DAVID THALER: ADDRESS TO THE PHILIPPINE ASSOCIATION OF LABOR MANAGEMENT
COUNCILS, MARCH 30, 2004

I.  INTRODUCTION

Honorable Deputy Secretary of Labor Danilo Cruz; Honorable UP-SOLAIR
Dean Emeritus Dr. José Gatchatlian, Honorable PALMCO President Mr.
Ronald Gaspar, and distinguished delegates from the Philippine
Labor-Management community: Magandang Umaga Sa Inyong Lahat.

I would like to say that it is a tremendous honor for me to have been
invited to address you at this significant event. I am literally humbled
to be in the presence of such a distinguished group of practitioners,
and I am greatly enjoying learning from your vast wealth of knowledge
and experience. While it is clear that true learning these two days will
come from formal and informal exchanges among yourselves, I hope that my
remarks can be helpful in placing your labor-management cooperation
efforts in a broader global context.

I would like to thank my PALMCO and UP-SOLAIR hosts for inviting me to
this important event and for their considerable efforts to ensure that I
have a smooth and comfortable experience. In particular, I would like to
thank PALMCO President Ronald Gaspar and UP-SOLAIR Dean Emeritus Pete
Gatchatlian. Your warmth and generosity have certainly made me feel
welcome and at ease this week. I would also like to thank Jess, Robert,
John, Evelyn, Gino, Ayan, Semi Anching, and everyone else who has made
my participation in this event a bit easier.

I am absolutely thrilled to be in the Philippines. As an American, of
course, one meets many, many Filipinos in our country, and they are
without exception warm, generous, funny, and cheerful. This experience
has been confirmed by my stay in Manila and here in Baguio.

II. **MICRO AND MACRO-LEVEL BENEFITS OF LABOR-MANAGEMENT COOPERATION**

In all seriousness, even though you and I are divided in important ways
such as by geography, ethnicity, and culture, we have one key thing in
common: our commitment to making the world a better place through the
promotion of mutual understanding. If you ask many idealistic young
people what they want to do when they get older, many will tell you that
they want to "work toward world peace." We can all be proud to say that
"we really do it!" Together we are missionaries delivering the message
of increased humanity, interconnectedness, and prosperity through
cooperation in the workplace.

Very often, the training that our labor-management programs provide is
the [only]{.underline} education that many people will receive beyond
their formal education, and formal education still [rarely]{.underline}
includes the types of conflict resolution and conflict management
lessons that are the focus of labor-management cooperation initiatives.
Studies have shown that people who are able to successfully navigate
conflict, and broker divergent interests with others, are far more
likely to be successful in life. In fact, such abilities have been shown
to be a [greater]{.underline} predictor of life success than is
analytical intelligence.

Therefore, we should be [proud]{.underline} that our efforts
[in]{.underline} the workplace bring numerous benefits
[beyond]{.underline} the workplace that, in the big picture, make our
world more peaceful and prosperous. I will discuss, in turn, benefits to
the workplace resulting from labor-management cooperation, and then
benefits beyond the workplace.

In terms of benefits to the workplace, this audience is quite familiar
with them. Obviously, labor-management cooperation
[benefits]{.underline} the workplace by improving industrial peace and
stability, and thereby productivity, efficiency and creativity. These
benefits can eventually produce more jobs through growth.

I am sure that your experience confirms that **better communication**
between workers and managers makes work processes more productive, more
efficient and safer. This is because labor-management cooperation
decreases the time and attention that businesses have to devote to
**activities and behavior that negatively impact productivity** such as
open conflict, issue avoidance, and the filing of complaints and
grievances.

Labor-management cooperation **also improves workplace morale and
company loyalty** by furnishing mechanisms for worker input into work
processes.

Beyond the immediate workplace, extending this principle to a national
level, labor-management cooperation **enhances the capacity of nations
to respond to the great economic changes brought about by increasing
globalization** \-- changes including diminished tariff protection,
privatization, plant closures, mergers, sudden shifts in market
conditions, continuous movement of capital, a constant need for skills
upgrading, and a need for \"better, faster, cheaper\" products.
Labor-management cooperation helps to deal with the impact of these
phenomena in a [peaceful]{.underline} and expeditious manner by
**promoting mechanisms to encourage bipartite dialogue to deal with
them.** . Such dialogue, if it becomes commonplace, **improves the
investment climate** in an economy **through enhanced social and
political stability**.

