A cross-country
comparison which finds ‘Strong evidence that countries with open trade policies
have superior labor rights and health conditions and less child labor’
(Flanagan 2004: 26) suggests that openness to the world economy does not
undermine workers’ rights and may even enhance them. However, the finding that
in any particular country openness to the world economy can go with high labour
standards is not incompatible with the proposition that globalisation as a
process undermines labour rights globally.
One process by which this could and does take place is by the transfer of production from countries with higher labour standards to countries with lower standards, leaving workers in the former unemployed. Thus in developed countries, jobs in the labour-intensive textile and garment industries have been decimated as production shifted to developing country export sectors (Williams 2004; Narendranath 2004). This has also caused job losses in developing countries, when production moved from higher-wage countries like Korea to lower-wage ones like Cambodia. Outsourcing in the service sector led to further transfer of employment from developed to developing countries, leading to calls for a curb on outsourcing in the US (Alden 2004).
A less obvious,
more insidious way in which labour standards are undermined is by the spread of
low labour standards to countries which did not formerly suffer from them, or
at least not to the same extent. The global expansion of informal labour –
workers who do not have any formal employment contract with an employer and
therefore are extremely vulnerable to abuse – is a case of this. Informal
labour was always preponderant in India, but the expansion of homeworking,
sweatshops, and the hiring of workers through intermediaries (‘labour
contractors’, ‘agencies’, ‘gangmasters’ and so on) in countries which were
formerly free of these problems (Mather 2005) has caused serious concern within
the ILO in the 21st century (ILO 2002).
In this context, the publication of International Trade and Labor Standards, with its carefully crafted proposal for a linkage between trade and labour standards that is both feasible and capable of stopping the downward pressure on labour standards, is of great importance. The authors have taken up objections to linkage in a step-by-step manner in order to formulate a proposal that meets almost all the arguments against it that are commonly put forward. This paper is an attempt to strengthen it by tackling some of the few remaining weaknesses.
Labour
Standards or Labour Rights?
Perhaps the main weakness in the proposal is the vagueness of its definition of ‘labour standards’. It starts off by suggesting that the ILO Core Conventions – dealing with freedom of association and the right to organise and bargain collectively, freedom from forced and compulsory labour, the elimination of discrimination in employment and occupation, and the abolition of child labour – should be the basis of the definition, but then adds that any plausible account of labour standards would have to make reference to the level of real wages. The heavy emphasis on the necessity for burden-sharing as an incentive for developing countries to join and comply with the linkage system adds to the impression that there is a quantitative element in the definition of ‘labour standards’. This is reinforced by the suggestion that ‘The linkage system would require that countries attain to a minimally adequate level of labour standards, as determined in light of its degree of development and other relevant considerations’ (p.65). There is also an unstated assumption that developing countries have low standards and developed countries have high ones, again suggesting a quantitative element in labour standards.
There is a danger
that including this quantitative element could undermine the feasibility of the
proposal. It is likely that there would be endless wrangling over a country’s
degree of development and hence its appropriate level of labour standards, and
over the minimum appropriate to the least developed countries. By contrast,
another view sees minimum labour standards as being defined solely in terms of
the ILO Core Conventions, and these in turn as embodying fundamental human
rights, and therefore being non-negotiable. While there has been some criticism
of this definition, especially arguments that the rights embodied in these
conventions are too restricted (Alston 2004), it also has undeniable merits.
One great advantage is that the ILO Declaration on Fundamental Principles and Rights at Work and its Follow-up, adopted in 1998, can be interpreted as agreement that these rights are applicable to all member countries, regardless of their level of development and of whether they have ratified the conventions in question or not. Given that most countries in the world are ILO members, that governments, employers and unions are represented in it, and that the majority of members belong to developing countries, this is probably as close as we can get to standards on which there is universal agreement. Charges of cultural and/or political imperialism would be less plausible if it can be pointed out that the majority of the world’s people have, through the ILO, endorsed these as fundamental rights.
It also rules out
problems that are potentially insoluble. For example, what if the government as
well as the majority ethnic community of a country thinks that systematic
discrimination against a minority community – or, indeed, against women – is
legitimate? The only way to deal with this situation is to say that the
principle of equality is non-negotiable, and those who do not accept it are
thereby violating fundamental rights embodied in the linkage system, which seeks
to protect basic labour rights rights rather than more broadly envisioned labour
standards.
