10:25 AM Jun 13, 1997

LABOUR: A 'WORLD OF DIFFERENCE, BUT NOT TWO WORLDS', SAYS BANK

Geneva, Jun 12 (Chakravarthi Raghavan) -- The president of the World Bank, James Wolfensohn, said Thursday that while the industrialised North and developing South were an inseparable whole rather than two coexisting worlds, there was "a world of difference" between them.

Wolfensohn told the tripartite International Labour Conference presently being held in Geneva that there was only one world when it came to the economy, environment, health, migration, crime, drugs, food and war.

But he acknowledged there was "a world of difference" between rich and poor countries: "Ours is a world in which three billion people live with less than two dollars a day, and 1.3 billion with less than one dollar a day."

Inequalities are growing, he told the Conference session, and when the world population reaches eight billion, probably 30 years from now, seven billion people will suffer the same hardships. Wolfensohn later had a dialogue session with the labour ministers and representatives of employers and workers.

Wolfensohn, who has a charming personal style, answered questions at a press conference in a manner aimed at disarming critics -- the Bank has done mistakes in the past, and might be doing so in the future too; or "I know nothing about structural adjustment, though I am constantly asked questions everywhere,", and then going to defend the basic policy-mix in SAPs as one to cut inflation and bringing economies into balance.

He disagreed with the view that much of the growing poverty and marginalisation in developing countries was due to the structural adjustment programmes of the Bank. The programs he said were those drawn up by the developing country governments and were aimed to put their macro-economics in balance, cut inflation. And while SAPs did cause some immediate hardships, these should be dealt with through safety-nets.

But at a time when the world economy is in the grip of disinflation which could easily tip over into deflation through the EMU and the stands of central bankers, the advices of the Bank to developing countries could only result in increasing the value of assets of idle wealth holders, while impoverishing even further those living on a dollar a day, Wolfensohn was told. How on earth could the Bank expect any productive enterprise to come up when real interest rates in these countries were now in the range of 6-8 percent, he was asked.

"I don't know," the former Wall Street investment banker said, without answering the question, but spoke about how he and his officials were working closely with finance ministers and officials of developing countries, and how the Bank was listening carefully to the views and advices of civil society. The bank has at each of its offices in countries an official whose sole responsibility was to work with civil society -- labour unions, NGOs etc -- in hearing their views and seeing how the bank's policies could meet these viewpoints.

But he deflected another questioner, who referred to a report in the morning press that the Bank was now going in a big way to lending in Russia, conditional on continuance of the policies that are subject of serious debate in the domestic political arena. The questioner asked why the Bank was interfering in the domestic politics and supporting one group of reformers?

The reform policies being pursued by President Yeltsin and his advisors were good in trying to turn the economy around, and the Bank was demonstrating its confidence in the success of the programs by putting its money behind it, Wolfensohn suggested.

The Bank President spoke of the Bank and the ILO working closely together, and his own presence at the Conference -- the first by a World Bank President -- as indicative of this support. He however refused to comment on ILO Director-General, Michael Hansenne's proposals on social standards, ILO declaration and social labels, saying that the same governments battling the issue here were also his bosses in the World Bank executive board and therefore he could not comment.

At the labour conference, this issue has overshadowed all others, with the developing and the industrialised countries, differing on the role the ILO should play on trade-linked labour standards.

The industrialised countries and big trade unions are in favour of active ILO intervention, developing nations argue that the such an ILO role would favour protectionist commercial tendencies.

While Hansenne has been sharply criticised by the Non-Aligned and other developing countries on this proposals, he has received the backing of the US, which praised the report, in which he recommended strengthening basic labour stipulations and establishing social surveys of countries and award of 'social labels' to those whom ILO feels are translating benefits of trade liberalisation to workers.

U.S. Deputy Secretary of Labour, Andrew Samet, who heads his country's delegation, congratulated Hansenne, and warned that the ILO was facing the prospects "of the worst kind of failure."

The United States wants the ILO to adopt a decision on the social dimension of globalisation, an issue that is being debated in a working party of the ILO's governing body for the last three years. The US proposals for a social clause would enable market access being conditioned on observance by countries of socalled core labour standards in ILO conventions, which the US itself has not ratified.

Samet said his government was in favour of the application of international labour norms, as well as the adoption of codes of conduct on social questions and consumption. The United States, he hinted, would continue to bring up the trade-social clause link at the WTO and other fora.

And the central trade union organizations, in particular the ICFTU, accused developing country governments of going back on their commitments at the Singapore WTO conference, when they were opposing the ILO's role to deal with the issues of trade, globalization and labour standards.

In a report on trade union rights around the world, the ICFTU spoke of a worldwide assault on trade unions and their leaders who "are being branded by advocates of economic liberalism as kill-joys of the great globalization party," the ICFTU report said. Trade Union leaders in denouncing the growing inequalities and demanding respect for workers' rights, have aroused the fury of governments "who have chosen to bow to pressure from financial markets rather than their own electorate."

Governments' thirst for investments is compounded by the insatiable appetite of employers for new markets and a "competitive" labour force, meaning cheap and endlessly exploitable labour. This combination of governments seeking to end their powers of intervention in the economy, and that of the business world striving to increase theirs, is one of the root causes of trade union repression, the ICFTU said.

The pressures of trade unions around the world, the ICFTU report claimed, had forced the WTO ministers at Singapore to make commitments to respect fundamental social rights. The trade unions would give full support to a policy of "constructive globalization" that would contribute to creating jobs, reducing poverty and inequality, but the processes seen today don't meet these objectives.

"Globalization has become synonymous with unemployment, under-employment and growing inequalities," ICFTU General Secretary Bill Jordan said in a foreword to the report. In a swipe at governments and employers who speak of the world market, Jordan said "Let it (the report) be a warning to politicians, the business world and employers: there will be a social world market or not world market."