DAVID THALER: ADDRESS TO THE TENNESSEE INDUSTRIAL RELATIONS RESEARCH
ASSOCIATION'S (TERRA) 2004 ANNUAL CONFERENCE, OCTOBER 21, 2004

I.  INTRODUCTION

Distinguished Delegates from labor, management and government, it is an
honor for me to have been invited to address you at your annual
conference. It is exciting for me to be in the presence of such an
experienced and knowledgeable group of practitioners, and I am greatly
enjoying learning from your wealth of knowledge and experience. While it
is clear that the true learning during this conference is coming from
the conversations among the participants, I hope that my remarks tonight
can be helpful in placing your labor-management cooperation efforts in a
broader global context.

I would like to thank Professor Canak for inviting me to speak. I met
Bill back in 1987, when I was a sophomore at Tulane University. Bill was
the Professor in a small seminar that had a title that would not be
surprising to anybody who knows Bill well. It was called "Wealth, Power
& Inequality." In that course we studied concentration of wealth through
corporate mergers and acquisitions, rising inequality, as well as
accusations that big business, the military, and high officials in
government were too close to one another. My, how things have changed
since 1987!

Actually, Bill's class indeed transformed the way that I looked at the
world and marked the moment in my academic and intellectual development
when I ceased believing and accepting what was told to me by the popular
media as well as conventional wisdom. Yes, it may be highly surprising
to those of you who know Bill well to find out that he instilled in me
\-- and I am sure continues to instill in his students \-- a healthy
degree of cynicism. I am deeply grateful to him for that.

When I asked Bill for an idea of what the group would be most interested
in, he told me "They *[already]{.underline}* know they need to get
along." Therefore, I will not spend too much time preaching to the
choir. After all, this is a group of people who have gathered for the
purpose of developing and sharing best practices in labor-management
cooperation.

-   *You already [know]{.underline} that* labor-management cooperation
    [benefits]{.underline} the workplace by improving industrial peace
    and stability, and thereby productivity, efficiency, creativity and
    safety;

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-   *You already [know]{.underline} that* labor-management cooperation
    decreases the time and attention that businesses must waste in
    dealing with conflict;

-   *You already [know]{.underline} that* labor-management cooperation
    improves workplace morale and company loyalty by giving workers more
    input into work processes;

-   *And you [even]{.underline} already know that* labor-management
    cooperation lifts humanity in other, non-economic, ways beyond the
    workplace, that the techniques cultivated through labor-management
    training 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.

Since you already know these things -- and I presume that you know about
FMCS and the vital role that our mediators perform in preventing and
resolving labor conflict in this country \-- I thought I'd spend my time
telling you about the international programs of FMCS and
***[why]{.underline}*** the U.S. government and select international
organizations give FMCS a good deal of money to provide training
programs around the world. [You have a right to know how your government
is spending **your** tax dollars]{.underline}.

In addition, I would like to share some of the insights that I've gained
in observing and working with labor relations practitioners in over 20
countries on 5 continents during the past few years.

II. **WHY THE U.S. GOVERNMENT AND SEVERAL INTERNATIONAL ORGANIZATIONS
    GIVE FMCS MONEY TO TEACH LABOR-MANAGEMENT COOPERATION AND DISPUTE
    RESOLUTION AROUND THE WORLD**

Before I go any further, I must explain what our mediators actually
[do]{.underline} when they head off to a foreign land, and [**who**
gives us money]{.underline} to send them. Each year, U.S. government
agencies such as the Department of Labor, the Department of State, and
the Agency for International Development give FMCS anywhere from a half
a million to a million dollars to help select foreign governments
develop institutions and good practices for the prevention and
resolution of labor conflict.

In recent years, these agencies have worked to support the U.S.
commitment to "promote and realize" the four core labor standards set
out in the International Labor Organization's 1998 *Declaration of
Fundamental Principles of Rights at Work*. These core labor standards
are:

-   Freedom of Association and the effective recognition of the right to
    collective bargaining;

-   Elimination of all forms of forced or compulsory labor;

-   Effective Abolition of child labor; and

-   Elimination of discrimination in respect of employment and
    occupation

To promote these core labor standards -- specifically Freedom of
Association and the right to collective bargaining -- in recent years
FMCS has also received funding from international organizations such as
the International Labor Organization itself, Asia Pacific Economic
Cooperation, and the Organization of American States.

So, what do FMCS mediators actually [do]{.underline} in other countries?
Our mediators generally deliver three services when they travel abroad:

-   They train government mediators in both basic and advanced mediation
    techniques

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-   They train labor and management leaders in the techniques and
    paradigms for improved labor relations -- for example, joint,
    interest-based problem solving, non-threatening communication,
    active listening and consensus decision-making

-   And they advise foreign governments on how to strengthen their
    institutions for mediation, such as by training their own mediators,
    performing public outreach, case management, developing a code of
    ethics, etc.

