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Labour Organization

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Labour Market Trends and Globalization's Impact on Them

 

Employment

Unemployment in developed and transition countries

Compared to the early 1970s, unemployment rates are now higher in almost all developed countries. In the 1990s, overall unemployment in OECD (Organisation for Economic Co-operation and Development) countries rose from its already unacceptably high level at the end of the previous decade. The number of unemployed persons was 36 million.

Especially grim have been developments in Europe. In OECD countries in North America and Oceania, unemployment has declined much more than in Europe in recent years. In Japan, the unemployment rate has traditionally been much lower than in other OECD countries, but it started to rise in 1992.

In 1996, unemployment in the OECD as a group rested at 7.5%, while it was 10.5% in European OECD countries. In Eastern Europe (see countries included) unemployment averaged 11.8%, while the European Union average was 11.3% in 1996. In these regions, unemployment was higher than the European average.

Within each region, some countries are doing much better than others on the unemployment front. Unemployment has declined in Ireland, the Netherlands, New Zealand and the United Kingdom during the 1990s. However, it has increased in Finland, France, Germany and Spain, among other countries. In this decade, the structural unemployment rate has increased most in Finland. (OECD, Employment Outlook 1996, Implementing the OECD Job Strategy and Economic Outlook, December 1997) Within Eastern Europe, the Baltic states had a better-than-average employment situation.

Eurostat estimated that 18 million people were unemployed in the EU in October 1997. But unemployment rates vary greatly within the European Union - from 20.8% in Spain to 3.7% in Luxembourg.

Since October 1996, unemployment has continued to fall in Denmark, Ireland, the Netherlands and Portugal – and, more fitfully, in Belgium. But little change was detectable in Spain and Finland, the worst-performing countries.

Unemployment seems to have stopped rising in France, Italy, Sweden, and Germany. In Luxembourg and Austria, the situation has remained stable. (See Eurostat tables on seasonally adjusted unemployment rates, October 1995-October 1997 and EU Unemployment Steady at 10.7 per cent in October)

Both in the United States and Canada, the unemployment rate has declined steadily since 1995, but unemployment has been much lower in the United States. In November 1997, the unemployment rate was 4.6% in the US and 9.0% in Canada. (See United States Bureau of Labour Statistics (BLS), Table on seasonally adjusted unemployment rates in nine countries, 1975- November 1997)

In developed countries, unemployment is higher among women than men, and is also higher among young people. In the EU in October 1997, 12.6% of women were unemployed, as were 21.1% of people under 25 years of age. In the United States, the unemployment rate for women was almost the same as that of men, but unemployment among the young was much higher than average, at 11.0%. (See Eurostat, Seasonally adjusted unemployment rates)

Despite the general rise in school attendance, the proportion of young people who were neither in school nor working increased between 1984 and 1996. This increase was higher than the proportional increase in unemployment in general.

In Spain, youth unemployment (39.4%) was almost twice as high as the average unemployment rate. In October 1997, unemployment rates for youth were also above 20% in Italy, France, Finland and Belgium. An exception to this general picture is Germany, where youth unemployment is below the average rate.

In the EU, the unemployment rate for youth has fallen in line with the overall unemployment rate. However, unemployment among young women is much higher than among young men, and the difference is larger than between women and men in general.

For youth unemployment, see also ILO, ILO Calls for Action against Youth Unemployment and Other Forms of Social Exclusion, and for unemployment in general ILO, Combating unemployment and exclusion, The Trade Union Advisory Committee (TUAC), Employment and Development in OECD Countries, TUAC, Trade Union Statement to the 1997 OECD Meeting of Labour Ministers and to the Kobe G8 Jobs Conference, TUAC, The OECD: Challenges and Strategic Objectives

Unemployment in APEC developing countries

Compared to most developed countries, which experienced a steep rise in unemployment in the early 1990s, the developing countries in APEC (the Asia-Pacific Economic Cooperation) have maintained very low unemployment on a consistent basis.

Only in Indonesia and Mexico has the unemployment rate risen in the 1990s. In Malaysia, Thailand and the Philippines, unemployment rates have declined, and in China, Hong Kong, Korea and Singapore they remained almost stable, in the 1.5-3% range. (See APEC, 1997 Economic Outlook)

Compared to unemployment in developed countries in 1996, unemployment rates in the developing countries of APEC are very low.

In most Asian countries of the APEC group - e.g. in China, Hong Kong, Malaysia, Korea, Thailand and Singapore - the unemployment rate was 3% or lower. None of the OECD countries reached such a low rate in 1996.

Unemployment was highest in the Philippines at 8.6%; however, even this rate was lower than in most EU countries in 1996.

According to ILO estimates, there are some 250 million children of ages 5-14 toiling in economic activity in developing countries. For close to one-half of them (some 120 million), this work is carried out on a full-time basis. For the remainder, it is combined with schooling or other non-economic activities. Among school children, up to one-third of the boys (33%) and more than two-fifths of the girls (42%) are engaged in economic activities on a part-time basis.

