Higher Labor Standards Research Articles

Why the Construction Trades Have a Valuable Role in Meeting the Climate Challenge

The construction industry accounts for 18 per cent of Canada’s greenhouse gas emissions. There is extensive evidence that this can be reduced significantly by implementing aggressive net zero building practices. However, the way the industry is organized impedes this achievement because it fails to promote the development of a broadly based, highly qualified, climate-literate workforce. Successful low carbon construction requires enhancement of workers’ knowledge, skills, and competencies because it requires much higher energy performance standards than traditional construction practice. Yet the industry remains wedded to the current system of low-bid, low-quality construction to cut costs. The organization of much construction work reflects a Taylorist approach, with extensive piecework and subcontracting that relies heavily on precarious, unskilled, and semi-skilled workers. Most employers avoid investing in trades training, leaving it to governments, unions, and individual workers to fund workforce development. Committed to a deregulated market with minimal government interference in their profit-making activities, many contractors oppose tougher building and energy regulations while lobbying against higher labour standards, occupational certification requirements, and union organizing. To meet their net zero targets, governments must recognize that market forces are inadequate to create the well-trained, highly skilled workforce needed. Major policy interventions are required to force industry to make the necessary changes in vocational education and training (vet) and employment practices – changes designed to upskill the construction workforce and give workers and unions a greater voice in shaping climate-informed building practice.

The European Union's forced labour regulation: Putting the ‘brussels effect’ to work for international labour standards

In September 2022, the Commission adopted a proposal for a Regulation on prohibiting products made with forced labour on the Union market. This arises in a context of rising concern over many years about breaches of workers’ fundamental rights and core standards of the International Labour Organization in supply chains of products that are marketed in Europe, particularly where multinational corporations have offshored production to states without the high labour standards enforced in the EU. There has also long been widespread concern, particularly from trade unions, that such offshoring enables manufacturers to undercut labour protections of European workers. Furthermore, the offshoring of manufacturing has enabled certain third countries to develop their industrial and technological capacities in ways that create geostrategic risks for the EU and its Member States, as these third countries become ‘systemic rivals’ of the Union. First, this article argues that the proposed Regulation fits with Anu Bradford's theory of the ‘Brussels Effect’ exposited in her 2019 book of that name, and that the Union should take advantage of Bradford's insights in developing the Regulation and future legal instruments. Bradford established the Brussels Effect as an empirical reality; this article makes a normative case that, in this instance, the EU institutions should actively embrace it as a means to advance its goals. The proposed Regulation is an example of the Union leveraging market power to accomplish normative goals, by exporting its values to third countries. This offers room for the EU to be a force for good in the world, answering some of the qualms raised in Bradford's work about the potential ‘imperialism’ of the Brussels Effect. The present article argues the Union should go further, try to ‘externalise’ more of the social acquis in the field of labour law, leveraging its international market power to both improve labour standards around the globe. This article challenges Bradford's original contention that the Brussels Effect does not apply to labour standards, arguing instead that it is possible, and normatively desirable, for the Union to follow this Regulation with a broader suite of measures aimed at globalising European labour standards, with benefits for both third-country nationals and citizens of the Union. Second, the article links the proposed Regulation to concern about the geostrategic vulnerability of Member States and the Union as a whole, where essential products are manufactured in third countries. This became apparent during the Covid-19 pandemic, with many critical supplies predominantly manufactured outside the Union. The ‘strategic autonomy’ agenda of the EU implies re-shoring of important industry, which is more easily accomplished where EU regulation lessens the ability of third countries to undercut the EU with low labour standards. This will have long-term economic benefits for the Union and its citizens, as well as depressing the potential for systemic rivals to the Union to develop their industrial and technological capacities at the expense of the Union and its Member States, and deprive governments that disregard fundamental rights of workers of revenues from investment, manufacturing and exports to the Union.

