We view workers as trying to find the best possible job and assume that most firms are trying
to make money. Workers and firms, therefore, enter the labour market with different
objectives- workers are often trying to sell their labour at the highest price, whereas firms are
often trying to buy labour at the lowest cost.
But this relationship between workers and firms involves much more than the exchange of a
worker’s labour service for the payment of an hourly or monthly wage. Labour standards that
guarantee appropriate working conditions and various forms of insurances1 which protect
workers are also provided as part of the employment relationship in most countries.2
As a result of this, the employment relationship, which is one of the most fundamental
relationships in our lives, attracts a good deal of legislative attention.
Wages and other terms of employment are not determined solely through market dealings
between workers and employers. The types of economic exchanges that can occur between
workers and firms are often limited by the set of basic rules that the government has enacted
to regulate transactions in the labour market.
Therefore, three leading actors are in the labour market: workers, represented by labour
unions, firms and the government.
Labour standards, which can be defined as “norms and rules that govern working conditions
and industrial relations”3, should cover most workers and workplaces, and represent the
minimum labour rights to which employees are entitled—a ground floor below which
employers cannot go. They include issues such as the minimum wage, maximum hours of
work, overtime pay, maternity leave, statutory holidays—in essence, an array of labour laws
that allow workers to better balance work and family, protect their personal time, and earn a
decent living under reasonable conditions.
In recognition of the fact that the relationship between a worker and an employer is not
always an equal one, labour standards represent a collective agreement society negotiates on
behalf of all workers.4 [...]
1 These insurances include, for example, unemployment, health care, and retirement income insurances (pensions).
2 According to Ronald G. Ehrenberg (1994), p. 5
3 According to the OECD (1996b), p. 25
4 “It is easier for an employer to replace recalcitrant workers than for employees to “replace” a recalcitrant employer,
especially when unemployment is high” (Stiglitz, 2001).
Table of Contents
1. Initial Consideration
1.1 Definition
1.2 Main Objective and Structure
2. Countries
2.1 Globalisation
2.2 Trade Unions
2.3 Multinational Enterprises
2.4 International Organisations
2.4.1 International Labour Organisation
3. Core Labour Standards
3.1 Freedom of Association
3.2 Discrimination
3.3 Forced Labour
3.4 Child Labour
3.5 Ratification
4. Economic Efficiency and Core Labour Standards
4.1 Equilibrium without distortions
4.2 Core Labour Standards and the allocation of production factors
4.2.1 Economic Efficiency and Employment Discrimination
4.2.2 Economic Efficiency and Forced Labour
4.2.3 Economic Efficiency and Child Labour Exploitation
4.2.4 Economic Efficiency and Freedom of Association
5. Other Standards
5.1 Social Security
5.1.1 Unemployment Insurance
5.2 Hours of Work
5.3 Minimum Wage
6. Other reasons for adopting labour standards
6.1 Scissor-shaped labour supply curve
6.2 Public Goods
6.3 Externalities
7. Foreign Trade
7.1 Core Labour Standards and Trade
7.2 Foreign Direct Investment and Labour Standards
7.2.1 Labour Standards in Special Processing Zones
7.3 Sanctions
7.4 Labelling
8. Costs
8.1 Ehrenberg Model
8.2 Productivity
9. Conclusion
9.1 The Future of Labour Standards
Objectives and Research Themes
This thesis examines the role and justification of international labour standards in the context of a globalizing world economy. It explores the relationship between labour standards, economic efficiency, and international competitiveness, while addressing the potential for these standards to serve as a framework for fair global trade and human rights protection.
- The impact of globalisation on labour market regulation and the role of international organisations like the ILO.
- Theoretical economic analysis of how core labour standards influence production factor allocation and economic efficiency.
- Evaluation of "other" labour standards, such as social security, working hours, and minimum wages, from an international perspective.
- Analysis of the economic justifications for labour standards, including public goods, externalities, and the prevention of exploitative "sweating" practices.
- Investigation into the interaction between foreign direct investment, trade policy, and the enforcement of labour standards.
