Worker's rights in times of economic crisis

06/11/2017

"Is it possible to maintain workers' rights in times of economic crisis? How to do this while maintaining competitiveness?"

Economic changes influence world of work and seriously affect employees. Globalization and technological changes on the one hand bring economic and human development to countries and societies, but at the same time lead to polarization in incomes and levels of well-being both between countries and inside countries.

Labour relations and workers’ rights are being under pressure in many countries, both in debates and in practice. The request for reform of labor legislation aimed at weakening of regulation and increasing the flexibility of labor relations is voiced by representatives of business quite regularly in recent decades. Arguments for deregulation, based on economic categories, technological change and international competition, and against it, based on a human approach, are widely debated. Competition for investments has already pushed for deregulation within countries, and influenced employment and social systems in general, resulting in change of employments relationship, social contracts, level of incomes and life.

The global financial and economic crises, which began in 2007 from the collapse of financial markets, became additional challenge for employment and labour relations. The need to overcome its negative economic consequences became an argument in the debate on deregulation.

In Europe, despite variations in countries, the different systems of industrial relations have weathered the economic and social impact of the crisis. Economic recession led to closing of enterprises and reduction of number of jobs, increased unemployment in many countries. Deterioration of labour market conditions included freezing of growth or reduction in wages for public sector workers and employees in other sectors, decreased incomes and living conditions of various groups. The influence varied in different countries depending on sector, age, region, but mainly influenced the poorest and unprotected groups. At the same time many states had to reduce social costs and abandoned some social obligations. In general, the crisis has resulted in less work, jobs cut, increased job insecurity and insecurity of well-being. Besides, it diminished workers’ choices, people had to choose atypical employment because there was no other employment.

The labour market reforms have been amongst the most widely spread policy intervention used by governments to address the negative effect of the crises.

Research show that the number of labour regulations reforms increased generally during the crisis in all countries. They have been more frequent in developed economies, in European Union member states they were particularly active. Reforms concerned the legislation of permanent employment contracts, other forms of employment, collective dismissals, working hours and collective bargaining. Developing economies were relatively more focused on collective bargaining institutions. The majority of the reforms have decreased existing levels of regulation, they rendered existing labour law provisions more flexible and loosened minimum standards. In some countries regimes of austerity were introduced. Often the voice of trade unions was not taken in consideration, and they were unable to prevent further deregulation.

The question is what consequences did these reforms help to overcome?

There is a large debate on the effect of the employment protection legislation (EPL) on labour market outcomes and on the relation between labour market institutions and employment performance. Lately (2013-2016) the conclusion was reached by the World Bank, IMF, the ILO and some researchers that even if the estimated effect of labour market regulations on macroeconomic outcomes exist, either positive or negative, in all cases it’s extremely modest. Some studies find that EPL has no effect on overall employment or unemployment rates; some – that it does have an effect on some specific categories of workers – such as youth and women. Analyses of labour market regulation reforms undertaken during the economic crises also showed negative short-term effects of deregulatory labour market reforms, while the medium to long-term effects cannot be explored now yet (Adacalitei, Morano 2015). In addition, these studies do not take into account the effects of the informal economy and informal labor relations, which are also strongly affected by the recession.

At the same time the effect of these reforms on the well-being of people, especially the poorest part, was negative. Workers were pushed into precarious employment, austerity measures introduced in some countries made working people, their families and pensioners pay for the crisis. The growth of the global inequality, we faced long before the crises, not only didn’t decrease, but even increased lately. Economic growth didn’t not translate into common prosperity.  

For long we lived in economic and political models in mind, which puts “compatitivity” of the enterprise and the “flexibility” of the work practice at the center of the stage. For states it was very comfortable to use this model, concentrated  on compatitivity and not on welfare of human being at work, to avoid costs for employer and to protect public funds. But more and more the understanding comes that aims of economic development per se may not be considered a value, when they don’t benefit public an individual welfare, and may even more be a threat not only to welfare, but also social, economic and political systems. More and more voices appear for finding a new paradigm, which would propose an alternative narratives and challenge mainstream discourses on the nature of the crisis and its impact on labour. Various concepts are suggested latterly, some of them – based on equality and solidarity, workplace democracy and socio-ecological sustainability, mobilization of movements, alliances and coalitions for transformation. In these concepts the decent work is not seen as an obstacle but as an alternative path to economic development. A serious question here is the rebalance of tax systems more equitably in favor of labour and mass consumption.

With this in mind we should find another reference points for thinking of future of labour relations. Thinking, in which the higher profit is not a priority, models of re-distribution are changed, and decent working conditions and well-being of workers is the aim, should become an alternative to current paradigm.

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