In absolute terms, Asia (excluding Japan), the world's most densely populated region, has the most child labour - approximately 61% of the world's total. About one in five children in Asia work (21%). (ILO, Statistics on Working Children and Hazardous Child Labour in Brief)

However some progress has been made in eradicating child labour. (ILO, Progress and Challenge in East and South-East Asia)

Jobs in Developed Countries

Among the ten major developed countries, the total number of jobs has increased considerably since 1970 only in the United States, Japan and Canada. However, developments were more moderate in Canada than in Japan or the US. (See BLS, Comparative Civilian Labor Force Statistics, On BLS tables, Germany refers to the Federal Republic of Germany before unification.)

Although Japan and the United States have the most advanced technological production systems, Japan managed to create 13.9 million new jobs in 1970-1996 (a 27% increase), and the United States 48 million new jobs (a 61% increase). Meanwhile, Germany managed to create only 1.2 million new jobs (a 4.5% increase).

Developed countries have lost jobs in manufacturing since 1970. In 1970, manufacturing employed 69.7 million people in the ten major developed economies. In 1992, the last year when data on all ten countries is available, only 63.7 million had their employment in this sector. The biggest decrease was in the United Kingdom, from 8.5 million in 1970 to 4.9 million in 1992.

Not even the United States or Japan have managed to increase manufacturing employment on a large scale. In the US, manufacturing jobs increased from 20.1 million in 1992 to 20.5 million in 1996. In Japan, the increase was from 13.8 million in 1970 to 15.7 in 1992, followed by a decrease to 14.4 million in 1996.

In the service sector, meanwhile, employment has grown. In these ten countries, services employed 127.4 million in 1970 and 216 million in 1994 (the last year for which data on all ten countries are available). The largest service-sector employment gains, however, are not in those countries that experienced the biggest losses in manufacturing jobs. Both in percentage and absolute terms, the increase in service employment has been the largest in United States and Japan. (See BLS, Comparative Civilian Labor Force Statistics)

The third sector, agriculture, has experienced heavy job losses in all ten of these developed countries over the period 1970-1996. (See BLS, Comparative Civilian Labor Force Statistics.)

Consequently, the developed economies have become very dominated by the service sector.

Except in Canada, manufacturing accounted for 25% or more of all jobs in these countries in 1970. In the UK, 35% of all jobs were in manufacturing at that time, compared to only 19% in 1992. Similar developments, although not so radical, have taken place in almost all countries. By 1996, the proportion of manufacturing employment had dropped below 25% in all ten of these countries, except Germany.

Compared to other countries, the proportion of manufacturing has declined relatively little in Japan and Italy.

The proportion of employment in the service sector across these ten countries is more similar than employment in manufacturing. In 1996, services accounted for 70-74% of all jobs in all these countries, except Japan and Italy (no data on Germany available).

Developments in individual countries began to converge in the mid-1980s. Until then, there were considerable differences in the proportion of service-sector employment in the individual countries. In Italy, services accounted for 40% in 1970 and 61% in 1996. During this period, many workers moved from agriculture to services. (See BLS, Comparative Civilian Labor Force Statistics.) The pace of change from agriculture and manufacturing to services has also been very rapid in France and the United Kingdom. In general, the change has been more rapid in Europe than in the United States, Canada or Japan.

Globalization and employment

Unemployment and the loss of jobs in developed countries is quite commonly associated with globalization. The main arguments that the impact of globalization is negative are as follows:

These arguments can be found f.ex. in International Federation of Chemical, Energy, Mining and Factory Workers (ICEM), Globalization and Social Policy. See also ICFTU: The Global Market: Trade Unionism's Greatest Challenge.

An opposing view, set forth for example by the IMF and the OECD, is that globalization (e.g. through foreign investment, trade, new technology and liberalization) contributes to growth, which is the key to employment. Unemployment, on the other hand, is mainly due to governments' failure to adopt sound macroeconomic and labour market policies. (See IMF, The Impact of Globalization on Workers and Their Trade Unions (http://www.imf.org) and OECD, Implementing the OECD Job Strategy)

Globalization and employment was discussed comprehensively in the ILO Enterprise Forum. See f.ex., Enterprises and Jobs: Jobs in the Network Enterprise, Implication for enterprises and the ILO of a changing world economy, A business perspective on social change and human values at a time of global competition , Social initiatives by enterprises and Enterprise and jobs: Increased productivity and competitiveness.

The European Union has produced a number of reports on employment and job creation. These reports focus on what has to be done in order to create more jobs - not on what went wrong. Priorities are flexibility, mobility and training. (See EU, Living and Working in the Information Society: People First, An Employment Agenda for the Year 2000 , Extraordinary European Council Meeting on Employment, November 1997, The Social and Labour Market Dimension of the Information Society , Information Society Forum Theme Paper)

The Sixth ILO Survey on the Effect Given to the Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy posed the following questions on employment:

Most of the respondents considered the impact of multinationals on employment positive. Answers to these questions on employment were received from 65 countries. (See the answers of each respondent)

Employment and international instruments for workers' rights

Unemployment poses a major challenge to social security. Some regulative international social security instruments exist (See Chapter: International Labour Law and ILO Convention on Maintenance of Social Security Rights). In general, however, the international labour instruments focus on the "right to work" and the rights of employed people.

The content, organization and financing of unemployment benefit schemes are of national concern. In the EU as well, the international regulative dimension is restricted to EU responsibility for the coordination of national social security schemes in cases where citizens exercise their rights of free movement within the Union.

The EU has produced a number of reports on modernizing the social security systems of its member states. Currently, the systems are very different. These reports conclude that social protection systems need to be adapted to the following changes in social and economic life:

In its communication "Modernizing and improving social protection in the European Union", the Commission recommends, among other things: integrating and updating tax and benefit systems with a view to increasing employment incentives; developing unemployment compensation schemes into employability insurance; narrowing the gap between total salary costs and net take-home pay for low-skill workers; increasing employment incentives and opportunities for older workers; and activating integration policies associated with minimum social benefits. (See also EU, Working on European Social Policy : A report on the Social Policy Forum and Eurostat data on social security and unemployment benefit costs in member states)

Child labour is forbidden by a number of international instruments (See Chapters: International Labour Law, Codes of Conduct for Multinationals and Corporate Codes of Conduct).However, by October 1997 the ILO Minimum Age Convention had still not been ratified by a great many countries. (For ratification and obstacles to ratification, see ILO, Standard-setting policy: Ratification and promotion of fundamental ILO Conventions)

Forms of work

Flexible forms of work in developed countries

The number and proportion of full-time employees with contracts of indeterminate duration has decreased constantly in developed countries since the mid-1980s. As labour markets have become more flexible, the forms of work have multiplied. Part-time workers and workers with fixed-term contracts (who are the first loops in the flexibility chain), turn into on-call and self-employed workers. International statistics on atypical forms of work do not keep up with this development. At the OECD level, there are statistics on part-time work only. The EU compiles statistics on part-time, fixed-term and self-employed workers. The United States Bureau of Labour Statistics has figures on on-call workers as well.

The proportion of part-time employment varies greatly, from highs in the Netherlands (36.5%), Iceland (27.9%), Switzerland (27.4%) and Norway (26.5%) to lows in Hungary (4.9%), Greece (5%), the Czech Republic (5.9%) and Italy (6.6%).

Common to almost all OECD countries - Turkey being the only exception - is that part-timers are mainly women. Women's share in part-time work is the largest in Luxembourg (88%), Belgium (87.4%), the United Kingdom (86%) and Austria (84.2%). (OECD, Employment Outlook 1997.)

In the EU, 32% of total female employment is part-time, compared with 5% for men. The Netherlands is far ahead, with 69% of the female workforce in part-time employment. In Belgium, Germany and Luxembourg, the rate of part-time employment of women is some 10 times that of men. Of the 124.8 million people with a full-time job in the EU, only one-third were women.

EU part-time workers usually work less than 31 hours a week, but 10% work more than that. In Denmark, the Netherlands and the UK, around a quarter of part-time jobs are under 11 hours per week. In these countries, plus Sweden, France and Portugal, 10% of part-time workers have a second job.

In the EU, part-time work is highest in distribution (20% of total employment), hotels and restaurants (25%) and other services (29%). Over half of those employed in other services in the Netherlands work part time, nearly one-half in Sweden and the UK, and about one-third in Denmark.

In countries for which the EU has 1983 figures, part-time work has increased almost without exception. It has decreased only in Denmark.

The recent improvement in employment figures has been largely due to an increase in the number of part-time jobs. The employment rate in full-time equivalent jobs has hardly moved over the past two years (55.2% in 1996, from 55.1% in 1994). The improvement recorded for women was limited (42.2% vs. 41.8%), while the fall continued for men (68.4% vs. 68.8%).

For more on part-time work in the EU, see the Eurostat data on the European labour force survey 1996, and table on part-time work in 1996 and European Commission, Joint Employment Report 1997.

In 1996, 14.1% of EU employees had a "contract of limited duration". This ranged from 2.6% in Luxembourg to 33.6% in Spain.

Fixed-term contracts are more typical of young people. The EU figure for those under 25 years of age was 35.1% (75.4% in Spain). Unlike part-time work, however, fixed-term work is more common among male workers and manufacturing workers.

Fixed-term contracts are most common in Spain and Finland, where part-time work is comparatively less significant. Greece and France are also countries with a larger proportion of fixed-term than part-time contracts. On the other hand, both of these atypical forms of work are used extensively in the Netherlands. Full-time employees with contracts of indeterminate duration accounted for 58% of all employees in 1996. In 1990, the figure was 65%. (See Eurostat table on fixed-term contracts)

In most countries where EU data are available, the proportion of fixed-term contracts increased in the 1980s, but has decreased in the 1990s. Most probably this is because many fixed-term employees have become self-employed workers, i.e. they have begun working as independent contractors. In 1996, the proportion of the self-employed was already greater than the proportion of fixed-term employees.

The 1996 European Labour Force Survey indicated that 149.3 million people in the EU had a job. 24.3 million of those with jobs said they worked part-time. Of the 124.8 million in full-time work, 102.6 million were employees (91.5 million with a permanent job, 10.4 million with a temporary one), 19.9 million were self-employed, and 2.3 million were family workers. Women accounted for little more than one-fifth of the self-employed, but two-thirds of family workers.

