This article is written by Sidra Khan, from Amity University, Noida. The article discusses whether the International Labour Standards set by the International Labour Organisation are effective in the global era or not.
Table of Contents
Globalization has profoundly changed and also influenced its legal structure, the culture and the organisation in which work is now being carried out. Multinational companies (MNCs) are immensely powerful and are now able to relocate wherever and whenever they want globally, finding the most lucrative way to raise their profits. In order to attract each other, developing countries in particular compete. What do International labour standards mean in this environment? In the past, the International Labour Organization has established the ILS. The ILO still exists today, but its default function suffers from huge deficiencies in its enforcement. In fact, the ILO is concerned with private initiatives being undermined. The argument is that there has been a shift from public to private regulation that has created interdependence between several players which is crucial for the existing ILS regulation. Therefore, the future success and efficiency of ILS depend mainly on how this interdependence works.
Meaning of International Labour Standard
It is necessary to understand its exact meaning to understand the role of the ILS. The word “labour standard” has two separate definitions, according to Sengenberger. The meaning of labour standards is normative or prescriptive and refers to the conditions of “work” and specifies fundamental working rights and basic social rights. These rules are set at both international and national level and are thus known as the International Labour Standards. Their terms and conditions of employment are defined in the same way. Their meaning refers to the situation of “what is.” ILS is laid down in the ILO conventions and recommendations and forms the ‘international labour code,’ which other sources of international agreements supplement these ILO instruments. Nevertheless, the following remarks are restricted to instruments of the ILO.
The meaning of the word ILS can be briefly clarified by their importance and purpose. One of the most controversial issues over the last 100 years has been the issue of necessity. This disagreement is the product of varying interpretations of the idea of free trade. Firstly, there are champions for free trade. We advocate the removal and the restructuring of labour markets of all trade and investment barriers. They believe that successful implementation of the ILS damages countries’ competitive advantage as often as domestic labour laws harm comparative advantages, such as natural resources, and preferences. Protectionists argue, on the one hand, against external regulation for the protection of national markets and national labour laws. Such two extremes seek to achieve a balance, leaving a hybrid labour law torn between its former security role and its current desire for versatility.
Functions of International Labour Standards
ILS roles are to redress and mitigate systemic shortcomings resulting from the particular characteristics of labour and labour relations, such as the fundamental asymmetry of power between the workers and the employers and the high potential for exclusion and exclusion Involvement, security and promotion are main functions that can be summarized as:
- To prevent disruptive competition through the defence of particular workers’ groups and setting minimum wage and working conditions;
- to promote constructive competition through guaranteed collective rights, for example, involvement in decision-making, improvements in productivity and motivation of workers, increasing aggregate demand, and promoting the creation of jobs, active labour market policies and ways of adjusting socially desirable measures.
The ILO has been formed since 1942 and has produced enormous numbers of Conventions and advice, given long-standing concerns about the importance and role of ILS. In the following section, its efficiency will be examined.
Labour laws in the context of globalisation
Economic gradual internationalization
Most of the trade in the past was simple, which means that all or most products were manufactured in a country and only exported or imported from elsewhere. But as a result of the gradual internationalization of the economy, this economic model has changed. It can be described as sometimes very distinctive cultural, economic and social processes. Economic globalization “refers to” the inclusion of cross-border economic activities through markets. This process is called globalisation.
Giddens and Hutton describe globalisation as the interaction between extraordinary technological innovation and a worldwide reach drifted by world capitalism that gives its particular complexity to today’s change. It now has a pace, unavoidability and capacity it had never before. Deregulated and liberalized capital markets offer the potential for unimpeded cash flows, thus making sales the most competitive. More accurately, cash is used where the expectation of revenue is greatest. Moreover, various multilateral conventions removed and thus facilitated globalisation, barriers to goods, services and capital flows.
In addition, the number of MNCs and their affiliates are increasing rapidly and can be considered as the ‘main drivers of economic globalisation.’ At the same time, the traditional structure of enterprises, a model on which the various national labour laws are oriented, is vanishing, creating enormous regulatory problems. Globalisation has transformed influence from regional to transnational companies, and has “transferred policy boundaries into the world’s domain, not the national economy”.
