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Outsourcing Hurts Globally Cohen Tells World Bank
Invited to give labor's view of outsourcing to a World Bank conference June 28, CWA Executive Vice President Larry Cohen said contracting out services is bad for workers, consumers and economic growth, leading "to a relentless global race to the bottom."
Cohen, president of UNI Telecom, the telecommunications branch of Union Network International, was asked to represent the organization at the Washington, D.C., conference. UNI encompasses more than 900 unions with 15 million members in 150 countries.
Because the profit-making potential of outsourcing is irresistible to many businesses, no matter the social cost, Cohen said "national governments, multinational organizations, and international development agencies, such as the World Bank, must adopt policies that support an alternative path to development - one that seeks to build sustainable economies by linking the defense of good, secure jobs in one country to the fight for good, secure jobs globally. This is UNI's vision."
He explained that UNI and CWA don't differentiate between "outsourcing" and "offshoring" - whether the work is sent down the block to low-wage workers or across the ocean where pay is even lower.
"From our point of view, the location of the outsourced work is not the issue," he said. "Rather, we are concerned about the forces that are driving companies to shed core business functions, to contract out work to the lowest cost bidder, and to sever the relationship between the worker and the employer. Employees of outsourced companies have no possibility to build long-term relationships with customers, or to provide information feedback to the core service provider, who is not their employer," he said.
Ensuring universal worker and human rights is vital to any development strategy, Cohen said, explaining how the right to organize and bargain collectively historically has been key to improving working conditions and a measure of job security. As workers' wages rise, so does demand for goods, which helps the economy grow.
"At the same time, social legislation - largely championed by the labor movement - sets minimum wage, hour, health, safety and other workplace standards, thereby blocking the competitive race to the bottom," he said.
All of that is complicated by outsourcing. "Outsourcing adds another dimension to the challenges we face in promoting global labor standards and worker rights," Cohen said. "Outsourcing by its very nature removes accountability and responsibility from the service provider. The outsourcer can claim a lack of power to improve worker living standards, since competition is based on low costs and minimal social regulation."
Cohen told his World Bank audience he appreciated their desire to hear the labor perspective, and said the international trade union movement looks forward to working with global development agencies, governments and the private sector to "restore global balance together."
"Policy has consequences for firms, workers and government," he said. "If we examine the real consequences, we can make a difference and together restore balance."
Cohen, president of UNI Telecom, the telecommunications branch of Union Network International, was asked to represent the organization at the Washington, D.C., conference. UNI encompasses more than 900 unions with 15 million members in 150 countries.
Because the profit-making potential of outsourcing is irresistible to many businesses, no matter the social cost, Cohen said "national governments, multinational organizations, and international development agencies, such as the World Bank, must adopt policies that support an alternative path to development - one that seeks to build sustainable economies by linking the defense of good, secure jobs in one country to the fight for good, secure jobs globally. This is UNI's vision."
He explained that UNI and CWA don't differentiate between "outsourcing" and "offshoring" - whether the work is sent down the block to low-wage workers or across the ocean where pay is even lower.
"From our point of view, the location of the outsourced work is not the issue," he said. "Rather, we are concerned about the forces that are driving companies to shed core business functions, to contract out work to the lowest cost bidder, and to sever the relationship between the worker and the employer. Employees of outsourced companies have no possibility to build long-term relationships with customers, or to provide information feedback to the core service provider, who is not their employer," he said.
Ensuring universal worker and human rights is vital to any development strategy, Cohen said, explaining how the right to organize and bargain collectively historically has been key to improving working conditions and a measure of job security. As workers' wages rise, so does demand for goods, which helps the economy grow.
"At the same time, social legislation - largely championed by the labor movement - sets minimum wage, hour, health, safety and other workplace standards, thereby blocking the competitive race to the bottom," he said.
All of that is complicated by outsourcing. "Outsourcing adds another dimension to the challenges we face in promoting global labor standards and worker rights," Cohen said. "Outsourcing by its very nature removes accountability and responsibility from the service provider. The outsourcer can claim a lack of power to improve worker living standards, since competition is based on low costs and minimal social regulation."
Cohen told his World Bank audience he appreciated their desire to hear the labor perspective, and said the international trade union movement looks forward to working with global development agencies, governments and the private sector to "restore global balance together."
"Policy has consequences for firms, workers and government," he said. "If we examine the real consequences, we can make a difference and together restore balance."