The United States Bureau of Labor Statistics (BLS) does not compile statistics on fixed-term contracts. In October 1997, wage and salaried workers numbered 119.5 million (92% of total employment), self-employed workers 10.4 million (8%), and unpaid family workers 0.2 million (less than 1%). Part-time workers numbered 22.0 million (18% of all wage and salaried workers). (See Bureau of Labour Statistics, Selected Employment Indicators)

In February 1997, 6.7% of workers (8.5 million) were identified as independent contractors, 1.6% (2.0 million) as on-call workers, 1.0% (1.3 million) worked for temporary help agencies, and 0.6% (800,000) worked for contract firms. On-call workers are called to work only as needed, although they can be scheduled to work for several days or weeks in a row. Workers with temporary help agencies are paid by the agencies, whether or not their job is in reality temporary. Workers provided by contract firms are employed by companies that provide them or their services to others under contract. They are usually assigned to only one customer and usually work at the customer's worksite.

These alternative employment arrangements were identified separately from the contingency of a job. Contingent workers are those who do not have an implicit or explicit contract for ongoing employment. The proportion of employees in alternative arrangements who considered their employment to be contingent ranged from less than 4% for independent contractors, to about 57% for workers at temporary help agencies. (For more information, see United States Bureau of Labour Statistics Survey on Contingent and Alternative Employment Arrangements)

Globalization and flexible forms of work

Globalization did not give birth to flexible forms of work (See Chapter Globalization) - but it contributes to their development through the international network enterprise, which was created by globalization.

The network enterprise is a unit of business operations made up of different companies or segments of companies, as well as of consultants and temporary workers attached to specific projects. Large companies rely on vast networks of suppliers, whose quality and responsibility are critical for the success of the larger company. In some cases, such as in Japan or the Republic of Korea, suppliers are generally loyal to one company. In other cases, such as in the United States, Western Europe, "Taiwan, China", China or Hong Kong, suppliers have alternative connections to different clients. The complexity of the new business system does not stop there. Large companies, particularly multinational companies, constantly set up "strategic alliances" - that is, agreements with other companies, sometimes competitors, in specific processes or product lines. These strategic alliances are limited in space (they may be country-specific), time (they are valid for a certain period only), and purpose (they may for example cover technology, but not markets - or vice versa). Since every major company uses this strategy, and all constantly change their purpose, the actual behaviour of companies is organized around a network of variable geometry.

The development of the network enterprise favours a diversity of contractual arrangements between capital and labour. The number of full­time, career-seeking, long-term salaried employees is decreasing, and the system is evolving towards a very diverse pool of workers that become part-timers, on-call workers, temporary workers, self-employed, or high-turnover workers. In the information age, a fundamental new trend in labour relations seems to be the individualization of labour conditions and labour contracts, reversing the trend towards the socialization of labour that characterized the industrial society. (Castells, Enterprises and Jobs: Jobs in the Network Enterprise. On the characteristics of each alternative worker group, see, Survey on Contingent and Alternative Employment Arrangements)

Flexible Forms of work and international instruments for workers' rights

There are quite many international instrument for regulating the use of atypical forms of work (See, ILO Conventions on Home Work, Part-Time Work and Private Employment Agencies and European Framework Agreement on Part-Time Work concluded between UNICE, ETUC and CEEP)

However, none of these instruments - nor any international instruments on working time - cover the self-employed. The EU's Working Time Directive also excludes self-employed workers. (See, EU, White Paper on Sectors and Activities Excluded from the Working Time Directive) Actually, the entire concept of the self-employed worker remains ambiguous, and one of the reasons for the popularity of self-employment is that by hiring self-employed workers, employers are exempted from most provisions of labour legislation, especially in the field of working time legislation.

Like unemployment, flexible forms of work pose a challenge to social security arrangements. Flexible forms of work lack continuity. Spans of work and unemployment alternate, as do weekly working hours. Defining the periods during which flex-workers are entitled to various benefits (e.g. to unemployment benefits), is becoming more difficult as the forms or work continue to multiply and definitions of various forms of work become blurred. Home workers resemble the self-employed, the self-employed resemble on-call workers, employees resemble entrepreneurs, etc.

Compensation costs and earnings

Definitions

Hourly compensation is defined as

Hourly direct pay includes all payments made directly to the worker, before payroll deductions of any kind, consisting of

(a) pay for time worked (basic time and piece rates plus overtime premiums, shift differentials, other premiums and bonuses paid regularly each pay period, and cost-of-living adjustments) and

(b) other direct pay (pay for time not worked (vacations, holidays, and other leave, except sick leave), seasonal or irregular bonuses and other special payments, selected social allowances, and the cost of payments in kind). Social insurance expenditures and other labor taxes includes

(c) employer expenditures for legally required insurance programs and contractual and private benefit plans (retirement and disability pensions, health insurance, income guarantee insurance and sick leave, life and accident insurance, occupational injury and illness compensation, unemployment insurance, and family allowances) and, for some countries,

(d) other labor taxes (other taxes on payrolls or employment (or reductions to reflect subsidies), even if they do not finance programs that directly benefit workers, because such taxes are regarded as labor costs). For consistency, compensation is measured on an hours-worked basis for every country. (For a more detailed definition, see United States Bureau of Labour Statistics, International Comparison of Hourly Compensation Costs for Production Workers in Manufacturing)

Hourly compensation costs in developed and developing countries

Total manufacturing

Hourly compensation costs for production workers in manufacturing have increased much more in Europe and Japan than in the United States and the Asian newly industrialized economies (NIEs) since 1975. In Mexico, the trend has been declining.

