Contemporary Global Controversies: Labour Standards

1 Contemporary Global Controversies: Labour Standards Outline I. Introduction II. Global controversies debate III. Columbia’s garment industry IV. Improving labour standards V. Conclusion

2 Contemporary Global Controversies: Labour Standards Currently in the world, a substantial number of people depend on self employment or own labour to generate income. Globally employment is crucial for people to survive in the economy today. Due to the differences in the levels and quality of employment, being employed does not mean that one will sufficiently meet his or her needs. The quality of employment greatly varies within and across countries. Therefore, employment does not offer a guarantee that one will meet his basic needs or have sufficient money to save for emergencies and further sustain the emotional and material well being of individuals. Through the labour standards, basic benchmarks have been used to address issues such as protecting rights of labourers and defining the conditions which labour can exchange.

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As globalization continues to advance, developing countries have continually been assimilated to the integration of the world’s economy hence the labour standards of these low-income countries are questionable; do labour standards actually benefit the vulnerable workers or do they negatively affect them?

This essay argues on the possibility of increased limitations of labour standards to protect the interests of the labourers; specifically the old models that perpetrate the regulations of formal and wage employment by governments.

These old regulations are possibly biased against vulnerable labourers including women who participate in informal employment. Though the labour standards are not completely irrelevant, as today’s social protection for labourers may be more relevant than the previous old model. However, more efforts need to be put forth to ensure that the quality of employment is upheld if transformations are to be realized (Heintz 65).

Do labour standards for labourers benefit them? The controversial question can be addressed properly through investigating and evaluating the global labour standards. The conditions are that labour standards should provide regulations that will improve working conditions and welfare of the labourers. The labour standards should further be designed appropriately to protect vulnerable workers such as women workers. The standards should also address issues of poverty and reduce inequalities. However, in developing countries with a weak social net, it would be better to labour under low-income than having no work at

4 all. The labour standards are more complex and they come with various cons.

Labour standards may lead to increased unemployment hence more ambiguity (Heintz 64).

Developing countries are characterized with high rates of low-wage labour and insufficient factors of production; capital equipment and technological knowhow. Low-wage labour is the competitive advantage of developing countries in production. Due to low-skills of the labourers, it shields most developing countries from global competition which eventually lead to less economic opportunities especially in developing countries. Moreover, arguments against labour protection provide evidence that labour markets are efficient and it maximizes on welfare within an economy. A perfectly functioning market leads to inefficient regulatory distortions in a bid to improve jobs but lead to low levels of employment. Currently, supply and production networks increasingly integrate and competition intensifies. These factors will enhance more sensitive changes in production costs. Changes will enhance improved labour conditions; better wages, safer workplace and social protection will lead to high costs. Higher costs subsequently lead to production moving to countries that will offer cheaper labour and less stringent regulations on labour standards. Hence, there is highly likelihood to have situations where improved labour standards would lead to reduced employment opportunities (Heintz 65).

Employment is also linked to competition, improvement in quality, and quantity of employment is imminent in scenarios where there is no coordinated labour standard internationally. Under a global coordinated labour standard,

5 there would be no disadvantaged country in terms of competitiveness.

Implementing similar global standards is difficult due to the differences in economies of the countries-countries employment and development levels vary significantly. Integration of labour standards will subsequently lead to deterioration of basic standards due to increased competition and the need for increased profitability levels. Countries will react by lowering the labour standards to keep up with the competition. Weak labour standards are regarded as unfair competition. Women normally offer inexpensive labour which leads to low costs enhancing high profits. These women are threatened by relocation in case production costs rise, therefore limit the improvement of labour standards.

Women also are unfortunate due to the types of employment available for them.

However, the low-income job opportunities for women go a long way in helping to avoid early marriages through freedom, gain experience in labour and strengthen their influence in the society (Heintz 66).

