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GB.270/14
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FOURTEENTH ITEM ON THE AGENDA
International Institute for Labour Studies
Report of the 39th Session of the Board
1. The Board of the International Institute for Labour Studies held its 39th Session on 14 November 1997. It was chaired, on behalf of the Director-General, by Mr. Tapiola, Deputy Director-General of the ILO. It had before it the report of the Director,(1) the Programme and Budget for 1998-99,(2) and a paper concerning the acceptance of contributions and gifts(3) in support of the Institute's activities.
Report of the Director
2. The Director noted that, as desired by the Board, the report on activities was an analytical assessment of the work undertaken in 1997 rather than a descriptive statement.
3. In 1997 work was undertaken in two substantive areas: the interaction between global production systems and labour markets; and social exclusion. With respect to the first, labour markets were examined through the prism of emerging global production networks driven by international trade patterns, foreign direct investment and regional integration. While firms at certain points of these networks provided high value added outputs both in economic and in social terms, labour markets were showing signs of segmentation, wage dispersion and a weakening of the traditional mechanisms of social solidarity. At the same time, labour policies were becoming increasingly important for competitiveness. Levels of skill development, enterprise learning, work organization and good industrial relations were also becoming determinants of foreign direct investment. The Institute's work on export processing zones (EPZs) in Africa went beyond the conventional focus on working conditions and employment. It placed EPZs within the perspective of global chains, and explored policy options to upgrade them economically and socially.
4. With regard to social exclusion, the Institute's contribution was to develop this concept as a complementary dimension to conventional anti-poverty strategies and to extend its applicability to developing countries. In 1997 steps were taken to relate these findings to ILO concerns in respect of poverty, employment and labour institutions; to lay the foundation for an ILO approach to development, linking economic growth to institutional change, human rights and social justice; and to create a new frame of reference for a range of ILO programmes, especially on gender, poverty, employment, social security, child labour and normative action.
5. The research findings also conveyed a broader message: they suggested how the Institute's core theme -- the changing relationship between social institutions and economic growth -- should be approached in future. Globalization was making it increasingly difficult to separate "labour institutions" from "new forms of industrial organization". Interaction between labour institutions and production systems was now continuous, reciprocal, and at all levels. Labour policies were emerging as the main determinants of the competitive advantage of new forms of industrial organization; and were as important in terms of market efficiency as of social equity. Furthermore, labour markets and social actors themselves were being transformed by underlying changes in technology, capital markets and industrial organization. Increasingly, industrial organization was being defined in terms of labour institutions and vice versa. Social actors and institutions played a major role in the processes of inclusion and employment. The trend was clear: the debate had moved beyond the promotion of social cohesion, to the instrumentalities through which it was to be achieved. The key question was the role of the social actors, and the nature of their partnerships in both market and non-market settings. These considerations had accordingly been reflected in the programme proposals for the next biennium.
6. Three other features of the Institute's activities deserved emphasis: interaction with the ILO; external diffusion of the Institute's research; and institutional support to ILO constituents.
7. Interaction with the ILO had increased both in depth and in scope. It ranged from the International Conference on Social Exclusion, which was organized with the specific purpose of relating the findings of the Institute's work to ILO needs; through the Institute's contribution to the ILO's action programme on EPZs; to collaboration on seminars, training courses and field missions. Institute publications were being made available to ILO staff through the internal computer network.
8. Research findings were diffused through participation in external initiatives, publications and the Institute's programmes for visiting scholars and student interns. Examples of the first included: collaboration with the Danish Government in a major international initiative for social cohesion; a keynote address by the Director to an international conference on global production systems and local labour markets organized by the Swedish Minister of Development Cooperation; a forthcoming presentation of the Institute's research on social exclusion to World Bank staff; and membership in the steering committee of a Ford Foundation project on social exclusion in the MERCOSUR region. Publications remained a major means of diffusion: 14 were issued in 1997 and a further seven were under preparation. There had been a significant increase of student interns, who were an important channel for promoting future research in areas of ILO concern. Interaction with the international student community was sought through the ILO Social Policy Lectures, the third of which would be held at the University of Malaya in December on the theme "Managing economic success: the social agenda".
9. The annual international internship course was a key vehicle for providing institutional support to ILO constituents. A regional seminar was planned in Abidjan in December in response to constituents' requests for more educational programmes at the regional level. The seminar was a new initiative and was being financed out of RBTC funds. Such resources would not be available in future and other funds would have to be sought if the initiative was to be repeated.
