IMF: Unionization, Higher Wages Reduce Income Inequality

IMF: Unionization, Higher Wages Reduce Income Inequality

IMF, unionization, minimum wagesThe notion that unionization and higher wages decrease income inequality is a fundamental premise of the Solidarity Center and our allies. But now a surprising source has reached the same conclusion: the International Monetary Fund (IMF).

“The decline in unionization is related to the rise of top income shares and less redistribution, while the erosion of minimum wages is correlated with considerable increases in overall inequality,” the IMF concludes in a newly released “staff discussion note.”

According to Inequality and Labor Market Institutions, a steep decline in union density is followed by a 1.8 percent increase of top incomes and a 3 percent decline for workers’ share over the ensuing five years. Further, “if de-unionization weakens earnings for middle- and low-income workers, this necessarily increases the income share of corporate managers and shareholders.” The study examined 20 advanced economies between 1980 and 2010.

Declining union strength “appears to be associated with less income redistribution, likely through a reduced influence of unions on public policy,” says Florence Jaumotte, an economist and co-author of the publication. Not to mention another fact: unions help raise wages, both for members and the community at large.

Long a bastion of pro-employer policies, the IMF is not willing to go so far as to recommend the obvious. Acknowledging its findings can “suggest that higher unionization and minimum wages can help reduce inequality,” the IMF dodges the logical conclusion to pursue such policies, saying its data “do not constitute a blanket recommendation for more unionization or higher minimum wages.”

The IMF study notes that such decisions should be made on a country by country basis—leaving the reader to presume that countries supporting shared prosperity among all citizens will enable their workers to form unions, and ensure a living wage for all.



Zimbabwe Supreme Court Guts Worker Job Security

Zimbabwe Supreme Court Guts Worker Job Security

The Supreme Court of Zimbabwe upheld a decision late last week stating that companies can now terminate workers’ contracts at any time, without offering them layoff benefits, by giving them three months’ notice.

The unanimous decision “has grave consequences for anyone under formal employment,” according to one news source and comes “at time when business is crying for flexible labor laws in order to improve industrial competitiveness,” according to another analysis. Employers often use the term “flexible” as a euphemism to describe workplace policies that benefit management at the expense of working people.

Noting that many jobs already have been lost in the days after the court ruling, the Zimbabwe Congress of Trade Unions (ZCTU) said in a statement that the judicial action is the latest in a series to “casualize” workers—that is, create an environment in which formal-sector workers, like those working in the informal economy, have few workplace rights

“The ruling will have an adverse effect of destroying the gains achieved over the past 35 years, with far-reaching economic” consequences, ZCTU said. Zimbabwe’s union movement is planning street protests until the government takes action to resolve the issue.

The case was brought by Kingstone Donga and Don Nyamande, who cited unfair dismissal and contract termination by their former employer, Zuva Petroleum. The employees argued that the Labor Relations Act had abolished the employer’s common law right to terminate an employment contract on notice. The court agreed with the employer.

More than 72 percent of Zimbabweans live in poverty, and the vast majority of the country’s nearly 15 million people are not employed in the formal economy. Rather than creating opportunities for stable, decent jobs in the formal sector, the ruling creates further economic destabilization.

Under Zimbabwe’s Labor Act, “every employee has the right not to be unfairly dismissed,” and the law details the process employers must follow when seeking to terminate an employee.

One analyst notes that employers will still need to exercise caution when they terminate employment on notice because there is still scope for them to be challenged on grounds of unfair dismissal. For example, a group of employees fired when pregnant would have cause to bring a discrimination suit for unfair dismissal.


Swazi Human Rights Leaders Released from Prison

Swazi Human Rights Leaders Released from Prison

Mario Masuku, Swaziland, Solidarity Center

Swazi human rights leader Mario Masuku was released from prison today. Credit: Links

Imprisoned Swazi human rights leader Mario Masuku and student activist Maxwell Dlamini were granted bail today by the Supreme Court of Swaziland, according to the Trade Union Congress of Swaziland (TUCOSWA). The two were charged with terrorism and jailed in May 2014 for slogans they allegedly shouted at a May Day rally.

Masuku and Dlamini were awaiting trial, and if found guilty, each could have faced up to 15 years of hard labor. Masuku, who became seriously ill in prison, was twice denied bail and prison officials would not allow his doctor to see him.  In a statement, TUCOSWA praised the release of the two men, noting, “these are but a few steps, which though appreciated, must tell all of us not to lessen our resolve for change in Swaziland.”