It is notable that in the United States, the curve is much more steady than in other developed countries.

Within Europe, differences between individual countries are remarkable. In Germany, hourly costs were $6.35 in 1975 and $31.87 in 1996, whereas the respective figures for the United Kingdom were $3.37 and $14.90.

In the late 1980s, compensation costs within Asia started to rise and diverge. In Korea, for example, these costs increased more rapidly than in "Taiwan, China". (Developments in 20 other countries since 1975 are included in the BLS table)

However, differences between developed and developing countries have only increased since 1975. In 1996, hourly compensation costs were half a dollar in Sri Lanka, and $31.87 in Germany. Within the European Union, the compensation level is lowest in Portugal. There is no great difference between Spain and the United Kingdom. The Northern European countries also form a very homogenous group.

In Singapore, Korea and "Taiwan, China", hourly compensation costs are higher than in Portugal. They surpassed Portugal in 1987.

Within North America, compensation costs in the United States and Canada are nearly identical.

Structural differences in manufacturing partially explain the huge differences in compensation costs. The BLS has produced tables on compensation costs for production workers in 40 manufacturing industries. Each table includes data on 31 countries (See, BLS, Hourly Compensation Costs for Production Workers in different industries, 1975 and 1984-1994)

Textile, apparel and leather

Trends in textiles, apparel and leather products deviate notably from the trends in manufacturing industries in general.

Interestingly, compensation costs in the US textile, apparel and leather industry have come closer to compensation costs in developing countries over the period 1984-1994. Over the years, costs in the United States have remained very stable compared to those in other countries. A similar curve can be found only in Mexico.

In many important European textile, apparel and leather producing countries, compensation costs have dropped. Examples are Italy, the United Kingdom and Sweden; in the latter, hourly costs in this industry were as high as in manufacturing in the early 1990s. No drop was visible in developing countries.

Paper and allied products

Unlike the textile, apparel and leather goods industry, the paper and related products industry is technology-intensive and male-dominated. In all countries, this industry's compensation levels are higher.

Compared to other countries, the curve of the United States is again the most stable, but in this industry the gap between the US and developing countries has changed little over the years.

Except for Japan, the shape of the curves in this industry is quite similar to that in textiles, apparel and leather goods. Japanese compensation costs have approached German compensation costs.

Hourly direct pay in developed and developing countries

Hourly direct pay includes all payments made directly to the worker, before payroll deductions of any kind. In other words, employer social insurance expenditures and other labor taxes are excluded. (See the definition)

Compared to hourly compensation costs, hourly direct pay is naturally much lower in developed countries, but the shapes of the curves are almost similar in each country.

In the Asian NIEs, the two curves are not as similar. In 1986, the direct pay curve turned up much more sharply than the compensation costs curve. In other words, the share of direct pay in total compensation costs increased. (See BLS, International Comparison of Hourly Compensation Costs for Production Workers in Manufacturing)

Total direct pay as a percentage of total hourly compensation costs does not vary between developed and developing countries as much as is often suggested. In Hong Kong, the share of direct pay is 96.8%. But it is also high also in Denmark (94.2%) and in New Zealand (94%). In the United Kingdom, the share is higher than in Sri Lanka.

[The reason why Denmark is different from the rest of EU, is that it finances its social protection system through taxes (over 75 per cent of receipts), whereas in other countries, contributions by employees and employers are the main source of finance for social protection. (Eurostat, Social Protection in the EU. See also Eurostat, Labour Cost in EU Countries that includes tables on social contributions by employees and employers as per cent of total social protection receipts and GDP)]

Unlike total compensation costs, the share of direct pay is country specific. Even within regions such as Europe, Northern Europe, Central Europe, Southern Europe, North America and Asia, there is great variation between individual countries. The share is 71% in Sweden and 83% in Norway - it is 87% in Luxembourg and 72% in Austria.

In countries where unemployment is high (e.g. in Spain, Finland, Italy and France), the share of direct pay is low. But it is low also in Austria and Belgium, where unemployment is low by European standards.

Among developing countries, the favourable development of East Asia is an exception. While wages have soared in East Asia, they have grown slowly or fallen elsewhere. (See World Bank, Workers in an Integrated World)

Pay for time worked in developed countries

Unfortunately, the BLS has no statistics on pay for time worked in developing countries. Pay for time worked includes only basic time and piece rates, plus overtime premiums, shift differentials, other regularly paid premiums and bonuses in each pay period, and cost-of-living adjustments (COLAs). Pay for time worked is measured on an hours-worked basis for each country.

In Italy, pay for time worked as a percentage of total hourly compensation costs is less than 50%. The share of pay for time worked varies more (by 49%-81%) than the share of direct pay (69%-94%) among developed countries.

The exceptions to these tendencies in Europe are Denmark, the United Kingdom, Ireland, Luxembourg and Norway. In all these countries, the share of pay for time worked is over 70%.

