Sustainable Livelihoods

Michael Whaites: Tanya is a social entrepreneur in Auckland Council. A social entrepreneur is someone who works inside a big organisation, like the Auckland Council, to promote practical solutions to social or environmental challenges, where progress is currently stalled by market failures, and does so applying the principles of social entrepreneurship. So how does this relate to free trade agreements and how do they counter sustainable living?

Tanya [He mihi] I work in a very small team called the Southern Initiative. We are basically a social innovation think and do tank that is focused on some of our really tough challenges and grappling with those challenges that are present in South Auckland. One of our priorities is creating shared prosperity. We are tiny and very lean in resource, but our job is to demonstrate that just, inclusive, circular and regenerative economic development is possible. That encompasses all the work we do around employment, skills, entrepreneurship and employment.

We are very fortunate in that we are kind of insider-outsiders. We work at grass roots with whanau, particularly those who are farthest from the labour market, and we also have access to the system, and we can take all those learnings that we have of working at the grass roots level and feed that back into the massive bureaucracies that have a massive impact on people’s lives.

One of the things that we have been doing is using the Council family’s procurement, which is really significant. We spend $3 billion a year just buying stuff. To really squeeze that purchasing power to create quality (which we have a definition of) employment and opportunities for South Auckland, and Maori and Pasifika in particular. One of the things we have been doing is stipulating wage rates in the contracts. The requirement is, for example, to start our Maori and Pasifika trade training graduates in construction and infrastructure and allied trades – we stick to our knitting because that’s what we as a council buy – and the starting rate is the living wage. Then the requirement is that the contractor or supplier needs to get people up to $25 an hour within 12 months of employment. At $25 an hour, which is only $50,000 a year, that’s when we close the gap between the South Auckland median income and the rest of Auckland median income. If you are a Pasifika person from South Auckland it is 79% more than the median income. Then we require them to do it again within 24 months of employment to get people up to $27.50 an hour, because then we have created an advantage for South Aucklanders.

That’s our job, to create an advantage. We are very cognisant of the hard economic lessons of the South, and what happens when you don’t focus on creating a workforce that is resilient to economic shock. We see this repeatedly every time there is an economic shock, unemployment in the South completely pulls away from the rest of Auckland and it doesn’t ever really recover. I’ve just done a deep data dive of a 1 km area in Mangere and the median income in this area is $16,500 per annum. It has reduced in both real and nominal terms since 2003 and is equivalent to $10,000 in 2003 prices. It’s just not going to get better. That is a market failure, and part of our job is to intervene because of that market failure. That’s one of the things that characterises the South and there are generations of South Aucklanders who pay for it.

It is really interesting to have opportunities like this to lift our eyes to the horizon, because we are so in there with whanau advocating for them. Our whanau have very complex personal lives. We have to get in there because it affects their employment and the unreasonable level of stress they are under so they can’t thrive, and they can’t create good livelihoods for them and their whanau.

We have a government that will be bringing out the first wellbeing budget next year. It speaks to everything that we stand for about investing in human capital and social capital and environmental capital as much as we do in physical capital. Therefore all of our instruments need to reflect that. One of the things for us about the CPTPP is how it might particularly affect us around local government, but also what it would mean around the offsets – how would labour market insertions in procurement contracts for domestic development purposes be categorised? That’s something we rely very heavily on and we are on shaky ground anyway, and we could be judicially reviewed. All these things are untested. So what might that mean for us to drive up wages and skills invested into people? Making that link between the global economy and our domestic macro-economy needs to be reflected in all of its instruments, as this government is saying it wants in the future.

Michael. I really like the story of your local government trying to drive up the minimum wage in your region. In Australia we hear stories of local governments taking back control of their waste removal services. In that way the wages are going back into their local community that is creating great benefits. So we have this tension of local progressive governments trying to create sustainable development in their communities. Meanwhile, we have progressive national parties signing the free trade agreements that will stop that. So the rhetorical question for you is: what relationships do we need to break at the national level in order to allow local progressive governments to achieve sustainable development?

Question. We heard earlier that global structures are in crisis because the multinationals break and/or ignore our rules for their own purposes. So should workers and communities in defence of our livelihoods argue for a return to the old world order and a seat at that table, or should we also break existing bad laws in order to establish community focused new world order?