Over dinner the other night, I was discussing with my colleagues how
labor-management cooperation lifts humanity in other, non-economic, ways
beyond the workplace. For one thing, the techniques cultivated through
labor-management training -- *among others,* communication of interests,
active listening, and consensus decision-making -- make us
[better]{.underline} family members, [better]{.underline} friends,
[more]{.underline} [effective]{.underline} businesspeople, and
[better]{.underline} members of the local, national and world
communities.

And far from being a "soft" topic, labor-management cooperation is a
[very]{.underline} [important]{.underline} component of a peaceful and
stable world. Labor-Management Cooperation **supports democracy and
social peace and stability** in the world by strengthening mechanisms
for collective bargaining and Freedom of Association. According to the
U.S. State Department's Advisory Committee on Labor Diplomacy, "Trade
unions play an important role in addressing poverty and building up
democratic participation. The primary goal of unions is to promote the
economic well being of their members, but unions also engage in the
*[democratic]{.underline}* process in order to achieve their goals, and
thus are [natural]{.underline} promoters of [democracy]{.underline} in
society. Trade unions protect human rights and promote public
accountability. Where free unions are allowed to operate, political
extremism is less likely to flourish. In the developing world, free
trade unions help to provide the underpinning for economic growth and
democracy by contributing to the emergence of a stable, fairly paid,
working middle-class."

While the Advisory Committee was focusing on the union side of the
equation, by implication a flourishing program of labor-management
cooperation makes the Committee's point even more valid. Good
labor-management relations and increased workplace democracy tend to
**reduce the number of people that feel marginalized** in a society. It
can thus make people more likely to promote their interests within an
established political framework, as opposed to other more radicalized
means, such as resorting to terrorism.

III. **HOW THE 21^ST^ CENTURY WORKPLACE IS DIFFERENT**

The mentioning of terrorism is an unfortunate, if appropriate, segue
into the next topic I would like to address, which is the issue of how
the workplace of the 21st century brings unique challenges to managers
and workers alike. Since the dawn of civilization, people have worked
for other people and, consequently, labor-management cooperation has
*always* been a topic of fundamental importance, involving issues of
human dignity, social justice, and the material advancement of the human
race. Thus I will not stand before you today to tell you that the topic
is more important than ever: productive labor relations always [have
been]{.underline} and always [will be]{.underline} critical to the
well-being of society. With that understanding, it is worthwhile to
examine what is different about labor relations in this first decade of
the 21^st^ century. What is the situation globally?

The major feature of 21^st^ century labor relations, so far, is the
oft-heard impact of globalization. In actuality, the world is
experiencing its third wave of globalization. The first wave, which
abruptly ended with the outbreak of World War I, began at the end of the
19^th^ century and was marked by big increases in flows of people,
capital and trade. The second wave, occurring after World War II, saw a
return to the pre-World War I levels of trade. In this
[third]{.underline} wave, which began in the 1970s, the volume of
international trade as a percentage of World GDP has risen to
unprecedented levels. In addition, in this wave the nature of global
trade for developing countries has changed. In 1980, ¾ of developing
country exports were primary commodities such as minerals and
agriculture. Today, 80% of developing country exports are manufactures,
an amazing turn-around.

As a result, these days, Philippine businesses are competing not just
with other Philippine businesses, or even just Asian businesses. Rather
they are competing with businesses from all over the world. In this
highly competitive environment, it is extremely important that
businesses and their workers have at their disposal the skills and the
institutional mechanisms conducive to the participation of workers and
managers alike in the creativity, innovation and dedication necessary to
survive in the face of such competition. The goal must be to give a
*real* voice to every person who works for the business, whether they
are from management or from labor.

Those businesses that enjoy greater labor peace will suffer fewer
distractions resulting from workplace conflict. They will have fewer
problems of absenteeism and will benefit from a better public image.
They will also experience better relations with their customers by
having employees that are happy and totally focused on client
satisfaction.

And there is less and less of a margin for error these days, since there
is ever more competition, and, among your competitors, there will surely
be several who have already [realized]{.underline} the value of having
new mechanisms to encourage the creative contribution of *all* who work
for an enterprise, whether they are managers or employers.