Surprisingly, the share is much lower in Japan (59%). In Japan, the share of other direct pay besides pay for time worked is by far the highest among all countries (27%). Japanese people are not well known for their long leaves. So, other direct pay must be composed more of bonuses than in other countries. (See, BLS table on other direct pay)

See also BLS tables on Social insurance expenditures and other labor taxes. BLS has analyzed the compensation costs trends during the period 1975-1995 in its report International Comparisons of Hourly Compensation Costs for Production Workers in Manufacturing. There is also a brief summary of trends on the period 1975-1996. However, the most comprehensive tables can be found in the 1997 publication.

Earnings of different worker groups in developed countries

Women and Men

In all developed countries, women earn less than men in all job categories.

In the EU, women managers are the worst off compared with men. A survey that covered four countries - Spain, France, the United Kingdom and Sweden - revealed that in the United Kingdom, women managers receive two-thirds the pay of their male counterparts. Even in Sweden, which is nearest to equality, this proportion is only 80%.

Women and men in lower-paid non-manual jobs - clerks, shop assistants, etc. - are closest to being equal in these four countries.

The report also detects a noticeable trend, remarkably consistent in all four countries, that women in older age groups fall even further short of the average earnings of their male counterparts. (Eurostat, Still a Big Pay Gap between Women and Men)

Education

The wage gap between more and less educated people has widened in recent years.

Although men still earn better than women in all education categories, the trend for men with less than a secondary education is worse than for women with the same education level. In the United States, real hourly wages of men with less than secondary education have been declining since the beginning of the 1980s. If this trend continues, wage equality between poorly educated men and women will become reality very soon. However, as in the EU, the wage gap between well-educated men and women has not narrowed. (Economic Policy Institute, Real Hourly Wages by Education)

Alternative forms of work

Part-time workers earn much less than full-time workers, even on an hourly basis: 85% of the full-time average in Sweden, 71% in France, 69% in Spain and 60% in the UK. Most part-timers are in low-paid jobs, and most are women - 67% in Spain, 68% in France, 69% in Sweden and 81% in the UK. (Eurostat, Still a Big Pay Gap between Women and Men)

Contingent full-time workers earn less than non-contingent full-time workers. Contingent workers are those who do not have an implicit or explicit contract for ongoing employment, and who do not expect their jobs to last. Wage and salaried workers are included, even if they already held the job for more than a year and expect to hold the job for at least an additional year. Self-employed persons and independent contractors are included, if they expect their employment to last for an additional year or less, and if they had been self-employed or independent contractors for one year or less. (United States Bureau of Labour Statistics Survey on Contingent and Alternative Employment Arrangements)
Full-time workers provided by contract firms - both contingent and non-contingent - earn best ($610 median weekly earnings). Median weekly earnings for workers with traditional working arrangements were $510 - exactly the same as for full-time non-contingent workers.

Workers provided by temporary help agencies earn much less than workers provided by contract firms.

Another BLS survey "A Profile of the Working Poor" shows that the percentage of working men living below the poverty level is lower than the percentage of women. But race and level of education distinguish the poor from the rest of the society more than sex does.

Compensation costs and globalization

Compensation costs are the cornerstone of arguments about the negative impact of globalization on workers' lives. According to the ICEM:

"Multinationals' control over international trade and investment has enabled them to use threats to intensify inter-government and inter-worker competition and to weaken attempts at improving working conditions and benefits. There can be no doubt that freer trade means greater dislocation and displacement of workers in high-waged countries. The investment by multinational corporations in the South, or developing countries, obviously has lower labour costs as a pull factor in certain sectors (such as textiles or electronic assembly, for example) but within the framework of globalization ideology this factor has been exaggerated. Market access, tax incentives, investment stability, and environmental and social protection regimes are also of considerable importance." (ICEM, Globalization and Social Policy)

Trade union organizations strongly criticize special economic zones, claiming they are characterized by low wages and abuse of workers. In an ICFTU report, export processing zones are called concentration camps. In addition, the ICFTU argues that the "Asian miracle" was largely built on the rapid growth of manufacturing industries, mainly light-assembly operations producing for export, and a steady increase in agricultural productivity. According to the ICFTU, most of the region's proliferating export processing zones have been deliberately created to prevent union organization as an incentive to investors. Foreign investors have been able to take advantage of the low pay and manual dexterity of workers. These industries have generated unprecedented employment opportunities for women, which are an escape route from rural poverty. However, working conditions are frequently long, arduous and dangerous. Few of the women keep these low-paid jobs much beyond their twenties, because employers fire those who marry and start a family. (ICFTU: The Global Market: Trade Unionism's Greatest Challenge)

For trade union views of special economic zones, see also ICFTU, Behind the Wire: Anti-union repression in the export processing zones, and workers' and trade-unions experiences in export processing zones in Hong Kong, Indonesia, Malaysia, Philippines, South Korea, Sri Lanka, "Taiwan, China", Thailand and Vietnam.

Among developed countries, compensation costs in manufacturing have risen at comparatively modest rates in the United States and the Asian NIEs, but sharply in Japan and Europe since the middle of the 1980s, when globalization accelerated (see chapters on Globalization, Multinationals, Investment Funds, and National Framework). In textiles, apparel and leather goods, the level of compensation costs in the Asian NIEs has risen more than in the United States, and consequently is approaching the US level. The gap between Asian NIEs and Japan and Europe has become wider. In direct pay, the trends are similar.

