G7 Summit

Speech by Federal Chancellor Angela Merkel at the G7 dialogue forum with trade union representatives

begin 23.03.2015

in Berlin

Mr Hoffmann,

Ms Burrow – Sharan,

Representatives of the international trade union associations and of the trade unions in the G7 countries,

Ladies and gentlemen,

Allow me also to bid you very welcome here in Berlin. I hope you have a chance, alongside your working itinerary, to gain a good impression of Germany’s capital city.

This dialogue forum with you, the trade unions, is the first in a run of discussions with organisations outwith government. We’re talking first to the trade unions and then – though not in this order – to the business community, young people, academics and environmental associations. And after the G7 summit in autumn, we’re going to hold a women’s conference dealing with autonomy and vocational training for women.

Our topic today is good work around the world. Why are we talking about that in the G7 context? Mr Hoffmann just gave lots of good reasons, and I want to add one of my own. It’s because good work is one of the key conditions of economic success. People often lose sight of that. Economic success and growth depend on the availability of work that is secure and good – and I mean good work in both senses: high quality products and services and jobs with good working conditions. Those two things go hand in hand. That’s what social market economy means to us in Germany. It’s not something we’ve invented to put on the G7 Summit agenda; the Federal Republic of Germany’s success throughout its history has been built on those ideas.

It’s not enough, of course, only to pay attention to good work in industrialised countries. Value chains can be global these days, so we cannot pretend that working conditions in the countries we buy supplies from have nothing to do with us. We reap the benefits of globalisation and an international division of labour, so we ought to know how that division of labour actually functions.

We have therefore proposed to our partners in the G7 that our Summit at Schloss Elmau in Bavaria this June should include discussion of fair working conditions. This is a topic that naturally draws the attention of trade unions. Thanks to your expertise – let me make this explicit – makes you a vital source of information for us, and a source of ideas too. We won’t be able to realise all the ideas you think of, but knowledge and know‑how are nonetheless extremely important to us.

I am therefore very glad to have this opportunity to speak here today and to discuss things with you later on – including the paper you have presented to me. You have not contented yourselves with a positive assessment of the subject matter but have made some very specific proposals which look likely to resonate far beyond the scope of Germany’s G7 Presidency. We will be trying to keep this topic on the agenda of subsequent Presidencies, though I feel it may prove to be a long slog.

Fair working conditions – it’s a subject that cannot and should not be confined to the remit of individual states. An estimated 80% of trade involves international supply and value chains. Interestingly, more and more people in the G7 countries are not basing their purchasing decisions on price alone but are interested in sustainable and socially responsible production and processing. There are therefore economic reasons too for investors and traders to ask what conditions are like at the various stages of a supply chain.

The answers they get must be full and truthful. We will only be able to improve things if we know exactly what the situation is – and in some areas today, that situation turns out to be quite shocking. Innumerable people are suffering greatly from environmental and air pollution in many industrial areas around the world. Roughly every 15 seconds, someone dies from an accident at work or a disease caused by their job. Next to the enormous human tragedy that each one of those deaths means, there are massive economic damages too. You have to wonder – I do wonder – whether we have to wait until something dramatic happens, like the collapse of the Rana Plaza factory building in Bangladesh, before reasonable working conditions are finally given a higher priority. Clearly, there is still far too little incentive to avoid such situations.

One and a half weeks ago, I hosted a meeting with the leaders of international economic and financial organisations in Berlin, as I do once a year: the World Bank, the IMF, the OECD, the WTO and the ILO. I believe that my annual invitation helped ensure those organisations also participate in the G20 Summit, which is very important. It was not at first self-evident that the ILO should take part, but since they all in a sense go together, they got that sorted together too. At that most recent meeting with the international organisations, we also spoke about labour standards. We were agreed that good work is a key component of sustainable growth around the world.

Companies based in G7 countries should scrutinise their supply chains to check that guidelines, including occupational health and safety guidelines, are being upheld. The G7 countries should work together towards that goal. One aspect of this is to talk to large firms which operate internationally. The other is to decide how we deal with small and medium‑sized enterprises. They need to be supported in upholding the standards and rules that are in place.

I find three points here particularly important: transparency, prevention and the possibility of voicing complaints.

To start with the first, greater transparency. In future, large corporations are to report more fully on corporate social responsibility. The EU has passed a directive to that effect. The directive proposes that certain companies make declarations about their environmental protection and their commitment to the welfare of their employees. This applies to large enterprises. The guidelines from Brussels now need to be translated into practice, and we’re in the process of doing that here in Germany. However, we do also need to find a sensible way of avoiding too much red tape while not losing sight of the essential objective.

Greater transparency is also ensured by online services, such as those enabling consumers to compare ecolabels and welfare‑standards certificates. The need is acute, given just how many of these there are. The German Government has set up a website called “Siegelklarheit” which examines common certification marks from the textile industry and assesses their quality, as we can’t just make do with all those different assertions. We intend to gradually expand our online services, adding one group of products after another.

Greater transparency helps consumers make informed purchasing decisions. Indian Nobel Peace Price winner Kailash Satyarthi put his finger on the essential point when he called transparency the key to fair supply chains. Transparency serves both to advertise positive examples and to drag negative examples out into the light, which should prove less of a boost to sales. This can generate incentives to create good working conditions even in those place where things are still very bad.