The Influence of the EU on UK Labour Law—Before and After Brexit

Abstract This article examines the influence of the EU over UK labour law, before and after Brexit. It compares the influence of the EU within the internal market with that under the UK–EU Trade and Cooperation Agreement (TCA) agreed in December 2020. It focuses both on the different mechanisms through which labour law standards may be enforced before and after Brexit, and, in particular, on the extent to which the internal market case law of the Court of Justice (CJEU) may be utilised by labour lawyers seeking to apply the ‘level playing field’ provisions of the TCA. Given the structure of the EU Treaties and the TCA, arguments for high labour standards within the EU and in trade agreements signed by the EU, are more likely to be successful not where they are based on autonomous social arguments, but instead where labour and trade law arguments are combined.

Impact of labour unrest and skilled workforce in host country on inflow of foreign direct investment – a case of Taiwan, ROC

PurposeIn this paper, the authors examined the changes in labour unrest and labour quality brought by high labour standards over a considerable period in Taiwan. Then, the authors studied the role of these changes in predicting the inflow of foreign direct investment (IFDI) in the country. To test the role, the authors measured the differences in effects of the two changes on wages, working hours and employment opportunities of skilled female and skilled male workers in FDI-intensive and non-intensive industries.Design/methodology/approachUsing a model built on pooled cross-sectional time-series data from 1999 to 2012, the authors measured the effect of changes in labour unrest and the presence of skilled workers on the net inflow of FDI. Using data from the Manpower Utilisation Survey (MUS), the authors applied differences–in–Differences-in--ddifferences- (DDD) and differences–in–Differences-in-ddifferences-in--differences- (DDDD) estimation methods to test the effect of changes in labour unrest and labour quality on three labour market outcomes, namely wages, working hours and job opportunities of skilled workforce.FindingsIncreasing labour unrest affected the employment opportunities of almost every unemployed person seeking skilled jobs in Taiwan. When the authors compared the adverse effect of high labour standards on employment opportunities and working hours, the authors found women looking for skilled jobs in foreign-owned firms to be the worst affected. Besides, foreign firms paid different wages to skilled educated men than what foreign firms' domestic counterparts paid to skilled educated men employed in Taiwanese firms.Practical implicationsAn in-depth analysis of changes in labour unrest and presence of skilled workers because of high labour standards and the extent to which such changes helped the nation to attract FDI should be useful to policymakers interested in understanding the impact of legislative measures and policy reforms on labour market outcomes across industry types, which matter to foreign investors. If changes in labour unrest and labour quality influenced the inflow of FDI more to firms in one set of industries than the others, the same should have a bearing on revamping of future enactment and enforcement in Taiwan.Originality/valueCurrent study findings would not only provide broad lessons to policymakers in Taiwan but findings of the authors' country case study should be able to guide growing economies that are equally careful whilst raising the labour standards as most fear that high labour standards can deter inflow of FDI because of increasing labour cost.

Corporate labour standards and work quality: insights from the agro-export sector of Guanajuato, Central Mexico

In this article we analyse how workers perceive corporate labour standards and the related work conditions in the agro-export sector of Northern Guanajuato, Central Mexico. We do so by first comparing labour standards on local farms to labour standards at an international fresh vegetable production, harvesting, processing and export company that has explicit corporate labour standards. Second, we present how workers from two rural communities of landless workers employed in the agro-export industry perceive the differences between work at local farms and work at the agro-export company. Our results show that better pay and secondary benefits resulting from corporate labour standards do not necessarily translate to perceptions of better work quality. This relates to the broader work conditions in which these labour standards are inserted. Many workers prefer work with lower labour standards but that has more convenient working hours and enables engagement in family and social activities alongside the job. Based on these results we argue that, from a sociological perspective, work quality is a situated and very context-specific notion. Therefore, higher labour standards and better pay even in contexts of cheap labour and widespread poverty are not necessarily associated by workers with higher work quality.

Restructuring Restaurant Work: Employer Responses to Local Labor Standards in the Full-Service Restaurant Industry

Recent research shows that increasing the minimum wage does not result in significant job losses. Yet, there is still uncertainty as to how higher labor standards may reshape employment practices within firms. This article directly examines employer responses to higher labor standards through a qualitative case comparison of the full-service restaurant industry across two fundamentally different institutional settings: San Francisco—with the nation’s highest minimum wage and related mandates—and North Carolina’s Research Triangle region. Evidence shows that higher labor standards led to wage compression even while some employers offered higher benefits to reduce turnover. San Francisco employers seek higher-skilled, more professional workers, rather than invest in formal in-house training, and find better matches. Yet, higher-wage mandates have exacerbated the wage gap between occupations, and some employers have responded by radically restructuring industry compensation practices by adding service charges and eliminating tipping.

