Protecting Labor Standards in a Global Economy|
University of Cambridge, United Kingdom
The tear gas and riot police of Seattle in December 1999 may not have achieved much for the World Trade Organization (WTO) around whose meeting they took place. But they did succeed in drawing the public attention, as never before, to the profound significance of trade liberalization for employment. The talks foundered, ultimately, on President Clinton's call for trade liberalization to be made conditional upon the enforcement of international labor standards. Traditionally dominated by European and American influence, the WTO's 135 members now include a majority of developing countries who perceive high-minded talk about decent labor standards to be no more than thinly disguised protection by the developed world.
It is particularly notable for the International Industrial Relations Association that the 20th Century ended with efforts to establish international labor standards. The increasing pace of the international exposure of employment has been remarkable. Over the decade from 1985-1994, the average annual rate of growth of world GDP was, in round numbers, three percent. But the average annual rate of growth of world exports was more than twice as great, at seven percent. Furthermore, the average annual growth in flows of foreign direct investment, reflecting in large part the growth in multinational companies, was twice as great again, at 14 percent (Rodrik, 1999). The human effect of this has been that, throughout the world, a rapidly growing proportion of employees are having their jobs exposed to international competition. And a rapidly growing proportion of employees are finding themselves employed by foreign-owned firms. Both nations and their trade unions are losing control over employment.
Collective bargaining arrangements that have developed to support common labor standards within national product markets have come under increasing strain as those product markets have become internationally exposed. The response to this, at the end of the century as it was at the beginning, has been to attempt to extend the regulation of labor standards beyond the reach of the bargainers. Because this is in the interests of nationally based employers as well as nationally based trade unions, such efforts have traditionally provided a strong common agenda for industrial co-operation.
So strong was this mutuality of interest at the start of the century that in 1919, spurred on by the experience of world-wide warfare, it gave birth to one of the most enduring international economic institutions, the International Labour Organization (ILO) to which this Congress is so indebted. Eighty years since the founding of the ILO, the international competitive pressures in both product and capital markets have become vastly greater. At the same time the mobility of labor between nations has been increasingly constrained. But while trade unions are just as concerned as when they participated in the founding of the ILO to protect domestic employment and jobs within their countries, many major employers have become so international that they have lost their commitment to the particular countries in which they might operate. The need that gave rise to the ILO is thus now stronger than ever, but the chances of it being met through co-operation between unions and employers becomes increasingly difficult (Kapstein, 1999).
The term globalization is used broadly in many contexts, but a useful starting point is to distinguish between the internationalization of the world economy through trade, on the one hand, and through multi-national companies, on the other. Although the two are closely linked through multi-national companies' necessary involvement in trade, they are quite distinct, and offer distinct challenges to both governments and trade unions (Jacoby, 1995).
In discussing the 20 papers being presented in this Track, I shall start with the relatively compact topic of multi-national companies, where the question of standardization or convergence appears as a key research issue, and linked to this the internal management of these companies. Then I shall consider papers that consider the wider impact of globalization on collective bargaining how are employers responding and how far can trade unions cope? We then move on to look at government intervention how far are internal legal structures sacrosanct, and what structures can cope supra-nationally to mitigate external pressures on national economies? This leads to the contrast of the North American Free Trade Area (NAFTA) and the European Union (EU), and then in greater detail to the continuing development of the EU itself. We then move on to the wider questions shaping governments' choice in protecting labor standards in the face of the external economic threat. The discussion ends where is started, with the moral issues involved in enforcing labor standards on desperately poor countries.
The Diffusion of Employment Practices in Multinational Corporations
For as long as there has been international trade, it has infiltrated competitive bench-marks into independent countries which have radically altered the lives of their citizens. But the growth of multinational corporations has been even more intrusive. With their entry into a country are imported whole new management systems and philosophies. How far do alien management practices adapt to the foreign host on arrival, and how do the immigrant corporations manage their adjustment? The first question is addressed by two papers, one concerned with how far non-American investors in the USA adapt to American practices, and the other with how far German companies retain their distinctive management characteristics when they establish workplaces outside Germany.
