Labor Unions & Globalization

In the U.S. - the model toward which many countries aspire to converge - the two most important aspects of corporate America's new competitive strategy in the late 1970s and early 1980s were the choice of conflictual rather than cooperative relations with labor (the disavowal of the traditional accords) and a rejection of support for an effective social 'contract,' one that assured both full employment and the maintenance of an adequate social wage. The corporate attack on labor was multidimensional. It include, among other things, war on unions, political support for stripping workers of their legal rights, the widespread use of replacement workers during strikes for the first time in the post-World War II era, outsourcing, and FDI [foreign direct investment] .

- James Crotty, Gerald Epstein, and Patricia Kelly

Globalization expands opportunities. Whether these are translated into benefits for workers depends on the valuable role that unions can play in competitive economies. This role is however most likely to produce lasting gains in an environment that encourages their participation in increasing productivity gains, in ensuring fairness and in protecting reasonable working conditions.

- Michael Walton

Webster's defines a labor union as "an organization of workers formed for the purpose of advancing its members' interests in respect to wages, benefits, and working conditions." Explaining the relationship between globalization and labor unions necessarily involves asking a series of polemical questions about the effect of increased capital flows on wages, regulations, and worker bargaining power. The explanation of this relationship often depends on the political position of the person writing or speaking on the subject. The articles selected will explore the diametrically opposed views of 'anti-establishmentarians' and 'establishmentarians' with regards to globalization and labor unions.

Last April 2001, AFL-CIO President John Sweeney addressed the 17th World Congress of the International Confederation of Trade Unions (ICTFU) in Durban, South Africa on the topic of globalization. The 50-year old ICTFU represents 125 million working people in 213 national trade unions from 145 countries. In discussing the topic of globalization, Sweeney expressed concerns shared by most labor union supporters throughout the world when he asserted that "[g]lobal capital and corporations have enlisted state power to free them from civilizing rules." Sweeney continued his critical appraisal of economic globalization by stating that "[t]he global economy that corporations have forged can only be tamed by the international solidarity of working families everywhere. . .[w]e must commit to pressuring our governments to champion the cause of building enforceable workers rights into the rules of the global market." Because of this critique and other similar critiques made by international labor organizations, unions are usually portrayed as being part of the 'anti-globalization' movement. In all major demonstrations from Barcelona and Sidney to Seattle and Quebec City, labor unions have been a very visible part of the 'anti-globalization' or 'global economic justice' movement. Labor unions argue that globalization, as it is currently constituted, favors the interests of multinational corporations and global capital to the detriment of working people around the world.

Briefly, the argument made by labor unions is that countries are forced to compete among themselves to attract the attention and the investment capital of companies. In competing with each other, countries invariably drive down wages, reduce tax rates, and eliminate legislation protecting workers and the environment, among other things. By creating favorable conditions for corporations in terms of lower costs, fewer taxes, permissive laws, and higher taxes through competition, the argument is that this causes a 'race to the bottom' in living standards for workers. Accordingly, the bargaining position of workers and labor unions is severely weakened as corporations play countries against each other to make the lowest bid. In summarizing the consequences of the 'race to the bottom effect', consequences that allegedly do more than simply harm workers, economist Robin Hahnel explains that

The 'race to the bottom effect' is real. Liberalization of trade and international investment does put downward pressure on. . . wages [and] labor standards. . . Third World peasants and workers do not enjoy the beneficial effect one might otherwise expect from increased international investment and specialization in labor intensive manufacturing in their countries. By strengthening the bargaining power of global capital versus any and all with whom it negotiates, liberalization of trade and investment leads to downward pressure on wages, labor standards, and environmental standards in First World and Third World countries.

However, establishmentarian supporters of globalization affirm that the 'race to the bottom effect' is largely an illusion and that economic globalization "improves the living standards of the vast majority of people", workers included. Pro-globalizers John Micklethwait and Adrian Wooldridge argue that the 'race to the bottom' critics are mistaken on at least four grounds: first, critics believe that employers are only concerned about the price of labor, when they are really concerned about the value of labor. As Micklethwait and Wooldridge explain, "what employers want is not cheap workers but productive ones. . .[a]nd the most productive workers are usually those with the best education, access to the best machinery, and a support system that includes things like good infrastructure."

Second, Micklethwait and Wooldridge claim that critics are mistaken about the ease and willingness of corporations, allegedly unmoored from their nations of origin, to simply relocate to more business-friendly countries around the globe. To support this claim, the authors state that "[d]uring the Justice Department's investigation of Microsoft, Bill Gates could not have threatened to move his operation to the Bahamas, even though Microsoft has relatively few fixed assets. Microsoft depends not just on a supply of educated workers. . .but also on its close relationship with American universities."

Third, the authors argue that critics exaggerate the 'hostility' of corporations toward labor unions and labor standards. They do agree with critics that all corporations at all times tend to react unfavorably to labor unions because "they [labor unions] want to shackle their [corporations'] freedom of maneuver with inflexible rules about, say, hiring and firing." However, globalization allegedly does not worsen this fundamental antipathy between corporations and unions. Regarding labor standards, Micklethwait and Wooldridge assert that corporations, especially multinational corporations, tend to improve working standards in pursuing the goal of increasing productivity.