Applying the "healthy cynicism" that I learned in my course with
Professor Canak, I will say that the U.S., like every country, operates
out of self-interest when it makes its foreign policy decisions,
including its decisions about where to direct its technical assistance
programs such as the ones that FMCS provides.

But [fortunately]{.underline} for FMCS, [fortunately]{.underline} for
the foreign governments that we help, and [fortunately]{.underline} for
the U.S., FMCS' training programs show the [ver]{.underline}y
[best]{.underline} side of our country, and promote very useful
institutions and practices. In doing so, FMCS' training programs greatly
enhance the Public Diplomacy efforts of our country. For [even
if]{.underline} the host government and its citizens resent the U.S.
and/or the things we stand for and do around the world, they always warm
up to the trainers as they deliver programs to teach conflict
management, collaborative problem solving, and mediation of labor
disputes.

In performing their work as trainers, FMCS' mediators become diplomats
for our country in the very truest sense of the word. Through our
programs, which always attract a great amount of interest and are always
oversubscribed, America the hyper-power becomes Peter Cheng from
Nashville, Sherman Bolden and Jim McMahon from Memphis, John Doern from
Wichita, etc. And the noble nature of what our mediators are teaching
makes for a softer portrait of America, one that spreads workers rights,
human rights and peace throughout the world. While FMCS' programs
ultimately may not win over people who are otherwise opposed to the U.S.
or our policies, at a minimum they do show our softer side and our
commitment to the good of humanity.

FMCS is [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.

For one thing, very often, in other countries the training that our
labor-management programs provide is the virtually the
[only]{.underline} education that many trainees will receive beyond
their formal education -- which in many cases is not beyond the teen
years \-- and formal education still [rarely]{.underline} includes the
types of conflict resolution and conflict management lessons that are
necessary for good labor relations. 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.

In addition, labor-management cooperation enhances the capacity of
nations to respond to the great economic changes brought about by
increasing globalization \-- changes such as 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 addresses the impact of these phenomena in
a [peaceful]{.underline} and expeditious manner by promoting mechanisms
to encourage labor-management dialogue to deal with them. Such dialogue,
if it becomes commonplace, improves the investment climate in an economy
through enhanced social and political stability.

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. **SOME INSIGHTS FROM ABROAD**

So having explained to you *why* the U.S. government and several
international organizations see it in their best interest to fund FMCS'
technical assistance programs, I would like to share with you some
insights on Industrial Relations overseas as compared with the U.S., as
there are certain legal, social, cultural, economic and political
aspects of other countries that a competent trainer must take into
account in order to be effective on foreign soil.

One characteristic of every country in which FMCS has worked is that
workers enjoy greater privileges under the law than do U.S. workers. For
example, the concept of Employment at Will is completely alien to every
country in which we've worked. Unlike in the U.S., where you can fire
someone for any reason whatsoever -- unless it is discriminatory or
contrary to other very specific public policies -- in other countries
employers have to follow carefully prescribed procedures before
dismissing workers.

For example, in Argentina FMCS was called in to help the province of
Córdoba in the wake of the severe economic recession of the early 2000s.
That recession caused a great number of worker dismissals and resulted
in a backlog of complaints to the Labor Ministry by workers against
their employers for failure to follow various legal requirements when
they dismiss workers: for example, in such cases employers must make out
a case of economic hardship, provide adequate advance notice to the
worker, follow a legally prescribed sequence in dismissing workers (for
example, seniority, or number of dependents), and pay the dismissed
worker a legally prescribed severance package, which is often an amount
of money for every month of service as an employee.

Other common social protections that we see in other countries are:

-   Mandatory vacation time -- 1 month in Peru

-   Mandatory bonuses twice a year

-   Payment for maternity leave and various other family situations that
    arise.

The fact that labor relations are so rights-based, as opposed to
interest based, in many countries, makes for much more difficult labor
relations. A rights based system is one in which many of the parties'
interactions and exchanges are governed by legal obligations flowing
from the employer to the employee such as, among other things, social
security payments, unemployment insurance, paid vacation time, bonuses,
and protection from unfair dismissal and the early termination of a
contract of employment.

Ignoring for the moment the question of whether such privileges for
workers are good or bad for an economy, from a conflict management point
of view, the more *rights-based* a system is, the harder it is to
resolve disputes because the most durable conflict resolution comes from
the parties' identification and sharing of their respective
*[interests]{.underline}* as opposed to making demands based on
inflexible *[positions]{.underline}*. Legal rights are inherently
positional, and as such, often form the basis of inflexible demands that
make conflict worse.

In the wake of globalization, with freer trade and capital flows and,
hence, greater competition across borders, we are seeing a great amount
of labor conflict as businesses deem it necessary to avoid as many of
their social obligations as possible. Unions, for their part, are
becoming more and more frustrated by the international pressure on their
countries to roll back protections that workers have traditionally
enjoyed, as well as a pervasive lack of enforcement of the existing
social protections that are on the books.