In his study of foreign firms establishing plants in the United States, William Cooke notes that, by comparison with most of their countries of origin, inward investors find a relatively unregulated regime, with neither government nor trade unions imposing substantial constraints. Whatever their habits at home, these immigrant companies appear to respond positively to this easier managerial environment. They are attracted by and soak up the union-avoidance culture of their American hosts. Indeed, the sharp decline in unionization within foreign-owned companies in the USA during the 1990s suggests that there may be an increase in this chameleon-like tendency of non-American companies to adapt to the local culture.
The extent to which German firms retain their national characteristics of labor management when they become established in other countries, in this case Britain and Spain, is addressed by Anthony Ferner, Javier Quintanilla and Matthias Varul. They find that German multinational companies are tending to react to the pressures of internationalization by adopting many Anglo-Saxon business practices, but that they are doing so in a distinctively German way. The incoming management in effect negotiates an acceptable modus vivendi with the institutions of the host country. They conclude that multinational companies act as a two-way vector of change, both bringing to the host country their own nationally distinctive way of doing things, and taking from the host country lessons for adoption at home. But the authors demonstrate that this does not necessarily imply international convergence. The innovations from abroad that companies adopt back home will be subtly adapted to fit their native business culture.
How do multinational companies manage their far-flung workforces? The management of professional employees is discussed by A.V. Subbarao in a literature review. He argues that effective management of a global workforce is tending to move companies away, not only from placing parent country nationals in management positions abroad, but also from relying on home country nationals to run their local show. The challenge he sees ahead is one of developing managers for international careers irrespective of their national origin. Moving on from the development of individual employees to the systems within which they work is the focus of two papers on international Japanese firms. The global expansion of Japanese multinational corporations has recently been confronting unprecedented constraints. Wellington Kuan reports on developments in management practices in 30 Japanese firms and discusses the scope for greater decentralization of their decision-making. The issue is addressed with case study evidence by Hirohisa Nagai in his study of the regional headquarters that Japanese multinational companies establish in Europe. By means of interviews with 12 different companies, he was able to classify the degree of decentralization, finding considerable variations between companies with different managerial functions, but with personnel management issues generally most amenable to local control. There does not appear to be any settled way of managing an international business empire.
Collective Bargaining under International Strain
Collective bargaining systems have developed over the years in very nationally specific ways. They have been largely sheltered within national frontiers, legal systems and trade barriers. Globalization weakens these sheltering walls and threatens the bargaining institutions that have developed behind them. The strain is especially great where it is accompanying political change. Tayo Fashoyin is concerned with rapid developments in the countries of Southern Africa which, in the past decade, have had to face a sharp increase in exposure to international competition at the same time as they have been adjusting to democratic politics. At the level of individual firms, globalization and liberalization have brought upheavals at the same time as their autocratic management structures have been crumbling. In Southern Africa the new political regimes have generally encouraged collective bargaining, and trade union leaderships have been predisposed to build their institutional structures at sectoral, multi-employer levels. How far have they been able to succeed?
Fashoyin reports on five case studies of firms in Botswana, Malawi, South Africa and Zimbabwe. These explore how far labor relations at enterprise level respond to institutional arrangements at higher levels. He finds that pressures to survive under increasing competition force the firms to improve productivity through bargaining and innovation at the level of the individual firm. Some of the case study firms manage exclusively through bargaining at enterprise level or below. Those which still retain a link with sectoral bargaining also have extensive bargaining within the firm. Some of these firms have adopted more sophisticated human resource management strategies as they strive for greater efficiency, but these have been accompanied by, rather than being an alternative to, a commitment to collective bargaining.
National trade union leaderships remain apprehensive that this potent combination of HRM techniques and workplace bargaining will undermine industrial agreements and weaken union loyalty. But they are aware that the demands of competitive survival leave both sides with no choice but to tackle productivity issues jointly at the place of work. Thus effective industrial relations at the workplace is neither guaranteed by, nor necessarily greatly influenced by, apparently orderly collective bargaining arrangements at national or industry-level. These developments may be transitional, but it is likely that the transition of control is towards, rather than away from, the individual enterprise. Collective bargaining will become increasingly fragmented.