Direct and Spillover Impacts of Increasing Enforcement of Labor Laws: Evidence from Argentina

This paper studies how increases in labor standards and enforcement affect workers and their families. Using a policy in Argentina that targeted domestic workers and their employers, I find a 35% increase in formality rates of domestic workers and a 4.2% increase in monthly earnings, despite a 3.9% reduction in hours of work per week. Moreover, I find evidence that the policy had effects on the labor supply decisions of other members of the domestic workers' households: hours worked by spouses of domestic workers and the labor force participation of young adult children of domestic workers decrease after the reform, an effect driven mostly by girls. The reform also helped close the educational gender gap: school attendance and years of education increased by 3% among boys of secondary school age, and secondary school completion increased by 20% among older boys. Taken together, the results suggest that higher labor standards and their enforcement can have sizable impacts among low-skilled workers as well as their families.

Labor Implications of TPP

The Social Dimension Labor Provision of the Transpacific Partnership (TPP) indeed represents the “Next Generation” in Free Trade Agreements (FTAs) and is possibly a “game changer” in the several Asian countries with TPP-side agreements with the U.S. As one of the few countries in the world that includes labor provisions in FTAs with Asia-Pacific countries, the U.S. in the TPP has built on its past FTA labor provisions and through its side agreements on labor with Vietnam, Malaysia, and Brunei to advance new and higher labor standards. The significance of the Side Agreements cannot be over-emphasized. As always, the proof is in the actual enforcement and, in the author’s opinion, future scrutiny should be on making enforcement meaningful. In the interim and final analysis, it may well be up to the economists to proclaim a conclusion on its economic impact and its success or failure.This paper places discussion of the TPP in the context of addressing the growth of FTAs and the limited use of social dimension provisions on labor, particularly with many Asia- Pacific countries, thus highlighting the progressive measures on labor protections undertaken by the TPP and how it fits with emerging developments in the region. This discussion is followed by identifying new research agenda implicated by TPP labor provisions and its side agreements and, providing analyses to the challenges and opportunities they present. Finally, in the conclusion, summaries, suggestions, and challenges to other disciplines will be made.

Selecting Partner Countries for Preferential Trade Agreements: Experimental Evidence From Costa Rica, Nicaragua, and Vietnam

Preferential trade agreements (PTAs) constitute the most rapidly growing form of trade liberalization in the global economy. In contrast to, for example, the World Trade Organization, PTAs allow for discrimination among potential partner countries. This helps explain their proliferation. But it also raises an important question: which countries are preferred partners for PTAs? On the presumption that public opinion matters—both normatively and analytically—for trade policy, we study what types of countries citizens prefer for PTAs. We focus on developing countries, as they both play an increasingly important role in the expanding global network of PTAs and also remain understudied in the literature on international cooperation and trade policy. To account for the multidimensionality of PTA partner country choice, we develop and test a theoretical framework through conjoint experiments embedded in national surveys in Costa Rica, Nicaragua, and Vietnam. The results show that, despite starkly divergent national contexts, citizens in all three countries opt for similar partner countries. Respondents prefer culturally similar countries, democracies, and countries that maintain high environmental and labor standards. Somewhat surprisingly, economic size and geographic distance prove less important in the choice of which countries to support as PTA partners.

Labor Standards, Labor Endowments, and the Evolution of Inequality

Proponents often recommend high labor standards as a means of reducing inequality between and within countries. Opponents suggest that labor standards exacerbate international and domestic inequalities. In this paper, we forward a simple argument whereby the impact of higher labor standards on domestic inequality depends on a country's labor endowment. We hypothesize that where labor is abundant, higher standards will exacerbate inequality. Where labor is scarce, higher labor standards might lower inequality. In both cases, the impact of labor standards on inequality work through an employment and wage effect. Using newly available data on labor standards around the world from 1981 to 2000, we provide evidence largely consistent with our hypotheses. Higher labor standards do, indeed, exacerbate inequality in labor-abundant economies. On the other hand, higher labor standards lower inequality in labor-scarce economies. We discuss the implications of these findings for work on labor market insiders and outsiders as well as the political economy of development.

