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Opinion

A New Social Contract

For the world’s workers and their families, recovery can only be just and sustainable if there is a new social contract. One which sees investment in jobs, social protection, inclusion and just transitions for the global shifts motivated by climate action, technology and the COVID-19 pandemic.

Even before COVID-19, the labour market faced historic levels of income, gender and racial inequality, within and between countries. This is aggravated by the climate emergency, unfair trade rules, precarious labour rights and a majority of people without social protection.

Our global supply chains are the foundations of international trade. Massive profits are made from a system built on the dehumanising exploitation of low wages, insecure and often unsafe work where human and labour rights have little or no place. It is simply unacceptable for the future to be rebuilt using the same model.

The pandemic has to date resulted in the loss of 500 million jobs (full time equivalent hours) and an additional 1.6 billion informal jobs – affecting those dependent on daily earnings and facing destitution. Meanwhile, the world’s richest greatly increased their wealth. Big tech alone increased its profits by more than 41% to June and is set to double that by Christmas. Yet workers in companies like Amazon have low wages, inhuman production targets, no sick leave and lack Personal Protective Equipment and the guarantees to keep them safe.

IMF

Source: IMF (2017) Drivers of Declining Labor Share of Income

The pandemic has exposed the fractures in our global economy which clearly point to failures of the economic model. A world dependent on frontline workers who are among the lowest paid is a bitter indictment on the current system. Distribution across more than three decades has seen consistent decline in labour income share, despite significant GDP growth.

Then there is the lost tax revenue and the resulting chronic underfunding of public services in health, education, elderly care and childcare, plus the gaps in social protection even where it exists.

Recovery must bring with it a more resilient and inclusive future; jobs, jobs and jobs – which must be climate-friendly. Jobs can be generated with vital investment in every sector. In Africa alone, if the $50 billion gap in energy security were filled with investment in a mix of renewables and energy efficiency measures it would generate around 3 million jobs. And every dollar into care, for example, can generate up to 2.7 times the number of jobs comparatively. These sectors and more need investment and quality job creation.

Beyond jobs, the elements of recovery and resilience are laid out in the 2019 ILO Centenary Declaration for the Future of Work. This new social contract is based on a labour protection floor for all workers irrespective of the employment arrangements. It covers fundamental labour rights and standards, occupational health and safety, minimum and living wages, and maximum hours of work. Married with universal social protection for all, a transformative agenda for women and just transitions for climate and technology shifts, these guarantees meet the test of Sustainable Development Goal (SDG) 8 on Employment and Decent Work.

It is critical to understand that resilience against future global shocks - whether health, environmental or economic - cannot be built without properly effective social protection for all, including income support for self-employed and informal workers.

To build social protection systems a global social protection fund to support the poorest countries is vital. We can fund this by a combination of direct contributions from the wealthiest countries, increases in targeted official development assistance, special drawing rights with targeted liquidity swaps, debt relief decoupled from austerity, SDG alignment and more.

And with tax reform – including an income tax floor for all corporations, a digital tax, a billionaires or wealth tax, a financial transactions tax and the completion of existing reforms to eliminate tax havens – governments can govern in the interests of people everywhere.

More broadly, funding the recovery will require an approach to investment and to managing debt that is patient, with a medium- to long-term outlook. We must end the speculative economy in the interests of stability and security as we repair the social, environmental and economic fractures of a world set on an unsustainable path.

Using the rule of law to ensure corporate responsibility is vital. Mandated due diligence is essential to keep human and labour rights front and centre, maintain environmental standards in the risk assessment of companies and ensure grievance procedures are in place to effect remedy. Only then will we see real change is possible in the quest to end the exploitative model of today.

The following measures are being debated in Europe as part of wider discussions on building a just recovery and the repair of the social economic model:

  • The recovery package is based on 3 pillars: the social pillar of rights, the green deal and just transition;
  • A minimum wage directive;
  • Mandated due diligence;
  • The Green Deal;
  • The regulation of big technology companies with privacy laws;
  • And the possibility of the EU Parliament leading an approach to broader accountability for people and the economy with agreed indicators that go beyond GDP.

At the heart of these measures sits the requirement for social dialogue to ensure trust in design and implementation.

For a more inclusive world we need reform of multilateralism on the same principles if we are to meet the promise of a zero poverty, net-zero carbon world outlined by the UN SDGs and the Paris Climate Agreement.

A just recovery demands nothing less.