23 September 1993

Doc. 6932

1403-23/9/93-1-E

OPINION

on the activities of OECD in 1992

(Rapporteur: Mr GUSENBAUER,

Austria, Socialist Group)

1.       The Social, Health and Family Affairs Committee seeks, as customary, to focus its contribution on a particular aspect of preparations for the annual debate of the Assembly on activities of OECD, "enlarged" in its participation to include delegations on an equal footing from all OECD member countries.

2.       Having focused last year on the need to ease the social shocks of transition from "command" to "market" economies in the countries of eastern and central Europe, it is perhaps appropriate this year to address the question how we are dealing in the OECD area with unprecedented levels of unemployment. The report of the Committee on Economic Affairs and Development1 includes a lengthy and admirably comprehensive commentary on OECD's activities and initiatives and recommendations to governments on the question of unemployment.2 Instead of offering further comment, at the risk of repetition, the purpose of this contribution is to stimulate debate.

3.       In difficult international negotiations, it is important to have agreement that certain issues be kept separate from others. But in parliamentary discussion, we are here to share perceptions both of the issues and the relationships between them. As the draft resolution points out (paragraph 5), "...voices in favour of protectionist measures are being heard. It is important to resist..." Yes, but let us examine the rationale behind these voices. Part of it is the link which is now perceived between socially intolerable levels of unemployment and the international economic order.

4.       Unemployment is now at the record level of 36 million in the OECD area. A breakdown by region is given in the Appendix, reproduced from the OECD Secretary-General's interim report on the organisation's special study for its Ministerial Council. The situation is described in this study as a "threat to the social and political fabric" of our countries. In the Committee on Economic Affairs and Development's draft resolution (paragraph 4), it is described as "totally unacceptable".

5.       It is tempting for the Social, Health and Family Affairs Committee to enlarge on this theme of "total unacceptability". We should perhaps at least observe that work in our societies represents much more than a source of income. It establishes one's position (and the possibility of improving it), one's sense of purpose and identity (at least in part), many relationships and loyalties and the possibility of social and cultural integration. Its disappearance brings acute anxiety, depression, disillusion and at worst, family break-up, marginalisation and exclusion. Such processes are often psychologically and socially irreversible (at least, in the short to medium term). Moreover, they are at the root of some of the great evils which menace society: destitution, insecurity, drugs, racism and xenophobia, urban decay. The threat to the social fabric is undeniable. If, as conjectured in France last June, on the basis of then current trends and policies,3 the unemployed come to equal the employed in numbers by the year 2000, it represents per se a threat to the hitherto consensual assumptions which underlie political democracy.

6.       If the end of the recession is unlikely to lead to creation of job opportunities on anything like the scale of current demand, more radical thinking is required on what needs to be done — over and above the important measures recommended by OECD and covered in Rapporteur Hellstrom's memorandum. The obligation accepted by most states of securing the right to work (and identified with the policy objective of full employment) should probably be replaced by the concept of an obligation, on the part of the state and public authorities, to ensure opportunities for every citizen of being "fully active". Co-operation of the "social partners" will be essential, and there are already signs that some trade unions are starting to reason other than exclusively in terms of the purchasing power of their members.4 This is the object of the second of the three amendments which the Social, Health and Family Affairs Committee proposes to the draft resolution.

7.       The link between unemployment and the international economic order is perceived when multinational firms close down factories and re-locate them in low labour cost (and, usually, low social protection) countries — not only in east Asia; also in central and eastern Europe, and within the European Community itself.5 The basis for the perception of this link is that most often such decisions make no sense except in terms of the "economic space" of the multinational firm.

8.       It is difficult enough for politicians to justify local and regional economic loss to their electors on the grounds of superior national economic interest. When national gain disappears from the equation, discussion moves inevitably to the international economic order. Calls for "protection" by people thinking in terms of their (and their families') standard of living are not to be "resisted" in the sense of draft resolution, paragraph 5.

9.       Just as no-one believes today that the end of the recession will make a decisive impact on the problem of unemployment, who believes that the "more efficient international division of labour" arising from a successful conclusion to the current Uruguay Round of GATT talks is likely to correspond, under current arrangements, to balanced "economic gains for all" as within and between OECD and some non-OECD countries? For the sake of credible argument on behalf of improved GATT arrangements, the Social, Health and Family Affairs Committee proposes, as the first of its three amendments, that the last part of the text — from the word "optimism" onwards — of paragraph 7, sub-paragraph i of the draft resolution be deleted. The wording in question reflects an abstract and reductive rhetoric which no longer serves the cause of effective argument for an open world economy.

10.       The Social, Health and Family Affairs Committee warmly subscribes to OECD's concern to avoid "precipitate and counter-productive policy action, for example — hasty and possibly ill-conceived macro-economic expansion; — inappropriate reversal of earlier labour market reforms to facilitate structural adjustment; — further resort to open or (more likely) disguised trade protectionism".6

11.       We also welcome the call for OECD to give the highest priority "...to laying down a conceptual foundation for a strategy of worldwide trade liberalisation".7 Our commitment to an open world economy needs to be argued in the light of considerations set forth in Rapporteur Hellstrom's explanatory memorandum.8 The expediency of reviving the 1947 proposal for an international trade organisation as an additional pillar of the United Nations system is an issue which may well arise in this strategy review. The commitment to worldwide trade liberalisation can no longer be argued without reference to the question of its impact on employment in the countries of OECD, which in turn raises the question of social and working conditions in some industrial sectors of some non-OECD countries. It may be recalled that the Havana Charter of 1947 included a "social clause" linking trade to internationally recognised workers' rights. Alternatively, if competition is perceived as unfair because of undervalued currencies reflecting the lack of social provision in the countries concerned, compensatory taxes might be designed with part of their product going to development aid.9

12.       We applaud the Committee on Economic Affairs and Development's awareness of the need for radical new thinking. Meanwhile we must seek to present the case for an open world economy in terms which do not provoke dismissal of current (imperfect) arrangements as a formula for equating social regression with (decisive) comparative advantage.

13.       It would nevertheless be damaging to blame the international economic order for difficulties which could be made less acute by domestic reform. Are we taxing labour and investment too much and energy and resource consumption too little? This is the object of the third of the amendments which the Social, Health and Family Affairs Committee, at its meeting in Paris on 17 September 1993, has agreed to table to the draft resolution.

* * * * *

Amendment No. 1

      In the draft resolution, paragraph 7, sub-paragraph i, delete the words "and realising economic gains by all through enhanced trade and a more efficient international division of labour";

Amendment No. 2

      In the draft resolution, paragraph 7, sub-paragraph ii, lines 4 and 5 to read "... by fostering flexible and effective labour market policies in co-operation with the "social partners", thus enabling the private sector, etc.";

Amendment No. 3

      In the draft resolution, paragraph 13, add the following words: "...economic activity, and to study the economic and social consequences of possible changes in overall taxation to reduce the burden on labour and investment through increased charges on energy and resource consumption".

APPENDIX

      Reporting committee: Committee on Economic Affairs and Development (Doc. 6900).

      Committee for opinion: Social, Health and Family Affairs Committee (and other competent committees).

      Reference to committee: Doc. 6897 and Reference No. 1893 of 3 September 1993.

      Opinion approved by the committee on 17 September 1993.

      Secretaries to the committee: Mr Hartland and Ms Meunier.

1 1Doc. 6900.

2 2Section B.1, paragraphs 36-50 of Rapporteur Hellstrom's explanatory memorandum.

3 1Statement by Mr Philippe Seguin, President of the National Assembly, to the Forum du Futur, 16 June 1993: