Globalisation: a threat to social policy?

There is growing concern that globalisation threatens the ability of developing countries to address social policy concerns. Is there a need for a global regulatory framework to protect social rights? Should the international financial institutions (IFI) be getting involved in social policy or would a new institution to deal with social policy be more likely to win support?

A background report commissioned by DFID for the 2000 White Paper on globalisation charts some of the debates regarding the integration of pro-poor economic and social policy frameworks. In assessing proposals to improve the international architecture of economic and social governance, the report suggests ways to overcome the north-south tensions which have impeded progress.

The report considers the evidence that inequality is increasing with globalisation, and the possible causes – concluding that there is strong evidence of increases in inequality both at the national and the inter-country level over the last thirty years. This is due to a range of factors. The gap between the best and lowest paid is widening, states are abandoning redistributive ambitions, organised labour is in decline and the share of total global income derived from capital is increasing. The scope of governments to fund social expenditure has been reduced as liberalisation restricts revenue from trade-related taxes, encourages the move from payroll to consumption taxes, and gives multinationals new scope to avoid tax demands.

The report looks at the factors driving enhanced awareness of the international dimensions of social policy. The flow of labour migrants is prompting developed states to consider how to improve the conditions that trigger migration. The ethical trade initiative, the international debt relief campaign and anti-WTO coalitions attest to the power of new forms of civil society action based on notions of global solidarity.

Other points made by the report include:

• The IMF/World Bank’s new-found interest in promoting good practice in social policy is not welcomed by many G77 states which fear a northern design to undermine the comparative advantage of the south – low wages and undemanding labour conditions.
• Collaboration in the field of social policy between the UN and IFIs is unlikely given G77 strength in the former and northern dominance of the latter.
• The IFIs are reluctant to promote international core labour standards without evidence they will contribute to economic growth and poverty reduction.
• The US government is challenging the growing consensus that conditionality related to trade agreements is an inappropriate means for pursuing global commitment to core labour standards.

While the outcomes of the 1995 UN social policy summit in Copenhagen and its 2000 review in Geneva have disappointed those arguing for robust international mechanisms to enforce social policy principles, they have fostered an informal climate in which a number of radical proposals are being mooted. These include:

• An international tax system to contain volatility and tax multinationals.
• A global central bank as lender of last resort.
• Better monitoring by the UN of economic and social rights.
• Making international financial institutions more accountable to southern states.
• Putting social clauses into multilateral trade and investment agreements.

Source(s):
‘Globalisation processes and the implications for the development of global responses in the field of social policy’ by Andy Norton and Sean Conlin, background report commissioned for the DFID White Paper, ‘Eliminating World Poverty: making globalisation work for the poor’, August 2000 Full document.
‘Can There Be a Global Standard for Social Policy? The "Social Policy Principles" as a Test Case’, ODI Poverty Briefing Paper # 2 Overseas Development Institute: London by Andy Norton, 2000 Full document.

Funded by: Department for International Development

id21 Research Highlight: 27 June 2002

Further Information:
Andy Norton
Overseas Development Institute
111 Westminster Bridge Road
London SE1 7JD
UK

Tel: +44 (0)20 7922 0380
Fax: +44 (0)20 7922 0399
Contact the contributor: a.norton@odi.org.uk

Overseas Development Institute, UK

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'Makers and shapers? Participation in social policy'

'Transforming work and welfare. Social policy, labour and unemployment in Russia'

'Winners and losers: making the most of globalisation'

Visit the Centre for the Study of Globalisation and Regionalisation

Eldis provides a portal to globalisation links