Published on: November 29, 2023
Authors: Tom Hayes
President Biden issued the first-ever Presidential Memorandum to promote labor rights outside of the U.S.
Why it matters: The push for labor rights abroad aims to prevent low-cost workers from undercutting American workers.
The big picture: The Memorandum dictates a 'Whole-of-Government' approach to address key labor issues and promote freedom of association, union organizing, and collective bargaining.
Yes, but: The US may face challenges in implementing 'Mexican' enforcement procedures with other countries.
What's next: The US government will work with NGOs and activist groups to further promote labor rights globally.
What all of this may mean for your global employee relations strategy is considered in the full commentary (see below) and will also be explored, in depth, in our upcoming programs, both European and Global. Full details shortly.
Interested? Email me at [email protected] and we will register your interest.
Full text of Tom's commentary piece:
Biden’s Global Initiative: Will it Make a Difference?
Weeks after becoming the first serving US President to walk a picket line with striking workers when he joined the UAW in demanding a better deal from the big three auto makers, President Biden has gone global in support of union organising and collective bargaining. November 17, the President issued the first-ever Presidential Memorandum to promote labor rights outside of the U.S.
The President clearly thinks there are 2024 votes to be had in being seen as pro-labor. Expect to hear the argument that the push for labor rights abroad is to ensure that “low-cost workers employed in bad conditions” in other countries can no longer undercut American workers with good pay in good conditions. The message from President Biden? “We are ending the race to the bottom”.
The Memorandum dictates a “Whole-of-Government” approach which will see all U.S. agencies which interact with foreign countries beefing up their abilities to address key labor issues. This includes State, Treasury, Defence, Justice, Agriculture, Commerce, Labor, Energy, Homeland Security, the International Development Finance Corporation, the Office of the United States Trade Representative, and USAID.
The US government will now promote freedom of association, union organising, and collective bargaining in all its interactions with foreign, economic actors. And it will use its trade and financial clout across a range of policy fields to promote this agenda. “You want US money, here’s the deal”. It will work with NGOs and other activist groups to push the envelope.
That Biden means business is made clear by the use the US government has made of provisions in the US/Canada/Mexico trade agreement to enforce changes in union recognition arrangements and collective bargaining agreements in individual plants in Mexico when unions, both Mexican and US-based, and NGOs have made complaints to the US Trade Representative.
But the US is not now doing trade deals with anyone. The US has surprisingly few such deals here.
So, it is unlikely it can get “Mexican” enforcement procedures into place with other countries. In any event, other countries would be reluctant to agree to such procedures unless they could be reciprocal, giving the partners to the deal the right to complain about US labor relations practices. Could Biden get any such trade deal through a Congress that has not enacted any significant changes to labor law since the Taft-Hartley Act back in 1947.
Will Biden criticise the refusal of the US company, Tesla, to sign a collective bargaining agreement in Sweden? The entire Swedish trade union movement is now taking industrial action, including a refusal by dockers to unload any Tesla at any port in the country, to force the company to the bargaining table. Employers in Sweden have also been highly critical of Tesla’s refusal to play by Swedish labor market rules.
We are a long way from the Reagan/Thatcher paradigm which promoted individualism over collectivism and sough to trim the power of unions. Across the legacy market economies of North America, Europe, Australia and New Zealand, union density has fallen dramatically since the days when President Reagan sacked over 11,000 air traffic controllers, members of PATCO, and Thatcher broke the National Union of Mineworkers. You can read the numbers at the OECD union database here.
The Biden move to promote union organising and collective bargaining across the world is not an isolated one. The European Union is travelling in the same direction. A “new collectivism” is in the offing. US government officials will no longer be lobbying against pro-union legislation, whether in Ireland or Indonesia. In fact, they will be calling for such legislation. That is the logic behind the Biden Memo.
And they will have an early chance to do so in Europe at any rate.
By late 2024, EU Member States will have to transpose into national law the Adequate Minimum Wage Directive which, among other things, mandates that governments put in place measures to ensure 80% collective bargaining coverage. Unions see a return to sectoral collective bargaining as the way to do this.