Further controversial debates are over labour standards helping or negatively affecting workers. The debate revolves around maintaining jobs and improving working conditions. Labour-intensive manufacturing has spread in many countries and is attracted to low-wage economies. Industries such as the clothing production have been outsourced to low-wage countries. Using wage rates as a proxy for improvements in labour standards, we can establish whether improvements in working conditions negatively influence labour-intensive activities. This proxy is a result of the link between wages and labour costs.

Studies of the global garment industry provided no evidence of labour- intensive

6 production negatively responding to improved labour conditions unless under certain conditions such as holding constant other factors apart from wages and employment. Global production which is organized and designed policies and strategies that will account for these factors can be a remedy to address the potential negative impact of high labour costs on employment levels (Hientz 67).

Developed countries especially of the global North, global labour standards is linked to large multinational retailers and industrial producers. This type of production and retailing system is called “commodity and supply chains”.

Large multinational companies outsource their production to low-wage producers who act as gatekeepers. The intermediaries determine who will have access high-income retail market. Taking organizational structure of supply chain into account, large multinationals invest significantly and build their brand recognition to compete in the market. These multinationals are frequently exposed to sanctions such as consumer boycott, negative publicity, and ruined brand image.

The adoption of codes of conduct by multinationals has committed them to guidelines for labour and environmental protection in the entire supply chain. The risk of sanctions in the event of a company not meeting these standards provides an incentive for them to adopt the codes of conduct (Heintz 67).

Implementation of internal codes of conduct by multinationals lacks credibility due to the non disclosure of violations, hence the need for independent monitoring of labour standard. However, poor monitoring will jeopardize the success of governing labour standards. A credible monitoring system would avoid labour standard trade-off with the regulation of the entire supply chain.

7 Subcontracted producers are pressurized by competition leading to sensitivity in labour costs and generally the cost of production. Prominent multinationals could facilitate the improvement of labour standards through raising the final retail price without necessarily affecting consumer demand. This disapproves the argument that adjusting other factors in regard to global labour standards would not realize the intended objective (Pollin, Burns and Heintz 153-71).

However, there are major shortcomings with codes of conduct in monitoring labour standards. Implementation of these codes is very complex and costly due to the diverse differences in the codes of conduct that are established.

Furthermore, the governance systems rely on professional auditors with less experience with local workers and communities that participate in labouring (O’Rourke 885). To address this issue, use of NGOs such as the UN and trade unions could network with auditors to monitor and provide a means of collecting complaints and grievances. Training of local organizations and NGOs could be undertaken and a certificate of compliance be provided for them. These arrangements could provide an incentive for the commodity chain and domestic organizations (Heintz 67).

The global codes of conduct have limitations in the supply chain approach.

Globally the workers who are not in the formal company that comply with corporate code of conduct are the ones who are low-income labourers. An example is the Cambodia’s garment sector which is a main employment for women. It provides an example of possibilities and limitations experienced in creating a system of labour standards for exports production with an international

8 organization. Cambodia negotiated a bilateral trade agreement with the US government in 1999. It granted preferential treatment to producers that comply with the labour standards. The international labour organization constantly monitored and reported on compliance with labour standards issues. Through the backing of the international labour organization (ILO 17), producers have the opportunity to secure the market by being ethical producers. Due to the agreement exports increased significantly hence showing that labour standards do not necessarily affect employment opportunities (Heintz 67).

Garment firms are mostly foreign owned due to subcontract arrangements. Inputs are exported from other countries and the garment assembling is done in Cambodia, the final product is then exported. Due to the reliance of imported inputs, the domestic textile industry virtually does not exist.

This leaves the country vulnerable to shift by foreign investors but at the same time benefits the sector’s growth (Heintz para 1). The collaboration between ILO and US government has provided employment for many women in Cambodia hence has lowered poverty levels and improved the living standards. Therefore, an international effort to protect jobs and to improve labour standards is likely to have a positive impact on labourers.