Finally, the authors state that critics wrongly entertain the idea that "globalization is a zero-sum game: that if the rich are getting richer as a result of globalization, then the poor must be getting poorer." Instead of a zero-sum game, where a fixed amount of wealth is inequitably distributed among the global rich and poor, Micklethwait and Wooldridge argue that globalization creates more wealth, increases efficiency, and improves "the lot of everybody."

Which of the above positions most accurately explains the relationship between globalization and labor unions? The articles below were selected not to provide an answer to this question, but rather to encourage the reader to continue researching the topic.

  • Sheila R. Cherry, "Union Leaders Seek Globalization,", July 2001.

    In this article, Sheila Cherry accuses America's largest organized labor organization, the AFL-CIO, of using globalization to advance its political agenda. Together with the International Confederation of Free Trade Unions (ICFTU), the AFL-CIO has been actively campaigning to internationalize its union drive. However, Cherry claims that the AFL-CIO is deaf to criticism of its policies swelling among the rank and file membership. She states that the AFL-CIO has unnecessarily allied itself to the Democratic Party in opposition to the Republican Party, and that this alliance has resulted in more concern of the union leadership for supporting Democrats favoring free-trade initiatives than protecting the interests of American workers. Cherry claims that American workers are much more concerned with the competitive job loss caused by globalization. Accordingly, she argues that the international organizing efforts of the AFL-CIO are not for the purpose of improving the lives of working people in the U.S. and around the world, but for increasing union membership to build political strength to elect union-supported Democrats to office.

  • Bill Jordan, Yes to Globalization, But Protect the Poor, Int'l Herald Trib., 2001.

    Bill Jordan, the General Secretary of the International Confederation of Free Trade Unions, claims that globalization has the potential to create prosperity for everyone on the planet, but that globalization is currently only serving the interests of the wealthy. He claims that the objective of the international labor movement with regards to globalization is to ensure that the benefits of increased economic output are shared by all. He argues that the policy for achieving this objective is to be found in the implementation of international core labor standards and in the growth of global trade unionism. He maintains that core labor standards would protect workers in developing market countries from inhumane treatment and workers in developed countries from sweatshop competition abroad. He also asserts that global trade unionism will guarantee a more equitable distribution of the economic benefits of globalization between companies and workers.

  • Trade Unions declare Global Day of Action for 4th WTO Ministerial Conference, International Confederation of Free Trade Unions (ICFTU), July 19, 2001.

    This article, published by the International Confederation of Free Trade Unions (ICFTU), assumes a very critical stance against globalization. The ICFTU claims that global inequality has been growing because the world economic system as it is currently conceived is distributing the vast economic benefits created by globalization unequally. The ICFTU is also critical of trade liberalization policies that have not brought world workers higher standards of living and increased employment. Since the World Trade Organization (WTO) supports global trade liberalization, the ICFTU announces its plan to initiate a series of protests and other activities during the next WTO Ministerial Conference. The article details the ICFTU action resolution drafted during the tumultuous G8 Summit in Genoa. As the article states, the events planned for the 'Global Day of Action' during the 4th World Trade Organization Ministerial Conference in Doha, Qatar, on the opening day of the conference in November include demonstrations, workplace discussions, work stoppages, public meetings and high profile media activities.

  1. James Crotty, Gerald Epstein, and Patricia Kelly, Multinational Corporations in the Neo-Liberal Regime, in DEAN BAKER, GERALD EPSTEIN, & ROBERT POLLIN, GLOBALIZATION AND PROGRESSIVE ECONOMIC POLICY 117 (Cambridge University Press 1998) (1999).
  2. Michael Walton, Labor Market Policies and Labor Unions (The World Bank Group, 2001).
  4. AFL-CIO, Combating Corporate Greed, Globally, at (last visited May 5, 2011).
  5. Id.
  6. Id.
  7. Robin Hahnel, Globalization: Beyond Reaction, Thinking Ahead, NEW POLITICS, summer 2000, vol. 8, no. 1, available at
  8. Id.
  9. John Micklethwait & Adrian Wooldridge, The Globalization Backlash, FOREIGN POLICY Sept./Oct. 2001, at 16.
  10. Id. at 22.
  11. Id.
  12. Id.
  13. Id.
  14. Id.
  15. Id.
  16. See Crotty, Epstein, and Kelly, supra note 1 (Economists Crotty, Epstein, and Kelly suggest that the question can be answered by focusing on the impact of foreign direct investment (FDI) and multinational corporations (MNCs) "the overall national and international context within which capital mobility occurs." This impact must be gauged by measuring "the state of aggregate demand (AD), the nature of the domestic and international rules of the game and institutions governing investment, and the nature of domestic and international competition." As the reader can plainly see, the proposed framework for answering the question is complex for the uninitiated, and are outside of the scope of the essay.).

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