The Race to the Bottom
Is There a Declining Standard of Living for Workers
in the Global Society
Dr. E. Patrick McDermott
Fulbright Asian Regional Lecture Program
Griffith University
Brisbane, Australia
The Race
 Focus on U.S.
 Your assistance as to how “the race” issues
differ in Australia
Definition of the “Race to the bottom”
 Living Standards
 Labor Standards
 Environment
 Power of Workers to Influence Their Standard of Living by direct action
 Government – Our ability to influence our standard of living through
government
 Other measures?
Definition – Who’s Vantage Point?
 U.S. centric view?
 Western centric?
 Organized Labor perspective?
 The “average Joe”
 What is the appropriate vantage point?
A “HOT” ISSUE – With or Without Buzz
Words
One view – Things are getting worse for the
average worker:
 Tattoos and body piercing as a manifestation
 The age of the homeless in Australia
 Howard government and AWS – decline of the strength of organized
labor
 Aftermath of the Brisbane dock strike - MUA
 Work transferred to countries such as China, Vietnam, etc.
Race to the Bottom
Another View - Job skill centered view
 The Weekend Australian, March 29-30, 2008 – “New
solutions in the fight for talent”
 _________________, April 1, 2008 – “Going global in
search of scarce skills”
 _________________ -March 29 – 30 - “Enduring joy of
temping”
 Quantas – “You never had it so good” – “A man no longer
devotes 24% of the hours in a year to work, as was the norm
in 1800”
Measurement - Always An Issue
 Tackling undeclared work in the European Union
http://www.eurofound.europa.eu/areas/labourmarket/tac
kling/search.php
“Undeclared work can be defined as work which is in itself
legal but is not declared to the authorities for tax, social
security and/or labour law purposes.”
Measurement
 Use of subcontractors, licensing etc.
 Information about working conditions in
China, Bangladesh, Vietnam, etc.
Measurement – Anecdotal
Corporate greed is bankrupting America. When business costs
go up they pass it on to the consumer with higher prices and
employees laid off. Those laid off cannot purchase much and the
result is more laid off. A profit does not seem good enough
anymore. It must be as much profit as possible to please
investors. Consumers only have a limited amount of income.
When costs go up we have to adjust our priorities. It's not the
lack of consumer spending, it's the lack of consumer disposable
income that is causing our dilemma. As business seeks cheaper
labor by not sharing the wealth, the result will be non-essential
business bankruptcies resulting in more layoffs, continuing the
downward spiral.
Measurement - The Economy – MSN
Money - USA
Will you lose your job
in 2008?
U.S. Crunch on the Middle Class
CRUNCH ON THE MIDDLE
CLASS:
http://articles.moneycentral.ms
n.com/Investing/HomeMortgage
Savings/WhyYouWillNeverOwn
AHome_SeriesHome.aspx
Measurement – Anecdotal - Europe
EAWOP Small Group Meeting on:
 “Job Insecurity in Europe: State of the Art and New
Directions”
 17–19 September 2008, Leuven, Belgium
 Call for Papers
Measurement – Anecdotal - Japan
Conflicts between labor and management have increased
sharply in recent years due to diversification in the realm of
employment. In fiscal 2006, labor bureaus across the nation
were consulted about 187,000 times over labor disputes, a
figure 1.8 times larger than four years ago.
The majority of cases, about 24 percent, were related to the
dismissal of employees, followed by cases involving the
downgrading of working conditions and workers being bullied
or harassed.
Measurement - Anecdotal - Indonesia
Rustam Aksam, president of the Indonesian Trades Union
Congress, observed, “Every country is now competing to
reduce worker rights....We’re racing to the bottom.”
Measurement of Worker Rights – U.S.
Department of State/OECD/ILO
Internationally recognized worker rights (OECD/ILO):
 the right of association
 the right to organize and bargain collectively
 a prohibition on the use of any form of forced or compulsory
labor
 a minimum age for the employment of children
 acceptable conditions of work with respect to minimum
wages, hours of work, and occupational safety and health.
