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Last Updated: Wednesday, 21 January, 2004, 21:26 GMT
Trade unions rue global jobs shift

By Tim Weber
BBC News Online business editor in Davos

Forum participants gather at the World Economic Forum meeting
Thousands of business and political leaders are in Davos
Globalisation has turned into a "race to the bottom", where jobs go to places with the cheapest workers and least onerous workers' rights.

Trade unionists say jobs migration is hitting not just industrialised nations, but developing countries as well.

Guy Ryder, secretary general of the International Confederation of Free Trade Unions, made the point at the World Economic Forum in Davos.

The five-day forum has brought together more than 2,200 of the world's elite.

Globalisation without rules does not work
Sharan Burrow, Australian Council of Trade Unions

Issues surrounding Iran, Iraq, the slide of the dollar, the world economy and globalisation, including the movement of jobs, are all high on the agenda.

The nature of the shift of jobs - not just in manufacturing but in services as well - pointed towards "an inherent deficit of the globalised economy", Mr Ryder said.

At the same time he accused business leaders of "betraying the trust built up during last year's meeting in Davos", by failing to clean up corporate scandals and not making good on promises of social partnership.

Middle-class backlash?

Union leaders were keen to point out that they did not want to deny developing countries the benefits of jobs and foreign investment.

But Philip Jennings, general secretary of Global Unions, which organises the service industry, said companies would still have to address the social disruption caused by such large-scale shifts of jobs.

"We are going to see a churn in employment security, and a round of wage deflation, which is bound to result in a middle class backlash," Mr Jennings said.

South-south movements

Union leaders called for international rules to introduce minimum standards of labour rights, human rights and environmental standards.

"Globalisation without rules does not work", said Sharan Burrow of the Australian Council of Trade Unions.

Globalisation had now started to hit even countries like Mexico, where 200,000 jobs had been axed and moved to China, and Bangladesh, where this year up to 1m jobs could go in the textile industry.

Indian carmakers, Ms Burrow said, had now asked their government for special zones with reduced labour rights because they could not compete with countries like Thailand.

Economists worried

And it is not just trade unionists that are getting worried.

Speaking at the World Economic Forum, Morgan Stanley chief economist Stephen Roach drew attention to the phenomenon of "global labour arbitrage", where what were high-wage jobs in developed world were transformed into low-wage jobs in the developing world.

This, he said, was hitting not just manufacturing, but service industries like banking as well.

Some participants at Davos have already asked what will happen when Europe and the USA are consumers only, but don't produce anything anymore.

Laura Tyson, Dean of the London Business School and formerly Bill Clinton's economic adviser, believes that such a scenario is not on the cards yet.

But there is a certain discomfort in Davos about the balance of danger or opportunity in the trend to outsourcing.

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