Recession in 2023? Here’s how trade unions are gearing up

This article is brought to you thanks to the collaboration of The European Sting with the World Economic Forum.

Author: David Sangokoya, Head of Civil Society Impact, World Economic Forum, Giannis Moschos, Community Specialist, Civil Society, World Economic Forum

• Global growth is expected to slow, and workers the world over are confronted with stagnating wages and skyrocketing inflation.
• Five trade union leaders have shared with the World Economic Forum what they’re doing to prepare for economic and social hardship in 2023.
• They flagged the need for greater social protections, mass reskilling and a baseline wage floor.

A recession could be on the cards for 2023. Across much of the world, inflation is the highest it has been in decades. Global growth is forecasted to slow and supply-chain disruptions and labour market pressures continue to be exacerbated by the pandemic and other variables. In Europe and North America, labour markets areunlikely to remain as tight as they have been, dimming the expectation that the cost-of-living crisis could ebb by year-end, according to the World Economic Forum’s 2023 Chief Economists’ Outlook.

In anticipation of the upcoming crises, trade unions have flagged the need for greater social protections, mass reskilling and an increase in wages including the establishment of a baseline wage floor.

As workers, employers and governments confront these challenges, engaging with unions can help government leaders and businesses take action to make the upcoming recession as short and shallow as possible. Trade unions play a crucial role in mediating and directly communicating workers’ concerns to leaders; data from the US show that increased union membership is correlated with higher income share for the middle class.

On top of that, through effective collective bargaining — the process by which workers pool negotiations with their employers — they can secure better terms of employment including pay, benefits, hours, job health and safety policies. Workers can also tackle issues affecting organizational performance and growth, and boost workforce morale.

Against this backdrop, the World Economic Forum asked five global trade union leaders attending the Forum’s Annual Meeting in Davos how trade unions are gearing up for a recession in 2023.

Here’s what they had to say.

‘Economies that are better able to withstand shocks are characterised by powerful trade unions and strong social dialogue.’

Veronica Nilsson, Acting General Secretary, Trade Union Advisory Committee to the OECD

Trade unions have been engaging with policymakers to change the current course of monetary tightening to avoid a global recession and jobs crisis, and to protect the purchasing power of wages. Today’s high inflation rates are driven by Russia’s war against Ukraine, disruptions to global food and energy markets and expanding profit margins — not by wages or by so-called wage-price spirals.

When the COVID-19 pandemic struck, trade unions were at the forefront of the fight to secure jobs, decent working conditions and access to social benefits. This new crisis is no different. If necessary, trade unions will deploy the tools that have proven to work, for example by pushing for short-time work arrangements that keep existing employment in place and prevent the recession from growing deeper. Measures may also include the negotiation of agreements that reduce job losses, facilitate the transition to new jobs within the same company, provide vocational training and education and other actions to support workers.

Economies that are better able to withstand shocks are characterised by powerful trade unions and strong social dialogue. After decades of policies to undermine labour market institutions, trade unions are calling on governments to restore the enabling conditions for worker representation and collective bargaining to thrive.

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‘We have to get investors to honour their responsibilities to protect fundamental human rights like freedom of association and the right to collective bargaining.’

Christy Hoffman, General Secretary, UNI Global Union

Enthusiasm for collective action and labour unions is the highest it’s been in my lifetime. Working people the world over have faced a deadly virus at their jobs and their families are weathering a generational cost-of-living crisis. Their response has been to rightly demand their fair share.

One of the pandemic’s lasting effects is that workers have revalued what their labour is worth and have reset their expectations about how they should be treated. I do not think recessionary forces will extinguish this desire for dignity and economic justice. In fact, it will push workers to demand more protections.

This means that trade unions have to redouble our efforts to meet workers’ expectations. It means we have to support organizing and expand collective bargaining. We need to show international solidarity with striking workers. We need to amplify the calls to stop corporate profiteering that is pumping up inflation. We have to get investors to honour their responsibilities to protect fundamental human rights like freedom of association and the right to collective bargaining. We must push for legislation that holds corporations accountable to workers throughout their supply chains.

‘Governments must act to stop the downward spiral into recession by investing in their people.’

Stephen Cotton, General Secretary, International Transport Workers’ Federation

The world’s economy relies on transport workers for the movement of goods and people.

In a world on the brink of recession, transport and transport workers can be the driver of economic and social progress.

The ILO (International Labour Organization) has debunked the myth that wages are causing inflation. Across the transport sector — from maritime workers to road transport workers — there have been increases in labour productivity, but a decline in wages. In 2022, labour productivity outstripped wages by 12.6% globally.

Governments must act to stop the downward spiral into recession by investing in their people. Workers need a pay rise. Labour shortages can be alleviated by providing decent working conditions and secure jobs with wages on which people can live.

Governments are out of step with what their voters are demanding. 81% of people in the ITF Global Poll 2022 want their government to invest in job creation for transport workers. 85% want their government to establish and protect a decent minimum wage for transport workers.

It’s time for governments to act in the interests of workers. Invest in transport workers’ jobs, pay and conditions, and we’ll continue to move the world forward.

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‘We will see a more competitive trade union movement and more strikes and other kinds of actions if nothing is done to fight the incredible increase in inequality.’

Atle Hoie, General Secretary, IndustriALL Global Union

With current inflation, including high prices on essentials like food and energy, trade unions need to negotiate wage increases that compensate, so that workers do not lose purchasing power.

We will be told that there is not enough money to compensate, but there is not less money in the world, it is just being redirected. Further increases in inequality are not the answer, that will only exacerbate the crisis. We also need income redistribution so that businesses can sell their products. Since business does not wish to understand this connection, or to act in accordance with it, trade unions have to grow in strength and fight for their fair share of the output.

We will see a more competitive trade union movement and more strikes and other kinds of actions if nothing is done to fight the incredible increase in inequality. 2023 might become a very tough year for many. Cooperation, fair distribution of income and wealth and good faith collective bargaining is the only way forward.

‘For education unions globally, perhaps the most important strategy is to teach the central lesson of the crisis: growth, innovation, and democracy — all are dependent on a vibrant system of public education.’

David Edwards, General Secretary, Education International

For education unions, talk of ‘gearing up’ for yet another recession ignores the fact that many have spent years seeing their members’ earnings eaten away by inflation, their students fall further into poverty and their colleagues burn out. This has left schools the world over without the requisite staffing — while autocrats, warmongers and authoritarians target them for defending democracy and the public good.

Some expansion will carry over into the new year — that is the valuation of the public sector and its workers. The pandemic once again reminded the public how essential public services are when markets fail and private provision collapses. This was true for K12 public education, as well as for technical and higher education, which are critical for reskilling and upskilling.

For education unions globally, perhaps the most important strategy is to teach the central lesson of the crisis: growth, innovation, and democracy — all are dependent on a vibrant system of public education.

Our focus will be on spotlighting the trillions stashed away in tax havens and loopholes and misdirected towards fossil-fuel pollution subsidies or debt interest payments that starve the public budget. This requires broad coalitions with students, parents and working people. This is the essential work of 2023 and beyond.

As part of the Forum’s Civil Society Communities, the Forum’s Labour Leader community engages trade unions and worker organizations to shape the insights, discussions and impact of the Forum’s multi-stakeholder platform.