Wednesday, July 25, 2012

Book Review: Social Dialogue and the International Financial Institutions: The case of Eastern Europe by Christina Hießl

     Christina Hießl's 2010 book Social Dialogue and the International Financial Institutions: The case of Eastern Europe is an important contribution to the nascent study of the inter-relationship between international financial institutions such as the World Bank and the International Finance Corporation and trade unions and employer groups.  Based on case studies, careful examination of country loan agreements and interviews with trade union officials at international confederations and in Central and Eastern European nations, the book assesses whether and to what extent the views of trade unions and workers are taken into account by IFIs in the design and implementation of country loan programs and policies.

     Social dialogue - the practice of including worker and employer representatives in the formulation of national fiscal and social policy - is as European as baseball is American.  Not only is the practice of social dialogue entrenched at the national level of many EU member states like Germany, Denmark, Spain, France and the Netherlands - it is entrenched at the EU level and in the OECD.  Thus, the question of whether Eastern and Central European nations - many of which are or aspire to be members of the EU - have strong social dialogue mechanisms is an important one to explore, as is the particular question of whether trade unions in these nations participate in social dialogue with international financial institutions such as the IMF and the World Bank which have had such a big impact on the economies of these nations since they emerged from communism in the early 1990s.

     The need for exploration of these questions is emphasized by the author, who notes that there is little written material on the subject of IFIs and social dialogue, especially in the context of the current global economic crisis when many long-established members of the EU like Greece, Italy, Portugal and Spain are in the position of having to seek aid from the IMF to bolster their faltering economies and weakened banking systems. 

     In an interesting background section, the author notes that trade unions were involved in the implementation of the Marshall Plan (overseen in part by the World Bank) in immediate post-World War II era Europe.  Later, the World Bank and IMF increasingly adopted a neoliberal economic approach while the International Labor Organization developed and advocated for an employment-intensive approach to economic growth.  The author recounts that the IFIs started taking steps in the late 1980s "in the direction of" acknowledging the importance of social policy, with a couple of meetings between the ILO and IMF.  The ILO reported on a high number of violations of the rights to freedom of association and collective bargaining in countries with IMF programs, however.  As late as 1999, the IMF had doubts about freedom of association and collective bargaining.  The author points out that since 2001, the attitudes of the World Bank and IMF have slowly begun to thaw towards these core labor rights - though complete acceptance is a distance dream.  In a milestone in the developing relationship between IFIs and social rights, since 2006 core labor standards have been a compulsory element of International Finance Corporation projects.  Despite this and a few other bright spots in the incremental (some might say glacial) process of change outlined in the book, the author found few instances of actual engagement between the IFIs and trade unions in Central and Easter European countries.  The author ascribes causation to various factors, not all arising from unwillingless on the part of the IFIs.  Some contributing factors include lack of capacity on the part of some trade unions, active interference and prohibition by governments and lack of social dialogue infrastructure in some Central and Eastern European nations.

     In examining case studies and discussing interview results, the author highlights the tension between IFI official emphasis on "rule of law" and "institution-building" while IFI policies often underming both, in contrast to EU emphasis on important educational and social dialogue infrastructure.  In doing so, she makes the important point that the process of changing the hearts and minds of IFIs like the World Bank and IMF with the goal of improving social dialogue with trade unions and employer groups in the implementation and development of loan programs and project will be a long and arduous one.  Social Dialogue and the International Financial Institutions: The case of Eastern Europe will form an important building block in making this process happen.