News | Labour / Unions - Globalization - Union Struggles Can Workers’ Rights Go Global?

With corporations more transnational than ever, unions and regulators are struggling to catch up


Workers thread webbing on the production line in a factory.
Workers on the production line at a factory in Huai'An, China. Photo: IMAGO / VCG

Around 80,000 corporations operate worldwide. They are responsible for and control over 80 percent of global trade flows.

The actions of transnational corporations (TNCs) have far-reaching effects on the economy, ecology, and the massive inequalities that prevail in the world. Yet they largely elude effective regulation when it comes to respecting human rights and labour standards. Their mantra is voluntary self-regulation. They enjoy extensive investment protection rules and resist any extension of regulation or attempts to rein in their profit-seeking actions.

By the same token, globalization allows corporations to undermine working conditions and labour protections established with individual nation-states, fuelling a race to the bottom that sees unionized jobs in the Global North eliminated in favour of low-paying, unprotected jobs in poorer countries.

What can trade unions and international institutions do to counter this trend? Kathrin Gerlof spoke with Janine Walter from the Rosa Luxemburg Foundation about the globalization of capitalism and the labour movement’s attempt to globalize solidarity.

Karl Marx based his famous call for the workers of the world to unite on his analysis of capital, namely his conviction that capital would have no trouble establishing itself transnationally, uniting, and conquering the world with its exploitative mode of production. Broadly speaking, he was right, wasn’t he?

Yes, he was. Processes of economic globalization have been some of the most visible and fundamental developments of the last few decades. Recent trends have pointed to a globalization of capital, but not necessarily to a globalization of the working class. Many workers have successfully fought for significant improvements in working conditions. While this has helped certain people, there is no effective global enforcement of fundamental labour standards.

Janine Walter directs the Rosa Luxemburg Foundation’s Southern Africa Office in Johannesburg.

This article first appeared in maldekstra #17. Translated by Hunter Bolin and Rose Wellbrook for Gegensatz Translation Collective.

Certainly, Marx could not have foreseen some things: the speed and extent to which transnational corporations (TNCs) have developed and the emergence of a global financial capital that yields tremendous profits independently of the so-called “real economy”. What characterizes our capitalist present?

As globalization processes have developed, TNCs have increasingly kept their production lines separate, resulting in global supply chains which are highly fragmented and geographically dispersed. TNCs have inserted themselves as key players in both the restructuring of national production systems into regional and global corporate networks and the coordination and control of complex supply chains.

Even if there are enormous differences between working conditions in the Global North and South, there are also many similarities. How can we summarize these?

I’ll start by acknowledging that economic globalization has brought considerable prosperity to a large part of society in the countries of the Global North.

In countries of the Global South, however, these developments have not led to improvements in living conditions or increased prosperity, but rather to a deterioration in working and environmental conditions. Of course, globalization has also had a negative impact on workers in the Global North: it has diminished workers’ rights and gradually dismantled the welfare state, for example.

One common feature is that, because the production systems overseen by TNCs are so fragmented, systems of labour regulation –– ostensibly oriented towards the nation-state –– have limited reach in terms of their regulatory powers. This has far-reaching consequences for the global, regional, and local structuring of labour processes as well as for working conditions and labour rights.

You write that TNCs are the driving force of globalization and that the unification of workers against capital has not managed to keep up with these developments. But let’s talk about what they achieved in spite of that.

The first efforts to develop a binding code of conduct for TNCs appeared as early as the 1970s. Although no binding agreement was reached, the proposals are regarded as the starting point for a more rigorous debate on issues of corporate responsibility. Since the late 1980s and early 1990s, working conditions at TNCs and along their supply chains have continued to garner widespread attention thanks in large part to activist campaigns. Issues related to child labour and sweatshops have received particular attention.

