From the TUC

OECD Forum 2017: ‘Bridging Divides’ and the role of unions

13 Jun 2017, by in International

Over two days last week, politicians, company CEOs, trade unionists, economists, NGOs and thinkers gathered at the OECD in Paris to consider major issues affecting the global economy. Under the heading ‘Bridging Divides’, this year’s OECD Forum had three major themes:

  • Inclusive growth
  • Digitalisation
  • Trust

These issues are, of course, interlinked. There was no pretence in Paris that globalisation has worked for everybody. In his opening address, the OECD Secretary General Angel Gurria spoke to the meeting of a very challenging and demanding moment:

“when our economic systems are weakened by a dysfunctional contradiction between extraordinary gains for a lucky few and the stagnation of incomes in average households; a moment when many people in many countries feel left behind and are demanding a better deal; a moment when the divides in our societies question the efficiency of our theories, of our policies, of our governments…”

Digitalisation could make these divides worse. Economists disagree on the extent, but all agree that a swathe of current jobs will disappear as Artificial Intelligence, Big Data and the ‘Internet of Things’ lead to different technologies communicating with each other without the need for human intervention. And all this at a time when trust in politicians and public institutions – described by Gabriela Ramos, the OECD Chief of Staff as “the glue that holds our societies together” – is at an all time low.

So how should we respond? And what is the role of trade unions in these developments?

Political intervention matters

First, it is important to be clear about the value, as well as the limits, of both globalisation and digitalisation. As Ken Ash, Director of Trade and Agriculture of the OECD, told the meeting:

“Trade is pro-poor and has helped to lift more than a billion people out of poverty in recent decades”.

On digitalisation, Andrew Wykoff, Director for Science and Innovation at the OECD, described how digital technology can improve medical diagnoses (it can do this by cross referencing a patient’s medical history with thousands of others with similar symptoms and histories, to identify the treatments that work best).

Another example of the benefit of digitalisation, this time in education, can be found at the University of South Africa. The university has opened up distance learning to thousands of African students who would never have had access to such an opportunity to study.

The key issue is that public policy is necessary to shape outcomes. Time is of the essence here, as technology is flowering at a staggering pace and policy makers must keep up.

To give an example of the importance of political intervention, Wykoff described how before 2012, Mexico had some of the highest broadband costs, and the lowest broadband penetration, within the OECD. Three opposing political parties formed a pact to address this issue; they changed the constitution, introduced an independent regulator and passed reforms to improve competition in the marketplace. In doing so, they brought costs down. This led to higher broadband usage and opened up digital opportunities to 50 million more Mexicans in the five years afterwards

Sometimes intervention entails hard choices. Gabriela Ramos described how tax systems have lost their progressivity. Economists talk about GDP, but they don’t talk about fairness. Everybody talks about the importance of education, but what education? Ramos said we must consider where we will have the greatest impact.

If forced to choose between money for universities and money for early childcare, we should choose the latter, as this would make the greatest difference. Children from poorer backgrounds don’t have the same cultural opportunities as those from richer families, so early childcare helps them to develop social and emotional skills.

Education is crucial

There is certainly a consensus that, in meeting the challenge of digitalisation, education matters. Cognitive skills and the ability to adapt will be fundamental. Those who cannot do so risk being left behind. Regulation is crucial to ensure that technology is not used for Orwellian control, as well as to protect against a fall in job and living standards.

Matthew D’Ancona, discussing his new book, ‘Post Truth’, also called for digital education as a core subject at school. This should not just focus on how to use technology, but how to protect data, and how to understand the way in which social media creates echo chambers. These chambers allow people’s broad views go unchallenged as their ‘friends’, and even those companies whose adverts they see, are pre-determined to their existing preferences and prejudices.

Does digitalisation mean the end of work as the engine of the economy and the delivery of living standards? Some believe it does and, if that is the case, a basic minimum income for everybody might be a policy necessity. Guy Standing described such a policy as a “social dividend on the collective wealth”. It could be progressive, paid for out of carbon taxes. It would enhance personal and community freedom, in the republican sense of freedom, i.e. it would give the ability to say no to an oppressive situation or an exploitative employer.

A trade union perspective

From a trade union point of view, it’s certainly true that public intervention matters. It was very welcome that over two days of intense discussion, I didn’t hear anyone argue that these great challenges are left to the whims of market forces, in the way that global economic organisations used to suggest.

If ever there was a time for active government policy, at national and international level, this is it. Trade unions believe the world of work remains central, but we must ensure that good work is available to those who want it and, self-evidently, work must pay. Richard Trumka, the General Secretary of the United States’ trade union confederation, AFL-CIO, forcefully reminded the meeting that “workers’ bargaining power has declined because globalisation has been managed in a way that pits worker against worker”. Trumpka added that “we must stop characterising the crisis in wages as something that is inevitable, rather than the result of policy choices”.

Going forward

Time will tell how much of a disruption digitalisation really creates. Previous industrial transformations have all resulted in more jobs, not less. However, these new jobs have been different, with different skills needed to perform them. This is why education is so important (and the point about early learning made by Gabriela Ramos was vital).

I managed to make a point during one debate about the importance of education as a public good. Every parent wants the best for their own child, but we surely need to change the narrative, at least as exists in the UK, from the “sharp elbowed middle class” whose sole focus is on their own children, so that excellence in education is demanded for all children.

I can see the power in the idea of a basic minimum income (and the TUC retains an open mind on this issue) but the risk is that it removes the incentive, indeed the necessity, of governments and businesses to create good jobs. I’m not sure I’d like to let them off the hook that easily. As Bill Spriggs, Chief Economist at the AFL-CIO told us, we’ve already had lots of automation – we got rid of secretaries, replacing twenty typists with two office computer operators. They are highly skilled, but we are not sharing their increased productivity with them, by paying them enough.

Finally, we must rebuild trust; hoping for the best is not good enough. Neither is simply compensating those who lose their jobs to restructuring. Luca Visentini, General Secretary of the ETUC, told the meeting that compensating workers who lose their jobs is not the answer; a macroeconomic policy, alongside trade, focused on creating good jobs is what is necessary.

These challenges are great, but we must rise to them. The Prime Minister of Denmark, Lars Lokke Rasmussen, invoked the spirit of George Marshall in his keynote address to day two of the OECD Forum. A vision such as that of the Marshall Plan is not out place in this discussion, but we shouldn’t wait for a saviour. Politicians must work with the very businesses, NGOs and trade unions that met in Paris, in an effort to find sustainable solutions. And we must take the public with us. It is a mighty challenge, but that is the task before us.