ILO - Right of Association
I. Right of Association:
 the right of workers and employers to establish and join
organizations of their own choosing without previous
authorization
 to draw up their own constitutions and rules, elect their
representatives, and formulate their programs
 to join in confederations and affiliate with international
organizations
 be protected against dissolution or suspension by administrative
authority
Right of Association – Continued
Right of workers to strike
Right to Organize and Bargain Collectively
II. Right to Organize and Bargain Collectively:
 the right of workers to be represented in negotiating the
prevention and settlement of disputes with employers
 the right to protection against interference, and the right to
protection against acts of antiunion discrimination
Forced or Compulsory Labor
 Forced or compulsory labor is defined as work or service
exacted under the menace of penalty and for which a person
has not volunteered.
Child Labor
Prohibition of child labor and minimum age for employment
 Raising the minimum age for employment to a level consistent with the
fullest physical and mental development of young people.
 ILO Convention 182 on the "worst forms of child labor" identifies
anyone under the age of 18 as a child and specifies certain types of
employment as "the worst forms of child labor.“ (slavery, debt bondage,
forced labor, forced recruitment into armed conflict, child prostitution
and pornography, involvement in illicit activity such as drug production
or trafficking, and "work which, by its nature, or the circumstances in
which it is carried out, is likely to harm the health, safety or morals or
children.)
 ILO Convention 182 permits the employment of children between the
ages of 16 and 18 if adequate protective measures have been taken.
Acceptable Conditions of Work
Acceptable conditions of work:
 establishment and maintenance of mechanisms, adapted to
national conditions
- wages that provide a decent living for workers and their
families
- working hours that do not exceed 48 hours per week, with a
full 24-hour day of rest
- a specified number of annual paid leave days
- minimum conditions for the protection of the safety and
health of workers.
U.S. - Union Membership - 2007
•
In 1983, the first year for which comparable union data
are available, the union membership rate was 20.1
percent
•
Union members account for 12.1 percent of employed
Is this a “race to the bottom” or
realignment of flexible IR models?
ILR Impact Brief -Workforce Alignment
and Fluidity May Yield a Competitive
Advantage
Lee Dyer Jeff Ericksen
What does the Data tell us?
 Decline/Shift of manufacturing
 Some improvement in lesser developed
countries
 Decline in organized labor
Union Earnings – U.S.
In 2007, among full-time wage and salary workers,
union members had median usual weekly earnings of
$863 while those who were not represented by
unions had median weekly earnings of $663.
For a discussion of the problem of differentiating
between the influence of unionization status and the
influence of other worker characteristics on
employee earnings, see “Measuring
union-nonunion earnings differences,” Monthly
Labor Review, June 1990.)
U.S. – Union Trends - 2007
Concentration -Workers in the public sector had a union
membership rate nearly five times that of private sector employees.
Sector - Education, training, and library occupations had the highest
unionization rate among all occupations, at 37.2 percent, followed
closely by protective service occupations at 35.2 percent.
Age -Wage and salary workers ages 45 to 54 (15.7 percent) and
ages 55 to 64 (16.1 percent) were more likely to be union members
than were workers ages 16 to 24 (4.8 percent).
What has caused the decline of
organized labor in the U.S.
 Exporting of jobs
 Aggressive management tactics (Wal-Mart, etc.)
 Bad leadership
 Cultural changes – What do the younger workers want?
Unions – For Longshoremen it has
never been better
-Container throughput up 10%
-14,279 new workers
-800 new longshoremen in Southern California
-38 % increase in overall registered work force
Has the Tide Turned In the U.S.?
HR 800 EH
110th CONGRESS
1st Session
H. R. 800
AN ACT
To amend the National Labor Relations Act to establish an efficient system to
enable employees to form, join, or assist labor organizations, to provide for
mandatory injunctions for unfair labor practices during organizing efforts, and for
other purposes.
Be it enacted by the Senate and House of Representatives of the United
States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the `Employee Free Choice Act of 2007'.
SEC. 2. STREAMLINING UNION CERTIFICATION.
U.S. Senate
S 1041 IS
110th CONGRESS
1st Session
S. 1041
To amend the National Labor Relations Act to establish an efficient system to
enable employees to form, join, or assist labor organizations, to provide for
mandatory injunctions for unfair labor practices during organizing efforts, and
for other purposes.