The shift to enterprise-based bargaining is equally evident when we turn from the emerging economies of Southern Africa to the highly developed countries of Europe. Accompanying it is the weakening of nationwide trade union organization. Trade unions are being forced increasingly into defensive strategies at enterprise level as countries effectively compete for jobs in the face of mobile capital and international markets. Stefan Zagelmeyer takes the example of the European car industry to assess how collective bargaining has changed. He focuses on the development of what has become known as employment pacts. The most significant of these has been at the company level, where it has become common for unions and employers to negotiate a range of concessions in pay and job flexibility in return for increased job security. Management has generally initiated this process, but unlike comparable experience in the United States it has not been associated with union avoidance. Instead unions have been involved in a co-operative way, often in a form of joint crisis management, in an effort to prevent capital from moving on. Unions are increasingly helping employers to make their local businesses competitive.
International companies and international competition pose profound threats to nation-based trade unions. The threats to their members' jobs and employment conditions are more and more beyond the reach of their traditional economic, legal and political points of leverage. Frank Borgers examines the recent response of American unions to these threats by means of three nicely varied case studies. One is of collaboration with British unions in trying to develop a common strategy with which to confront the snowballing international mergers of the telecommunication industry. The second is of the Teamsters' campaign to mobilize against the potentially harmful impact upon American trucking of NAFTA. The third looks at the bitter campaign to protect contracts after the merger of American and Japanese rubber tire companies.
The cases reveal vividly the difficulties of building international trade union action when movements of jobs between countries is at issue, and when the rhetoric of struggle can so easily slip into that of xenophobia and even racism. Success in an international campaign requires deep financial resources and also the careful strategic integration of foreign with domestic action. Such strategies demand more centralized authority than many unions are accustomed to. The international alliances that the case study unions developed in their campaigns were essentially temporary, fading as events moved on. Borgers speculates that there may be a more lasting role for third party labor strategy specialists to assist in designing campaigns and facilitating transnational links.
National Labor Law and International Pressures
The conventions of the ILO are not binding. Their effectiveness in upholding collective bargaining depends upon their adoption by national legislators. How far are national legal systems influenced by international considerations? One way of answering this question is by asking how far past impositions of alien labor law systems have come to dominate the indigenous legal traditions of the countries involved. This is addressed by Sean Cooney and Richard Mitchell in a comparative analysis of labor law in four newly industrialized countries in East Asia: Singapore, South Korea, Taiwan and Hong Kong. Their concern is with the durability of the hybrid legal systems that these countries acquired or inherited from the developed world 50 or more years ago. These legal implants are operating in a context quite different from which they were derived. They were generally introduced as part of the wider apparatus of colonial rule, and some of these control features were to be of use to the autocratic governments of these countries as they emerged after independence. But the implants appear to be fairly weakly embedded and to have a limited capacity to affect labor relations. In practice, indigenous legal concepts have generally become dominant. This suggests that we should not expect increasing globalization necessarily to lead to the convergence, and far less the international homogenization, of labor law.
It was a concern for continental peace which gave birth to the European Union; the motivations for NAFTA were both less ambitious and more purely economic. It is, despite this, instructive to compare their evolution and experience. Marie-Ange Moreau and Gilles Trudeau address this from the legal point of view. The global economy raises two related questions about a country's labor law. What are its effects on the country's competitiveness? How attractive will it appear to new investors? Increasingly intrusive global competition and increasing mobility of capital pose fundamental threats to the freedom of a country to ensure what it might consider to be a decent level of social protection for its own workers. If this threat is to be countered, labor law must begin to intervene at a supra-national level. They describe the severe limitations of attempts to do this on a global basis through the ILO and WTO. Drawing on the European and North American experiences, they suggest that the prospects for co-ordination and harmonization are better at the regional level. Supranational legal standards are developing most effectively where they follow the contours of international economic integration.