Tanya  I’m not sure if it is an either or. I think it’s completely different, and maybe several, alternatives. One of the things we have learned is that in complex situations there is no single silver bullet. You need many silver bullets. Our team is known for not following the rules, and it hasn’t served us badly. It has actually attracted investment into us. We have grown from 4 people to 40 in just 4 years. There are times when breaking the rules is a very necessary thing – or not following them. I am really interested in those brave smart, public servants who are willing to do that and who are backed by brave, smart elected representatives who are really willing to take that risk.

Question. About the concept of leisure. Max Weber said something like one does not live to work, one works to live. Do we over-value the concept of work and should we value the concept of leisure more, especially when contemplating the demographic automation and technological and economic changes we are anticipating.

Tanya  That’s a really interesting question. For Maori, we don’t have a choice. We have been alienated from capital, so we can’t use capital to create wealth or livelihoods. NZ’s economy has been built on the deliberate alienation of Maori from their capital. We see that all the time in South Auckland. Lots of people just don’t have a choice. The perverse thing is that when they are working it still leads them into poverty, and places a whole new range of stresses on people and makes their lives poorer. Their mental health is something we are really seeing in all our entrepreneurship work. Mental health is the elephant in the room. It is brought about by circumstances that are really wicked and complex. I equate the idea of leisure with having meaning and purpose is one’s life. Whether that’s through work or through being part of communities. We have an issue with alienation from each other, and symptoms of that are why NZers have such very high rates of alcohol and drug abuse.

People are trying to get out of our heads, we are alienated from each other. So the idea of leisure and how do we create an economy where people and the planet matter and enables people to have good lives, is a really great question, to which I have no solution. One of the things we struggle with in the South is that any job is a good job. It’s not. Poor jobs keep people poor. We advocate people staying on a benefit rather than going into some shitty go-nowhere job that just places lots of stress on them, and they can be home when their kids come home from school.

The living wage movement came about because of a failure of regulation to support in any way the lowest paid workers in the country. Workers that E Tu represents who are cleaners or security guards are not workers for whom you can raise the wages through the normal negotiating process, because the funding for those workers’ wages comes from another source and that source is not at the bargaining table. For instance, local or central government hold the purse strings to a lot of those workers’ wages. But the union negotiates with Armourguard or with Spotless or whoever the company is who directly employs those people.

The idea behind the living wage movement was that we would bring together the forces from beyond unions and beyond the bargaining table, forces from across civil society, to create sufficient voice and sufficient influence to bring about a change to the way that governments address questions of low pay and growing poverty and inequality in NZ. So the living wage movement needed to target more than a labour relations regulatory environment. It needed to look for things like public policy around procurement and how governments would do something about the way they entered into the contracts for services that they do with a lot of the companies that drive wages down, or are forced down because of the competitive tendering process.

The way that we dealt with that and targeted central and local government has proven to be really successful. There’s a lot of possibilities. There’s the wonderful example of what’s happening with the Southern Initiative that Tanya Pouwhare talked about. We have also got the first city council over the line as a living wage employer, that’s the Wellington City Council. And the workers’ stories from that council where their lives have been transformed are truly remarkable. Sometimes it’s maybe only a 30% increase in their income. And for many people, maybe even for some people in this room, that amount of $20.55 isn’t that much. But for these workers it gives them a hope, and they suddenly start to plan, dream of doing things like taking families on holiday, being able to do things like tangi where they need to get proper transport to, going home to the Islands. There’s so many things which in many ways are essentials that families juggle and suddenly it’s possible for them to pay for some of them. The stories are very transformative. But getting Wellington City Council over the line was not without a legal challenge by the Chambers of Commerce because they didn’t believe that the Council could set terms for their procurement of services. In fact there’s an objection to the idea that anything but the lowest possible price should apply.

We now have a central government that is committed to moving its core public contracted workers to a living wage by the end of this electoral term. So again, for the first time, procurement is in the spotlight. The biggest challenge around that stuff is you are dealing with completely different people. We are trying through the living wage movement to close the gap between public officials and citizens so people can organise in all the ways we like to in order to influence public officials to make commitments and then to stick to them. That’s what we hope democracy will deliver.