IN THE SENATE OF THE UNITED STATES
SECTION 1. SHORT TITLE.
This Act may be cited as the `Employee Free Choice Act of 2007'.
SEC. 2. STREAMLINING UNION CERTIFICATION.
China and the “Race”
 As a prime beneficiary of globalization is China driving down
labor standards?
 Has globalization bettered the life of Chinese workers?
China, Capitalist Accumulation, and
Labor - A Socialist Viewpoint
China’s growth has been driven by the intensified
exploitation of the country’s farmers and workers,
who have been systematically dispossessed through
the break-up of the communes, the resultant
collapse of health and education services, and
massive state-enterprise layoffs, to name just the
most important “reforms.”
China, Capitalist Accumulation, and
Labor
 China’s gains have been organically linked to development
setbacks in other countries.
 China’s growth has become increasingly dependent not only
on foreign capital but also on the unsustainable trade deficits
of the United States.
 Accumulation dynamics underlying China’s growth are
generating serious national and international imbalances that
are bound to require correction at considerable social cost
for working people in China and the rest of the world.
China, Capitalist Accumulation, and
Labor
Base assembly-line wages in the Pearl River Delta virtually frozen at about $80 per month for the past
decade.
Factor in inflation over roughly the same period, and
average pay in real terms has declined by as much as
30%.
With the price of raw materials rising and factory profit
margins shrinking, blue-collar workers are at the losing
end of a long chain of supply and demand.
China, Capitalist Accumulation, and
Labor
Anita Chan:
“in reality the wages of the migrant industrial workers
are often considerably lower than the official standards.
For one thing, the minimum wage, set by the month,
does not reveal the illegally long hours worked by
migrant workers to attain that minimum. According to
a survey I conducted in China’s footwear industry, the
average workday there amounts to about 11 hours each
day, often with no days off—that is, about an 80-hour
work-week.”
China, Capitalist Accumulation, and
Labor
Regular formal wage employment in China’s urban
sector actually declined at an annual average rate of 3
percent over the period 1990–2002.
Total regular (formal and informal) wage employment
remained basically unchanged over this period,
registering a zero average rate of growth. Only
irregular employment grew, increasing at an annual
average rate of 18.5 percent.
“DAGONG”
One recent example - Adidas
“Fair play is impossible, say Adidas workers” (Sunday
Times Investigation)
 $25 a week
 cheating on pay
 Forced OT with no pay
 Over 70 hours per week to get a living wage
 5 strikes in last 12 months (unreported)
 Males not wanted (“boss thinks men are troublemakers”)
“Life is
very hard. We work morning to night, but
have no money left”
Pro-Globalization Perspective - Cultural
Nationalism – The Last Resort of Scoundrels
“Globalisation might be expected to have
reduced the appeal of nationalism and the scope for
intervention. But greater competition compresses
the space for monopolists and rent seekers, and this
is what has provoked the backlash.”
Professor Eric Jones, Professorial Fellow, Melbourne Business School. Emeritus Professor La Trobe
University
Policy, Vol. 23,No.2,Winter 2007,
Classical Economics View
 Law of Comparative Advantage
 Labor is a Commodity
 No support for workers organizing to take “wages out of
competition”
 No consideration of a “Social Contract”
“Racing to the Bottom or Climbing
to the Top”
Analysis of New Data set on collective labor rights
Their analysis of the correlates of labor rights in 90 developing
nations, from 1986 to 2002, highlights globalization's mixed
impact on labor rights. As "climb to the top" accounts suggest,
foreign direct investment inflows are positively and
significantly related to the rights of workers. But at the same
time, trade competition generates downward "race to the
bottom" pressures on collective labor rights.
Layna Mosely and Saika Uno, Comparative Political
Studies, Aug. 2007, Vol. 40 Issue 8, 923-948.
Is there a “Race to the Bottom”
 What is the appropriate vantage point?
 Socialist
 Classical economic (labor is a commodity)
 Industrial Relations
 Corporatist
 Darwinian
 Social Contract
 Other ?????