Regional Groupings Europe and NAFTA Compared
If both legal and economic considerations favor regional groupings, how do the political institutions of the EU and NAFTA operate? Paul Teague compares how they have developed their internal structures and political philosophies. European legal innovations are generally the outcome of untidy compromises and have had only limited success in setting labor standards, notably on health and safety issues and equal opportunities. The social dialogue process, a form of collective bargaining between the summit trade union and employer bodies, has generally been more effective. So also has been the recent development of national policy co-ordination. The result is that a common European understanding is developing which causes the established national systems to deliver policies that are in conformity with over-arching European Union regulatory frameworks. NAFTA, by contrast has no independent legal or administrative structure. No attempt has been made to transcend the boundaries of existing national systems and little attempt, beside a side accord on labor, to develop a supranational body of labor laws or rules. Whereas the European Union is seeking to create a post-national form of industrial relations, NAFTA is concerned to make national regimes more open and supportive to labor.
This contrast between the two free trade areas is nicely developed by other papers. How NAFTA implements labor standards is analyzed by Mark Thompson in his account of the regulation of health and safety in Mexico, Canada, and the USA. In this generally non-controversial field the NAFTA legislation requires each country to maintain standards within their own legislative frameworks. Complaints can be made by one country against conditions in one of the other two. In principle, complaints can go to an arbitration panel which can impose trade sanctions, although this has not yet happened. He shows there to be substantial institutional differences between the mechanisms employed in the three countries. The U.S. is a regulation-based system, with relatively specific regulations, and weak participation by labor and management in the workplace. Canada represents an internal responsibility model, with less specific regulations and reliance on joint labor-management committees in most large workplaces. Mexico is a tripartite system, with a more modest body of regulations and an extensive system of joint or tripartite committees required by law. He concludes that there are no prospects for NAFTA leading to greater institutional harmonization between its members.
The European Experiment
The European Union is the boldest experiment in seeking to develop common labor standards across a regional grouping of, currently, 15 independent countries. We should never forget that the underlying motive to forge a common market across Europe was political. It was quite simply to prevent a reoccurrence of the many wars which for hundreds of years have wrecked and torn European society. Economic unity was wisely seen to be a precondition of political harmony. But economic unity, with the free movement of labor and capital between frontiers, could only be achieved by upholding common standards under which labor is employed. The social dimension thus became, and remains, the cornerstone of the whole European experiment.
The development of the social dimension experiment is authoritatively described by Berndt Keller. With the opening up of the internal market in the early 1990s, and the introduction of a common currency to many members in 1999, the European Union has become, if not a national federation, at least the world's most tightly integrated regional trading block. He examines how far this has been accompanied by the development of a coherent system of industrial relations. From the start of European integration, the Northern member states, and especially their trade unions, have pressed for the strengthening of the social dimension of the internal market as a protection against social dumping by members with lower labor standards. The fear has been that, with very limited inter-state mobility of labor and of transfer payments, and with the removal of different exchange rates, member states will seek to protect employment through their collective bargaining systems, with the threat of a race to the bottom and a downward spiral in labor standards.
The development of the European Union's employment policy has been uneven and gradual. Initially in the 1950s and 1960s there was a belief that little central direction would be necessary and that increasing economic integration would drive the social dimension forward. But, partly because of the inflationary and employment crises of the 1970s and early 1980s, there was little early progress apart from the advancement of gender equality. Since 1985, however, there has been much more concerted development on a range of fronts. Part of the reason for this has been an increasingly flexible approach towards regulation. There has been a shift away from harmonizing standards and towards establishing minima. It has been found more effective to use soft regulations such as recommendations and social dialogue rather than hard legal directives. During the 1990s it became accepted, in place of centralized authority, to follow the principle of subsidiarity, encouraging responses and solutions to EU policies at the lowest practical level, whether that is enterprise, sectoral or national.