As a result, the decentralization of production and modern ways of investment has changed the working world profoundly. Next to cost-free information and distribution, new information technology allows the globalisation process to be expediated. The information revolution is at the heart of social and economic globalisation, states Keohane and Nye. In addition to that “the division of labour is restricted by the size of the market,” and of course “the market now covers the globe.” It has allowed the transnational organization to operate and the expansion to the markets, which encouraged new foreign dividing labour. It is described by Stiglitz as the “enhanced integration of the countries and citizens of the world, resulting from the enormous reduction of transportation costs and communication costs and the breakdown of artificial barriers to the trans-boundary flows of goods, services, resources, information, people.” Nonetheless, these advances have triggered a number of labour standards problems as seen in the following section.
Globalisation raises obstacles to working standards
If the globalisation trend can be seen as economically beneficial, it can have a devastating effect on labour systems. Although the economy is globalizing, labour structures and regulations of the labour market remain predominantly domestic, as domestic labour standards are regulated and monitored. This applies to the ILO standard-setting instruments, which must usually be implemented by national authorities because in the strict sense there is no international labour law, i.e. the competence of implementing the standards worldwide.
In order to compete with the global competition, the worldwide network of production, capital and markets leads developing nations with infrastructure disadvantages to the tentative effect of social dumping by reducing their working standards already at a poor level. It could cause an upward spiral race that could be avoided by efforts to ensure that all competing countries follow standards.
In addition to causing difficulties in developing countries, low expectations are not only causing problems in developing countries but also causing problems in developed countries with civil and labour rights being blatantly violated. During the course of negotiation, for instance, employers are frequently confronted with a transfer of the company or the danger of merger with foreign companies. For example, the President of the largest employers’ organization in Germany commented: “In ancient times, employers wondered” how bad is the wage agreement for me?”. “I’m no longer worried about the deal since I have four or five strong escape routes. they say today. In the Czech Republic, I can just move 10,000 jobs. Moreover, the membership of the Union, collective representation and trade have gradually and significantly declined and unions have recognized that “they are ill-equipped to tackle globalisation,” with a huge adverse impact, bearing in mind that the unions are the key stakeholders in improving the working conditions.
Such innovations placed tremendous pressure on many national labour laws to compete with various countries. The challenge comes from the fact that the more detailed and effective the national legislation is and therefore hamper MNCs, the more likely it would be to push the MNCs. In this sense, the biggest danger for labour standards is the global capacity of MNCs relative to the labour laws, which are usually still regional in nature. And the “race to the bottom” appears inexorable. Therefore, the “multinational corporations are a threat to national politics” and that the “globalisation threatens national states’ ability to control their own national economies” have come true. Within this section, the role of ILS will be discussed, and whether global/regional players can tackle the international economic decision-making trend of MNCs or solve it.
International Labour Organisation and effectiveness of International Labour Standards
The International Labour Organisation, with 183 member states, is a United Nations specialist body. It has a tripartite framework with members of states, employers and workers. This structure provides the social partners with a unique forum for debating and developing standards and policies. To date, 189 conventions and 201 guidelines have been issued by the ILO addressing almost all facets of work and social rights. Nevertheless, there could still be grave concerns about the importance of such a robust regulatory agency, even though the ILO sees that “a normative action is an important tool for the realization of decent work.”
Conventional obligations can be established by the Member States legally binding only after their voluntary ratification. In comparison, guidelines do not define legal duty except in core labour standards (CLSs), which have been established by the Declaration of the ILO on fundamental principles and rights at work 1998 (ILO Declaration 1998) without ratification of the reality of membership of the ILO. The ILS is assisted by a supervisory mechanism to ensure that signed agreements are applied. There are two distinct control mechanisms in this monitoring system.
Firstly, the regular system which uses the Member States’ periodic reports and secondly special procedures. Special procedures shall be the general application procedure for representations and complaints and for the special freedom of association procedure. In general, these supervisory procedures require prior ratification as a requirement irrespective of their effectiveness. But the main issue emerges at this stage. Most countries do not actually attempt to ratify conventions. This refers in particular to developed countries fearing “disguised protectionism” and competitive disadvantages. In total, less than one-quarter of the ILO Conventions have been ratified by three-fifths of Member States and fewer than twenty conventions have been ratified. Nonetheless, another assertion is more sobering. Ratification does not mean compliance, so there is still a large compliance gap. The explanations for this are distinct.
First of all, there is a lack of appropriate administrative frameworks for implementation in developing countries in particular. Nevertheless, policymakers are also not interested in enforcing this because, due to low labour rates and weak labour rights, they see their competitive advantages imperilled.
Secondly, due to the lack of real sanctions and the reliance upon the goodwill of Member States the supervisory structures of the ILO are not very effective. At the most, a declaration of violation or a request to behave in accordance with the conditions would conclude the case. The procedures are therefore focused on ‘shame mobilization.’ In the future, it is expected that due to pair strain, the Convention violating countries will behave accordingly. It is clear that this process has failed.
Thirdly, in developing countries, there are over 70 special export processing areas which are off-limits for many ILSs and in order to draw investors, labour restrictions are relaxed.
Finally, all the ILO regulatory efforts only concentrate on the structured and formal sector, i.e. this area that deals nationally with labour relations. ILO regulation does not achieve the informal economy, i.e. economic practices not recognized, recognized, registered, covered or controlled by public authorities. However, the vast majority of employees in the developing world work in this sector.
In addition, ILO systems do not hold MNCs accountable as their tools are addressed only to non-company states. Nevertheless, harmonization may be very useful to improve the ILS.
International Labour Standards and MNC Policies
Throughout establishing national policies, regulations and procedures on different aspects of social and labour law, universal labour standards have proved to be effective and useful. ILO Conventions and Recommendations range from national tripartite consultation to grievance proceedings of businesses, salaries, working time, leave, occupational safety and health holidays, non-discrimination to positive action for the elderly, disabled women and other vulnerable groups, labour market legislation, employment management, the human resources sector ILO Conventions and Recommendations.
The ILO conventions and guidelines in this regard are not binding unless a State ratifies the Conventions in question and reiterates the respective principles of the national law. The US government uses a number of methods to uphold international labour norms. The labour side provision of the North American Free Trade Agreement (NAFTA) includes the Caribbean Basin Plan, the Generalized System of Preferences, Section 301 of the Trade Act, 1974, the extraterritorial implementation of US labour law, voluntary corporate standards of conduct and the North American Labor Provision. Several NGOs and businesses are working to disseminate information on products and businesses that do not involve child labour through so-called “social labelling” to consumers. Another example of this is the fair trade etiquette TRANSFAIR seal in the tea industry. Its goals are to ensure fair market rates that cover production costs plus a fair trade premium for existing producers; the involvement of real producers in the use of fair trade premiums; an expectation of rates in advance; and promotion of the long-term relationship between producers and importers.
The International Organization of Employers expressed misgivings, for example on the issue of labelling campaigns, that they only address a small section of children’s labour, without focusing on the problem, and that they act as a “fast fix” to child labour by drawing on consumer “feel-good” sensibilities. They do not guarantee non-employment of child labour by virtue of the label and they may sometimes lead to producers being penalised even though they have not employed child labourers.
International Labour Standards implementation and promotion
International labour standards are supported by an internationally unique supervisory system that ensures that countries implement the conventions ratified. The ILO evaluates and defines areas in which norms can be best enforced annually in member states. If the application of standards does not present problems, the ILO seeks to help nations by means of social dialogue and technical assistance.
Following its adoption by the International Labour Conference and its ratification by the States, the ILO developed numerous ways to track the implementation of conventions and guidelines in law and practice. The supervisory mechanism exists in two kinds:
Regular supervisory system:
Review by the Member States of the periodic reports on measures taken to implement the provisions of the Conventions ratified.
The proceedings for representations and the general application procedure for complaints and particular freedom of association procedure.
The framework for supervising the application of standards
Two ILO bodies analyze the reports on implementation in law and practice submitted by the Member States and make recommendations in this regard from workers’ and employer organisations, on the basis of the normal framework of supervision.
- Expert Committee on the application of conventions and recommendations.
- The Tripartite Committee on Conventions and Recommendations of the International Labour Conference.
The three following procedures are focused on the presentation of representation or complaint in comparison to the normal supervisory system:
- Representations procedure for the application of the Conventions ratified.
- Application procedure for ratified conventions complaints.
- Special procedure for complaints concerning freedom of association by the Committee on Freedom of Association.
International labour standards are basic instruments that the international community adopts and represent common labour ideals and principles. The ILO considers it important to monitor developments in all countries, whether they ratified them or not, although the Member States can decide whether or not to ratify agreements. In accordance with Article 19 of the ILO Constitution, Members States shall report on measures which they have taken at regular intervals to implement any provision of certain Conventions or Recommendations and identify any barriers which have prevented the ratification of a Convention or delayed it.
