1. Americas Choice: Class Conflict or a New Social Contract at Work The Future of Work Conference Thomas A. Kochan MIT Institute for Work & Employment Relations MIT Workplace Center London June 23, 2003

2. The Issue: Mismatch of Policies & Institutions with Work & the Workforce ¯ Key Facts: –Changes in Work & the Workforce –Policies & Institutions Designed in 1930s ¯ Result: –Mismatch creates gap between winners & losers and limits economic performance and innovation –A breakdown in the old social contract ¯ The Challenge –Break the policy impasse by reframing the debate, engaging new voices, & building on local innovations –Building a social contract for the future

3. The Puzzle: Why the Deafening Silence? ¯ Decade of boom & bust leaves working families with: –Stagnant, declining incomes –Increased inequality –Longer working hours –Less retirement savings; fewer health care benefits –Broader job insecurity –Breakdown in trust in corporate leaders –Loss of worker voice in society ¯ Current government policies producing: –Further cuts in services & jobs –Tax policies that further increase inequality –Deep divisions over war policies –Direct attacks on workers, unions, and core values

4. One Scenario: An Era of Tension, Division, Conflict, Decline, and Potential Backlash ¯ Government service cuts at state & local level ¯ International tensions and anti-Americanism intensify ¯ Anti-globalization protests ¯ Racial tensions ¯ Widening income inequalitydomestic and global ¯ Work and family conflicts ¯ Loss of confidence in key institutions ¯ Growing sense of Helplessness ¯ High potential for backlash and extremism

5. An Alternative Scenario: A New Social Contract ¯ Engaging the Public: Can it be a force for Change? ¯ Revisiting basic values: The moral foundations for work ¯ Work & its Role in Society ¯ Expanded View of the Key Actors & Institutions ¯ Multiple Stakeholder View of the Firm ¯ Expanded Roles for Unions/Associations ¯ Expanded Role for Labor Market Intermediaries & Community Groups ¯ Recast Government as a Catalyst for Change

6. Starting Points: The Moral Foundations for Work ¯ Efficiency: Necessary but not Sufficient ¯ Work as a Source of Dignity and Personal Development ¯ A Living Wage ¯ Respecting Diversity & Equality of Opportunity ¯ Solidarity & Social Cohesion: The Common Good ¯ Voice & Participation ¯ Local Control: Solving Problems at the Source ¯ Integrating Work, Family, and Community Responsibilities ¯ A Social Contract

7. Economic Function security standards of living efficiency quality goods & services Individual Value dignity respect identity voice social interaction World of Work Place in Society family community citizenship A Holistic View of Work in Society

8. The Firm & its Multiple Responsibilities The Firm Shareholders & Customers Union Partnerships Communities Labor Market Networks Employees Suppliers & Contractors Government Agencies

9. The Challenge Managing a company, not a share price, means balancing the requirements of shareowners, customers, employees, and communities. And managing a company for the long-term, not just the short-term, requires building sustainable value for shareowners and customers and employees and communities. And these relationships of sustainable value require real trust and real candor. Carly Fiorina, CEO, Hewlett Packard, October 12, 2002

10. The Opportunity There has never been a time when corporations have had the reach, the resources, the knowledge, and the expertise to make a difference that we do today. Now, more than ever, corporate leaders have an opportunity to redefined the role of the corporation on a world stage; to leverage our ability to improve the live of people, communities, and nations for the better. Carly Fiorina, CEO Hewlett Packard, October 12, 2002

11. Realities: Changing Role of the Firm ¯ The New Business Model: Core Competencies –More difficult to perform labor market functions –Unstable boundaries: Unstable Partnerships –Premium on Flexibility; Adaptability to Uncertainty ¯ Increased Role of Knowledge/Human Capital –Knowledge Workers or Work Systems? ¯ Must Work Collaboratively with other Institutions ¯ Todays Reality: Diversity in Organization Forms ¯ Transparency, Trust, & Accountability: Laws, Leadership, & Employee Voce

12. Multiple Purposes of the Next Generation Unions Next Generation Unions Political Voice Direct Participation Coalition Partner Mobility & Occupational Community Collective Bargaining Strategic Partnerships

13. The Realities: Void in Worker Voice ¯ Workplace –Pre-depression levels of union membership –Representation Gap increasing ¯ Collective bargaining in decline –Cant take wages out of competition –Declining power of the strike ¯ Enterprisestruggling to find a forum –Partnerships, ESOPS, Shareholder Resolutions…. ¯ Absence of voice in national political affairs

14. Will there be a Next Generation Labor Movement? ¯ Diverse Labor Force Wants & Needs Diverse Forms of Participation & Representation ¯ Unions as Extended Networks Require: –Continuous membership over full career –New approach to membership recruitment –New sources of power –New coalitions –Different structures--coordination across union boundaries ¯ Question: Can the labor movement adapt and reform or will it require a rival movement?

15. Emerging Labor Market Institutions Labor Market Intermediaries & Community Groups Job Matching Coordinating Networks Information Services Family Advocacy & Services Training & Life Long Learning Worker Advocacy & Coalition Building

16. Intermediaries & Community Groups ¯ Multiple Functions –Job Matching –Life Long Learning –Advocacy: Living Wages; Work & Family –Institution Building ¯ Major Challenges: –Sustainability –Building Power –Moving to Scale: Having a National Impact

17. Government: A Catalyst for Change? Government Linking Macro Policies Supporting Mobility Investing in Human Capital Experimenting with Self- Governance Setting & Enforcing Minimum Standards Updating Labor Law Experimenting with ADR Promoting State & Local Experiments

18. Current Realities ¯ Demise of the U.S. Department of Labor –From the days of George Shutlz & John Dunlop –To a silent White House Puppet ¯ Current Assaults on Worker Rights –Department of Homeland Security: Collective bargaining cannot be allowed because it is a threat to national security. ¯ Continuing Business-Labor Gridlock

19. A Shadow Government Policy: A Realignment of Roles ¯ Federal Govt. as Catalyst for Change ¯ Increased Role for State & Local Govt. ¯ Increased Role for International Agencies –ILO, IMF, World Bank, WTO…and NGOs ¯ A Comprehensive Reform/Updating of labor and Employment Law ¯ Greater reliance on private institutions for enforcement/dispute resolution ¯ Return to Professional Leadership in Labor & Employment Policy

20. The New Approach in Action: Building a Family Centered Labor Market Policy ¯ Firm-Based Family Friendly Policies ¯ Employee Participation to Support Use and Adapt Government Regulations ¯ Collective Bargaining to Expand Coverage ¯ Networks to Promote Family Based Model ¯ State, Federal Policies to Fill Gaps, Extend Coverage, Provide Resources, Support Local Adaptations & Experiments

21. Making it Happen ¯ New Ideas ¯ More Innovations ¯ Public Engagement ¯ Full Range of Voices: Labor, Management, Community Groups, Women & Family Advocates…. ¯ National Leadership?