The World Needs a Social Contract

Translation from Norwegian

 

By Minister of Foreign Affairs Jonas Gahr Støre and Director General of the ILO Juan Somavia

The global economy is at a crossroads. Decades of deregulation and market opening have led to growth, integration and wealth creation – but also volatility, insecurity and wealth concentration. These imbalances are not sustainable in democratic societies.

The “triple F crisis” – in fuel, food and finance – the continued stalemate in the Doha trade talks and looming recession, call for bold new decisions on global economic governance. The world needs a social contract. 

Globalisation – the mutually reinforcing combination of new technologies and liberal economic policies in open societies – has brought great benefits to the world. Many people in many countries have been lifted out of poverty and have greater freedom and new opportunities. 

Polls and politics tell us that most people in most countries also feel greater uncertainty.  Many live in fear; they feel insecurity for themselves and their families in the face of global competition and rapid change. They do not see their productivity expressed in their purchasing power.

We believe these concerns are understandable and legitimate, but even if you disagree,  they do represent a political reality. 

Thus, as we want to sustain democratic support for an open, rules-based global economy, we need to take these concerns on board in our policy-making. 

We need policies that make globalisation work better for all. This is first and foremost a question of fairness – in the distribution of power and wealth, costs and benefits, and real opportunities – both among and within countries.

The emergence of new economic powers, multiple business actors and an increasingly active civil society creates new challenges for global governance, which the current architecture of international organisations is ill equipped to handle, based as it is – with one exception – on state representation by governments.

The one exception is the International Labour Organisation (ILO), which uniquely comprises not only governments, but also workers’ and employers’ representatives among its decision-making members. Thus, the ILO is ahead of its time.

An interesting paradox in fact, since the ILO is one of the oldest members of the family of international organisations, established by the Treaty of Versailles already in 1919. Its Constitution recalls two values: “Labour is not a commodity” and “Poverty anywhere is a threat to prosperity everywhere.”

This is a mirror of Norway’s own model, where tripartism and social dialogue, workers’ rights and social protection combine to make Decent Work an explicit policy objective and criterion for political priorities. And this is not only a question of fair distribution. In Norway’s experience, putting fairness first makes the economy prosper as well, to the benefit of business - and society at large.

In the last years, the ILO has taken the leadership in developing a response to the social challenges of globalisation: The ILO Declaration on “Social Justice for A Fair Globalisation” was adopted by consensus among governments, worker’s and employers’ representatives from 182 countries, on 13 June this year. 

ILO’s Decent Work Agenda is both a vision and a toolbox for policy-makers. It reflects the fact that a good job is one of the most basic and justified democratic demands of people everywhere. 

The Decent Work Agenda places employment creation at the centre of economic policy-making; calls for adequate social security, promotes social dialogue and tripartism, and last but not least, underscores the importance of respecting, promoting and realizing fundamental principles and rights at work, highlighting freedom of association and the right to collective bargaining. Gender equality and non-discrimination are key to all these objectives. 

The Declaration underscores that labour standards should not be used for protectionist trade purposes – and makes clear that violation of fundamental principles and rights at work cannot be used as a legitimate comparative advantage. 

As such, the ILO Declaration is a breakthrough for coherence in global governance, putting social justice on par with economic efficiency.

It presents a Social Contract for the 21st century. 

The Decent Work Agenda provides political leaders with an approach which combines relevance to the issues on which national elections are won and lost, with a common platform for the necessary international decision-making.

Only by making globalisation more balanced and fair can we make it legitimate, and only by making it legitimate can we make globalisation sustainable. These are issues which key international organizations like the World Bank, the IMF, WTO, OECD, UNDP and the ILO should address together.

Many leaders are already promoting Decent Work as a global goal of interest to everybody – as an explicit objective and criteria for economic policy-making and international cooperation, including in trade, finance and development. Deepening this process is essential.

These challenges require striking a new balance among society’s most influential forces: the governing power of the state, the productive dynamism of the market, the democratic voice of society, and the civil liberties and needs of individuals, families, and communities.

There are no quick fixes or magic solutions, but we believe that it can be done. We will need strong leadership, daring to call a spade a spade, imagination to think out of the ideological boxes and a great sense of urgency.