VZCZCXRO2249
RR RUEHAG RUEHDF RUEHHM RUEHJO RUEHLZ RUEHPOD
DE RUEHRL #1032/01 1420544
ZNR UUUUU ZZH
R 220544Z MAY 07
FM AMEMBASSY BERLIN
TO RUEHC/DEPT OF LABOR WASHINGTON DC
RUEHC/SECSTATE WASHDC 8343
INFO RUCNFRG/FRG COLLECTIVE
RUEHXI/LABOR COLLECTIVE
RUEHBR/AMEMBASSY BRASILIA 0273
RUEHLO/AMEMBASSY LONDON 8271
RUEHMO/AMEMBASSY MOSCOW 1808
RUEHOT/AMEMBASSY OTTAWA 1045
RUEHFR/AMEMBASSY PARIS 8807
RUEHRO/AMEMBASSY ROME 0533
RUEHKO/AMEMBASSY TOKYO 1473
RUEHGV/USMISSION GENEVA 1365
RUCNDT/USMISSION USUN NEW YORK 0471
RUEHBS/USEU BRUSSELS

UNCLAS SECTION 01 OF 03 BERLIN 001032 
 
SIPDIS 
 
STATE FOR DRL/ILCSR, EEB/IFD/OIA, EUR/AGS, AND EUR/ERA 
LABOR FOR ILAB 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ELAB SOCI OECD IBRD ILO GM
SUBJECT: G8 LABOR MINISTERS ON THE SOCIAL DIMENSION OF 
GLOBALIZATION 
 
SUMMARY 
 
¶1.  Labor ministers of the G8 countries, meeting in Dresden 
May 6-8, said governments need to address the social 
dimension of globalization by devising employment and social 
protection strategies and promoting corporate social 
responsibility.  They asked the G8 heads of state and 
government to endorse these proposals when they meet in 
Heiligendamm in June. 
 
¶2.  German Minister of Labor and Social Affairs Franz 
Muentefering chaired the meeting and issued a concluding 
statement, available at the Ministry's website 
(www.bmas.bund.de).  The other G8 countries were represented 
as follows: Canada's Deputy Minister of Human Resources and 
Social Development Janice Charlette, France's Director 
General of the Ministry of Employment, Social Cohesion and 
Housing Agnes Leclerc, Italy's Minister of Labor and Social 
Security Cesare Damiano, Japan's Parliamentary Secretary for 
Health, Labor and Welfare Hirokazu Matsuno, Russia's Minister 
of Health and Social Development Mikhail Zurabov, the UK's 
Minister for Employment and Welfare Reform Jim Murphy, and 
U.S. Assistant Secretary of Labor for Employment and Training 
Emily Stover DeRocco. 
 
¶3.  Brazilian Minister of Social Security Luiz Marinho gave a 
special report on social protection.  Also participating were 
ILO Director-General Juan Somavia, OECD Secretary General 
Angel Gurria, EU Employment Commissioner Vladimir Spidla, and 
World Bank Vice-President Danny Leipziger.  Delegations 
representing the OECD's trade union and business and industry 
advisory committees, TUAC and BIAC, also met with the 
ministers.  End summary. 
 
MORE AND BETTER EMPLOYMENT 
 
¶4.  The G-8 labor ministers agreed on the need for 
growth-oriented macroeconomic policies, the need to open 
labor markets to all workers, especially vulnerable ones, and 
the need for more training programs to provide more and 
better job opportunities.  The ministers noted that "there is 
no single successful policy package to achieve balance 
between flexibility and security" and suggested that 
appropriate solutions "depend on national circumstances." 
They also called for family-friendly employment policies to 
increase labor force participation rates, especially for 
women, the disabled, and older workers. 
 