And with the continuing growth of the service sector in many countries,
there is more and more need for what we call "soft skills" such as
communicating, resolving conflict, solving problems, and reacting
effectively to situations that differ from the normal course of
business.

In this age of globalization, therefore, it is fruitful to think of your
implementation of a labor-management cooperation program like an
investment for a business, just like any other investment, except that
instead of investing in a machine to improve the business, it is an
investment in the [Human]{.underline} [Capital]{.underline} of the
business.

As an additional feature of the modern workplace, one can hardly ignore
the impact of technology on working life. The ever increasing importance
of information in today's workplace, and the many ways of receiving,
processing and communicating information, have challenged managers and
workers alike to develop new ways of structuring their relationship in
order to maximize their productivity with this information. Traditional
top-down, command and control labor-management relationships might have
been appropriate in an era of routinized, assembly line, work processes
focused on repetitive activity. However, this new era of rapid
technological change and voluminous, increasingly sophisticated
information flow necessitates that workers be empowered to take the
initiative to assume creativity in developing effective work processes.

This is true simply because there is too much information for managers
to keep control of, and the simultaneous tasks that arise in today's
work place are multifaceted and increasingly demand [new]{.underline}
learning and understanding. Today's workers require an environment of
both constant, formal upgrading of skills as well as an environment that
encourages the manager-to-worker and worker-to-worker interactions that
are conducive to informal learning. Brains are increasingly replacing
muscles as the most important anatomy for the workplace.

And the final factor to keep in mind about the modern workplace is the
increasing role that the dignity of the human being plays in working
life. Perhaps it is easy to dismiss such a statement in the cynical age
in which we live, but not too long ago, unhealthy and unfair labor
practices were conducted with impunity in many, many places. Abusive
child labor was accepted as a natural consequence of poverty. Famously
in my own country, forced labor was socially acceptable, as was
discrimination in the workplace based on factors such as race, gender,
religion and ethnic background. Freedom of Association existed only in
theory.

I am [not]{.underline} here to naïvely tell you that we have eradicated
these despicable practices. We clearly have not; not in the United
States, and not anywhere else. However, these days, in any developed
system of labor relations, respect for human dignity must be taken into
account, whether by force of law or simply by changing norms, as
reflected in the ILO's 1998 *Declaration of Fundamental Principles of
Rights at Work,* which obligated all ILO member states to undertake
measures to promote core labor standards.

This question of human dignity enters more subtly in labor-management
cooperative initiatives such as the ones promoted at this event. While
these initiatives certainly may reflect a general [respect]{.underline}
for human dignity, they also reflect the increasingly competitive
business environment that obligates all businesses to motivate their
workforce as much as possible. Let me explain.

Separate and apart from the imperatives I have already discussed,
Labor-Management cooperation is important because it can be a vehicle to
empower workers at all levels to provide input into work processes and
thereby exert greater control over their working lives. Many of us spend
the majority of our waking hours at work as well as a majority of our
lives in the workforce. If a worker is stuck in a situation in which
virtually all of his decisions are made and all of his time is
apportioned by a manager, this means that he is spending much of his
life deprived of the well-documented fundamental need for control. He is
deprived of the ability to "create" in accordance with his values,
talents and abilities and, as a consequence, enjoy the value of his
creations. That worker stands little chance of realizing what Abraham
Maslow referred to over 50 years ago as "self-actualization."[^1]

As we have seen in the many labor-management initiatives highlighted at
this event, improved labor-management cooperation allows people to take
more control of their working lives and more fully realize their human
potential than is possible in workplaces characterized by traditional
top-down, assembly line, work processes focused on repetitive activity.

In particular, the workplace of the global, information-based economy,
characterized by myriad ways of receiving, processing and communicating
information, by its very nature requires a "human value added" in order
to maximize the productive use of that information. In this workplace,
if there is no human value added, a job will either be automated or
eliminated. Machines can do rote, repetitive tasks well enough. Human
beings are needed for the creativity and ingenuity that a machine could
*[never]{.underline}* furnish. If a worker is in an environment in which
nearly all of her actions are mandated by someone else -- namely her
manager -- she is apt to become a robot. She will not provide that
"human value added" and her [productivity]{.underline} will suffer, her
[efficiency]{.underline} will suffer, her [quality of work]{.underline}
will suffer, and [customer relations]{.underline} will suffer. She will
also be absent from work [much]{.underline} more often. Thus, we see
that not only is labor-management cooperation consistent with evolving
universal social norms, in the era of globalization it makes very good
business sense.