Until the late 1990s, the debate over labour standards at the international level was ostensibly conducted in the context of trade negotiations as part of unilateral or bilateral trade regulations. This debate centred on import bans on products made by forced or child labour, as well as generalized schemes of preferences, which granted tariff concessions for certain products or countries. Due largely to pressure from the trade union movement, the debate on social clauses and trade gained new momentum in the early 1990s during the World Trade Organization (WTO) negotiations.

Still, there was no majority among the international community in favour of anchoring labour standards in the WTO’s trade regime. Nonetheless, international agreements on binding labour standards do exist in the form of positive international law. Examples include the Universal Declaration of Human Rights and the comprehensive labour rights implemented by the International Labour Organization (ILO).

How do you view the different codes of conduct that TNCs impose on themselves? Could they be a way of enforcing labour standards?

TNCs from the textile industry in particular began developing their own codes of conduct in the early 1990s after coming under fire for use of child labour. Corporations use these codes of conduct –– which they adopt voluntarily and integrate into their corporate social responsibility (CSR) programmes –– as a way to commit to complying with certain social and/or ecological standards. In fact, these codes of conduct are the most common way in which companies take responsibility for their actions.

Just because action is theoretically possible does not mean that it is used to assert workers’ interests. This requires the workers to organize.

I see two main problems with this approach: first of all, these codes are implemented unilaterally from above. Workers and trade unions have no say in the formulation or implementation of CSR programmes.

Secondly, these codes of conduct are generally ineffective. Their main goal is to minimize risk in the face of heightened consumer expectations, and should thus be seen as part of companies’ marketing strategies.

We’re dealing with corporations whose assets sometimes exceed the GDP of entire countries. But above all, we are dealing with companies whose production networks externalize social and ecological costs. What does externalization mean in this context?

When calculating market price, corporations do not factor in all the costs that arise in the production of goods. Instead, they externalize these costs, often to the detriment of workers in the Global South. For example, we can buy clothing very cheaply in Germany. Since corporations are primarily motivated by high profits despite low retail prices, they cut costs by paying seamstresses in Bangladesh less. This is a very simplified picture, but it’s a good illustration of the phenomenon of externalization.

What do you mean when you talk about a “race to the bottom” in terms of labour and social standards? Are we in a period of retreat? Are our hard-fought achievements being dismantled?

Companies are always looking for new locations where they can relocate production in order to produce even more cheaply. This practice is especially common in the German automotive industry. One consequence is that nation-states pass employer-friendly labour legislation in order to attract companies. This creates a race to set the most attractive conditions for corporations, while workers’ interests often fade into the background. In this sense, we can speak of a retreat.

This is all the more true for newly emerging industries such as the digital platform economy. In many countries, drivers for ride-hailing apps are not even considered as employees, but as self-employed. This is one way that companies like Uber avoid paying for social security, paid leave, or sick pay.

Your research is on strategies adopted by trade unions. Let’s start by clarifying some key terms: you write about Global Union Federations (GUFs) and their strategy of concluding so-called Global Framework Agreements (GFAs). What are these federations, and what is the significance of these agreements?

GUFs are worldwide federations of national trade union organizations whose members work in specific industry sectors or occupational groups. After a series of mergers, there are now nine GUFs in existence. At the end of the 1990s, the workers’ movement adopted the view that a globalized world required global unions. International Trade Secretariats (ITSs) had already existed for around 100 years, serving as a foundation for international organizations of workers, but their organizational and working methods were outdated and unable to tackle the challenges of the twenty-first century. After these ITSs were transformed and reorganized, they were officially renamed as Global Union Federations in January 2002.

Trade unions were faced with the challenge of developing a political and organizational strategy that would harness the power of local and national unions to close the gaps in regulations on working conditions between legislation in different countries. GUFs developed Global Framework Agreements for this very reason. GFAs are agreements negotiated and signed between GUFs and TNCs.

By adopting GFAs, companies agree to comply with certain standards rooted in fundamental labour rights and social legislation. In addition to the ILO’s core labour standards, the most common reference points are international guidelines such as the United Nations Universal Declaration of Human Rights or the OECD Guidelines for Multinational Enterprises.

What’s different about GFAs is that workers are involved in both the negotiations and the implementation. GFAs were the first instrument to recognize trade unions as legitimate negotiating partners at a global level. In this way, they encourage a global dialogue on social issues.

For this reason, GFAs can broadly be classified as a key component of the trade union strategy of making transnational connections to meet contemporary challenges. They create new mechanisms for structuring global dialogue on social issues and enforcing fundamental labour standards along global TNC supply chains.

It is important to note that GFAs are not legally binding. If a company violates a GFA, the agreement can be terminated, but there are no legal consequences. This is precisely what happened in the case of the GFA between the IndustriALL GUF and Volkswagen: when Volkswagen denied workers at the VW plant in Chattanooga, Tennessee, the right to freedom of association in 2019, the union terminated the GFA.

The first GFA was signed in 1988. They had spread widely by 201, and most agreements were concluded with European corporations, primarily with German companies. Can we give ourselves a pat on the back?

The reasons for all that can be traced back to the history of labour relations in Europe. Collective cross-border relations between workers and employers had already developed during the processes of economic globalization in the 1960s and 1970s. Especially in Europe, companies began to take part in transnational networking meetings with full-time trade union representatives. The first European informational committees –– a precursor to the European Works Councils –– were founded in the mid-1980s.

From the mid-1990s onwards, a real “surge of transnationalization” swept across Europe, which was substantially different from developments anywhere else in the world. The adoption of the European Works Councils (EWC) Directive in 1994 was a major step forward.

The fact that around 90 percent of GFAs are geographically concentrated in companies based in continental Europe or Scandinavia indicates a national path of dependence on processes of transnationalization within industrial relations. Thus, GFAs have primarily been concluded with companies based in countries where industrial relations are well-developed. These countries usually have industry-wide practices for collective bargaining, trade union representation on boards, and consultation through works and trade union councils. For this reason, they are designated as coordinated economies.

The fact that transnational corporations are also gaining ground in emerging economies raises the question of whether GFAs can really be a global tool for enforcing labour rights. Can they?

I don’t consider them adequate for enforcement across the entire supply chain. How GFAs are implemented varies widely, even among European companies, in terms of both implementation and the extent of regulations along supply chains.

Take so-called “emerging economies”, for example: if a unionized core workforce is well-protected by labour rights in certain industrial sectors, but the majority of workers are employed in informal or precarious sectors, we see that GFAs only apply to the core workforce.

Then there’s the question of whether GFAs are suitable in other contexts. If national labour relations are more antagonistic, for example if workers primarily pursue their interests through industrial action, how much sense does an instrument based on dialogue make? I’m not saying that they can’t co-exist, but it can be problematic.

Power relations are an inherent part of organized labour relations, in the sense that there are organizations representing both sides, the workers and capital. Thus, it is inaccurate to claim that one side has all the power and the other side is powerless. Labour movement slogans have long championed the idea that strikes can make production grind to a halt. When do opportunities arise for workers to take action?

Much of that depends on the sector in which workers are employed rather than making generalizations about the system as a whole.

Fragmented supply chains have the potential to cause major disruption to production. During the COVID-19 pandemic, we saw what happens when one part of the supply chain is disrupted: entire industries falter because they do not have enough materials to support production. Workers at so-called “choke points”, i.e. logistical bottlenecks such as ports, have a lot of leverage here. However, just because action is theoretically possible does not mean that it is used to assert workers’ interests. This requires the workers to organize, through GUFs and their member unions, for example.

In many areas of the service sector, however, there are fewer possibilities for action. Since much of this work tends to be non-specialized, workers can be easily replaced. This decreases workers’ power significantly.

Could you please explain the power resource approach? How do you determine which resources give unions power?

The power resources approach emerged around the turn of the millennium. Up until that point, trade union research focused on analysing the decline of trade unions. There was plenty of empirical evidence to substantiate this trend: declining levels of organization, stagnating wages in real terms, a decrease in collective bargaining power, weaker roots in workplaces, and a decline in political influence.

In the meantime, a new branch of research was established, initially in the Anglophone world, which focusing on the strategic capability of trade unions. In Germany, too, a mainstream approach emerged that examined possibilities for action and the most valuable resources available to trade unions. This approach is rooted in the assumption that there are fundamentally different forms of so-called “power resources” that workers can mobilize to assert their interests.

International regulations are precisely what we need to prevent companies from using regulatory loopholes to shirk responsibility. This is where civil society must maintain and even increase pressure on governments.

Distinctions are made between the structural power, organizational power, institutional power, and social power of wage earners. These different power resources are interrelated and partly dependent on each other.

Structural power corresponds directly to the position of workers within the economic system and how different actors in this system are interdependent on one another. It is based on the potential power of workers to disrupt production processes.

Organizational power involves pooling power through collective entities such as trade unions. Workers can mobilize other resources for exerting social power by incorporating a broader spectrum of actors into the struggle to assert their interests. This is what happened, for example, in the dispute over working conditions in the global supply chain of the textile industry, in which NGOs and trade unions were active.

Labour relations are shaped by a company’s country of origin, but that doesn’t really account for why Apple or Microsoft, for example, have access to the raw materials for their products which are mined under such dreadful conditions. Nor does it explain why Nestlé can rely on child labour on West African cocoa plantations to sell its products cheaply in shops.

The manner in which a company conducts its business activities abroad is largely influenced by the institutions in its country of origin. As for industrial relations, it has been shown that different companies handle similar economic challenges in very different ways and that this depends largely on how institutionalized working relations are.

Scholars point to a “an increasingly limited country-of-origin effect”, in the sense that TNCs are increasingly detaching themselves from national constraints, although national economies continue to be a significant reference point. TNCs often come under pressure to adopt their host country’s national standards, but they generally develop a certain flexibility in order to retain elements of their own management culture.

In an analysis of the entrepreneurial behaviour of German TNCs abroad, scholars identified a certain degree of “Anglo-Saxonization” of corporate management styles, although entrepreneurial activity more broadly continued to align with German institutions. This was particularly true in transnational labour relations, in which the rhetoric of cooperative relations and partnerships was predominant.

Ultimately, it is nation-states, or rather communities of nation states, that would have to introduce political regulations to keep corporations in check. We should not be too optimistic. All the same, which developments are signs that change is afoot?

Some progress has been made, but there is still much to be done. In June 2021, pressure from civil society forced Germany to pass the Supply Chain Act, which refers to the UN Guiding Principles on Business and Human Rights and came into effect in 2023. This is a step in the right direction since it represents a shift away from voluntary CSR programmes toward binding human rights requirements.

That said, it will initially only apply to companies with a registered office or branch office in Germany that employ at least 3,000 people and, from 2024, to companies with over 1,000 employees. If companies neglect their due diligence obligations, the Federal Office of Economics and Export Control can collect fines from their net turnover or exclude them from public contracts.

But even that only applies to a company’s in-house business practices and those of its direct suppliers, not to direct subcontractors. It is common knowledge that human rights violations are often committed by subcontractors, i.e. at the beginning of the supply chain. In addition, there are no civil liability regulations, which means that companies are only liable for damages caused by disregarding their duty of care. In general, injured parties have little chance of winning compensation.

Negotiations around a legally binding international agreement on business and human rights have been ongoing at the UN level since 2014. Of course, economically powerful countries such as Germany oppose large-scale regulation that they view as excessively detailed, citing the national supply chain acts as justification. But such regulations are precisely what we need to prevent companies from using regulatory loopholes to shirk responsibility. This is where civil society must maintain and even increase pressure on governments.