So we try to do that, but then a procurement process takes place which is highly commercial. The interests of citizens are very much not in the front of their minds. It will be interesting to see how, in a much higher profile way, central government start to change their procurement policies so those companies don’t pay the lowest amount of money. When you are looking at the types companies, these are enormously wealthy companies, like Armourguard. They are big multinational firms that can afford to pay more.

The risk is that, in that space that we are trying to close between citizens and government, there are the trade agreements that set new terms. So in the end we lose hope that it is possible to organise something different. We lose hope that in fact we can collectively create a voice to bring about the sort of changes that we want. In some ways it’s not just about union power, and our ability to influence government – it’s about the weight that governments put on the enabling of civil society organisations to do the work that they have to do to balance the power of the market. Those things are incredibly important if we want to protect democracy for the future and give the people in our constituency some hope that they can bring about change.

Michael Whaites: If the union movement or civil society move is not strong enough, and they have to come together, the rhetorical question is what does the new social movement look like if we are to change the way deals are done?

Q. We heard earlier that global structures are in crisis because the multinationals break and/or ignore our rules for their own purposes. So should workers and communities in defence of our livelihoods argue for a return to the old world order and a seat at that table, or should we also break existing bad laws in order to establish community focused new world order?

Annie – It’s very hard to break rules if you don’t have collective power. Otherwise you are making random attempts. It’s hard to organise against the kind of forces that exist out there now and we have to be very smart and organised to do that. From my point of view, we can only operate in the world as it is, and that’s complex but it requires a lot of collective voice from many diverse organisations if we are going to win.

Q. In view of the earlier conversation about the Googles and Facebooks, how do you get the movement and mobilise people when basically so much of what’s happening with trade and multinationals the agenda is set way outside anything we have control of.

Annie – the concept behind a new Auckland Community Alliance, which is called Te Ohu Whakawhanaunga, is that we build the relationships across diverse groups that want to see a reduction in poverty, and want to see flourishing communities. It’s not actually formed. It will form in about 2-3 years, because when we form we want to bring on board all the organisations that want to have a collective civil society voice. Then having formed those relationships we develop a programme of work that we are all committed to. And we try to step away from some of the issue-based politics that sometimes divide groups where we need the strength of as many as possible. It may mean that some issues don’t ever see the light of day because there isn’t a consensus around it. But there are really positive examples where quite big structural and system changes have been made by building that kind of consensus across diversity.

Michael Whaites: The obvious question to ask you is how have trade and investment agreements affected workers’ rights and what are some of the fundamentals that have been problematic.

Laila: There are obviously much broader impacts of trade and investment agreements on workers and employment than I am going to address today. My specific focus is on the impact of the labour chapters and rules or references to labour standards that are increasingly present in free trade and investment agreements. In NZ they have been largely to date in the form of memorandums of understanding between NZ and various bilateral trading and investment partners – China, Malaysia, Singapore, Hong Kong, and so on. They are not enforceable, but they are understandings about how each party will conduct itself in relation to labour laws and standards domestically. The most recent agreement, CPTPP, includes a full chapter on labour, which is supposedly enforceable.

I want to come to the issue of how these rules do or don’t impact. Basically, there are two kinds of principal issues here. First, do these rules enable countries to improve or protect their existing labour standards? Second, are there elements in these agreements which actually prevent countries from improving or protecting their existing labour standards? In my assessment, having looked at hundreds of agreements in a lot of detail, and the last 50 negotiated globally, and all the cases there have been on the enforcement of labour rules in trade and investment agreements or issues that have arisen from that, if we didn’t have labour rules and standards in these agreements we wouldn’t be in a worse position than we are.

Because the detriment of those agreements to jobs and workers is well beyond any arguable benefit from the labour rules and standards.

The second conclusion I have reached is that the investment rules, in particular the rules that enable investors to sue governments for regulatory interventions, although to date they have not had a negative impact on labour regulation, that is only because no country has entered into a process of transformational labour law reform over the last 30-40 years, which is also the period of explosive growth of investor-state dispute settlement (ISDS). If you look at it theoretically and what could happen if, for instance, the living wage campaign or social procurement advocates really succeeded through pressuring and mobilisation and getting central or local government rules that are really transformative of labour rights, then I have no doubt we would be vulnerable to litigation.

The way these agreements have been drafted, including the CPTPP which our minister of trade describes as a gold standard agreement, do not have protections in them for the policy space we would need if we had a reassertion of trade unionism and a really successful momentum for progressive labour law reform of the kind that many in this room would aspire to.