It has generally been trade unions which have pressed the social dimension forward and the employers who have resisted, preferring to minimize intervention. Although the unions have achieved a sectoral pattern of organization within their Europe-wide confederation ETUC, the employers have deliberately, avoided this within UNICE, so that movement below the national level is limited. Partly because of this, the marked differences of both labor law and industrial relations systems between countries have changed relatively little. There has not been much national convergence. Furthermore, cross-border collective bargaining does not take place because employers see no benefit in it for themselves. With relatively little procedural change, European social policy remains, in substantive terms, a patchwork of minimum standards. While economic integration has accelerated, social integration has been much slower. The prospect of enlargement eastwards into countries with lower labor standards is likely to inhibit the EU's social integration further.
While Keller describes the rather stumbling process whereby European politicians have tried to develop a common employment policy, Timo Kauppinen and Philippe Pochet are concerned with the way in which external economic forces have shaped this process. In particular, they are concerned with the consequences of the recent adoption by most of the member states of a common currency. How far will this speed up or modify industrial relations change in Europe? As a monetary union, Europe is unusual by comparison with other federations with single currencies. Other federations generally have greater internal mobility of labor. They have considerably greater budgets in the hands of the federal government, not least because of centralized defense spending. They also have far greater financial transfers between states as a result of centralized social security spending on pensions, unemployment pay, health etc. They generally have a high degree of fiscal harmonization. Europe's weakness in these respects increases the strain that the labor market has to bear in coping with differential adjustments between the member states. Greater priority has to be given to controlling inflation than to the pursuit of full employment. This increases the demands placed upon the social partners within each country to control collective bargaining outcomes, and to co-ordinate their actions across Europe.
The spread of footloose multi-national corporations and the opening up of increasingly global markets both have the effect of increasing the areas over which labor market comparisons are made and over which productivity levels are bench-marked. Within Europe, increased competition tended to encourage internal coalitions between governments and capital during the 1980s. But in the 1990s, as unions have weakened, this has increasingly turned towards coalitions between capital and labor intended to increase competitiveness within their native economies. Trade unions have sought to cope with their diminished power at the national level through domestic amalgamations and Europe-wide co-operation. A manifestation of this is social unionism whereby they try to link organized labor with the cause of those who are excluded or are on the margins of the labor market. Success in this venture is uncertain. What is evident is that international competition is the main force bringing wage moderation. Perhaps the most trade unions can expect is that improvements in their networks will bring better co-ordination of bargaining across Europe.
There is general agreement that there are conflicting trends both towards decentralization of collective bargaining and towards greater Europeanization. But there are also profound economic changes underway. The growth of a single capital market is causing shareholder-value driven Anglo-Saxon models of corporate governance to displace more socially oriented ones. The share of wages in total income has been declining across Europe. Market forces are driving industrial relations in Europe as never before, but they are product and capital market forces, rather than labor market forces. There is also a clear trend that is leading away from traditions of collective responsibility, with trust in the social state, towards a new individual responsibility. Where unions are still strong, this may bring a reaction, but the extent of such strength must be in doubt. EMU and globalization will not lead to convergence, but rather to a diversity of responses, specific to the different countries, while debate will grow about the creation of a new European social model which can better cope with these changes.
For all the emphasis of European Union politicians on achieving a convergence of labor standards, there is the paradox of a strong counter current: industrial relations institutions are increasingly becoming decentralized. Sectoral agreements are generally in decline, displaced by bargaining at or below the level of the enterprise. What is the outcome of this apparent tension? James Arrowsmith and Keith Sisson address it with a well targeted empirical study of how firms, in practice, manage issues of pay and working time. They combined survey and case study approaches to look at four very different sectors in Britain and, for three sectors each, France and Germany. They found that decentralization of authority served the function of signalling to local managers their responsibility for maintaining competitiveness. But, in exercising this decentralized authority, the local managers in practice paid great attention to what others within their sector were doing. This is partly because of distinctive technical characteristics of each sector. It is partly because such external comparisons are seen as legitimate in the eyes of employees. It is partly also because local managers are keen to imitate what is perceived to be current best practice. The result is that the variance of practice within sectors is, for many issues, less than the variance of practice between sectors, and this is so even between European Union countries. The interesting consequence is that, across the whole European Union, we may indeed be seeing convergence in substantive terms of employment, sector by sector, but not convergence in the institutional arrangements that lie behind them.
