By Satur C. Ocampo
At Ground Level | The Philippine Star
“Improving the state of the world” is the avowed mission of the 43rd annual gathering of big capitalists this week at the World Economic Forum in Davos, Switzerland, based on a risk assessment (beneath the “euphoria” over global economic recovery) that the growing gap between rich and poor is the “single greatest worry for 2014.”
Taking that as a cue, the International New York Times recently presented a preview of “dueling Davos agendas”: 1) labor wanting to have “a word or two on its behalf at capitalism’s conclave,” and 2) big-money corporations hoping for a return to (the) “merger mania” of the pre-2009 global financial-economic crisis, that made certain conglomerates “too big to fail” as to impel the US government to bail them out with taxpayers’ money.
Let’s dwell more on the first agenda, since it’s more problematic than the second and it involves the lives and welfare of millions of workers and their families.
Philip Jennings, general secretary of UNI Global Union, reportedly representing 20 million service workers belonging to 900 unions in 150 countries, aims to deliver the message for labor. Rank-and-file workers have never been invited to the elitist WEF, but Jennings, maybe because he has a master’s degree from the London School of Economics, has been attending the annual gathering since 1995.
Speaking at a Davos panel discussion last year, he elicited an indifferent response among business executives when he averred, “The world needs a pay rise.” This year, Jennings hopes to get a better response because a top Walmart executive has agreed to face him in an invitation-only workshop on leadership and trust.
Also this year, the INYT conjectures, Jennings can invoke as support for labor the “rhetorical wind” coming from the following:
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• President Obama, who has vowed to help unions “to organize for a better deal for workers and better wages for the middle class” as one way of addressing the stalled social mobility in the US, which he called “the defining challenge of our time.”
• Pope Francis, who has questioned (indeed, debunked) the workability of “trickle-down economics.”
• John Cridland, head of the Confederation of British Industry (the UK’s biggest business organization), who has scolded companies for not paying their employees enough.
• Christine Lagarde, IMF managing director, who has remarked on the issue of inequality: “For too long, economists looked at growth alone, but not its distribution. We are now more keenly aware that a more balanced distribution of income leads to more sustained growth and greater economic stability.”
An IMF research report has affirmed that income distribution is increasingly skewed in favor of capital, with real wages stagnating or declining in most rich industrialized countries. At the first Davos gathering in 1971, it was estimated that corporate chief executives earned, on average, 20 times more than a typical employee. In 2014, CEOs earn several hundred times more than their average worker.
Such gaping income disparity, the IMF study notes, not only creates social problems but can drain economic demand, impede growth, and even lead to the next financial crisis.
A related Reuters report provides a partial but vital explanation for the rising unemployment and stagnating or declining wages. It says that during the prolonged financial-economic crisis business firms “clipped (operating) costs, wages and jobs and built up huge stockpiles of cash, rather than invest in new plants, staffs, updated technology, equipment or acquisitions.”
Thomson Reuters data show that companies around the world “held almost $7 trillion in cash and equivalents in their balance sheets at the end of 2013” — more than twice the level 10 years earlier.
Yet, despite the forecasts of faster economic recovery in 2014 among the rich nations led by the US – which should spur investments for expanding production and hiring of more workers — most firms prefer to hoard cash.
Why? The cash hoarding, Reuters points out, is “driven by corporate anxiety about exposure to soaring pension and health care costs as work forces age and government coffers shrink.”
Two other reports confirm this corporate anxiety – or corporate selfishness and insensitivity to the workers’ welfare.
One is the annual “Global Risk 2014” report prepared for the WEF, based on feedback from 700 industry leaders. It cites corporate exposure to “skyrocketing” health care costs and “buckling” domestic health care systems as “key threats in the years ahead.”
The other is a working paper for the US Federal Reserve Board, prepared by its staff economists, which examined the responses by 550 chief finance officers to the Duke University quarterly surveys in the past two years.
This corporate selfishness and insensitivity to their health and welfare is bad enough for the workers. Worse, it’s compounded by the grave setbacks inflicted on trade unionism — both in the rich and poor countries — by the neoliberal-globalization policy of “labor flexibilization” (contractualization and other anti-labor schemes) in the past three decades.
Except in the Nordic countries, union membership in most rich industrialized nations have plunged to 17%. The unions’ clout in collective bargaining has been greatly curbed, enfeebling them from preventing mass layoffs and forcing workers to accept much-reduced wages and benefits in exchange for retaining their jobs.
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E-mail: satur.ocampo@gmail.com
January 25, 2014