10. Mr. Imoisili (Employer member) thanked the Institute for its excellent performance and felt that it had amply justified the Governing Body's confidence in it. He was impressed by its proactive approach; its keen appreciation of the environment in which it operated; and the clear assessment of its own strengths and weaknesses. The Institute had both a vision and a clear mission, and this was reflected in its growing stature and credibility outside the ILO. His own involvement in various activities permitted him to give the report his wholehearted endorsement. While he deeply appreciated the new programme orientations on business, labour and society, he was concerned by the relative absence of reference to government. The ILO was a tripartite organization and the State was a key actor. With globalization threatening sovereignty, and individualism threatening institutionalized democracy, governments were increasingly vulnerable, and were as much in need of study and assistance as the social partners.
11. Mr. Ahmed (Worker member) conveyed the appreciation of the Workers' group for the report. The issues addressed were of great practical value and he was particularly appreciative of the policy lessons they contained. Globalization often had an unfavourable impact on workers, further marginalizing the poorest. While recognizing that governments were influenced by the need to attract vital foreign direct investment, he felt that EPZs had added to the suffering of the working classes by downgrading labour standards and ignoring basic rights. He was pleased to note that due importance had been given to the concerns of the social actors in the new programmes and hoped that employers' and workers' organizations would be closely associated with this work. These organizations were at ground level and could contribute in practical ways to the programmes by ensuring that they reflected existing realities.
12. The Workers' group was particularly supportive of the educational activities. The links being developed with the student community were a vital means of taking the ILO's message to future generations. Interaction with universities should, therefore, be strengthened. The internship course continued to have the support of the Workers' group and it was pleased to note a similar activity at the regional level.
13. In the context of the ILO's follow-up to the Social Summit, Mr. Ahmed hoped that the Institute would give due importance to the problems of the informal and rural sectors, and of vulnerable groups including working women and children and bonded labour. The focus should be on their empowerment and on identifying ways in which they could be assured of greater access to productive resources and to decision-making bodies.
14. The representative of the Government of Hungary felt that the imbalance between the attention paid to the State and to the social actors was more apparent than real. She appreciated the new directions of the programmes on Business and society and Labour and society and understood that they would eventually come together to define the new relationships between business and labour, as well as their separate relationships with civil society. Governments would learn much from this exercise. The link between the current work of the Institute and its future directions could, however, be further elaborated.
15. The representative of the Government of Brazil said his Government appreciated the strategic role played by the Institute in identifying and exploring issues of future relevance to the work of the ILO. This was of particular importance in the current context of globalization and trade liberalization. The project on social exclusion was a case in point and constituted an important element in the ILO's follow-up to the Social Summit. The series of seminars and other events organized by the Institute and its many publications had contributed to a better understanding of this complex concept, and had given rise to positive ideas for overcoming exclusion. The programme on global production systems was also most timely and had provided an new perspective on the nature of labour markets in a global economy. He hoped that the Institute would continue to function as the think-tank of the Organization, providing information and stimulating debate on issues of future relevance.
16. Mr. Anand (Employer member) was pleased to note that the Institute's research findings identified skill development as a crucial policy issue. It was necessary to highlight the importance of the cooperation of the social actors with governments in this field. Experiments currently being carried out by employers' and workers' organizations offered lessons which deserved documentation and diffusion. The international conference on social exclusion had provided the ILO with a useful concept in its fight against poverty, and had identified the parameters of an action programme. It was now for the ILO to make use of the wealth of information provided by the Institute. Noting that social institutions were themselves in the process of mutation, Mr. Anand was pleased that the Institute planned to address this issue in its future programmes. When actors changed, institutions and modalities had to follow suit and the Institute's research could provide useful indications on the nature and direction of change, and on the options available to the social partners. Labour and business were two vital arms of the ILO, and studies which would help them to cope with their future social responsibilities would be of immense value.
17. Mr. Anand felt that the Institute's research on production chains could contribute to the development of a new ILO policy approach which optimized their contribution to employment and skill development. This was an area in which the Institute could help the ILO to move from promoting the goal of social justice to achieving it.
18. He noted with satisfaction the organization of a regional seminar in Abidjan, and the ILO social policy lectures in Kuala Lumpur.
19. Mr. Anand greatly regretted that the concern expressed by the Board in 1996 with regard to the Institute's financial needs had not evoked any response. He felt that if the Institute was to continue in its path-breaking role, the ILO had to provide more resources and facilities.
