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In this video, we're
going to take a look

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at how the social contract
issues have been addressed

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around the world.

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It turns out there's quite a
bit of experience with this,

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sometimes with success for
a limited period of time

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and sometimes without
as much success.

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So let's see how other
countries address these issues.

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Let's start with Australia.

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Australia has a long history.

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In the 1980s, a
new prime minister

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came along by the
name of Bob Hawke.

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And he came into office
negotiating a new labor

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agreement called the accord,
with the labor movement,

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where he was saying to labor,
if you limit your wage increases

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to the price increases that
are happening in the country,

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we will then find
some offsetting things

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that we can do in
social welfare.

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So they negotiated a
national health insurance.

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They negotiated a
national pension program.

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They put in place a variety
of other worker adjustment

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programs.

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And for business,
they allowed over time

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much more flexibility in
promoting collective bargaining

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at the level of the firm.

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That worked for quite a while.

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New prime minister comes
in from a different party,

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says no more of this.

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And so it hasn't really
continued up until today.

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But now, in recent
years, Australia

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has taken a more
modern approach.

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It says today's workforce
needs flexibility

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for more parental leave
so that women and men can

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take care of their family
and work responsibilities.

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So in 2011, their first
parental leave program

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was put in place at
a national level.

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Now they're struggling
to make that work

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and to fight those
who want to repeal it,

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but it is continuing to
play an important role.

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Like Australia, Britain
has a long history.

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In the 1980s and
'70s, like Australia

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they were trying to
limit wage increases

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to deal with inflation.

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And then in the
1980s, along comes

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Margaret Thatcher as a new Prime
Minister, called the Iron Lady.

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And she says no more of that.

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I'm going to take a hard line.

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She took on the
most powerful union

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in the country, the miners'
union in 1984 and 1985.

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And she basically broke
a strike of that union

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and started to bring down
the rate of wage increase

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and help companies get more
flexibility and limited labor's

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power.

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That carried forward
up until the election

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of another new Prime Minister,
Tony Blair in the 1980s.

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And Tony Blair
basically said, I'm not

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going to go back to
the old labor policies,

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but I'm also not going to
continue the Thatcher approach.

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We're going to try a third way.

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And he looked at the
workplace issues that

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were relevant for
his point in time

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and he said, let's negotiate.

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Let's put in place a commission,
a labor, business, government,

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academic commission to
set up a minimum wage

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so that we can help those
at the bottom of our income

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distribution.

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And that's the most
successful part of his legacy.

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Well, if you really want to look
at the longest history of labor

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management consultation
and cooperation,

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you have to go to continental
Europe-- countries

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like Sweden, Denmark,
France, Germany, sometimes

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Italy and others.

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In Sweden, for example
there's a long history

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of business, labor, and
government negotiating

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in a cooperative way, both
at the national levels

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and more recently at the local
and regional levels and company

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levels.

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Basically, it's all part of
the social democratic values

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of the Swedish and
Nordic societies saying,

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we need to work together to
promote democracy and equity

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in our economic policies.

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And so that policy
continues today, even

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in times of difficulty.

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We'll take another look at
another country, Denmark.

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Denmark in recent
years has recognized

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the real issue is,
how do we adjust

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from an industrial
to a more dynamic,

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innovation-based economy?

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That means firms
need more flexibility

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to hire and fire and lay off
people as the economy changes.

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And so Denmark has
traded off what they

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call flexibility for security.

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That is, firms are more open
and free to lay people off.

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But there's an active
labor market policy

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that then supports workers
as they make the transition

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to new jobs, with a
stronger safety net,

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with training, and with
adjustment and assistance.

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So that then helps firms to
maintain their flexibility

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and to adapt to changing times.

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So around the world, we see a
variety of different approaches

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to these issues.

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Japan is another country
with a long history of labor

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management consultation.

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For years, its Ministry
of International Trade

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and Industry worked
with business and labor

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at the national level in
lots of consultation to say,

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here is basically
the wage target

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for increasing wages this year.

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And then individual companies
and enterprise unions

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would use that
target to negotiate

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their specific conditions.

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And that worked
quite well for Japan

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and for business and labor in
that country for many years.

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But then as the economy
changed and Japan

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began to get competition
from China and other places,

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it broke down.