Of course, it’s always better to counteract risks in the first place, before they result in industrial accidents and diseases. This brings me to my second point, the importance of prevention. Relevant factors here are, for example, training for inspectors and the establishment of on-site fire services. The development of accident insurance is also crucial. What’s clear though is that we need to collaborate with partner states and companies in order to establish a long-term safety architecture. And that won’t just take good will, of course – it’s a question of money too. Hence our idea for a prevention fund. Such a fund could be sourced from the budgets of large enterprises. I will say, however, that the whole discussion is still at a very early stage. The idea has not been met with enthusiasm in every quarter.

The aim has to be to reduce industrial accidents as much as possible. That’s what we intend to work towards with our partners in the G7. We also want to continue working on the topic in the G20. We are very glad that the Turkish G20 Presidency has set itself the goal of advancing occupational health and safety this year.

Nonetheless, experience has shown that, however much we do in the interests of transparency and prevention, there will always be companies which ignore agreements and break the rules. And so we come to my third point: the vital importance of structures which make it easier for employees to voice complaints and stand up for their rights – and without having to risk losing their jobs as a result. We have to keep that in mind at all times.

One possible solution is to have companies set up their own points of contact for complaints. Access to them should be as unhindered as possible. And of course this shouldn’t be allowed to erode the rights of any trade unions active in a particular enterprise. On the contrary, global framework agreements between trade unions and businesses, covering the entire supply chain, would seem to be a possibility. We might consider that option. I’m not trying to get other people to do my job for me; I just mean that’s also something we could think about.

Alongside companies’ own initiatives and agreements between labour and business, there are the National Contact Points. These are maintained by each state which considers itself bound by the OECD Guidelines for Multinational Enterprises. One of the things those National Contact Points do is to follow up complaints in order to mediate between the affected individuals and companies. In our international relations too, we could insist on adherence to those OECD Guidelines as part of our development aid agreements. I believe we could still exert more pressure there in our day‑to‑day work.

The G7 countries should take a leading role in that regard and scrutinise their National Contact Points to establish what has and what hasn’t proved worthwhile. We should also talk in this context about what the consequences should be when companies refuse to participate in mediation proceedings. I believe if we G7 countries really took on a leading role here, it would help us be able to say that the G7 shoulders global responsibility.

When the leading industrialised nations agree on something, when we act in concert, we do in a way set standards which others around the world can’t easily avoid. This is very important, not least with regard to the transition from G7 to G20. That’s why we will be reporting on your meeting here and on what you are calling for at the sherpa meetings between now and the G7 Summit – this will make the demands we make of our G7 partners look practically easy, which might help us get a few steps forwards.

Ladies and gentlemen, it is important not to leave any globally significant subject out of the G7 process. The topic we are discussing today is vital, but you talk about other things too, such as pay, job creation and much more. I want to use this opportunity to give you a quick outline of our other topics too.

Next to the state of the global economy, which is always on the G7’s agenda, Ukraine and other foreign-policy matters will in all probability also play a role. Sadly, we found ourselves forced to turn the previous G8 format into the G7 format in view of the annexation of Crimea.

We will talk about dismantling trade barriers and other obstacles to trade. I completely agree with you: free‑trade agreements must not guarantee free trade alone but must, fundamentally, also uphold standards of welfare and consumer protection. I believe a free‑trade agreement with the United States of America could set very high standards for other agreements to follow. Here we have two negotiating partners, after all, one of them, the EU, already in possession of really high standards and the other, the US, symbolising a major proportion of the world market. We could thus play the role of pioneers.

Our agenda also covers such topics as protecting the environment and consumer protection, to name but two. This year the G7 will be endeavouring to contribute to two international processes. Firstly, we will be supporting the UN conference being held in autumn to take the Millennium Development Goals to the next stage. It would be useful if the G7 countries came to it with a shared stance. Secondly, the Climate Conference will be taking place in Paris at the end of the year. The G7 also wants to support the French Government, which is organising that conference. We know that a lot depends on whether we establish an international agreement for an ambitious climate regime – particularly considering the levels of poverty in Africa and people’s standards of living there.

During Germany’s G7 Presidency, we want to ensure that the industrialised countries assume a leading role in the development of a more low-carbon and resource-efficient economy, advance the relevant innovations and technologies and make sure the funding is in place for adapting to the effects of climate change. We pledged in Copenhagen that 100 billion dollars would be available by 2020 – but we’re still a long way from fulfilling that pledge.

We will also be keeping up with the UN process of establishing the post‑2015 agenda for sustainable development. We’ve planned a number of topics that we feel could be helpful here: protection of the marine environment, resource efficiency, resistance to antibiotics and the fight against diseases. We particularly need to ask ourselves what we have actually learned from the Ebola epidemic. We will be collaborating closely with the World Bank and the World Health Organization. Furthermore, as I have mentioned, we will be looking at education and vocational prospects for women.

On the topic of health, I would just like to point out that we have, alongside Ghana and Norway, submitted a proposal to the UN Secretary‑General on how we might set up a panel to ask what lessons we have learned from the Ebola outbreak. I don’t think we are really aware yet just how quickly epidemics can develop these days in view of our dense global network of ties. As an epidemic, Ebola actually spread relatively slowly. The international community is not ready for such crises.

This is the context for our discussion of supply chains. I think it’ll fit in nicely, because it’s a subject that’s connected to all sorts of social issues, including the protection of health and environmental matters. Let me thank you once again for dedicating so much time and attention to this topic. As I’m sure you’re aware, two members of our Federal Government, Social Affairs Minister Nahles and the Development Minister, have dealt with and discussed the subject in a major conference. We will endeavour to feed the outcomes of that conference into the negotiating process too. It is handy that we still have a bit of time before the G7 Summit in June; it should allow us to make progress on some of the concerns.

Thank you very much – and now, I look forward to the discussion!