20. The representative of the Government of Senegal said that the activities carried out in 1997 were of considerable relevance to his country. Like many previous speakers he felt that the Institute was raising some very important issues for the ILO and hoped that the resources allocated to it would match the demands made on it. Its visiting scholar programme was invaluable in bringing new expertise into the ILO and of widening its horizons. The Institute's courses and seminars contributed to capacity-building in member States and there should be more initiatives like the seminar on micro-enterprises organized earlier this year. Publications contributed to the visibility of the ILO and the Institute had been particularly active in this area. He hoped that more would be done to promote the Institute's publications and to make them more widely available. He urged closer working contacts with researchers in other organizations of the UN system which could be mutually beneficial.
21. Ms. O'Donovan (Worker member) felt that the Director's opening remarks raised important issues which deserved more careful scrutiny and reflection and should be made available to the Board. With respect to global production systems, the new business strategies were giving rise to two conflicting tendencies: a demand for higher quality and productivity, on the one hand; and subcontracting which led to low investment in human resource development, on the other. This was an issue which merited closer attention. Noting the reference to a business and society network, she hoped that a similar network would be developed in relation to the Labour and society programme, particularly as labour networks were less well developed than business networks.
22. Mr. Sombes (Worker member) endorsed the remarks made by Mr. Ahmed regarding the quality and interest of the Institute's work. The Institute should continue its work on EPZs, with particular reference to social exclusion in the zones and their impact on industrial relations and working conditions. The programme on Labour and society would be of immense value to the trade unions and could contribute to the training of trade union researchers. He supported this programme and hoped that adequate means would be made available to permit this important work. He called attention to the fact that democracy and good governance were crucial preconditions for sound industrial relations and respect for fundamental human rights, and suggested that these issues be reflected in the Institute's future work.
23. The Director thanked the Board for its interest and involvement in the Institute's work. Responding to Mr. Imoisili, he said that the work on social exclusion and EPZs, which were the major areas of activity in 1997, directly involved the role of governments. The work done on business and society and labour and society in 1997 had been of a preliminary nature. The question of the role of employers' and workers' organizations in skill development raised by Mr. Anand, had indeed emerged from the work on EPZs, but it fell within the competence of the ILO's Employment and Training Department. He thanked the Government of Brazil for its support, and particularly for its contribution to the programme on social exclusion. The visiting scholar programme, referred to by the representative of the Government of Senegal, was seen as an important means of bringing new ideas and expertise to the Institute and he regretted that a lack of resources limited the programme to scholars who could afford to meet their own expenses. The seminar on micro-enterprises had been organized in close collaboration with the Enterprise Department and the Institute would be happy to undertake similar activities in the future. He noted the request that publications be made more widely available and would pass it on to the ILO's Sales section which was responsible for the dissemination of priced publications. The tension between subcontracting and ensuring quality and competitiveness, referred to by Ms. O'Donovan, would be a central issue in the Institute's work on corporate strategy, which was a part of the Business and society programme. Developing a labour network would be an integral part of the Labour and society programme.
24. Commenting on Mr. Anand's remark on resources, Mr. Tapiola called the Board's attention to the fact that the first consultation on the ILO's programme and budget for the years 2000-01 would take place in the Governing Body in March 1998. This was a key moment when constituents could give the Office indications for future work. It was important to determine the role of the Institute in the whole chain of ILO activities and to see what a more focused approach to the objectives of the whole Organization would mean for the Institute in practical terms. Personally, he was convinced of the importance of the Institute, not only as a separate entity, but also as a source of ideas which could feed into the work of the departments and the field structure. In a time of scarce and stagnant resources, it was essential to take stock of available tools and to use them to best advantage. The Institute was one such tool.
25. The Board took note of the report of the Director.
Programme and Budget for 1998-99
26. The Director called the Board's attention to the fact that the Programme and Budget for 1998-99 reflected a change of orientation. The basic theme of the Institute, which had been defined by the Board in 1985, as the changing relationships between labour institutions, economic growth and social equity, remained unchanged. It had been made even more relevant by globalization. This theme had been explored in terms of two perspectives: labour institutions; and new international organization. While these remained the guidelines for the Institute's research, they had hitherto been developed as separate programmes. Globalization meant that it was now more realistic to view them simultaneously rather than separately. A new synoptic focus had, therefore, to be found to address the original theme identified by the Board.