The Scope for National Action to Alleviate the International Threat
Regional groupings offer the possibility that contiguous countries might be able to protect themselves from competing with each other by the ultimately self-destructive process of driving down the labor standards of their citizens. But what about individual countries for whom such alliances may not be an option? It is a question of acute relevance to those countries where strongly centralized political structures have lost their grip.
The countries of Central and Eastern Europe following the collapse of the Soviet bloc are being studied by Michael Fichter and Bodo Zeuner. Their concern is with the influences shaping the emerging industrial relations institutions as the central control of the state retreats. Their research concentrates upon five of the countries whose adjustment appears to be more rapid: Estonia, Poland, the Czech Republic, Hungary and Slovenia. They suggest that one critical condition influencing the development of new institutions is the extent to which trade unions can develop their own basis of support, independent of government. The second is the extent to which employers and their investors can develop bilateral relationships with unions at the workplace, also independent of government, and thereby adjust to a complete reliance on the market. For Central and Eastern Europe the proximity of the European Union is critical. The closer movement of these countries towards and into the European Union will bring two contrary pressures. On the one hand the relatively weakness of the trade unions of the Eastern countries will encourage investors to use them as a base from which to undercut the stronger trade unions of the Western member states. Running contrary to this, however, are the Social Dialogue traditions of the European Union which will tend to encourage the firmer institutional anchoring of both trade unions and employers associations. Which pressure will predominate will depend to some extent upon the speed of European Union enlargement.
Democratization encourages a shift from unitary to pluralistic approaches to industrial relations, concludes Venkata Ratnam from his literature review. A consequence is that economic development is to some extent linked to the protection of human rights. The trade unions of the developed world seek to link labor standards to international trade liberalization. But worker organizations in developing countries are generally opposed to this, preferring to press for improvements within their own countries. International pressure to raise labor standards will grow, with new actors such as consumer groups and non-governmental charities playing an increasing part. It is no longer enough for developing countries to sweep the embarrassment of workers with restricted labor rights behind the fences of export-processing zones. In a globalized economy the whole market, domestic and international, has become an export-processing zone.
The massive canvas of India offers Debashish Bhattacherjee the opportunity to paint a picture of the way in which a truly national system of industrial relations has, and is, giving way to many local systems. How far was this an unavoidable response to external pressures, and how far was it a consequence of internal political factors? His authoritative historical account describes the background to the crisis in legitimacy that confronted the state-controlled industrial system in the 1970s, and the varied ways in which it is being resolved. Gradually, over a period of internal liberalization, the Indian state has withdrawn from the economic and industrial relations arena. The sectoral basis of bargaining and also the traditional trade unions have come under strain as enterprise based bargaining with plant-specific unions have delivered superior settlements in dynamic sectors. The resulting disarray amongst unions, political parties and regional governments has prevented agreement on national industrial relations reform that might provide comprehensive legal structures that would contain this fragmentation and its increasing neglect of unorganized workers. A consequence is increasing inter-regional variation in labor standards. This brings a growing concern that some regional governments may compete for investment with implicit promises of a union-free environment. In effect India is experiencing the internal development of the wider international problem of labor standards regulation. But Bhattacherjee argues that it is not the necessary consequence of globalization, but the avoidable result of political indecision at the national level.
Whatever the political success or failure of individual countries to tackle the problems brought by globalization, Sarosh Kuruvilla and Christopher Erickson discern a wider pattern. They examine the experience of seven Asian countries as the impact of international trade and inwards investment has intensified. They note a widespread shift in the focus of state regulation of industrial relations. Legal and institutional structures were initially developed, for both economic and political reasons, to contain and manage industrial conflict. But international competitive pressures have moved this focus. Governments are now more concerned to use their regulative influence in order to improve business competitiveness and the flexibility of labor. Labor law has itself become an instrument of international competition.