But there is little appetite among employers to go down what might be called the “French road” where unions with just 8% of the workforce in membership negotiate agreements that the law then applies to all workers.
Much will depend on how governments transpose the Directive, but the mood music has changed. Individualism is out. Collectivism is in.
More immediately, from January 2024 the EU’s Corporate Sustainability Reporting Directive kicks in. Among other things it will require companies within scope to inform “workers’ representatives at the appropriate level” and discuss with them “the relevant information and the means of obtaining and verifying sustainability information”, covering:
Working conditions, including secure employment, working time, adequate wages, social dialogue, freedom of association, existence of works councils, collective bargaining, including the proportion of workers covered by collective agreements, the information, consultation and participation rights of workers, work-life balance, and health and safety.
This Directive will soon be joined by the Corporate Sustainability Due Diligence Directive which will put a heavy onus on multinationals to take responsibility for employment and labour conditions throughout their supply chains.
The CSRD is all about reporting. The CSDDD is not only also about reporting but will require companies to take action to mitigate harms or potential harms. Already, under existing national legislation, such as the German Supply Chain Act, NGOs and others are filing claims against major multinationals alleging human rights and environmental abuses.
Other legislation will see employers having to engage with “employees’ representatives” to discuss closing gender pay disparities where analysis shows gaps of more than 5% to exist, while other legislation will oblige employers to inform and consult with employees’ representatives over the use of algorithms and AI in human resource decision making.
There is also a revision of the European Works Council Directive in the works.
Unions and Employee Voice
Does all this mean the unions are about to make a big comeback? Unlikely, in the legacy market economies at any rate. The union heyday in the private sector was the day of mass (male) manufacturing industry, energy extractors such as mining, and transport. Those days are gone and even if industry is “reshored” because of geopolitical tensions it will be heavy on robots, light on people. It is unlikely that robots will be joining the UAW or IG Metall anytime soon. But never say never!
The personal services sector is too fragmented into multiple, small operations to make organising doable, or else worker turnover is too high to guarantee stability. Unions can put down roots where operations are big, and the job is for life. Which is why unions are still strong in the public sector.
Further, too many union officials are more interested in far-left politics and using the union movement to advance ideological agendas that have no electoral traction. No wonder workers do not join.
But if yesterday cannot be recreated, there is always a tomorrow. Because of the raft of laws noted above, across Europe employers are looking at a new wave of information and consultation obligations with elected employees’ representatives. Unions and consultancies, existing and new, will compete to advise such representatives.
Outside the legacy market economies and where the US government has a large and economically important footprint, such as Mexico, new pressures will be brought to bear and unions will find they have a new friend. As long as there is a Democratic Administration in DC.
Many will regard it as the height of hypocrisy on the part of the US to push union organising and collective bargaining abroad while union density in the US languishes below 10% and collective bargaining coverage is about the same. US labor law has not been updated since the 1940s. Nonetheless, the Biden initiative creates a new dynamic. Whatever about home, the US is going to use its power abroad to push for a unionised world. The EU’s due diligence laws will force companies to put data on their employee relations structures into the public domain, data that will eagerly be made use of by unions, NGOs, and the Biden Administration.
Social media will provide new ways of connecting employees with activists and making information instantly transparent.
Whatever about the rest of the world, Europe is on the cusp of a new “electoral collectivism” in the workplace because of the new laws we have mentioned. There is a danger of “activist capture” of these new mechanisms of representation if turnout is low. Management will need to stress that involvement is important and that they see elected representatives having a significant contribution to make to the success of the business. Management needs to make it clear that being an elected employee representative is a career gateway, not a career dead-end. The mandate of elected representatives could be limited to two terms at most.
Elsewhere in the world, the old adage applies. You get the labor relations you deserve. Work hard to make sure you get the labor relations you want.
Things have changed. There is a new American sheriff in town. At least for the next year.