Most countries are too poor to have a sufficient number of properly
trained inspectors to adequately enforce the labor law and, compounding
this problem, the inspectors that are on the job are inadequately paid
and thus subject to a great temptation for corruption. That goes for the
mediators as well. In Indonesia, for example, our FMCS trainers were
told by their mediator students about the ritual of "the envelope": the
exchange of graft that marks the beginning of many mediation sessions.
Not surprisingly, the party that pays the most money often obtains the
favorable result.

In such stories we see the great relation between productive labor
relations and the Rule of Law. Namely, where there is a weak Rule of
Law, parties will resort to self-help such as strikes, lockouts,
violence, threats, and corruption. Colombia comes to mind, where the
vice-president of the union of one of our students in Cali was murdered
on the first day of training, and student after student in Cali,
Medellín and Bogota told us tales of kidnappings that they had
experienced. During one of our programs, our student's family received a
bouquet of "condolence" flowers as a threat against him, even though he
was very much alive and an active participant in our class. He wound up
going to a six-month union "training program" in Spain.

As one might expect, a weak Rule of Law breeds a much more contentious
atmosphere for Labor Relations because parties know that, ultimately,
they must resort to self-help in many instances because they will have
little recourse to the legal system to enforce their rights. This
problem is even more acute in countries where the law sets up a high
expectation in terms of rights and privileges.

Aside from these issue surrounding the vindication of legal rights and
privileges, countries around the world request FMCS' assistance for a
variety of *[other]{.underline}* reasons in order to gain the economic
and social benefits of labor-management cooperation and early dispute
resolution. For example, in Cambodia, at the present time the only
options for the resolution of collective disputes are either self-help
or a slow, expensive and corrupt judicial system. To address this issue,
the Cambodian government has requested FMCS' assistance to help
businesses and their workers set up workplace labor-management
committees along the lines of the LMCs that many of you participate in
here in Tennessee. We hope to be in the ground in Phnom Penh, Cambodia,
by the spring of 2005.

Cambodia is not alone on emphasizing labor conflict prevention programs.
At the other end of the economic spectrum, last year FMCS delivered a
program in Canada to teach advanced Preventive Mediation skills to
experienced mediators from the Canadian FMCS. A delegation from Korea
went to our Seattle field office for the same program a month later. The
Philippines, for its part, has become a worldwide leader in sectoral and
regional labor-management cooperation initiatives along the lines of the
Dubuque, Iowa program that we heard about this morning.

The fact is that, in our international work, there is considerably
greater interest in FMCS' conflict prevention programs than in its
dispute resolution programs. For this reason FMCS has been an active
promoter of international best practices in labor-management
cooperation, especially in the Asia Pacific region. A trip to the "What
We Do" section of the FMCS website will confirm that.

Another motivation for the adoption of FMCS' techniques of conflict
resolution is the privatization and downsizing of national enterprises
that has been occurring in many countries over the past 20 years. The
Chinese Ministry of Personnel, for example, has approached FMCS to
deliver a mediation training program to its officials to give them the
tools to deal with potential social unrest resulting from its downsizing
of the government and State Owned Enterprises. Our Director, Peter
Hurtgen, will travel to Beijing and Shanghai in just three weeks, and we
are hoping to deliver a technical assistance program in China sometime
next year.

In the European Union, FMCS has helped the 10 incoming EU countries
develop National Development Plans for the delivery of governmental
labor dispute resolution services. In Eastern Europe they are currently
craving the benefits of the relatively dynamic western style economy of
the EU, but they crave it with trepidation as they mourn the loss of
stability and predictability of their old systems, with all of their
shortcomings.

One 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. 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 in the U.S. 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. Other countries have resisted the
liberalization of their labor market as best as they can, but with
painful social unrest as employers and the government find it
increasingly harder to provide the benefits that workers have become
used to.

It is in the wake of these tensions that the labor peace that FMCS
programs foster is more necessary than ever.

From a Project Management point of view, in order to not waste the
government's money with a program that does not leave a lasting impact,
FMCS always seeks to make its programs sustainable by creating an
institution to continue the project's work after it is over. For
example, in the African nation of Mozambique, FMCS trained labor,
management and government officials and helped them organize a
**Tripartite Training Team**, whose members are now teaching
labor-management cooperation skills to companies and unions throughout
the country.

Another example is Argentina, where FMCS students' formed the
*Association of Public Labor Conciliators of the Argentine Republic,* a
not for profit Organization dedicated to delivering training and
professionalizing the practice of labor conciliation in Argentina.
Mediators from 17 provinces have already delivered many training
programs.

As a final observation, I would like to note that around the world 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. It is not true
that we Americans are the most materialistic people in the world: it's
just that we have more "materials." 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, I encourage you 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.