There is no single simple route for labor market regulation. Erling Rasmussen and Jens Lind note the sharp differences in recent policy direction of two countries with many social and economic similarities, Denmark and New Zealand. Their contrasting response of labor market regulation to heightened international competition in the past decade has been as antipodal as the countries' global position. Denmark's strong collective traditions continue, while New Zealand's have been all but erased. As a result, Denmark's high union density has increased to over 80 percent while New Zealand's has plummeted to under 20 percent. The paper shows that both have achieved increased labor flexibility by these very different routes, but Danish employees still have access to a consultative union voice that has been largely lost in New Zealand.
The Enforcement of Labor Standards
International trade is the vehicle whereby the poor labor standards of one country threaten the labor standards and employment of another. But Jose Pastore's paper challenges the logical jump by which it is often argued that labor standards should thereby be tied into international trade agreements. He questions both the motives of those calling for such links, and the consequences of such action.
The greater international mobility of capital than of labor inevitably weakens workers and sets the scene for an international race to the bottom in terms of labor standards. It is a race of profound significance because it not only impoverishes vulnerable workers, but also concentrates income and wealth in countries of high capital ownership. Economic globalization thus breeds the globalization of inequalities. There is, of course, a long history of richer nations trying to use constraints on international trade as a device for forcing poorer nations to raise labor standards. But their prime motive is generally not a concern for exploited workers in developing countries. Their prime motive is the protection of jobs in their own countries. The use of sanctions to uphold international labor standards may or may not protect jobs in developed countries. But it very rarely actually achieves any significant improvements in the developing world. Indeed, it may simply lead to job loss in poor countries where jobs are already scarce.
Child labor is the emotive issue which Pastore uses to develop his argument. It was an issue central to the international debate during the 1990s and to ILO action and WTO debate in 1999. He argues that children are forced to work largely because their families need the money to survive. Since the families cannot defer the consumption of food they are forced to defer, or abandon, investment in their children's futures. If trade sanctions deny the children the chance to work in jobs that compete with the developed world, these children will not go to school as an alternative. They cannot afford to do so. Instead they are likely to turn to crime, prostitution, drug dealing, or dependency on the state, all of which impose huge additional costs on the developing countries in which they live.
He illustrates his argument with data from Brazil, where there are already restrictions on employment under the age of 16, but where, as in many developing countries, they are hard to enforce. He describes a social program in Brasilia intended to reduce the number of working children and to increase attendance at school. Families were paid the minimum wage if their children attended school regularly and got good grades. This program had a significant effect in reducing school drop-outs and failures. Furthermore, the cost to the state per child kept in school was nearly 20 times cheaper than that of keeping a child in a criminal reformatory. He concludes that it is far better to tackle child labor not by trying to ban it, but by tackling its root cause, the fact that families simply cannot afford to send their children to school. Removing their jobs by trade sanctions would certainly not put the children back in school, and would probably push them into crime.
Pastore is not arguing against international labor standards, which he sees to be necessary benchmarks for any society. His argument is that the imposition of labor standards through international trade sanctions is unlikely to succeed in its stated objective of helping workers on sub-standard objectives. Developing countries already lack the capacity to enforce existing standards, so there is little value in the international community pressing for them to be tightened. It is poverty in the developing world that creates the competitive threat to jobs in the developed world that lies behind the call for international labor standards. Only the alleviation of poverty will ease that threat.
These papers reflect a truly international research debate of far-reaching significance to the workers of the world. At the most basic level the issue is the growing inequality of the world's income. There is an increasing awareness that combating this is not only a moral, but also a practical necessity. Deepening inequality undermines democracy, and it increases the dangers of international conflict. It was the recent memory of the horrors of such conflict that was the driving force behind the creation of both the ILO and the European Union.
The growth of international trade and of international corporations will undoubtedly increase the world's wealth. But if it is unregulated, it will also increase the world's political instability. During the last century trade unions did much to reduce inequality through collective bargaining at national and sectoral level. These research papers leave no doubt that the scope for such bargaining will be greatly reduced as our new century proceeds. International labor standards will become increasingly important as the means of reducing international inequality. But, as this research also makes clear, their development will require great political sensitivity at national, regional and international levels. Trade unions are well-placed to play an important role in developing international labor standards. In doing so they will need to draw on their finest traditions of altruism towards the unorganized workers of the world.
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