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And now China is
trying to figure out

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how to get wages moving
more aggressively

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and prices increasing, because
it's having trouble adapting

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to a more dynamic economy.

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Another example, a
very different example,

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would be in Korea.

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Korea has had a very tumultuous
labor management history.

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Up until the mid-1980s, unions
were suppressed in Korea.

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And there were often
violent strikes

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that would come and
then get suppressed

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and the police would come in.

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And it would all die down
for a while and be quiet.

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But then in 1987,
the government began

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to open up the labor market
to stronger worker rights.

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And it said, let's
try to work together.

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But that long
history of conflict

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made it very, very difficult
for labor and management

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to work together.

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And so even today, we
now see big protests

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happening in Korean workplaces
as the government tries

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to get Korean employers
to be more flexible.

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And Korean workers
are saying, we

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are not sharing in all of the
prosperity of this country.

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Another example
would be in China.

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Perhaps there's no
country that more needs

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a new social
contract than China.

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As we all know, as the
Chinese economy began

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to open up to more
private enterprise

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and foreign investment, we saw
a wave of strikes in China,

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first at Honda in
2010, a big strike that

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resulted in a wage increase.

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And we've seen that
carry over in strikes

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at one of Apple's big suppliers
of parts for computers

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called Foxconn, where not
only workers are striking,

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but sometimes they
commit suicide

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in protest of the
conditions that they face.

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So China doesn't really have
institutions and policies

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to govern workplace
negotiations.

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It badly needs to find a way
to allow workers to express

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their needs, their interests,
their voice at the workplace

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and at the same time maintain
what they call tranquility

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in their relationships.

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But it's very difficult.

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Today, perhaps
too often, we find

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that not only are these
spontaneous worker

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protests occurring,
but they often

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take the plant manager hostage.

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So here's a picture
of an American

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who has a plant in
China who's actually

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waving from inside his office
to people on the outside,

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because the workers
are saying to him,

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you're not paying fair wages.

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We need to negotiate
a better arrangement.

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So around the world we
see these differences.

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We see in Singapore, for example
a much better labor management

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relationship, because there the
government takes a strong hand,

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controls a lot of
economic policy.

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But it does so with what
we would call a high road

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strategy.

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It invests in training.

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It encourages firms to have
good labor management relations.

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It's controlled
the labor movement

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so that there aren't
as many strikes.

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This is controversial,
because it's

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not quite the democratic
society that we would want.

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But it's the way in which
they do it in Singapore.

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If we turn to South
America, countries

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have had a more difficult time.

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There, they've had on
and off approaches,

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again often with dictatorial
governments controlling labor

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and management
activities, but now

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opening up to more
democracy but having

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tremendous problems with price
increases and labor protests.

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And then finally, I think we
can see some countries where

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organizations act on their own.

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So in Brazil, for
example, some companies

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are taking their own approach
to developing a social contract

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and not waiting for the
government to take action.

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Well, what lessons can we
learn from all of this?

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I think there are two.

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First, it often takes a crisis.

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A crisis will lead the
parties to pull together,

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whether it's the
end of World War II

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or whether it's a deep
financial crisis in Asia

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or some kind of
other natural crisis

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that might occur, perhaps from
climate change or whatever.

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So crisis often helps parties
to set aside their differences.

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And for a while, they can
work together and forge

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a new set of agreements.

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The second thing to remember
is that timing is everything,

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that one has to take
advantage of specific events.

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And when they occur,
like a financial crisis,

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maybe you can renegotiate
pensions in an appropriate way,

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or you can deal with problems
of recalcitrant unions

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or recalcitrant
employers and find

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ways to get them
to work together

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because there's a specific
issue that they both confront.

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So timing is
everything, using crisis

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as an opportunity for change.

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So all around the world,
workers, employers,

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governments, educators
need to figure out

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when it's possible to
negotiate a new social contract

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and what are the issues that
are current and relevant

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to our times.

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Every country in the world
needs to address these issues,

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because we have serious
problems in our workplaces

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that need to be addressed.

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And so we're very interested.

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What are your thoughts?

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What's most important
in your country?

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What issues should the parties,
with your help, be addressing?

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We look forward to
getting your thoughts

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on this in our discussions.