The action follows the acquittal and release early this month of Thulani Maseko and Bheki Makhubu. Maseko, a human rights lawyer, and Makhubu, a newspaper editor, were arrested in March 2014 for writing about government corruption and judicial independence and were serving two-year prison terms.

TUCOSWA continues to be a consistent leader in support of union leaders, journalists and human rights activists who have been threatened with violence, arrest, prosecution for their human rights advocacy. Swazi police have harassed members of TUCOSWA, a Solidarity Center ally, breaking up their union meetings and banning rallies.

In May, an international delegation of union leaders traveled to Swaziland, calling on the government to guarantee the rights of workers to freely form unions and exercise freedom of speech and assembly. Led by Wellington Chibebe, International Trade Union Confederation (ITUC) deputy general secretary, and joined by Jos Williams from the AFL-CIO Metropolitan Washington Labor Council and Richard Hall from the Solidarity Center, the fact-finding group found that repressive legislation used by police against union activities had not been addressed by Parliament, even as the government continues to imprison human rights activists for exercising their right to freedom of speech.

Just days before the delegation arrived on May 14, the Swaziland government announced it had registered TUCOSWA after a three-year delay since the federation’s founding.

Rights for Kuwait Domestic Workers: A Good Start

Rights for Kuwait Domestic Workers: A Good Start

There is some good news for domestic workers in Kuwait: The National Assembly adopted a new law in June that will grant them unprecedented legal rights. The law applies to family maids, baby sitters, cooks and drivers.

More than 660,000 domestic workers are currently employed in Kuwait, most of them migrant workers from Asia and Africa. Human Rights Watch researcher Rothna Begum says this is a “major step forward” for Kuwait because for the first time it provides domestic workers with “enforceable labor rights.”

“Now those rights need to be made a reality,” she says, “and other Gulf states should follow Kuwait’s lead.”

Under the law, which brings Kuwait closer to compliance with internationally recognized labor standards, employers must grant domestic workers a maximum 12-hour workday with one day off per week and 30 days paid leave per year. The law also establishes a minimum wage of 45 Kuwaiti Dinar (around $150), guarantees end-of-service benefits—one month’s wage for every year worked—and bans employing domestic workers who are below age 20 or more than 50 years of age.

The National Assembly also voted to establish a shareholding company for recruiting domestic workers. The company would replace more than 300 independent offices, streamlining the recruitment process and limiting potential abuse of domestic workers. The assembly also voted to create Kuwait’s first National Human Rights Commission.

Begum, however, pointed out that some legal gaps remain. For example, it is not yet clear how the law will be enforced, and domestic workers still are not allowed to join unions to protect their rights.

Abdulrahman al-Ghanim, a migrant worker advocate at the Kuwait Trade Union Federation (KTUF), says the law should only be the beginning. Migrant workers especially are in need of further protection, he says. In Kuwait and other Gulf countries, the current Kafala system—in which recruitment agencies sponsor migrant visas—makes it easy for employers to abuse domestic workers and then charges workers as criminals when they try to escape. Kafala is “a system of slavery,” he says.

“The new legislation is a start,” says Begum, pointing out that the law still does not match the standards for domestic workers established by the International Labor Organization (ILO). “Kuwait should continue improving protections for domestic workers,” she says.

Bangladesh Women Workers Increasingly Empowered

Bangladesh Women Workers Increasingly Empowered

Women garment workers primarily fuel Bangladesh’s $24 billion a year garment industry, yet women are “still viewed as basically cheap labor,” says Lily Gomes, Solidarity Center senior program officer for Bangladesh.

“There is a strong need for functioning factory-level unions led by women,” says Gomes, who is leading efforts to help empower women workers to take on leadership roles at factories and in unions throughout Bangladesh. Some 60 percent of garment factory unions are now led by women, she said, and they are leading contract negotiations and discussions with government over improving working conditions.

Gomes, a Reagan-Fascell Democracy fellow at the National Endowment for Democracy, spoke last week in Washington, D.C., about the status of women, the legal protections (or gaps in those protections) for women workers, the recent deadly factory disasters and the ensuing international outcry and pressure on international clothing brands to demand workplace safety improvements.

This legal and international environment offers the opportunity to create “the political space for unions to organize, register and collectively bargain,” says Asia Regional Program Director Tim Ryan, who also spoke at the event.

“Women garment workers at the factory level, at the union and federation levels, are asserting themselves both as leaders in their organizations and now in their communities,” Ryan says.

But “the pressure both from below and above has to continue to maintain these gains women workers are making, and to further the fitful progress of democracy in Bangladesh.”

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