic development, GDP, globalization, labor economics, labor rights, neoliberalism, sweatshops, worker rights, workers

Small Biz Owners Say Health Care Reform Helps Cover Workers

Small Biz Owners Say Health Care Reform Helps Cover Workers

by Mike Hall, Jan 5, 2011

Here’s something that certainly isn’t going to be highlighted when Republicans begin their let-no-facts-get-in-the-way show trial of health care reform. Small business owners say the Affordable Care Act will spur them to provide health insurance for their workers.

Yep, while House Republicans stage their health care reform repeal vote Kabuki dance this week and next, the same small business owners Republicans claim to represent are looking at health care reform as a way to cut their health care costs.

A poll of small business owners with 50 or fewer workers by the Small Business Majority finds that two key provisions of the health care reform law—small business tax credits and insurance exchanges—make them more likely to provide health insurance to their employees. The Small Business Majority is a national nonprofit small business advocacy organization.

The small business tax credits allow businesses with fewer than 25 employees who have average annual wages less than $50,000 to get a tax credit of up to 35 percent of their health insurance costs beginning in tax year 2010. Insurance exchanges, which go into effect in 2014, are online marketplaces where small businesses and individuals can band together to purchase insurance.

The poll shows that 33 percent of employers who currently don’t offer insurance said they’d be more likely to do so because of the tax credits. Another 33 percent of respondents not offering insurance said they’d be more likely to because of insurance exchanges. The results for employers already providing benefits are almost identical.

John Arensmeyer, CEO of Small Business Majority, calls the finds “encouraging” but says most employers are not aware of tax credit or exchanges.

Once small business owners learn about the tax credits and insurance exchanges, they realize these provisions will help them provide insurance to their workers, many for the first time ever. However, many employers don’t know these provisions exist, so it’s imperative to continue getting the word out so they can take advantage of these benefits.

Among the survey’s other findings:

• An average of 31 percent of respondents—including 40 percent of businesses with 3-9 employees—who currently offer health insurance said the tax credits will make them more likely to continue providing insurance.
• Nearly one-third (31 percent) of respondents already offering insurance said the exchange makes them more likely to continue offering it.
• Only 31 percent of small business owners are very or somewhat familiar with the exchange, and 67 percent are a little or not at all familiar with it.
• The margin is smaller when asked about the small business tax credit: 43 percent of respondents are very or somewhat familiar with it, and 56 percent are a little or not at all familiar with this provision of the law.

And speaking of bipartisan support—the respondents represent a range of political points of view: 41 percent identified themselves as Republicans, 21 percent as Democrats and 27 percent as independents.

Click here for the full survey.

Tags: Affordable Care Act, health care, health care reform, insurance exchanges, labor, small business, Small Business Majority, tax credits, union, union blogs, unions

Channels: Economy, Legislation & Politics

Organizing 2.0 Savvy Online Campaign Yields Victory for N.Y. Can Plant Workers

IBEW

Organizing 2.0: Savvy Online Campaign Yields Victory for N.Y. Can Plant Workers

December 28, 2010

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A unique campaign to boost membership in New York may be a harbinger of future efforts to strengthen workers’ voices on the job, where laptops can be as important as leaflets.

Nonunion workers at Anheuser–Busch InBev Metal Container Corporation in Newburgh, who make cans for Budweiser beer and other brands, were worried about their futures after the company was sold in 2008 to a Belgian group.

Employees reached out to Local 363 last spring for support – but the fear of captive-audience meetings, harassment and other actions by the employer left many at the plant wary of how to press forward without management sidelining their efforts.

So organizers got crafty and set up a special blog strictly for the 164 employees to debate, strategize, air concerns and ultimately come together for victory, all while avoiding many of the union-busting tactics so common in most campaigns.

Lead organizer Sam Fratto said the anonymous nature of the site – where workers did not have to use their real names – ensured that employees could express their views and ask questions without the threat of reprisals from management. Said Fratto, who serves as the local’s senior assistant business manager:

This was basically like having a 24-hour-a-day union and campaign meeting. It got the workers involved and allowed people to weigh in with questions and concerns before or after their shifts. It showed that they didn’t have to be afraid to speak their minds.

Rick Lewis, a 20-year veteran of the plant, said the blog “made the impossible possible.”

Fratto explained:

They were afraid to talk among themselves on the floor. They’d tried organizing the plant a few years back with a different union, and the bosses retaliated – they even fired some folks. But this time with the blog, nobody’s jobs were in jeopardy because management couldn’t single out who was for or against the union.

