Keynote address by President of the Republic of Finland Tarja Halonen at the European Foundation for the Improvement of Living and Working conditions in Dublin, 13 November 2007

(check against delivery) The Challenges of Globalization for Labour Market Policies and Social Dialogue – the Global Perspective

Globalization has been one of the hottest topics in public debate during the recent years. Globalization has its winners and its losers, both within and between countries. It is good however that the globalization debate has recently turned from confrontation to dialogue. We now understand the advantages and disadvantages of globalization better, and also realize that the real question is how to develop a fairer globalization.

The European Union is a global actor, and therefore both the EU and its Member States participate in the better governance of globalization, both worldwide and at the European level. We have excellent potential for influencing this phenomenon. Our societies are based on democracy, respect for human rights, the rule of law and social responsibility.

A road to a fairer globalization begins at home. This was one of the key messages of the World Commission on the Social Dimension of Globalization. The World Commission was set up by the International Labour Organization in 2002 as a tool for finding ways of governing globalization better. I had the honour of co-chairing the World Commission together with Mr Benjamin Mkapa, who at the time was President of Tanzania. The World Commission was originally a group of not like-minded people, but as a result of our talks we were eventually able to publish a unanimous report in 2004, entitled A Fair Globalization: Creating Opportunities for All.

The implementation of the recommendations of the report has been at least as demanding as its preparation. The EU has been commendably active in supporting discussion of the report of the World Commission and in ensuring that the debate on the social dimension of globalization remains on the agenda in international cooperation.

The recommendations of the World Commission have been taken on board by the United Nations and many other organizations. The UN World Summit in 2005 voiced its support for a fairer globalization and decent work as a key development goal. On the initiative of the UN Economic and Social Council, efforts are now underway to mainstream the objectives of employment and decent work in all aspects of the activities of the United Nations. Among other things, these will be used as indicators in the monitoring of the attainment of the UN Millennium Development Goals.

The International Labour Organization has publicized the work of the World Commission and promoted its recommendations in many ways. The ILO and Portugal, the current holder of the EU Presidency, organized a policy forum in Lisbon less than two weeks ago on the topic of decent work and fair globalization. In addition, the ‘green jobs’ initiative of the ILO combines the goal of decent work with sustainable development and combating climate change. The purpose of the initiative is to support cooperation between the social partners and governments so that labour markets may better prepare for the inevitable challenges caused by climate change.

Our efforts towards a fairer globalization are a good exercise for facing the wider challenges of sustainable development. The wellbeing of humanity is not enough. Human wellbeing must go hand in hand with the wellbeing of nature. Worldwide sustainable development is only possible if we genuinely care for people while being environmentally conscious at the same time.

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Various international organizations have adopted globalization as a strategic focus from their respective points of view. But even if international organizations only focused on their core competence, their agendas are still interlinked. Therefore, we must pay more attention to coherence.

It is regrettable but true that a lack of coherence at the national level is multiplied at the international level. Representatives of a single country may present different opinions about the same matter – depending on which organization the issue happens to be discussed in. There is also much to be hoped for in consistency, cooperation and information sharing between international organizations.

In early October, I had the opportunity to talk about the importance coherence – among other things – when I addressed this year’s World Trade Organization Public Forum. The topic of the forum was “How can the WTO help harness globalization?”. The WTO is today no longer a club for industrialized countries; it has become a true world organization, and the majority of its members are in fact developing countries.

Trade and trade agreements are bound up with non-economic dimensions of development such as the environment, democracy and human rights. Trade does not promote development if the products being traded are manufactured under inhumane conditions. Governments must take responsibility in this. Fortunately, consumers have already begun to choose products on the basis of fairness. It is the task of the WTO to guarantee a universal, rules-based, open and fair multilateral trade system.

The European Union is a major player in development policy and international trade. It does matter how we choose to emphasize the social dimension of globalization. During the Finnish EU Presidency last autumn, Council Conclusions were adopted concerning decent work, with connections also to trade and development cooperation.

In the dialogue between the Union and various individual countries and other regions, globalization issues are regularly discussed. Examples may be found in last autumn’s ASEM summit in Helsinki and the forthcoming summit between the European Union and the Latin American and Caribbean countries in Lima next May. Our partners seem to be interested in European experiences in the Lisbon Strategy and social justice. This has also emerged in my private discussions with my colleagues, for example during the state visits to Finland by President Bachelet of Chile and President Lula of Brazil.