IV. **AVIEW FROM THE UNITED STATES: HOW AMERICANS VIEW THE CURRENT LABOR
    MARKET**

Finally, I thought that you might be interested in a view from the
United States, how Americans see the issue of globalization and its
impact on the job market.

In this election year, aside from National Security, the most important
issue on Americans' minds is the issue of jobs. Perhaps naïvely,
politicians are blaming companies that they call "traitors" for
outsourcing their jobs overseas to faraway places such as India, South
Africa and the Philippines. It is my personal belief, and the belief of
many knowledgeable economists, that this is a very shortsighted view.

Throughout history, the focus of production and, hence, job creation,
has shifted in the world according to the law of comparative advantage.
That is, if one country is capable of producing a good or a service
utilizing resources in a manner that diverts productivity from other
areas, to a [lesser]{.underline} extent than another country would
divert productivity if it produced that same good or service, then the
production of that good or service should shift to that other country.
Meanwhile, the country that \--quote unquote \-- "loses" that production
is free to invest its resources in activities that yield it an even
greater return.

Even accepting the law of comparative advantage as valid, one still
cannot deny that there are many people who feel the pain as they lose
their jobs due to shifting production as well as other phenomena of
modern labor markets, such as sudden changes in consumer preferences,
the loss of a customer base, a sharp increase in input costs, political
or economic instability, or changes in the country's regulatory
environment. In many countries, since there is a lack of unemployment
insurance and other social safety nets to cushion the impact of change,
job loss can easily spell economic disaster.

In the face of such a painful transition, in the United States and many
other countries there is a growing realization of the importance of
continuous learning and constant need for skills upgrading. This applies
most acutely to older workers, whose skills are becoming outdated more
rapidly than ever before. The U.S. strategy has been to allow the
process of globalization and technological change to continue, and to
provide training for displaced workers. Our experience in this area has
been mixed, as many workers find it hard to learn new skills and also
feel too pressed by other economic urgencies to pursue job retraining.
They therefore remain at the fringes of the labor market.

Another phenomenon affecting job creation in the U.S. is the issue of
rapid growth in productivity: during the last several years productivity
has grown at unprecedented rates, thereby automating many jobs out of
existence. Historically, economists tell us that productivity growth
eventually slows down and firms must start hiring again. In the
meantime, many workers remain unemployed, and when firms do start
rehiring, they expect that their new hires have the skills to
accommodate the new "[productive]{.underline}" machinery that they have
installed. Again, job retraining is only a partially effective remedy.

For those fortunate enough to have a job, an additional concern of the
American labor force is the balance between work and family. More and
more, as businesses cut their labor forces, workers are being squeezed
to work more hours and to be more productive. In addition, technology
has allowed work to erode family life by obligating people to be
available by cell phone, e-mail and the newest gadget, the blackberry.
This has presented a great challenge to businesses, workers and public
policy makers alike. One result has been the increasing adoption of
[flexible]{.underline} work arrangements, whereby workers can work a
greater number of hours on certain days, and fewer hours on other days.
In some cases, businesses allow workers to perform all or part of their
functions from home.

In any event, the increasing expectations in terms of material comforts
have created a society marked by stress, family strife and numerous
mental health issues. I notice this not only in the United States, but
very much so in other countries that I have the opportunity to visit. I
will never forget the time when, at the beginning of our training
program in Mozambique, we went around the room and asked everybody what
they wanted out of life. Person after person responded that he or she
wanted to be "rich" or to have material possessions such as a car or a
large house. While I do not diminish the importance of material comforts
and their role in overall quality of life, since you are part of a
rapidly developing economy I urge you, my colleagues from the
Philippines, to learn from our experience, and to never lose sight of
what is important in life -- family, friends, connecting with others,
spiritual satisfaction, and the overall feeling that one is helping the
world to be a better place. It is my firm belief that we could solve
many of the world's conflicts -- labor or otherwise -- if people focused
in on what is truly important to them, on what truly enriches their
soul, and dedicated themselves to loving life more than hating someone
else.

Thank you for your attention.

[^1]: