View from New York: Clinton spells trouble for unions

Bill Clinton may not have been American business's first choice for president, but neither was he the favourite of the country's organised labour. As is the case after the election of any Democrat, the bond market is nervous, Wall Street is worried about millionaire taxes, and US industry fears new regulation.

But for America's trade unions, Mr Clinton's promise to restore the living standard of the American worker poses a more direct challenge, and one potentially more threatening than anything they faced in a decade of Republican rule: it is becoming clear that he is ready, if necessary, to do this without them.

Industry and trade were both on Mr Clinton's agenda this week, as he met first Detroit's car makers and union leaders, and later Mexican President Carlos Salinas de Gortari. And despite cheery reports after the former from Owen Bieber, the president of the United Auto Workers, it is apparent that free trade with Mexico and elsewhere - rather than labour's usual prescription of protectionism - will be part of the next administration's formula for 'a high-wage, high-growth economy'.

At the same time, Mr Clinton's emphasis on competitiveness is likely to lead to more pressure from Washington for co-operation and flexibility in the workplace, a relationship that poses risks for traditional collective bargaining. While employers are going to be asked to give workers a greater say in production, 'not only business but labour is going to be obliged to adapt, change and adjust as well', notes Peter Lunnie, a spokesman for the National Association of Manufacturers.

'We're going to have real fight there, particularly over trade,' warns Gary Hubbard, communications director for the United Steelworkers of America. 'We're going to have be just as vigorous and vigilant in our lobbying and political activities as during the last decade of Reagan and Bush.' Industrial policy, he notes, 'means different things to different people'.

Mr Clinton's challenge to America's industrial labour movement was laid out this week at the confirmation hearings in Washington for Robert Reich, his unexpected choice for the usually low-profile post of Secretary of Labor in his new cabinet. Mr Reich, a friend since his days at Oxford and the architect of the governor's winning economic platform, won enthusiastic support from senators of both political parties on Thursday when he talked about 'worker readiness' and 'high-performance workplaces'.

National fictions

Mr Reich, a professor of economics and political science at Harvard's Kennedy School of Government, was until quite recently a strident proponent of direct government support for besieged American industries such as steel and cars. But a 1989 meeting with Gilbert Williamson, then president of NCR, an international computer maker, convinced him that subsidising multinational corporations was a waste. Mr Williamson explained that he didn't particularly care about the state of American competitiveness: 'We think of ourselves as a globally competitive company that happens to be headquartered in the United States.'

Corporate citizenship is thus all but irrelevant for Mr Reich, national labels are convenient fictions and the US trade deficit largely meaningless, being caused mainly by US-owned firms making products abroad. 'It is hopeless to premise economic policy on controlling your borders,' he argues.

The appropriate place for society to invest is in those production factors that aren't mobile, human capital and public infrastructure. A company's employees are its most precious assets, he insisted again and again at Thursday's hearing, laying out a general programme for education, worker retraining, and employee involvement that would help the US to retain and attract high-value-added 'quality' jobs.

'As the recovery takes hold, most of those who are now unemployed will get jobs back,' Mr Reich told the Labor Committee of the US Senate. 'But the question is, what kind of jobs? They probably won't be as good as those they had before.'

As the knowledge content of both goods and services rises, he says, unskilled workers - who account for about 78 per cent of the US labour force - are constantly under threat, both from low-wage countries overseas and new technology at home. And as manufacturing jobs come to involve a higher component of engineering and marketing, Mr Reich says he is less concerned 'with the loss of old factory jobs than I am with the fact they pay less and less, or that they're being automated'.

'This is the long-term trend in the American economy, and I am determined to reverse this trend,' he told the senators. 'We have to make work pay.' Mr Reich's proposals would reorganise schools and the nation's unemployment-insurance system - which he says was designed for a temporary redundancy cycle that no longer exists - and impose a requirement that companies in the US spend 1.5 per cent of their income on worker training.

But 'at the centre of America's strategy for economic growth,' says Mr Reich, is more employee input into how businesses are run - by legislation, if necessary. Some companies 'haven't yet seen the light, that those places where workers have a voice to express concerns and ideas are also the most productive and profitable.

Worker directors

'I haven't yet decided on the right combination of carrots and sticks,' he said, but he didn't rule out some form of co-determination, the German system where worker representatives sit as corporate directors.

'I don't know what the inhibitions are,' Mr Reich said when asked about the idea. 'Front-line workers have all the information. They know production processes, the markets, the technology. I see the best-run companies in America and they're the ones that utilise them in the process.'

Many employers are certain to resist this sort of initiative, but so too are many union leaders. They have seen membership dwindle since the late 1970s and are locked into rigid adversarial bargaining models. 'Quality teams' and other worker-participation schemes have been regarded with suspicion by the American labour movement - often with justification - as an attempt to circumvent contract guarantees.

But some trade unionists, sensing a historic opportunity, are ready to meet Mr Clinton's challenge. The day before Mr Reich's confirmation hearing, the United Steelworkers sent letters to America's five biggest steel producers, citing the need to create a modern industry and stating its willingness to discuss 'reorganising the way work is done'. In exchange for job security and consultation, the union offered to cut work rules and sign agreements as long as nine years.

'The industry has needs and the American economy has needs,' said the USWA president Lynn Williams. 'Now is the time to move forward.'

Steel is something of a special case within US business, having shouldered the brunt of the industrial contraction of the 1980s. But other manufacturing industries are increasingly facing similar problems, and Mr Hubbard expects other member unions of the national AFL-CIO to follow suit with similar initiatives. 'But we've come a long way,' he says. 'This didn't just happen overnight.'

Nor, for that matter, in the two weeks since Mr Clinton named Mr Reich to be his Labor Secretary.

(Photograph omitted)