However, the data also show striking differences between the levels of compensation costs in developed and developing countries. These differences raise an important question: How are labour and businesses in the industrialized countries withstanding competition from producers with low labour costs in the age of trade liberalization? For example, why has only a single country in Sub-Saharan Africa - Mauritius - expanded its manufactured exports at a rapid rate, even though wages in Sub-Saharan Africa are among the lowest in the world? And even though the Lomé agreement allows African exporters access to the European market?

One reason is that labour is not "cheap" where productivity is very low - and this is, unfortunately, the case in the vast majority of developing countries. But another major reason is that many (or perhaps most) exports from developing countries are an integral part of corporate strategies in industrialized countries, in so-called production sharing between industrial and developing countries within vertically-integrated international manufacturing industries. Much of the trade generated by regional agreements, such as in NAFTA and in special European Community tariff schedules, consists of production sharing. There are no precise statistics about production sharing, but in the early 1990s at least $800 billion of about $2.7 trillion in total world trade in manufactures (approximately 30%) consisted of some form of global production-sharing operations. Much of this was among industrial countries, but a considerable amount was between industrial and developing countries. Production sharing is one of the main reasons why foreign direct investment has been pouring into East Asia and other low-wage areas. (IFC, Emerging Economies: How Long Will The Low-Wage Advantage Last?)

According to the Sixth Survey on the Effect Given to the Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy, the wages paid by multinationals in developing countries are comparable or, in most cases, better than average wages or wages paid by local companies. (See the answers of the respondents) The survey also dealt with EPZs. All respondents said that national labour laws apply throughout the country, including EPZs, but many trade union representatives pointed out that they are not applied the same way in EPZs, and that multinationals pay less than is their ability to pay. (See the answers of the respondents)

Wages and international instruments for workers' rights

Almost all international labour instruments forbid discrimination. Men and women, and people of different races and national origin, should be treated equally. (See chapters on International Labour Law, Codes of Conduct for Multinationals, and Corporate Codes of Conduct.)

However, the data show that wage discrimination is common in every country. Women, black people and people of Hispanic origin are paid less, even if they have the same level of education and the same job status as men and white people.

There is no evidence that white men are more skilful at their jobs than rest of the population. Statistics show that the growth of firms owned by women continues to outpace overall business growth, and employment in women-owned firms with 100 or more employees has expanded six times faster than the average for the economy as a whole. Women-owned firms are also more likely to remain in business than the average firm. (For further details, see ILO, Enterprise and jobs: Job generation by micro, small and medium sized enterprises)

Migration

The net number of migrants in North America and Europe was larger than in other regions over the period 1990-1995. But the immigration rate is highest in Oceania. Most immigrants come from Asia, but the emigration rate is highest in Latin America and the Caribbean (UNDP data).

According to the Population Division of the United Nations Department for Economic and Social Information and Policy Analysis, over the entire period 1965-1990, the annual rate of growth of migrant stock was 1.9% at the world level. However, estimates of the rate of growth for intermediate periods indicate that the pace of growth of the world's migrant stock has increased, from 1.2% per year in 1965-1975 to 2.2% in 1975-1985, and finally reaching 2.6% over the period 1985-1990.

The experience of developed and developing countries regarding immigration contrasts markedly. The annual growth rate of the international migrant stock in developed countries increased only moderately, passing from an annual 2.3% in 1965-1975 to 2.4% in 1985-1990. However, the total number of migrants in the developing countries increased ninefold over the same time frame, rising from 0.3% to 2.7%. (E/CN.9/1997/9: World demographic trends: Report of the Secretary General. See also migration tables on the countries in Africa, Asia, Europe, Latin America and Caribbean, North America and Oceania in 1990)

International migration strongly influences overall population change in some countries. In 1996, more persons were added to the population through net international migration than through natural increase in Canada, Croatia, Germany, Italy, Eritrea, Kuwait and Rwanda (United States Bureau of Census data).

According to the International Organization for Migration (IOM), push factors of emigration have been reinforced since the 1980s, in both developing countries and the former socialist countries. (International Organization for Migration (IOM), Foreign Direct Investment, Trade and Aid - An Alternative to Migration)

The United Nations Commission on Population and Development estimated in its 1997 Report on World Population Monitoring, that in the European Union, the non-EU foreign labour population has risen steeply since 1988. Workers have come mostly from the former Yugoslavia and the Eastern European states, Turkey and the Maghreb. In 1993, there were 2.5 million citizens of Central and Eastern Europe in European Union countries.

In the Czech Republic and Slovakia, political changes have led to a decline in the number of foreign workers. The former Czechoslovakia imported foreign workers from Vietnam, Angola, Mongolia and Poland. The numbers of these workers hovered around 100,000 until 1990. The number of foreign workers had declined to less than 15,000 in mid-1992. In Hungary, where it was estimated that there were some 50,000 illegal workers in 1992, some 50,000 work permits have been issued annually for jobs that are not being filled by nationals. In the Russian Federation, it is estimated that between 300,000 and 500,000 foreigners, mainly from the former Soviet republics and China, are either employed illegally or are in transit to other destinations.