However, it might be argued that this makes the system too rigid, insufficiently flexible. In fact, the opposite is true. For example, removing wage levels from the definition of minimum labour standards makes it possible for workers to opt for a wage freeze or even a wage cut in order to preserve jobs, as workers in certain circumstances have chosen to do. So long as implementation of the human rights embodied in the core conventions is guaranteed, it can be assumed that this is a democratic decision made by those who are most affected by it.
What about the contention
that the rights embodied in the core conventions are unaffordable by poor
countries, and their enforcement may even block development? As the paper
correctly observes, there are strong arguments for maintaining that these
rights are in fact central to the very definition of development, and that real
development cannot occur in their absence, although it may certainly be
possible for a few individuals or business houses to amass a great deal of
wealth. Secondly, the point is also made, cashing in on the expansion of the
tertiary sector, where most of the new jobs are being created, requires an
educated workforce, which in turn depends on universal elementary education at
the very least.
In fact, a model of development built on a disempowered and destitute population producing for export to rich countries is no longer viable. With the market for many consumer products saturated in developed countries, companies are seeking out ‘emerging markets’ for investment. Qualifying for these investments depends on having reasonably good infrastructure and creating mass markets for consumer products, which in turn depend on wages above the level required for mere survival. A.T.Kearney’s survey of over 1000 top international companies in 2001 showed that the two major attractions of India as an investment destination were (a) the potentially huge size of its market, and (b) the availability of an educated, skilled English-speaking labour force at competitive wages (Global Business Policy Council 2001). However, China was considered more attractive because its market was seen as being disproportionately larger – ten times larger, in the view of some companies – probably because prices of consumer goods were much lower in China, so that a mass market for them had been created (Vijayraghavan 2000). Thus development, even in a narrow economic sense, involves the expansion of the domestic market, as well as a tax base large enough to support state investments in infrastructure and education, both of which are promoted by implementation of the core conventions.
Practical
mechanisms
The ILO is the only organisation with the competence to monitor labour rights, investigate complaints, and assist governments to improve compliance with the core conventions. It would have to perform these functions for a joint ILO/WTO body set up to oversee the operation of the linkage system, and would need adequate funding for this purpose. In this context, ‘burden sharing’ between developed and developing countries would be an important element in implementing a linkage scheme, but it must be emphasised that countries with higher labor standards must not be understood as being synonymous with developed countries, nor those with lower standards with developing countries. Thus the transfer of resources should not necessarily be from countries with higher to those with lower labour standards; it would hardly be fair to transfer resources from Sweden to the USA, or from Sri Lanka to Bangladesh.
One suggestion for
an equitable and feasible mechanism for resource transfer is that WTO member
states should fund the linkage scheme by contributions which are a flat
percentage of their GDP, while the amount of financial help countries are
entitled to in order to fund improvements in labour rights is inversely proportional
to their per capita GDP: from each according to their ability, to each
according to their need.
It should be possible for anyone to make a complaint, including workers’ organisations. It would then be the task of the ILO to investigate the complaint, and determine who is responsible for the violation, if it exists: the culprit might be a domestic company, a multinational or foreign retail company, the government, the IMF or World Bank (whose policies may undermine labor rights), or some combination of these. The next step would be to suggest a strategy to eliminate the violation, and work with the government to implement it. Only if the government refuses to cooperate should penalties be considered as a last resort.
What should the
penalties be? An important condition for making linkage acceptable to Third
World governments and even trade unions is that it should not be possible to
use the system in a discriminatory manner against developing countries. In
order to ensure an equal standard, ratification of the relevant conventions,
their incorporation in national legislation, and genuine efforts to implement
the laws should be required of a member state before it has a right to take
action against another state. This would take care of valid objections to the
possibility of the US taking action against other countries for violating
rights which are being violated in the US itself.
If a country is in fact in compliance with the ILO core conventions, it should have the right to refuse to import products made in violation of them. For example, WTO rules should allow a developing country which has eliminated child labour to refuse to import products made by children, which might threaten it with a reappearance of child labour in its own economy if domestic producers tried to compete with these imports by employing children themselves. And a developed country which is implementing these conventions should be allowed to discriminate in favour of imports made in compliance with them, in order to encourage respect for human rights in the global economy. It has been suggested that one way to achieve this is to expand Article XX(e) of the WTO agreement – which permits countries to ban the import of goods produced using prison labor – to include goods and services produced in violation of any of the core human rights conventions (Elliott and Freeman 2003: 90-91).