Michael: Rhetorical question – if the reality is that we would be no worse off if the labour chapters were removed, is there any point in us being at the table?

Question: We heard earlier that global structures are in crisis because the multinationals break and/or ignore our rules for their own purposes. So should workers and communities in defence of our livelihoods argue for a return to the old world order and a seat at that table, or should we also break existing bad laws in order to establish community focused new world order?

Laila:  I’m not sure I can see an equivalence between the options available to those of us with few resources available to us, other than our time or collective energy, and the corporates who bring in large investments and have huge political influence a la Uber and so on to get what they want. What I would say is that I really strongly believe that the method for achieving people-centred regulation is still very rooted in the domestic body politic, and in work in communities. While the area of labour regulation is heavily influenced by the forces of globalisation, investment and so on, the place for developing our industrial relations rules, our culture, is still very much in the domestic environment.

If anyone has to break the rules of this kind of international economic regime, it’s the state that needs to break the rules of there are rules against regulating to enhance the wellbeing of communities for which you have responsibility as the state, then the state must break those rules. Obviously the best thing we can do is to stop those rules being put in place, which is why we campaign against these kind of agreements. But there must be a willingness of the state to break those rules in the interests of the community. That’s the level where that responsibility lies.

Question: How do we make sure the work in China and other countries also benefit from our progressive improvements? A few months ago the Indian PM and Chinese Premier said we are all for globalisation. They see the short-term benefits. They don’t see the long-term price that they are going to pay. Taiwan, where I come from, is now a ruined environment. The same as China. Is that part of the price we have to accept because we want cheap labour and they keep moving production around from China to Vietnam or another country? How do we actually keep the balance. Chinese people say “do you realise how polluted it is to produce all the solar panels for the developed countries”. How do we get rid of this kind of dilemma?

Laila: That’s a really good question, and at the nub of the dilemma. I want to relate it back to the trade agreements and how it works within that framework. Traditionally, we had tariffs and other forms of protection for local manufacturing or local capitalism, and local workers. We’ve moved away from that to this believe that a free trade and investment environment will lift standards for China or any other country by some miraculous process around the world. Obviously trade unions and workers in countries that have been negatively impacted by the opening of their markets to cheaper imports have said we want some constraints on that.

Which is why this idea of labour chapters and labour rules came into play. But the reality is that those rules don’t help either party. Despite the fact we’ve had these rules and agreements for 20+ years, it is mainly in the US agreements and often with South American countries or the Middle East. There are very poor connections between those rules and improvements in wages or working conditions in those countries. There has been one case that’s gone the distance on the enforcement of those rules, which is a US case with Guatemala. The US lost that case. Even though the tribunal said yes Guatemala has broken fundamental agreements, the US couldn’t prove that has advantaged Guatemala in terms of its trade with the US and therefore they lost. All our agreements have the same problems. The reality is that these rules have not led to improvements in working conditions in those countries.

What I think is the most important thing we do, is to preserve the democratic space, whether it’s here or China or any other country for the communities in that country to organise and assert themselves in relation to the regulatory system. We might not like things that happen in other countries, but the approach in these agreements hasn’t actually made them better.

What it does do is limit the possibility in those countries for them to organise and win improvements themselves at home. We have to be a little less paternalistic about it. Let’s acknowledge that our wealth has come through hundreds of years of exploiting in our own home countries and have exploited people in poorer countries who have provided us with the resources on which richer countries have got richer. We need to delete the paternalism and the most important thing we can do is protect the space for people to organise domestically. We don’t do that by saying these are the rules you have to follow, as we don’t actually enforce those rules because we want cheap products. And we don’t have the capacity in our own civil society organisations and unions to stop imports etc from those countries anyway.

Michael Whaites: If free trade agreements aren’t that great for workers, how are they for migrant workers? It is hard to discuss the connection between free trade agreements and labour migration without discussing the effect in terms of the perspective of sending countries.

Dennis: One thing I would like to establish is that since the neoliberal inception, free trade agreements did not establish sustainable jobs in sending countries. In fact, migration was because of de-industrialisation, the backwardness of their agriculture, the costs of massive unemployment.