A comprehensive annual general review on the law and procedure of Member States, on a theme chosen by the Governing Bodies, is published in the Committee of Experts. These surveys are primarily based on reports from the Member States and information transmitted by organizations of employers and workers. It allows the Expert Committee to assess the impact of conventions and recommendations, analyze government difficulties as an obstacle to their implementation and identify ways to overcome them.
International Labour Standards in Developing International Labour Laws
In promoting international labour standards, the International Labor Organization played an important role. India is an ILO founding member and has helped codify the standards. It also helped to develop its own legal and institutional framework in the areas of social and labour. In recent years attempts have been made to connect standards to foreign trade through means of a social clause by the World Trade Organisation, with the same goal being accomplished by way of social labelling through the product codes and consumer boycotts.
To harmonize globalisation, attempts are being made to align foreign trade with a social clause mechanism to prevent developed countries from benefiting from trade liberalization on the basis of comparatively low labour cost. Universal labour standards are well established. The debate deals with the means of implementation, and in particular with the arguments about the attempts to link certain core labour standards with international standards. Therefore, the problem does not lie in the need to enforce universal labour standards. The question remains whether any kind of link with trade should be punished for countries and companies which continue to achieve competitive advantage through the violation of fundamental rights.
Employers in various developed countries and unions, government agencies and employers in various countries in development have resisted any formal connection between labour and trade standards. While producers in developed countries appear in an attempt to take advantage of cheap labour in developing countries, developed-country workers feel it could affect employers’ jobs in the developed-countries if they enjoy the comparative advantage of cheap labour. The social partners in developing countries, therefore, perceive the relation between the social clause and trade as the attempt of governments and employees in developed countries to take away this advantage from the developing countries.
International Labour Standard Benefits
Global labour standards have been made more important than ever because of the complexities of globalisation. What are the advantages today?
Provides Productive Employment
The creation of people as human beings is the key priority of international labour standards. The international community acknowledged in the Declaration of Philadelphia (1944) that “work is not a commodity.” Labour is not an inanimate commodity, such as an apple or TV set, negotiable at the highest benefit or the lowest expense. Employment is part of daily life and essential to the dignity, health and growth of an individual as a human being. Growth of the economy should involve creating employment and working conditions where people can work in democracy, protection and dignity. Briefly, it is not economic growth for itself that is being done but to better people’s lives. There are international labour standards to ensure that it remains focused on enhancing men and women’s lives and dignity.
Decent education restores people’s hopes for jobs. It brings together access to meaningful, well-paying jobs, occupational safety and family social security, greater opportunities for personal growth and social inclusion, independence for individuals to identify their claims and to organize and engage in life-impact decision-making and equal opportunities and justice for men and women.
Decent research is not just an aim, it is a way to meet the special goals of the current International Sustainable Development Programme. Decent work and four pillars of the Decent Work Program – job development, social security, human rights and social dialogue – were essential to the United Nations General Assembly in September 2015. Objective 8, of the 2030 Agenda, calls for sustainable economic development, complete and meaningful jobs and decent work for everyone to be promoted. Furthermore, a large number of the 16 UN objectives, new development vision, broadly include the main components of decent work.
Equality of play
A universal social contract legal system means that the global economy has the same area of practice. It helps governments and employers prevent the temptation to reduce labour standards in the expectation that they can benefit from greater competitive advantages in national trade. Over the long term, nobody profits from these activities. Shrinking labour standards can encourage the spread of low salary, low profile and high-turnover industries while at the same time slowing trade partners’ growth and preventing a country from developing more stable highly skilled jobs. Since the international labour standards of governments and social partners are minimum standards, it is in the interest of everyone to see such laws being applied in their entirety so that those who do not follow them do not weaken the efforts of those who do so.
A way to boost financial results
Global labour regulations were often seen as expensive, hampering economic growth. However, a growing research force has shown that adherence to international labour standards is often followed by efficiency and economic performance changes. Minimum salaries and working hours and fair opportunity will result in increased workplace satisfaction and efficiency and decreased staff revenue. Training investment can lead to a better-trained workforce and higher levels of employment. Safety standards can reduce expensive accidents and healthcare expenses. Security of jobs can foster risk and creativity amongst employees. Social protection, such as unemployment and active labour market policy, can facilitate flexibility in the labour market, sustainable and acceptable to the public, economic liberalisation, and privatization. Free association and collective bargaining will lead to better negotiations with and collaboration on labour management and thus improve working conditions, decrease expensive labour disputes and improve social stability.