It also became apparent to us that the company knew about the blog and was monitoring it daily – but we didn’t have anything to hide, so that didn’t matter. What mattered was that people felt comfortable coming forward with their ideas about how to build a better workplace.

The company set up its own version of a site – but it lacked two-way communication, only plugged the company’s talking points and fell flat with the work force, Fratto said. And despite management’s efforts to hone in on pro-union workers, captive-audience meetings couldn’t refute what the workers were reading on Fratto’s blog. He said:

They can’t top this. The company tried to get people to spill info about the campaign, but the workers just stayed silent. And since nobody’s wearing T-shirts or handing out stickers or fliers, who could they put the pressure on? Nobody.

Fratto started the blog last June with a straightforward post titled “Fellow Can Plant Workers: Follow Us Here.” He wrote:

In these tough economic times, it is very stressful for every middle-class family when it comes to worrying about work or what will happen at work. It is less stressful when you work under a written contract. This election will be successful because it is being handled by the workers themselves – as a group.

Check back here frequently for updates, information and the truth.

A word-of-mouth buzz about the blog grew, and Fratto’s flagship post generated more than 200 comments, most of them positive.

Wrote one commenter:

Thank you for creating this … I believe it is what we needed to balance out what we are told during the workday by management.

Another wrote:

This site is great. We need a safe place away from work to share our thoughts.

The next few months ushered in a fluid campaign, a successful election last August – where more than 75 percent of the work force signed cards – and what Fratto calls a productive first round of negotiations in December, where negotiators have raised issues regarding disciplinary procedures, overtime, scheduling, medical leave and other policies.

Employee Joe DeStefano, 49, has been at the plant since it opened in 1988. He said there’s been a significant change in staff/company relations that he hopes will carry through to a collective bargaining agreement and beyond:

Management has been treating us respectfully and things are going pretty smoothly right now. People are working together better than before the campaign. The common goal right now seems to be more focus on doing things right and making our plant the best that it can be.

We want to show the company, and the country, that we are unique, dedicated, focused, skilled and willing to make our plant an example to all – to show that the IBEW workers at Newburgh are willing to strive for perfection and achieve excellence in all that we do.

Local 363 officials said they are impressed with the tenacity and camaraderie of the new members. Business Manager/Financial Secretary John Maraia said:

They understand the power associated with having a written contract to work under. The workers knew they had to take steps of their own to protect themselves. We are glad they had the courage to take those steps and we welcome them into the IBEW.

Said Fratto:

We invite the entire IBEW membership to visit this blog and offer encouragement to these brave members.

Send your own message of solidarity to the workers while they negotiate their first contract by visiting www.canplant.blogspot.com and posting a comment.

Online Organizing Key to Workers’ IBEW Win

Online Organizing Key to Workers’ IBEW Win

by Mike Hall, Jan 4, 2011

When workers decide they want to come together and form unions, it’s a well-documented fact that management is none too happy about it.

Talk with your fellow workers in the lunchroom, speak out at a forced, closed-door meeting with the boss, or—heaven forbid—wear a pro-union shirt, hat or sticker and you’re sporting a bull’s-eye for retaliation. In more than one-third of organizing campaigns, pro-union workers are fired.

In Newburgh, N.Y., last spring, workers at an Anheuser–Busch InBev’s Metal Container Corp. plant—where a previous organizing attempt drew intense management harassment and the firings of some workers—employees reached out to Electrical Workers (IBEW) Local 363.

But as the IBEW Now News Blog reports:

The fear of captive-audience meetings, harassment and other actions by the employer left many at the plant wary of how to press forward without management sidelining their efforts.

So organizers got crafty and set up a special blog strictly for the 164 employees to debate, strategize, air concerns and ultimately come together for victory, all while avoiding many of the union-busting tactics so common in most campaigns.

Lead organizer Sam Fratto says the blog was like having a “24-hour-a-day union and campaign meeting.” Because of their past experience, workers were:

afraid to talk among themselves on the floor. But this time with the blog, nobody’s jobs were in jeopardy because management couldn’t single out who was for or against the union.

Over the course of the summer, the blog became an online meeting spot for the 164 workers, who knew plant management was monitoring the blog. But despite management’s efforts to hone in on pro-union workers, captive-audience meetings couldn’t refute what the workers were reading and commenting about on the blog. Says Fratto:

The company tried to get people to spill info about the campaign, but the workers just stayed silent. And since nobody’s wearing T-shirts or handing out stickers or fliers, who could they put the pressure on? Nobody.

In August, the workers voted overwhelmingly to join IBEW and are now in contract talks. Read the full story here, and visit the can plant blog here.