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The Lisbon Strategy is a very good globalization strategy, but its implementation has not proceeded as planned in all Member States. I believe that the Lisbon Strategy can enable us to meet the challenges of globalization. We must however adhere to the simultaneous promotion of economic growth, employment, social cohesion and sustainable environmental policy. A narrow approach cannot be a sufficient response to global issues.

A few weeks ago, I gave a talk at the London School of Economics and Political Science on the topic “Can the welfare state work in a globalizing world?”. The debate with young students was assertive. My answer to the question – and theirs as well – was “Yes, it can”. Finland’s experiences have shown that the basic elements of the welfare society are also they key to international success. We support an open and dynamic market economy, but our system is based on a strong sense of social justice. Ensuring free basic and higher education, public health care, social security and social services help our citizens cope with change.

All the Nordic countries — the five Nordic sisters, as I call them — rank very well in international comparative studies on competitiveness, sustainable environmental policy, technology and social conditions. There are many differences between the countries, but the uniting factor is that we all share a very similar approach to building up a society – that is the welfare state model.

The world market is becoming increasingly segmented and specialized. This must be seen as an opportunity for Europe, not a threat. Countries are obliged to improve their production processes and services, and this requires investment in education, creativity and innovation. The principal goals on the labour market are productivity-enhancing procedures, good work organization, and continuous updating of competence and training, or in other words lifelong learning.

Europe is doing relatively well just now; our economic situation is very dynamic for the time being. However, we cannot keep jobs in Europe by force. Large-scale job losses resulting from the closure of industrial sites have severe consequences for the people and families living in the regions concerned. Entire villages or towns may suffer as a result of such measures.

Our systems must be based on helping people to cope with difficult times and supporting them in new finding jobs. For example, better training opportunities and a more flexible and activating use of unemployment benefits would make it easier to cope with situations where change is inevitable.

As the dynamics of the international division of labour shift, and as competition pressures increase also in high-expertise jobs, training challenges are becoming ever greater. It is the quality of training rather than the quantity that becomes a crucial competitiveness factor under these circumstances. This applies not only to elderly employees but to young people too. Their training will become outdated far more quickly than was the case for us members of earlier generations.

Education and training boost the capacity for self-determination and for people to make their own choices in life. It also helps people use their competences and skills in the best possible way for their own benefit, and for that of their family and society as a whole. In working life, training has traditionally been a good “insurance” against unemployment and as a tool for attaining a better pay, too. However, equal pay for women and men will need more measures than just increased training, since these days women are often better educated than men.

Common EU level principles can provide Member States with useful incentives to develop their labour markets. It is also important to exchange experiences between Member States, even if it is not necessarily feasible to copy over a particular model from one country to another. For example, the flexicurity debate currently ongoing in the Union may result in ‘social innovations’ which the Member States can then use in their national policy making.

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The core treaties of the ILO guarantee the right of organization and they support the work in accordance with the tripartite principle in preparing legislation concerning working life. We must take into account these fundamental principles in the development of our societies. They are key components of grass-roots democracy.

The EU supports dialogue between the social partners, and the Founding Treaty gives the social partners the right to agree on many issues regarding working life and provides for certain procedures for doing so. Social partners at the European level have made use of this potential, most recently in concluding the Autonomous Framework Agreement on Harassment and Violence at Work. There are other examples too.

Tripartite work can be very effective. A joint process smoothes out the rough spots and makes it easier for the three parties — the social partners and the government — to find common ground. The result is a win-win situation, as everyone is more or less happy. The use of this model can benefit the society as a whole and increase the predictability in the society.

One of the special features of the model, which is known as the Nordic labour market model, involves the close cooperation of the central organizations of employers and employees with the government. All of Finland’s central labour market organizations are represented here today. I should mention that in Finland there is currently a threat that nurses will go on strike. The atmosphere is quite tensed. I hope that we can soon find a solution that all parties can agree to this situation.

The role of the social partners in this highly demanding situation created by globalization is crucially important. Cooperation with the social partners is a challenging task, and that includes for the social partners themselves. These organizations, too, are required to modernize and find new and creative ways of thinking.

Cooperation with the European social partners is vital in building a citizens’ Europe. Genuine cooperation at the European level requires a common European will to match the needs of businesses and the needs of employees in a balanced way. If and when both parties are satisfied, we will be better prepared as Europeans to promote decent work and fairer globalization worldwide.

Thank you for your attention.