However, there is
a danger that such action by itself could have adverse effects: for example,
that children who are simply expelled from export production might end up in
even worse occupations. The only way to preclude such an outcome is to ensure
that the minimum labour rights embodied in the linkage system are enforced not
just in production for export but in all production, and indeed this is
what Barry and Reddy propose. But this raises a new problem: to use
international trade sanctions as a penalty for the violation of labour rights
in production for the domestic market would not be appropriate. Instead,
putting pressure on offending governments could, for example, take the form of
fines; if the violations are by a Third World subsidiary of a multinational
based in a developed country, or a Third World supplier of a developed country
retailer, both countries could be fined in proportion to their GDP. The fines
could then be used by the ILO to eliminate the violation: to take children out
of employment and assure them of a livelihood and education, to set up
machinery to deal with cases of bonded labor, union-busting or discrimination,
and so on.
Such a system would help to rule out the possibility that linkage might harm those it is meant to help, while at the same time putting pressure on recalcitrant governments to change their policies. It would also help to raise money to fund the reforms from governments which could afford to spend more on labour standards, but instead had other priorities, such as military spending. A cross-country study of child labour, for example, concluded that ‘poverty is not even a significant reason for child labour when the influence of other explanatory factors for child labour are taken into account,’ (Ahmed 1999:1820), suggesting that it is lack of will on the part of governments to provide a good education for every child that is responsible for child labour. This is confirmed by examples within India, where state governments with a commitment to providing an education for all children have succeeded in eliminating child labour despite being poor, while richer states continue to have a much higher level of child labour (Burra 2003). In such circumstances, the threat of fines would be an appropriate way to put pressure on WTO member states to undertake the policy changes required to protect these basic human rights.
Informal labour
Perhaps the biggest challenge faced by a linkage system – as, indeed, by any attempt to defend basic labour rights – is dealing with informal labour. Workers who are employed but have no legal status as workers, nor any formal relationship with an employer, can easily be denied basic rights and dimissed with impunity if they try to demand them; indeed, this happens all the time in India. They constitute a large and growing section of the global labour force, and it can be argued that any system of labour rights protection fails unless there is a strategy for including them in it.
This is a problem
that goes beyond linkage. Informal women garment workers in Bombay suggested
that registration of all employers and employees, and some form of legal
employment contract – in other words, measures to formalise their employment –
would be necessary if they were to have the right to organise and other basic
rights; labour legislation which currently excludes them should also be
extended to cover all employees (Hensman 2006: 127). The ILO could, and should,
do something to remedy this situation. At a seminar on informal workers
organised by IRENE (International Restructuring Education Network Europe), the
Clean Clothes Campaign, and the Evangelische Akademie in Meissen in September
2004, one of the proposals was that the right to proof of identity as workers
and proof of employment should be incorporated in one of the ILO Core
Conventions. The most appropriate would be No.98, on the Right to Organize and
Collective Bargaining (1949), which deals (among other things) with
protecting workers from victimisation
for belonging to a union or taking part in its activities (Hensman 2006: 156).
If one of the ILO Core Conventions is amended as suggested, inclusion of informal workers would automatically become part of the linkage scheme. This would undoubtedly add to the cost of implementation, since it would then become necessary to set up the machinery to register informal employers and employees, and the employment contracts entered into by them, as well as to monitor the application of labour laws to these workers. But the costs of not dealing with this problem would be infinitely greater, although not so easily measured in financial terms: the lives, limbs, health and democratic rights of a large and growing section of the world’s labour force.
Campaigning for
Just Linkage
The campaign for a workers’ rights clause to be part of WTO’s international trade agreements, which was so vociferous at the time of the 1999 Ministerial meeting in Seattle, has died down considerably. There could be several reasons for this. Resistance from Third World employers and governments which saw such a measure as threatening the cheap labour regime in their countries is one. Governments of developed countries which were pushing for it may simply have been playing to their working class constituencies in an opportunistic manner, abandoning the proposal when it no longer served their political purposes.
However, the main
reason was probably the fact that the constituency which could have derived
most benefit from it – workers in both developed and developing countries –
were confused and divided on the issue. Unions in developed countries proposed
a linkage mechanism that could, conceivably, be used for protectionist
purposes, and thereby antagonised unions in developing countries, who concluded
that it might put their jobs at risk. Conversely, unionists from developed
countries were shocked at what they thought was endorsement of child labour by
their counterparts in developing countries who opposed the proposal! Anti-globalisation
activists saw the WTO as being by its nature neo-liberal, and neo-liberalism as
being inimical to labour rights; they therefore concluded that the proposal was
eyewash, and should be dismissed along with the WTO itself, an attitude that
made its way into some sections of the labour movement. The debate, if it could
be called that, was not conducted in an orderly manner.