In spite of the benefits of the international efforts, there are limitations to the benefits realized. The garment sector only provides a short-term employment. A research of UNIFEM showed that women who work in the garment factory are stigmatized hence cannot return home, these women are attached to young and single working women. This leaves women who have

9 been stigmatized by their home communities to have a precarious life.

Investigating the ages of women in Cambodia, and their various issues of employment and labour markets we find that women’s labour force is high at early stages but significantly deteriorates after the age of 50. Most women above fifty participate in less employment activities; however unemployment rates remain fairly constant across the different cohorts. Most young women are employed in the garment factories as well as the unpaid workers in the family enterprises. Women turn to self-employment as they grow older especially for women above the age of 40. Therefore, these pattern raises issues on improvement of labour standards so as enhance workers export. Efforts of improvement of labour standards mainly focus on workers export sector, factory workers and waged workers. But these workers are only a fraction of the labourers. There is a significant number of informal employees and informal selfemployment. Hence the economic independence is short-lived, subjecting them to unemployment (Heintz 69).

The labour standard program adopted by Cambodia – Better Factories Program has managed to successfully address issues of labour. However, there are still many loopholes in the program which need further discussion in the context of global labour standards. These discussions should try to address the issues on sustainable and life-long employment and improvement of labour standards (Heintz 70).

A global labour standards system aim is to enhance basic social protection to vulnerable workers. Developing countries have mostly unregulated

10 and informal employment. These informal employments are low waged in most developing countries, plunging their families to low standards of living on average. Due to lack of regulation in informal employments, workers are eventually excluded from labour standards. Labour standards concentrate on one type of employment; wage employment, despite it being the less popular form of employment. The set labour standards designed to protect the waged employees also exclude a significant number of women in the informal employment. It is also difficult to assimilate the global labour standards into the informal sector since they presume a certain employment relationship (Heintz 70).

The realities of global employment can be conceptualized to fit the global labour standards. In order to satisfy the different global labour standards expectations, workers who are not waged should be provided with education on their basic rights and standards and the environmental conditions of their informal employment. Including non waged workers in social security and insurance schemes and health insurance would benefit the informal workers through receiving benefits. Social protection and a new approach of labour standards would contribute to the realization of global labour standardization aim.

The argument that with improved labour standards there would be loss of jobs especially in sectors where there is competition should be contested and result to regulation and change to reflect the realities of labour. This can be done through inviting informal employment and formalizing them into labour standards (Heintz 71).

11 In my own view, multinationals should try to adhere to codes of conduct standards since there would be no significant effect on trade and competitiveness. Therefore, adhering to code of conduct standards will virtually improve the labour standards. Promoting non-governmental organizations and trade unions which address issues regarding labour standards is important to increase monitoring and evaluating trends in the formal and informal sectors.

Moreover, I am in support of brand or product labeling showing conditions and labour standards under which the goods are produced. Labeling will have an advantage over political standards in improving labour standards due to the firms’ dependency on a competitive market. Governments should also enforce labour standards in their countries and further provide regulations that protect labour standards. Enforcement of labour laws will enhance compliance of the set standards by corporations leading to improved labour conditions. Through the international labour organization (ILO), governments can increase their competence levels through technical assistance.

12 Works Cited Heintz, James. “Rethinking global labor standards: controversies, constraints, and possibilities.” The Good Society 16.2 (2007): 65-72.

Heintz, James. Cambridge journal of economics. Oxford Journals, 28 February 2005. Web. 26 November 2011.

ILO. Women and men in the informal economy: a statistical picture. Geneva: International Labor Organization, June 2002. Web. 26 November 2011.

O’Rourke, Dara. “Multi-stakeholder regulation: privatizing or socializing global labor standards?” World Development 34.5 (2006): 899–918.

Pollin, Robert., Burns, Justine., and Heintz, James. “Global apparel production and sweatshop labour: can raising retail prices finance living wages?”

Cambridge Journal of Economics 28.2 (2004): 153–71.