In Australia, Canada and the United States, policy changes have led to the opening of more doors to people whose skills or know-how are considered in short supply in the labour market and to those who can contribute to the development of science and technology. These include professionals and persons of exceptional ability, and those able to bring in capital.

In the United States, the Immigration Act of 1990 led to a near-tripling of the share of employment-based visas issued each year, from 54,000 to 140,000. (See the selection of nonimmigrant and immigrant visas in United States) Nor does Canada's immigration policy, as reflected in past levels of intake of temporary workers and labour-force immigrants, suggest a trend towards growing restrictiveness. From a level of 115,500 in 1981, the aggregate number of temporary and immigrant workers admitted into the country rose to 347,800 in 1990. (The United Nations Commission on Population and Development, 1997 Report on World Population Monitoring.)

According to the ILO, the number of non-immigrant work visas in the United States grew by 4% annually, from 340,000 in 1990 to 413,000 in 1995. If business workers providing temporary services for their country or company were included in the migration figures, the number of working, non-immigrant arrivals would have climbed from 3 million to 3.6 million. In Canada, the number of temporary worker visas issued has quadrupled over the past decade. The average annual inflow of temporary workers into Canada was two and one-half times larger than the number of permanent immigrants, with 234,000 temporary workers compared to 114,000 immigrant workers. Much the same pattern prevails in Australia.

Throughout the Pacific Rim, which is a relatively new destination for migrants, there are hardly any permanent migration-for-work schemes. In the early 1990s, Japan established an elaborate system of more temporary openings for highly qualified foreigners and persons of Japanese descent, plus training-with-employment schemes for people from less developed countries in the region. (ILO, Private Employment Agencies Send Millions Overseas to Work. See also: ILO, Report of the Tripartite Meeting of Experts on Future ILO Activities in the Field of Migration)

Migration and globalization

As the United Nations Commission on Population and Development says in its report, despite the growing importance of international migration, the statistics needed to characterize migration flows and monitor changes over time are often lacking. There is not enough data to document the link between migration and globalization, but there are a number of suggestions. Two main ideas are that globalization decreases migration, and that globalization increases migration of well-educated people from developing countries to developed countries.

When the monitoring of views and perceptions towards migration first began in 1976, international migration was a topic of secondary concern for many governments. Only a minority of governments had explicit policies with respect to intervening in migration levels. Many more governments now consider migration and its consequences to be significant for their countries. By 1995, 40% of countries had developed policies to raise or lower immigration, and 24% to raise or lower emigration. In 1976, only 6% of governments viewed immigration as too high, but this percentage rose to 13% in 1980 and reached 19% in 1983. Governments' perceptions of both immigration and emigration levels have shown remarkably little change since 1983.

On the other hand, the number of governments adopting measures to control or reduce these flows kept growing until recently. The percentage of countries with policies to lower immigration steadily increased, from 6% in 1976 to 19% in 1986 - it then jumped to 32% by 1989 and reached 35% by 1993. In 1995, the percentage stood at 33%. A reversal occurred after 1989 with respect to emigration policies. The percentage of countries seeking to lower emigration, which had increased from 13% to 25% between 1976 and 1989, fell to 20% in 1993. Developed countries showed the strongest inclination towards restricting immigration, but developing countries are following the same trend. Currently, only a small number of countries admit a significant number of immigrants for permanent settlement - chiefly Australia, Canada, New Zealand and the United States. Policies for permanent settlement in these countries increasingly put a greater emphasis on migrant skills. (United Nations Commission on Population and Development, Report on World Population Monitoring 1997)

The UNCTAD/IOM study Foreign Direct Investment, Trade and Aid - An Alternative to Migration finds that increased flows of FDI and trade, as well as more effective use of development aid, impact directly and indirectly on migration. Foreign direct investment contributes directly to a reduction of migration by creating jobs in foreign affiliates and, through an array of forward and backward linkages, in the host economies as a whole. Indirectly, FDI contributes to economic development by bringing technology and organizational and managerial know-how, and by providing the investing country with access to markets. FDI can thus generate a sense of hope among potential migrants for a better economic future in countries with insufficient capital but abundant labour.

Such countries can also increase exports by making dynamic use of the comparative advantage of their low-cost labour. Trade tends to reduce migration through the creation of additional employment and accelerated economic growth in exporting countries. The increased tradability of skill- and knowledge-intensive services opens up new opportunities for high-wage jobs in the migrant-sending countries, and can be expected to induce skilled workers to stay in their home country.

A recent survey of IOM: Gains from Global Linkages: Trade in Services and Movements of Persons concludes that greater emphasis by developing countries on accelerated development of the modern services industries and their increased participation in world trade in services through freer temporary movement of service-providing persons hold enormous potential for creating new and better jobs and raising incomes in these countries.

If these linkages are used wisely, they could reduce pressures for disruptive migration and help in better management of international migration. This message is contained in a new study just released by the IOM in Geneva, prepared by the organization's senior consultant, Professor Bimal Ghosh. The study shows, by way of illustration, that developing countries could over time create between 6 and 30 million new jobs and an additional export income of $210 billion, by competing in the world market only for those skill- and knowledge-intensive services for which they have a comparative advantage and which can be delivered mainly through telecommunications systems.


Globalization and Workers' Rights

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