27. The over-optimistic view of the early 1990s that the market would provide its own solutions to social needs had been tempered by political realities; by a better understanding of the importance of social institutions in affecting market outcomes; and by a greater appreciation of the transformative power of social actors. A new individualism was changing public attitudes towards established institutions, whether political parties, trade unions or business associations. This, coupled with new industrial structures, was changing the traditional roles of ILO constituents themselves. Private values were being transformed into market signals through consumer demand, corporate boycott or regulatory pressures. Public debate had gone beyond the state/market question and was increasingly concerned with market/society relationships. This highlighted the role of social actors in determining market outcomes. These were the emerging realities which the Institute, and the ILO, had to capture and reflect in their programmes. They pointed to an emphasis on social actors and their changing institutional environments. This had already been reflected in the Board's discussions in 1996. The proposed programmes on Labour and society and Business and society were a response to those concerns. Taken together, they aimed at placing tripartism in the contemporary perspective of globalization and social change.
28. Referring to the earlier statements by the representative of the Government of Hungary and Mr. Imoisili, the Director agreed that no discussion on civil society could be complete without consideration of the role of the State. Indeed, the debate was just beginning and could be expected to gain momentum in the next few years. However, the role of the State in relation to social policy would be conditioned by the evolution of trade unions and employers' organizations. Their reactions to changing industrial structures, the levels at which they interacted, and the nature of new industrial relations were essential elements in defining the role of the State itself. Similarly, any initiative by business and labour to explore their own adjustment mechanisms would prepare the ground and improve the climate for future tripartite negotiations. This was why the Institute had begun with activities on business and labour. The role of the State would be examined through the Intersectoral activities programme to prepare the ground for a detailed consideration in the 2000-01 biennium. The programmes as a whole were an attempt to respond to the felt needs of ILO constituents by providing them with an analytical and conceptual framework to develop new perspectives for future growth. The programmes would also generate a higher public profile for the social actors. The relationship between civil society and the market was going to be the subject of international debate in the next decade. It was essential for the ILO to be present in this debate, and the programmes aimed at positioning it to enhance public recognition of the role of its constituents.
29. The Educational and intersectoral activities programme had been strengthened to prepare the ground for future Institute programmes; to increase exchanges between external academics, ILO constituents and staff; and to contribute to ILO follow-up on the Fourth World Conference on Women.
30. The Institute would have a total of nine professional staff, including the Director, in the next biennium. This was essential to achieve the minimum critical mass required to launch new programmes. As the Institute was entering into new areas, it was proposed to use staff resources flexibly to bring in high-level academics for brief periods to initiate new activities, to ensure an overall balance between the two substantive programmes, and to optimize the specific research profiles of individual staff members. The Institute intended to seek extra-budgetary resources where possible and hoped that the Board would assist by helping it to set up research networks and access third-party financing.
31. Mr. Anand expressed reservations concerning extra-budgetary financing for the research programmes. He contended that the new programmes covered very sensitive ground and it was imperative that the research should be seen to be entirely objective. That alone would ensure its acceptability to ILO constituents. Research should, therefore, be financed by the ILO's regular resources to avoid any hint of undue influence or control. This would require a larger ILO contribution to the Institute in future biennia. He noted that preliminary consultations on the 2000-01 biennium would take place in March 1998. It was important for the groups and for the Office to take the necessary steps at that time.
32. The new programme orientations were both appropriate and timely. Employers' organizations and trade unions had evolved in the context of adversarial industrial relations. Current global realities were calling this into serious question, and with it, the structure, functions and adequacy of these bodies and their methods of interaction. The survival of society and the promotion of social justice now called for cooperation. This required a sea change in attitudes on the part of the social actors themselves and an expansion of their areas of action and competence beyond industrial relations to human resources development, employment promotion and social inclusion. This, in turn, required them to form strategic partnerships and alliances with other like-minded bodies. Mr. Anand said that in setting up networks, it was important to go beyond employers' organizations to business associations such as the International Chamber of Commerce (ICC). The IOE had good working relations with the ICC, and it was important to draw upon their resources and knowledge. In embarking on the new programmes, the Institute had assumed a lead role in identifying the parameters of future social policy. Trade unions and employers' organizations were stable elements in a rapidly changing polity, and any action which assisted them in fulfilling their leadership role would be of incalculable value. He, therefore, reiterated his concern that adequate resources be made available to enable the Institute to carry out its proposed programmes.
33. Agreeing with Mr. Anand's remarks, Mr. Imoisili said that the proposed programmes were of considerable importance to the ILO's tripartite constituency. The Employers' group had noted, with concern, the fall in the ILO's contribution. The Institute had established a record of fiscal discipline, and the distribution of resources between the programmes had the approval of the Employers' group. He supported Mr. Anand's contention that third-party financing had to be approached with caution, and hoped that as governments were the major sources of funds, the usefulness of the Institute's work on the social partners would be recognized. He had some reservations on the use of the term "organized labour" (paragraph 21) which needed to be carefully defined. He noted that individual employer-employee relations were growing, as was a human resources model of labour relations. These new developments, and their relationship to organized labour, should not be overlooked by the proposed studies. The programme and budget had the approval of the Employers' group.
