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Workers have their say at Davos

21 January 2014 By UNI Global Union

DAVOS, Switzerland — Philip Jennings, a union leader from working-class Wales, has been coming to this Alpine ski resort for two decades to rub shoulders with the bosses of the world. His message has not changed.

You can read this article on the UNI website here

"The world needs a pay rise," Mr. Jennings said on a Davos panel last year. Some executives in the room rolled their eyes, others smiled politely. Did he want to go back to the 1970s, one journalist inquired. Did he understand basic economics? Mr. Jennings, who has a master's degree from the London School of Economics, is general secretary of UNI Global Union, which represents 20 million service workers in 150 countries. This year, as he again carries labor's message to Davos, he arrives with some rhetorical wind at his back.

President Obama last month called the stalling of social mobility "the defining challenge of our time" and vowed to help unions "to organize for a better deal for workers and better wages for the middle class."

Pope Francis has questioned the idea of trickle-down economics. Even John Cridland, the head of Britain's biggest business organization, the Confederation of British Industry, has scolded companies for not paying employees enough.

The sponsor of the Davos convocation, the World Economic Forum, in its annual risk assessment released last week, cited the growing gap between rich and poor as its single greatest worry for 2014.

And research by the International Monetary Fund suggests that the income disparity in some of the world's richest countries is not only creating social problems but could sap economic demand, impede growth and even lead to the next financial crisis.

"For too long, economists looked at growth alone, but not its distribution," Christine Lagarde, the fund's managing director, wrote in an email seeking comment on the cost of inequality. "We are now more keenly aware that a more balanced distribution of income leads to more sustained growth and greater economic stability."

The balance has been getting increasingly skewed. Real wages have stagnated or declined in recent years in most rich industrialized countries, even where productivity has grown. The chief executives who assembled at the first Davos meeting in 1971 would have earned an average of about 20 times what a typical employee made, according to data from the time. C.E.O.s today now make several hundred times more than their average worker.

Mr. Jennings, 60, says the only way to reduce that wage gap is for working people to again have a voice. His father, he said, was a toolmaker in a Rover car factory in Cardiff who with co-workers successfully went on strike for better pay and work conditions back in the 1950s and '60s. "We need to revisit some of the old struggles," he said. "We need to rediscover collective bargaining."

But unions, a powerful force in improving wages and social welfare programs in the West in the 20th century, are struggling in the 21st. Their members now compete with cheap labor in emerging economies and with ever smarter, faster and cheaper machines. With the exception of the Nordic countries, union membership in most rich industrialized nations has plummeted, to 17 percent across the member countries of the Organization of Economic Cooperation and Development.

Might inequality become a rallying cry? Many experts are skeptical.

"An increasingly globalized and technology-intensive system can't be counted on to bargain on behalf of labor" in Western countries, said Stephen Roach, a Yale economics professor and a former chairman of Morgan Stanley Asia.

Indeed, at a time when not just the number of unionized workers but work itself may be getting scarcer, unions need to change as radically as the economy around them, said Andrew McAfee, a professor at the Massachusetts Institute of Technology.

"All the old assumptions would have to go," said Mr. McAfee, co-author of "The Second Machine Age," a soon-to-be published book about technology's effect on employment. He will be attending Davos this week for the first time.

In coming years, he predicts, machines will be able to do many of today's jobs, whether as driverless taxis, buses and delivery vans, or as lettuce-picking robots. Long term, the only way to keep people employed and socially mobile is to create an education system that produces digital-age workers whose skills are complementary to machine intelligence, Mr. McAfee said.

Meanwhile, governments need to be open to new — and sometimes old — ideas of redistribution, he said. Maybe most important, he said, is an overhaul of a taxation system that in most countries still overwhelmingly relies on revenue from labor sources like income and payroll tax. "There is a very simple rule of economics," Mr. McAfee said. "If you want less of something, tax it. If you want more of something, subsidize it."

The Rover factory where Mr. Jennings's father worked was closed long ago. A supermarket opened in its place.

It is ever harder to organize workers, Mr. Jennings acknowledged. His group, UNI Global Union, is an umbrella for 900 unions representing various categories of service workers. Most of its growth has been in emerging economies, where worker activism is on the rise, echoing earlier stages in western development.

Mr. Jennings still remembers his first Davos cocktail party, in 1995. He huddled in a corner with a couple of other unionists, one from Germany's IG Metall and one from Britain's Trade Union Congress. So exotic was their presence amid the capitalist clamor, he recalled, that journalists would follow them even "into the gents."

Since then, about a dozen unionists have attended each year and have become more adept at "Davos speed-dating," he said. In 1999, he said, he got involved with the United Nations Global Compact Initiative, whose corporate members have committed to health, environment and labor standards.

UNI Global Union affiliates have organized workers subsidiaries of Western multinationals, like the retailing giant Walmart in countries like Brazil and South Africa.

But so far, the union has gotten nowhere with Walmart in the United States, Mr. Jennings said. Every time he has tried to corner a senior Walmart executive at Davos in recent years, he said, "they run the other way."

This year, though, he is scheduled to come face to face with Dan Bartlett, the company's top brand executive and former communications director for the White House under George W. Bush. Mr. Bartlett, Walmart confirmed, has agreed to participate with Mr. Jennings in an invitation-only workshop on leadership and trust.

"Here in Davos," Mr. Jennings said, "we do actually have a seat at the table, and they have to listen to us. At least once a year."

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