Institutional Transplant and American Corporate Governance: The Case of Ferodyn

This paper examines the relationship between employment relations and American corporate governance using the case of Ferodyn*. In response to difficult industry conditions and sagging performance, American-owned Landis* Steel Corporation and Japanese-owned Daiichi* Steel Corporation jointly financed and built Ferodyn, a state-of-the-art high quality steel finishing facility. Although the joint venture was extremely successful in terms of quality, productivity and industrial relations, it came under severe stress from both external and internal pressures. Ferodyn’s success was moderated by the market in that it was never able to extract a price premium for the quality of steel it produced. At the same time, pressures in the form of corporate governance and the parent / subsidiary relationship were substantial. Institutional investor demands for improvements in short run shareholder value ultimately resulted in the sale of Landis to Maxi-metal*, a global steel conglomerate, committed to a strategy of minimising costs. In this case, the organ transplant provides a useful metaphor: Ferodyn was like a strong and healthy ‘organ transplant’ in a weak and ailing corporate ‘body.’ So long as there were buffers in place to protect it from rejection by its host, Ferodyn could prosper, giving rise to exceptionally high labour standards and quality of life for its employees. In effect, the American system of corporate governance and the nature of power relations in the corporation created antigens that weakened both Landis’s ability to support the joint venture and Ferodyn’s ability to survive in an alien and hostile corporate, industry and macro-economic environment. * Ferodyn, Landis, Daiichi and Maxi-metal are fictitious names.

FDI, BITS and the Marginalization of Labour Standards

The primary aim of this paper would be to establish whether the international investment treaty regime can, at all, exert an influence on international labour standards. The researcher shall first examine the impact that foreign direct investment may have on labour standards. Authors have directly linked foreign direct investment to a lowering of labour standards, by stating that higher labour standards lead to greater labour costs, which could discourage foreign direct investment, as, all things being equal, investors would prefer the country with lower labour costs. However, empirical evidence has suggested that this linkage may be exaggerated, and that in many cases, the positive influence of higher labour standards may offset the negative (if any) influence that they may create through higher costs. This brings us to the second leg of the argument, namely, how labour regulations can possibly be challenged in investment disputes. The paucity of direct jurisprudence on the interface between IIAs and labour standards means that the researcher shall examine the stand of arbitral tribunals in cases which have referred to anti-corruption provisions and environmental rights, in order to estimate the possible position of labour rights vis-a-vis investor protection. There have been cases with respect to denial of permits on alleged environmental grounds. Subsequently, the researcher would also examine labour standards as human rights obligations. The human rights obligations of a state may require that states regulate the activities of non-state actors, so as to ensure that their citizens enjoy their rights.

Could international labour rights play a role in US trade?

During its last complete business cycle, from 2001 to 2007, the USA experienced unsustainably high trade deficits. Policymakers are considering a number of measures to avoid a recurrence of such large external imbalances. One such measure is the promotion of better labour rights around the world. Proponents argue that higher labour standards would boost US exports by increasing income growth abroad and reduce US imports by shrinking international price differences. Opponents of such a policy move argue that it is disguised protectionism that will impede trade and harm living standards in the USA and abroad. In this paper, I combine US trade data with data on international labour standards and other relevant economic variables to study any links between labour rights abroad and US trade. The results suggest that the USA would have benefited from more exports if there had been better worker rights around the world, but that labour rights would not have had any measurable impact on US imports. That is, the promotion of better worker rights around the world could contribute to smaller external imbalances without impeding international trade flows.

International Labour Standards and North–South Competition

ABSTRACTThis paper models the economic aspects of labour standards (LS) in an oligopolistic framework of three countries, incorporating labour–management negotiations in the North and monopsonic labour markets in Southern countries. Contrary to the literature, a higher LS not only incurs a higher cost, but also benefits workers and induces them to work harder. Because of these links, Northern intervention, via import taxes or minimum LS regulation, may often have perverse effects on Southern countries. Specifically, imposing an unconditional tariff against a certain Southern country to force up its LS does not work. Further, the unconditional tariff would shift production to another country. These shed light on why developing countries oppose including LS in WTO negotiations. However, a LS‐contingent tariff, or a minimum LS regulation is effective in raising LS in Southern countries, but the utility of the Northern labour union may fall. Incorporating altruism and humanitarian concerns mitigates the effects of unconditional tariff policies. Finally, as the empirical evidence shows, we demonstrate that multinational enterprises choose to locate in those developing countries whose LS is relatively higher.