34. Mr. Ahmed said the Workers' group supported the new programme orientations, which were both timely and pertinent. However, he noted the imbalance in staff allocations between the two programmes and hoped it would be corrected. The Workers' group was particularly happy with the way in which the programme on Labour and society had been formulated. They hoped that gender issues would be adequately addressed and that the programme would help unions to develop their analytical and research capabilities. The Institute's intention of exploring strategic alliances between the formal sector actors and their informal sector counterparts would be of great value to the trade unions. While he respected Mr. Imoisili's opinions concerning the human resource model of labour relations, he felt that an institutional framework was necessary if workers were to exercise any real influence, not just at the enterprise level, but also on national industrial and labour policy. As individuals they were vulnerable to exploitation; as members of an organization they were protected by collective bargaining and were more likely to subscribe to the ideals of industrial peace and social harmony. This was in the interest of the employers. He hoped that the Labour and society programme would contribute to building trade union capacity to negotiate, not only on behalf of its own membership, but also on behalf of workers in the unorganized sector. Similarly, he hoped that the Business and society programme would highlight the social responsibility of business and its role in promoting social dialogue, good working conditions and sound labour management relations through respect for fundamental human rights.
35. The representative of the Government of Brazil said he valued the Director's explanation of the change in programme orientation. He conveyed his Government's support for the programme and budget.
36. The Director assured the members of the Board that careful note had been taken of all their comments and thanked them for their support and encouragement, not only at Board meetings, but throughout the year. He would take into account Mr. Anand's suggestion that the Institute look beyond trade unions and employers' organizations to intermediary bodies such as the ICC. He also noted the observation concerning the importance of ensuring the perceived independence of the research proposed.
37. The Board adopted the Programme and Budget for 1998-99, and accordingly transmits the programme to the Governing Body of the ILO for endorsement and the budget for final approval, in accordance with article II, paragraph 6, of the Regulations of the Institute.(4)
Acceptance of contributions and gifts
38. The Chairman noted that there were two issues for discussion under this item, the Phelan legacy and a contribution by the Employers' Confederations of Denmark, Finland, Norway and Sweden to the internship course.
39. The Director explained that the Institute had benefited under the terms of the wills of Mr. Edward Phelan, former Director-General of the ILO, and of his wife Mrs. Ferdinande Phelan. Edward Phelan was one of the first officials appointed to the ILO when it was created in 1919 and rose to become Assistant Director-General in 1933 and Deputy Director-General in 1938. He was appointed Director-General in 1941 and held the post until 1946. He made an exceptional contribution to the growth and development of the Organization in the inter-war years and was largely responsible for its survival through the Second World War. Under the terms of Mr. Phelan's will the Institute was to receive 10 per cent of his estate, on the understanding that this would be used for fellowships bearing his name. Under the terms of Mrs. Phelan's will, the Institute was to receive 25 per cent of her estate. To date the Institute had received approximately 470,000 Swiss francs from the two legacies. The final sum would be determined by the amount realized from the sale of the Phelan property. The Institute intended to invest this sum in a separate account and use the interest to finance appropriate fellowships.
40. The Director thanked the Employers' Confederations of Denmark, Finland, Norway and Sweden for their contribution of US$5,000 to the internship course.
41. Mr. Ahmed wished to record the appreciation of the Workers' group for the Phelan legacy. He also thanked the Nordic Employers' Confederations for their contribution to the Internship Course.
42. Mr. Imoisili asked that the appreciation of the Employers' group for the Phelan legacy should also be recorded, and suggested that this generous gift be brought to the attention of the estates of former Directors-General. The fellowships might be used to bring members of employers' and workers' organizations to Geneva to work on issues of mutual concern to the ILO and to their national bodies. He also wished to convey the thanks of the Employers' group to the Nordic Employers' Confederations.
43. The Board recommended to the Programme, Financial and Administrative Committee of the Governing Body of the ILO the acceptance, with thanks, of the Phelan legacy and of the contribution of the Employers' Confederations to the internship course.
Geneva, 18 November 1997.
Point for decision: Paragraph 37.
1. INS.B.XXXIX/2, appended.
2. INS.B.XXXIX/3, appended to GB.270/PFA/3/1.
3. INS.B.XXXIX/4, appended to GB.270/PFA/3/2.
4. The proposals were examined by the Programme, Financial and Administrative Committee as set out in GB.270/PFA/3/1.