One unfortunate consequence was that the international and developed country unions which had been the strongest supporters of the ‘social clause’ turned to other strategies, especially International Framework Agreements and Codes of Conduct. Yet the implementation of both of these faced enormous difficulties (Miller 2004, Kwan and Frost 2002, O’Rourke 2002 and many others), and even when they were able to protect labour rights, the number of workers affected were minuscule by comparison with those who might have been reached by a clause in WTO agreements. This does not mean that these strategies should be abandoned, only that it is still necessary to supplement them with a more inclusive measure.
Nonetheless, there were some gains. One was the attempt by some of those who supported linkage in principle to craft a proposal that would meet valid objections which had been made to the earlier one. If a campaign for such an improved scheme can be launched at this point, it could result in a more satisfactory debate. And if the measure is actually incorporated in WTO agreements, it would do much to legitimise the international trade body in the eyes of unions and labour activists throughout the world.
(This commentary on a proposal to link international trade and labour standards was published in Christian Barry and Sanjay G. Reddy, International Trade and Labor Standards: A Proposal for Linkage, Columbia University Press, New York, 2008, pp. 117–126.)
References:
Ahmed, Iftikhar, 1999, ‘Getting Rid of Child Labour,’ Economic and Political Weekly, Vol.XXXIV No.27, pp.1815-22
Alden, Edward,
2004, ‘US white-collar job losses touch a raw nerve,’ Business Standard,
29 January
Alston, Philip, 2004, ‘“Core Labour Standards” and the Transformation of the International Labour Rights Regime,’ European Journal of International Law, Vol.15 No.3, pp.457-521
Burra, Neera,
2003, ‘Rights versus Needs: Is it in the “Best Interest of the Child”?’ in
Naila Kabeer, Geetha Nambissan and Ramya Subramanian (ed), Child Labour and
the Right to Education in South Asia: Needs versus Rights? Sage
Publications, New Delhi, pp.73-94
Elliott, Kimberly Ann, and Richard B.Freeman, 2003, Can Labor Standards Improve Under Globalization? Institute for International Economics, Washington, D.C.
Flanagan, Robert
J., 2004, “Labor Standards and International Competitive Advantage,’ in Robert
J.Flanagan and William B.Gould IV (ed), International Labor Standards:
Globalization, Trade, and Public Policy, Stanford University Press,
Stanford, pp.15-59
Global Business Policy Council, 2001, FDI Confidence Audit: India, A.T.Kearney Inc., USA, February
Hensman, Rohini,
2006, Globalisation and the Changing Regime of Workers’ Rights: Formal and
Informal Workers in Bombay in the Context of a Globalising Economy,
Academisch Proefschrift, Universiteit van Amsterdam
ILO, 1998, Declaration on Fundamental Principles and Rights at Work and its Follow-up, ILO, Geneva
ILO, 2002, Resolution
Concerning Decent Work and the Informal Economy, ILO, Geneva
Kwan, Alice, and Stephen Frost, 2002, ‘“Made in China”: Rules and Regulations versus Corporate Codes of Conduct in the Toy Sector,’ in Rhys Jenkins, Ruth Pearson and Gill Seyfang (ed), Corporate Responsibility and Labour Rights: Codes of Conduct in the Global Economy, Earthscan Publications, London, pp.124-134
Mather, Celia,
2005, ‘Unions Face up to Contract/Agency Labour,’ International Union
Rights, Vol.12 Issue 1, p.22
Miller, Doug, 2004, ‘Preparing for the Long Haul: Negotiating International Framework Agreements in the Global Textile, Garment and Footwear Sector,’ Global Social Policy, Vol.4(2), pp.215-239
Narendranath,
K.G., 2004, ‘US, EU jittery as deadline for freeing of textiles nears,’ Economic
Times, 16 February
O’Rourke, Dara, 2002, ‘Monitoring the Monitors: a critique of Corporate Third-Party Labour Monitoring,’ in Rhys Jenkins, Ruth Pearson and Gill Seyfang (ed), Corporate Responsibility and Labour Rights: Codes of Conduct in the Global Economy, Earthscan Publications, London, pp.196-208
Vijayraghavan,
Kala, 2000, ‘If you can’t beat Chinese imports, source from them,’ Economic
Times, 30 November
Williams, Frances,
2004, ‘WTO rejects textile quota reprieve,’ Business Standard, 30 April