Flagging Standards: Globalization and Environmental, Safety, and Labor Regulations at Sea – By Elizabeth R. DeSombre

Flagging Standards: Globalization and Environmental, Safety, and Labor Regulations at Sea – By Elizabeth R. DeSombre

Labour Standards for a Fair Globalization for Workers of the World

Labour Standards for a Fair Globalization for Workers of the World Anil Verma (bio) and Gail Elman (bio) Introduction Recent developments in globalization have highlighted our failure to reach a global consensus on the fundamental questions for a just and fair globalization for workers.1 Finding justice for workers in a globalizing world raises many questions. Should there be international standards for conditions of work? What form and content should international labour standards have? Whose mandate should international labour standards fall under? And, how should compliance and non-compliance with international standards be monitored and remedied or penalized? There is no general model for international labour standards. Currently, countless initiatives, implemented by various actors, seek to address the problem. Further, new frameworks are constantly being proposed and debated. While some models are working better than others, we are still not close to a long-term solution.2 Current approaches to labour protection result from workers, employers or governments negotiating together, or where that is not feasible, acting unilaterally. The "go it alone" strategy not only severely limits one's capacity to monitor and enforce labour standards, but it also puts into question the legitimacy of the entire model. Furthermore, politically and economically powerful actors are able to impose their models on others without regard to the rights of others. For example, the United States is unilaterally moving its labour standards agenda forward with regional and bilateral labour treaties attached to trade agreements.3 As such, there is much to be gained from having fewer models, but with greater linkages between actors. This paper reviews some of the major debates and challenges surrounding international labour standards to contextualize our own insights on the development of an international regime of labour standards. We include a brief overview of the effectiveness and limitations of the various approaches taken to address them and a summary of some of the new models being proposed. Our goal is to demonstrate that the success of any model for international labour standards will depend on greater consensus among the parties to the employment relationship (i.e., workers, employers and governments) on transparency in monitoring and reporting labour conditions and on the social goals of globalization. Justifications for International Labour Standards There is nearly universal consensus within the international community that people are entitled to work under certain labour standards by virtue of their humanity. As such, most countries agree that fair labour standards are needed in our society. International labour standards are viewed as a tool to uphold fundamental human rights across the globe.4 The humanitarian argument is timeless and self-explanatory of the inclusion of labour standards in Article 23 of the Universal Declaration of Human Rights. However, beginning in the 1970s, globalization and the expansion of trade shifted the focus of the debate towards economic justifications for international labour standards.5 Developed countries became concerned that poorer labour standards, and lack of enforcement, create an unfair comparative advantage in global trade. Others argued that permitting trade based on poor labour standards promotes "social dumping" which is an attempt "to gain international competitiveness by cheapening labour in violation of fundamental rights at works…."6 This can lead to a "race to the bottom", which is the downward harmonization of labour standards caused by the need to remain competitive in the global market.7 Thus, in a globalized economy it is argued that poor labour standards in one country have negative consequences for the workers in other countries. Additionally, some academics contend that much of the global evidence over the last century suggests that higher labour standards are positively correlated with economic prosperity.8 Types of International Labour Standards Labour standards may be conceptualized at two levels: basic and comprehensive.9 Basic standards involve setting up a 'floor' which individual units are free to exceed, but cannot fall below. Alternatively, comprehensive standards involve a process for continual regulation and improvement. Verma (2003) notes that basic standards are more likely to be workable and acceptable as international labour standards because they leave space above the 'floor' within which national governments can legislate.10 Most countries have labour legislation stipulating labour conditions that may include, among other issues, minimum...