Excerpt from the Book
1. Initial Consideration
We view workers as trying to find the best possible job and assume that most firms are trying to make money. Workers and firms, therefore, enter the labour market with different objectives- workers are often trying to sell their labour at the highest price, whereas firms are often trying to buy labour at the lowest cost.
But this relationship between workers and firms involves much more than the exchange of a worker’s labour service for the payment of an hourly or monthly wage. Labour standards that guarantee appropriate working conditions and various forms of insurances which protect workers are also provided as part of the employment relationship in most countries.
As a result of this, the employment relationship, which is one of the most fundamental relationships in our lives, attracts a good deal of legislative attention. Wages and other terms of employment are not determined solely through market dealings between workers and employers. The types of economic exchanges that can occur between workers and firms are often limited by the set of basic rules that the government has enacted to regulate transactions in the labour market.
Summary of Chapters
1. Initial Consideration: Introduces the fundamental relationship between workers, firms, and the government in the labour market and defines the scope of labour standards.
2. Countries: Discusses how globalisation impacts labour markets and the shifting roles of trade unions, multinational enterprises, and international organisations.
3. Core Labour Standards: Details the primary fundamental human rights conventions, including freedom of association, non-discrimination, the abolition of forced labour, and child labour prohibitions.
4. Economic Efficiency and Core Labour Standards: Provides a neo-classical economic analysis of how labour standards impact market equilibrium and the allocation of production factors.
5. Other Standards: Examines supplementary standards such as social security, working hours, and minimum wage policies across different national contexts.
6. Other reasons for adopting labour standards: Explores economic justifications like the "scissor-shaped" labour supply curve, the provision of public goods, and the correction of negative externalities.
7. Foreign Trade: Analyzes the link between trade liberalisation, foreign direct investment, and labour standards, including mechanisms like sanctions and labelling.
8. Costs: Evaluates the financial burden of labour standards using the Ehrenberg model and examines the relationship between these costs and worker productivity.
9. Conclusion: Summarises the findings and provides an outlook on the future of international labour standards in an integrated world economy.
Keywords
Labour Standards, Globalisation, International Labour Organisation (ILO), Economic Efficiency, Trade Unions, Multinational Enterprises, Foreign Direct Investment (FDI), Minimum Wage, Social Security, Forced Labour, Child Labour, Trade Sanctions, Product Labelling, Productivity, Ehrenberg Model.
Frequently Asked Questions
What is the primary focus of this research?
The work focuses on the economic and social justification for international labour standards and how they interact with global market forces, trade, and economic efficiency.
Which labour standards are considered "core" standards?
Core standards include freedom of association, the elimination of all forms of forced or compulsory labour, the effective abolition of child labour, and the elimination of discrimination in respect of employment and occupation.
What is the central research question?
The research investigates whether a universal code of international labour standards is necessary in the face of globalisation and if such standards can enhance or hinder economic competitiveness.
What methodology is used to evaluate the economic impact?
The study employs neo-classical economic frameworks, including isoquant analysis and general equilibrium models, to assess the impact of standards on market equilibrium and production efficiency.
How does this work address the costs of labour standards?
It utilizes the Ehrenberg model to demonstrate that some costs associated with social insurance and labour standards are shifted onto employees in the form of lower wages, but also argues that productivity gains can offset these costs.
What is the role of the ILO in this context?
The ILO is identified as the central competent body for setting and monitoring international labour standards, though it operates under constraints due to the lack of strict international enforcement power.
How does the "scissor-shaped" model explain the need for standards?
The model illustrates that without a minimum wage or regulated hours, workers in developing markets might be forced into "sweating" (working excessive hours for survival wages), and that standards can help achieve a more optimal economic equilibrium.
Why is product labelling considered an alternative to trade sanctions?
Labelling allows consumers in high-income markets to influence production conditions through their purchasing decisions, thereby avoiding the heavy-handed, protectionist risks associated with official trade sanctions.
- Quote paper
- Carsten Garus (Author), 2003, Analysis and international comparison of selected labour standards, Munich, GRIN Verlag, https://www.grin.com/document/24366