¶5.  The OECD's Angel Gurria, saying the gains from 
globalization are neither automatic nor painless, 
acknowledged that the share of wages in national income has 
fallen in most OECD countries in the past two decades, as 
pointed out by the trade unions.  While disputing the notion 
that globalization is chiefly to blame, he acknowledged the 
need to address the public perception that this is so.  Labor 
markets need to support rapid worker adjustment towards 
expanding sectors, he said.  Overly strict employment 
protection legislation can reduce worker mobility, but a 
certain degree of employment protection, like advance 
notification of large-scale layoffs, can reduce adjustment 
costs.  Displaced workers need to be compensated by means of 
time-limited adjustment measures that "make work pay," he 
recommended, citing as examples the earned income tax credit 
in the United States and "moderate" minimum wages. 
 
¶6.  Assistant Secretary Emily DeRocco agreed with Gurria that 
in order to maximize the gains from globalization, labor 
markets need to support rapid worker adjustment, and product 
markets need to facilitate the creation of new businesses. 
"Although global competition is typically seen as a national 
challenge," she said, "the front line of the battlefield is 
regional: the place where companies, researchers, 
entrepreneurs and governments come together to create a 
competitive advantage."  She described the Department of 
Labor's program for Workforce Innovation in Regional 
Economies (WIRED) and invited her G8 colleagues to visit the 
United States to see it.  She also noted that some U.S trade 
 
BERLIN 00001032  002 OF 003 
 
 
adjustment assistance and disabilities programs, which 
provided beneficiaries with large financial outlays without a 
direct incentive to reenter the job market, had low success 
rates and were poor models for emulation. 
 
¶7.  The UK's Jim Murphy said he was interested in the 
experience of other G8 countries in dealing with those 
"farthest from the labor market," which he described as 
workers left behind domestically and now left further behind 
in the global labor market, including members of racial and 
ethnic minorities and the disabled.  Canada's Janice 
Charlette mentioned the importance of immigration for 
Canada's labor markets, but Russia's Mikhail Zurabov stressed 
the problems caused by illegal immigration from the former 
republics of the USSR. 
 
¶8.  The ILO's Juan Somavia said the ministers' remarks 
confirmed the view of the World Commission on the Social 
Dimension of Globalization that "the response to 
globalization can be said to begin at home."  He said the ILO 
is following up on the Commission's 2004 report by focusing 
on how developed countries deal with the social dimension of 
globalization, and he invited the ministers to participate. 
 
¶9.  Germany's Franz Muentefering attributed rising employment 
in Germany to his government's decision to cut corporate 
taxes ("against opposition from my own party") and said the 
government had also found it necessary to create tax 
incentives for things like home renovation in order to 
encourage notoriously cautious Germans to spend.  Personal 
services are likely to be a growth sector in the future, he 
said, but the trade unions keep talking about creating 
manufacturing jobs.  Finally, he made a pitch for a minimum 
wage in Germany to relieve the government of the burden of 
topping up the wages of the working poor. 
 
SOCIAL PROTECTION IN THE DEVELOPING COUNTRIES 
 
¶10.  The ministers lamented the fact that ILO standards in 
the field of social protection are poorly implemented, and 
asked the ILO to analyze the reasons and suggest solutions. 
They also said the G8 governments themselves need to do more 
in their bilateral and multilateral development cooperation 
programs to expand social protection into areas including 
health care, child benefits, old-age pensions, and employment. 
 
¶11.  Social security is not only a human right, said ILO 
Director-General Somavia, but also a productive factor that 
facilitates social and economic development.  A basic set of 
social protection benefits should be introduced at an early 
stage of economic development, sequenced by order of priority 
if necessary for budgetary reasons.  This could constitute 
part of the global socio-economic floor advocated by the 
World Commission on the Social Dimension of Globalization, 
along with minimum social and labor rights that go beyond the 
borders of social protection. 
 