The Race to the Bottom
Is There a Declining Standard of Living for
Workers in the Global Society
Dr. E. Patrick McDermott
Fulbright Lecturer
East China University of Political Science
and Law
Shanghai, China
epmcdermott@salisbury.edu
Collective Consultation - Shenyang
Regulations of Shenyang municipality on collective contract
(Unofficial U.S. Embassy Translation)
Article 1
In order to regulate the acts of formulating collective contracts, and to set up
harmonious labor relations, these regulations are formulated based on the actual
situation of Shenyang municipality in accordance with the ‘labor law of the people’s
republic of China and the trade union law of the people’s republic of China’.
Article 5
The United Migrant Workers' Union shall conduct collective consultation over the
standards of labor remuneration, work safety and health, etc., and conclude collective
contracts with the public service institutions or enterprises where the migrant workers
are employed, or with relevant organizations of employers within a region or in a
business sector.
Prohibited Conduct - Shenyang
•Not providing relative materials in signing a collective contract;
•Rejecting the request for negotiation from the other party
•Not submitting copies of a collective contract to the administrative division of the
authority for labor and social security within the required time limit after the
contract is signed or amended or not notifying the administrative division of the
authority for labor and social security in a written form of the termination of a
collective contract;
•Transferring employees' representative to a disadvantaged position or terminating
the representative’s labor contract without reasonable cause;
•Deliberately delaying the signing of a collective contract or not completely fulfilling
obligations of the collective contract;
Prohibited Conduct - Shenyang
•Forcing the other party to accept its demands by
threatening, bribing, cheating and other malpractices;
•Obstructing or hampering the guidance from the trade
union at a higher level to the trade union at a lower
level in conducting collective consultation and signing
a collective contract.
Collective Consultation - Shenyang
The "United Migrant Workers' Union" is an organization
unique to Liaoning Province. The first municipal level branch
was set up in Shenyang by the municipal Free Trade Union in March
2006, offering free membership to migrants regardless of whether they
had stable jobs or not. The union is also open to migrant construction
teams, migrant home renovation workers, and those laid-off workers in
the city who are in search of jobs. Press reports indicate that the union
provides free job-hunting, training services and helps migrant workers
who have trouble in schooling their children or shouldering medical
costs. The union claims it can help migrants with legal-aid and
demanding unpaid wages.
Right to Strike
 SHENYANG – Quit on Impasse
 SHANGHAI
Article 32
Either party to the collective bargaining can apply to the competent labour and social security
authorities for conciliation or settlement if one party refuses or delay the request for collective
bargaining by the other party without justified reasons, or no consensus or a collective contract may
be reached or concluded as a result of the collective bargaining. Meanwhile, the competent labour
and social security authorities may initiate the procedure of conciliation or settlement at their
discretion without application for conciliation or settlement by either party.
During the process of conciliation or settlement by competent labour and social security authorities
for disputes arising from collective bargaining, the competent labour and social security authorities
may handle the cases jointly with the representatives from the trade union at the same level and the
representatives from the enterprises.
Article 33
If any disputes arise out of the performance of the collective contract, and the dispute or disputes
are not settled even after consultation between the employees and the enterprises, both parties may
submit the case to the competent labour and social security authorities for conciliation or
settlement.
Collective Bargaining in China - Shanghai
Regulations on Collective Labour Contracts in Shanghai Municipality
(Passed on the 38th Session of the Standing Committee of the 12th Shanghai Municipal People’s Congress
on August 16, 2007)
Chapter I General Provisions - Article 1
On the basis of the actual circumstances in Shanghai Municipality, these Regulations are formulated in
accordance with the provisions stipulated in the “Labour Law of the People’s Republic of China”, the
“Labour Contract Law of the People’s Republic of China” and the “Trade Union Law of the People’s
Republic of China” and other relevant laws and regulations, to regulate collective bargaining, the
establishment and fulfillment of collective contracts, and to protect workers’ legal rights and interests, for
the purpose of building up and developing harmonious, stable labour relations.
Article 2
These Regulations apply to labour relation issues concerning the collective bargaining, the establishment
and fulfillment of collective contracts between the enterprises and the employees within the jurisdiction of
the Municipality.
Article 3
The “collective bargaining” mentioned in these Regulations refers to negotiations and consultations
conducted by the employees of an enterprise as one party and the enterprise as the other on an equal
footing over issues concerning Labour relations.