International investors should not ignore the positive impact of labour standards. Research has shown that foreign investors rate labour quality and political and social stability above low labour costs in their selection criteria for countries where to invest. At the same time, there is no evidence of further competition in the global economy in countries which do not follow labour standards. Global labour regulations not only tackle improvements in the workplace climate for protecting workers but also take fair business needs into account.
A defence net during an economic downturn
Also rapidly growing economies with highly trained employees will suffer unexpected financial recessions. The Asian financial crisis in 1997, the 2000 dot-com blast and the 2008 financial and economic crisis revealed how dramatic depreciation in currencies or falling market prices can undo decades of economic growth. For example, in many of the countries concerned, during the Asian crisis of 1997 as well as the 2008 crisis, unemployment rose significantly. The devastating impact on employees of these crises was compounded by the fact that social security programs were scarcely enforced in many of these nations, including unemployment, health care, progressive labour market policies and social dialogue. A macroeconomic and job-related strategy can contribute to addressing these problems while taking account of social impacts.
A Poverty Reduction Policy
It was always the acceptance of rules that depended on economic development. Legislation and functioning legal bodies guarantee property rights, contract enforcement, substantive compliance and defence against crime-all basic elements of good government that no economy can run without. A fair collection of rules and institutions market is more effective and benefits everybody. There is no other labour market. The healthy and stable labour market for employees and employers is guaranteed by fair work practices set by international labour standards and enforced by means of national legislation. A significant proportion of the population is active in the informal economy in many developed and transition economies. However, these countries are also incapable of delivering meaningful social justice. But in these situations, International labour standards can also be effective tools. Both staff, and not just those who work under structured labour contracts, are protected by most ILO requirements. Certain standards such as the standards dealing in certain fields of the informal economy with host workers, immigrants and rural workers, indigenous or tribal peoples, etc.
Enhancing freedom of association, expanding social protection, improving workplace safety and health, developing vocational training and other actions required by International Labor Standards have proved effective strategies for poverty reduction and the incorporation of workers into the formal economy. In addition, the creation of institutions and mechanisms capable of enforcing labour rights demands international standards of employment. Together with a number of established rights and rules, operating legal bodies that help to formalize the economy and establish an environment of trust and order that is important to economic growth and development.
The amount of foreign knowledge and experience
In collaboration with experts from all over Europe, universal labour standards are a result of consultations between governments, employers and employees. They represent the international consensus on how to address a specific labour problem globally and reflect expertise and experience from around the world. Governments, employers and workers’ unions, international agencies, multinational corporations and non-governmental organisations, through their strategies, organizational goals and day by day activities, will take advantage of this information. The legal existence of the principles ensures that they can be used in legal structures and governments at a national level and in an international law framework that will contribute to greater international community integration.
Considering the efficiency of international labour norms, it should also be remembered that ILO regulatory actions include voluntary adoption of global labour standards which creates binding obligations for States in turn. This approach was preferred to the approach initially intended by founders of the ILO who would have given the International Labor Conference the power, subject to the right to “opt-off” within certain time limits, to adopt binding international labour legislation directly. The retained solution is a realistic approach to labour legislation, but it means that actions related to standard ILO depend in large measure on Member States’ willingness and capacity to meet standard commitments. As Member States experience economic crises, successful enforcement of the universal labour standards can be affected. Generally speaking, globalization has affected the willingness of States to assume their position under the ILO Constitution under the pressure of international competition.
It is a priority for ILO in these circumstances to ensure that it has the institutional capacity to: establish substantive standards; retain them up-to-date, including adaptation to evolving needs, expectations, activities and technical conditions as appropriate; use all the diverse and complementary mechanisms available in its Constitution in line with their effectiveness, and ensure that they are effective. In the framework of the Social Justice Declaration, the governing board is currently discussing a process for updating standards to reinvigorate and reinforce the ILO body of standards, ensuring that they adequately protect all workers in today’s workplace, suggesting an efficient implementation. That method, if implemented, would provide the Office as a whole with an ongoing work plan with respect to standards.
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