¶12.  World Bank Vice-President Leipziger said the prevalence 
of the informal sector in developing countries means social 
protection must not be linked to employment status if it is 
to meet the needs of the working poor.  He said it is 
unrealistic to expect most developing countries to provide 
the full range of protections available in most developed 
countries.  He stressed the importance of sustained high 
growth for extending protection to more households and urged 
G8 countries to open their markets so that poor countries can 
raise their incomes and create employment, citing as good 
examples trade preference agreements like AGOA.  He urged G8 
governments to scale up development assistance to meet the 
commitments they made at the Gleneagles summit, and to 
promote circular migration and facilitate the flows of 
remittances, which far surpass development aid. 
 
¶13.  Brazil's Luiz Marinho also stressed the importance of 
access to markets in developed countries.  He rejected the 
notion that social protection is too expensive, saying the 
history of European countries shows the opposite is true. 
 
BERLIN 00001032  003 OF 003 
 
 
"We see social protection as an investment," he said.  "It is 
much more expensive not to have it." 
 
¶14.  Germany's Franz Muentefering said the European tradition 
of the welfare state based on the principle of organized 
solidarity is well proven and can be applied elsewhere. 
Assistant Secretary DeRocco said the central features of the 
U.S. approach to social protection are promoting labor market 
flexibility, fostering education and training, maintaining 
high economic growth, and rewarding work, initiative and 
personal responsibility.  Policies that simply transfer 
public resources to the poor will lead to welfare dependence. 
 She praised the 1996 welfare reform in the United States, 
which she said had transformed Aid to Families with Dependent 
Children into a program that acts more like insurance against 
temporary poverty and less like a permanent transfer program. 
 
CORPORATE SOCIAL RESPONSIBILITY (CSR) 
 
¶15.  The ministers said companies large and small can help 
governments shape the social dimension of globalization 
through voluntary CSR efforts that go beyond compliance with 
legal obligations.  They encouraged companies in the G8 
countries and elsewhere to observe the OECD Guidelines for 
Multinational Enterprises, made a commitment "to actively 
supporting the dissemination of these guidelines and 
promoting a better governance through OECD Guidelines' 
National Contact Points," and appealed to governments of 
developing countries to associate themselves with the values 
and standards in the Guidelines.  They also expressed support 
for the ILO Tripartite Declaration of Principles concerning 
Multinational Enterprises and Social Policy and the UN Global 
Compact, and they "noted with interest" the negotiation of 
international framework agreements between multinationals and 
global union federations. 
 
¶16.  U.S. Assistant Secretary DeRocco called CSR a subset of 
corporate behavior and pointed out that President Bush had 
enthusiastically signed the Sarbanes-Oxley Act to increase 
federal oversight of corporate governance.  Over 50 U.S. 
government agencies have programs that address various 
aspects of CSR, said DeRocco, citing three examples at State: 
participation in the Extractive Industries Transparency 
Initiative, the Secretary's annual Award for Corporate 
Excellence, and DRL's Partnership to Eliminate Sweatshops. 
Department of Labor programs to combat child labor, carried 
out in cooperation with employers' organizations abroad, were 
another example of USG support for CSR.  "The single most 
socially responsible deed companies can perform," she 
concluded, "is to earn a profit, grow, create jobs and 
enhance our prosperity." 
 
¶17.  OECD Secretary-General Gurria praised the efforts of 
OECD countries like the UK and the Netherlands to strengthen 
the role of their National Contact Points for implementing 
the OECD Guidelines.  EU Employment Commissioner Spidla said 
CSR can only be meaningful if it involves labor-management 
dialogue, hence EC support for the international framework 
agreements negotiated between multinationals and global union 
federations.  France's Agnes Leclerc agreed and said the ILO 
could facilitate the necessary dialogue.  Canada's Janice 
Charlette said a survey by her ministry of 60 large Canadian 
companies showed CSR is still a work in progress. 
Governments need to look at a combination of carrots and 
sticks to encourage companies to engage in CSR, she said. 
 
NEXT YEAR IN JAPAN 
 
¶18.  The Japanese government offered to host the G8 labor 
ministerial in 2008 and the ministers accepted. 
 
¶19.  This cable has been cleared by the Department of Labor 
delegation to the G8 ministerial. 
TIMKEN JR