Economic Growth and Labor Standards: A Dynamic Panel Data Approach

I explore the relationship between economic growth and international labor standards in a panel of 121 countries from 1974 to 2004. A large literature has empirically tested the neoclassical growth model using cross-sectional or panel regressions. Here, I augment the growth model with labor standards. I use a dynamic panel data model to account for the endogeneity of the determinants of economic growth as well as including the role of labor standards in driving the economic performance of a country. The panel data methodology controls for specific country- and year-effects and accounts for possible endogeneity bias using instrumental variables estimation. I use two measures of labor standards: the rate of work injuries and the rate of strikes and lockouts. I find that higher labor standards are associated with better economic growth. For instance, the results suggest the absence of a positive association between the rate of work injuries and the level of per capita income, as well as the absence of a negative association between the rate of strikes and lockouts and the level of per capita income.

Core Labor Standards and Development: Impact on Long-Term Income

Summary. — The paper focuses on the impact of international core labor standards on long-term per capita income. In order to do that, it is necessary to build a new synthetic indicator of labor standards using multiple correspondence analysis, measuring the four core labor standards recognized by ILO. We propose an estimation of the steady-state per capita income for a large panel of countries (104) and then that of developing countries. The two-stage least square method is used to correct potential problems of endogeneity. The findings show that, by and large, countries with higher labor standards have a higher steady-state level. � 2007 Elsevier Ltd. All rights reserved.

Rising above Sweatshops: Innovative Approaches to Global Labor Challenges

Journal of International Business Studies (2005) 36, 246–249. doi:10.1057/palgrave.jibs.8400130 In a world of organizationally disaggregated but global supply chains, the responsibility of consumers and upstream distributors for the lower end of their product chain has increasingly captured the minds of the interested public as well as corporate executives. Multinational enterprises are under pressure to increase the labor, health, and environmental standards in not only their operations abroad but also in the operations of their suppliers and subsuppliers. However, there is no clear guidance for well-meaning managers about what constitutes good labor practice and how it should be implemented. Hartman, Arnold and Wokutch aim to fill this gap and present the state of the art of the scholarly debate on international labor issue and provide case studies of companies that have taken innovative initiatives that may serve as best practice for others wishing to raise their labor standards, and thus their corporate reputation. The focus of the book is on actions initiated at corporate headquarters, and on global management practices that may amend the conditions faced by those at the bottom of the supply chain. The editors have succeeded in tying together the current state of the debate, and providing ideas and management tools for corporate executives. Following the editors’ introduction, Jill Murray sets the stage with an excellent summary of the key arguments in the sweatshop debate, and the evolution of the debate in recent years. This chapter on its own provides good introductory reading for students of international business at any level. Chapter 3 is supposed to discuss the economic context, yet Jonathan London limits himself to the interesting but somewhat narrow issue of industrial relations in developing countries. At this stage, I would have liked a critical discussion of two propositions frequently advanced by economists: ‘managers social responsibility is to serve shareholders – which eventually will be best for all’, and ‘sweatshops are good for economic development – see how Taiwan and Korea progressed over the past 30 years. In consequence, economists would often take an instrumental view of ethics, that is, higher labor standards are good if they directly (e.g., via increased productivity) or indirectly (e.g., via reputation effects) benefit the company’s share value. The contributors to this volume Journal of International Business Studies (2005) 36, 246–249 & 2005 Palgrave Macmillan Ltd. All rights reserved 0047-2506 $30.00

Trade and labour standards: theory and new empirical evidence

Recent trade negotiations, both at the regional and multilateral level, have seen a resurgence of the issue of trade and labour standards. Labour interests in high-standards countries argue that low labour standards are an unfair source of comparative advantage, and that increasing imports from low-standards countries will have an adverse impact on wages and working conditions in high-standards countries, thus leading to a race to the bottom of standards. For low-standards countries, there is the fear that this is just a form of disguised protectionism and that the imposition of high labour standards upon them is equally unfair since it will erode their competitiveness, the latter being largely based on labour costs. Our objective in the present paper is to cast some light on the above debate from both a theoretical and empirical perspective. In particular, we first discuss some possible theoretical links between labour standards and comparative advantage through their effects on the terms of trade. We then investigate empirically the relationship between labour standards, comparative advantage and export performance. Overall, our empirical results suggest that caution should be exercised before drawing broad conclusions on the magnitude and direction of these effects.