When you discuss migration and free trade agreements it’s all about remittances. Would you believe remittances now outweigh the sending country’s overseas development assistance? There are many sending countries now that are heavily dependent on remittances. 2014 was the highest number of remittances recorded by the World Bank, $8.6 billion dollars. If you look from that perspective, there are 4 countries that are benefitting from this: India, about $60-69 billion; China $60 billion, despite their domestic development; Philippines $24 billion; and Mexico. These countries, instead of creating sustainable jobs, strengthen their labour institutions to export their labour force.

NZ and Australia are countries in the Pacific where we benefit from that but we don’t ask questions. If we employ nurses in NZ, what does that mean for the health system in the Philippines, for example. The same with India, will there be a shortage there? We never ask those questions. That is a problem in terms of the labour migration aspect in the free trade agreements.

Second, you need to look from the perspective of how the developed and sending countries correlate on this. Some of them are arguing, ‘hey a free trade agreement will increase productivity’. If you go to NAFTA, for 8 years of its existence, yes it increased the productivity by 50% but there was a massive decline in wages. If you look at the population of Mexicans now living in the US because of NAFTA, it hugely increased their proportion of the population. So a lot of companies right now are heavily relying on the cheap labour export policy of different countries. That’s a major problem for us.

The next question is how the government can protect those migrant workers in the host country, because there is a lack of understanding of their situation nowadays. It is very important for us to understand the free trade agreements, let alone the bilateral agreements, because they have shaped the migration policy.

Migration is actually a gate – how much do you open up the gate for those migrants. If you don’t ask questions about what is happening in the sending countries, you won’t be able to understand what is happening in the host country.

Michael: Some people do ask those questions about the movement of migrant nurses! The rhetorical question for you has to be: if the free trade agreements are really about sustainable development, shouldn’t that mean the migrant workforce would dry up? If we had true development in every country, why would you need to flee to another country to get better wages and conditions?

Question. We heard earlier that global structures are in crisis because the multinationals break and/or ignore our rules for their own purposes. So should workers and communities in defence of our livelihoods argue for a return to the old world order and a seat at that table, or should we also break existing bad laws in order to establish community focused new world order?

Dennis: First and foremost in the age of global recession I don’t think we can go back to the old rules. That’s a big problem now. Coming from a trade union background, I don’t speak on behalf of trade unions, but the way trade unions are responding right now is quite reactive. That’s why, for example, some civil society organisations are taking over some space in terms of holding those transnational companies accountable. In the last 5-10 years there are now some discussions about what we can do in order to make these free trade agreements and transnational companies accountable. There are discussions about global framework agreements that global union federations are using. There is also discussion about supply chain agreements, where we can be part of those free trade agreement discussions.

The problem is that these supply chain agreements are being discussed separately. But it can be a useful tool for us in order to arrest some of the problems created by the free trade agreements. For example, there are some free trade agreements that address anti-modern day slavery. That supply chain agreement is aside from government and trade unions, there’s a big part that civil society organisations play in that. So there’s a template and a platform. We need to think of how we can maximise that and convince the stakeholder, the government, to advocate for those rules in terms of free trade agreement negotiations.

Question. How do we make sure the work in China and other countries also benefit from our progressive improvements? A few months ago the Indian PM and Chinese Premier said we are all for globalisation. They see the short-term benefits. They don’t see the long-term price that they are going to pay. Taiwan, where I come from, is now a ruined environment. The same as China. Is that part of the price we have to accept because we want cheap labour and they keep moving production around from China to Vietnam or another country? How do we actually keep the balance. Chinese people say “do you realise how polluted it is to produce all the solar panels for the developed countries”. How do we get rid of this kind of dilemma?

Dennis: The free trade agreement is easing the transnational companies’ ability to offshore jobs overseas. Some companies are now shifting from China to Vietnam because the average minimum wage in Vietnam is only one third of the average minimum wage in China. That’s why China is now circumventing the free trade agreement by engaging in a bilateral public-private partnership agreements, as well as spending money and giving some aid and loans. As part of those contracts China says I am going to build your road or your rail, but I am going to bring my own people, to the point that they undermine the existing immigration policy. It’s happened to Samoa.

It’s happening now in the Philippines, where they have 15% unemployment but there are growing numbers of Chinese workers on visa. It’s interesting that doesn’t matter which impoverished country you do to in the world, you find migrant workers who are working for even cheaper wages. So something has to break that cycle.