Improve Labor Standards Research Articles

MINIMUM WAGE IMPACTS IN CHINA: ESTIMATES FROM A PRESPECIFIED RESEARCH DESIGN, 2000-2007

I. INTRODUCTION Issues associated with minimum wages are generating heated debate in China. Supporters argue that in the transition to a market economy, minimum wages can serve an important safety-net role by providing a minimum floor on wages, thereby protecting otherwise vulnerable workers from the most egregious aspects of intensively competitive markets (Sun 2006; Zhang 2007; Zhang and Deng 2005). This is especially the case for the large influx of rural migrant workers coming from the countryside to the city, both from within the province and from other provinces. Furthermore, the higher labor cost may foster managerial efficiency and labor productivity and induce employers to move up the value-added chain and invest in productivity improving technology (Cooke 2005). From these lines of argument, Chinese scholars have often argued in favor of the more proactive use of minimum wages, which they often regard as otherwise too low and ineffective (Han and Wei 2005). In contrast, opponents of minimum wage laws argue that they inhibit the transition to a market economy by interfering with China's comparative advantage based on an abundance of low-wage labor. Such regulations raise costs and inhibit the growth in demand for Chinese products and hence in the derived demand for their labor. Such growth would otherwise increase both employment and wages. Opponents reiterate the basic arguments against minimum wage legislation in that it will reduce the employment opportunities of low-wage labor and also lead to offsets in such forms as reductions in other elements of the compensation package (Gong 2009; Chen 2001; Xue 2001; Ye 2005). This argument is part-and-parcel of the broader argument that artificially raising wages can jeopardize the growth process that by itself will foster increases in the demand for labor and hence foster higher wages and improved labor standards in general. (1) China's experience with minimum wages is new, having first introduced them in 1993. As discussed subsequently, however, minimum wages have been altered many times since then such that they can be regarded as a potentially important policy instrument. In spite of this importance, there are very few empirical studies on the effects of minimum wages in China (Luo 2007a, 2007b; Shi 2009) and only one study in English (unpublished) to our knowledge (Ni, Wang, and Yao 2008). This is part of the more general gap of a lack of evidence on labor markets in developing countries (Hamermesh 2002)--evidence that could otherwise facilitate critical evidence-based policy making. This is particularly important in the minimum wage area because minimum wages are obviously subject to policy control and manipulation, and in countries such as China, they are an integral part of the transition to a market economy. The purpose of this article is to begin to fill that gap by providing evidence of the impact of minimum wages in China. We do so using the novel methodology of a prespecified research design (Levine 2001; Neumark 2001) based on data that provide a large number of minimum wage changes from which to identify the effects of minimum wages. The article is structured as follows. Section II discusses the theoretically expected impact of minimum wages and Section III outlines the existing empirical evidence from the literature in both developed and developing countries. Section IV provides details on minimum wage legislation and its implementation in China. Section V outlines the methodology of the prespecified research design and provides the estimating equation, while Section VI outlines the data. The empirical results are presented in Section VII, and Section VIII provides a concluding summary. II. EXPECTED IMPACT (2) Unlike the empirical evidence that is controversial (discussed subsequently), the theoretically expected impact of minimum wage legislation is well established in the literature. …

Labor Standards and Labor Market Flexibility in East Asia

Since the 1980s, de jure labor standards have improved in Northeast and Southeast Asia and de jure labor market flexibility has decreased. For most countries in the region, however, de facto labor standards are much worse than de jure standards, and de facto flexibility is much higher than de jure flexibility. International pressure has rarely produced meaningful change in either labor standards or labor market flexibility. Authoritarian regimes have proven the most immune to international pressures to improve labor standards and to increase labor market flexibility. The most significant improvements to labor standards usually follow democratization, with international influences working in tandem with domestic pressures. International actors have had little effect on improving labor standards in semi-democracies, with the exception of Cambodia, but progress there depended on a carrot, not a stick. Demands by the international financial institutions to increase labor market flexibility have been minimal, with the notable exception of South Korea. Both democracies and authoritarian regimes have adopted laws that reduce labor market flexibility, and domestic political concerns rather than international influences were the primary driving force.

More Rights, Less Power: Labor Standards and Labor Markets in East European Post-communist States

This paper examines changes in labor markets and labor rights for 13 post-communist states of East Central Europe and the Former Soviet Union. It focuses on the simultaneous pressures to increase the flexibility of labor markets and improve labor standards in the years since the collapse of communism. Comparative measures and patterns of both de jure and de facto standards and flexibility are presented, and the roles of key institutional promoters of change are analyzed. I find that a combination of democratic regime type and European Union accession has pulled East European states toward the strengthening of collective labor rights. The effect is strongest on the states that joined the EU in 2004, weaker for those joining in 2007, while the three post-Soviet, non-accession states remain significantly more labor-repressive. Labor market flexibilization has been a more uniform trend in the post-communist region. In the context of this project’s inter-regional comparisons, contemporary Eastern Europe has the strongest labor rights. At the same time, the decline of trade unions and limits of collective bargaining in most post-communist states undermine the effectiveness of transposed EU legislation and bargaining institutions in empowering labor. As shown by the exceptional case of Slovenia, strong unions are necessary to fully enforce rights.

Improving Labour Standards in Clothing Factories

This article studies the effects of the United States—Cambodia Textile Agreement (UCTA, 1999—2004) on labour standards in Cambodia. The authors find that the Agreement’s labour initiatives have led to relative improvements in the working conditions in garment factories. The study draws on extensive fieldwork conducted in Phnom Penh in 2006: in-depth interviews with dozens of respondents from all key stakeholders (labour, management, NGOs, governments and the trade agreement’s labour projects — Better Factories Cambodia and the Arbitration Council); and observations of these groups’ activities. The article also presents a systematic analysis of the reports produced by the UCTA-provided monitoring. Policy implications are discussed.

The promise and perils of private voluntary regulation: Labor standards and work organization in two Mexican garment factories

ABSTRACT What role can corporate codes of conduct play in monitoring compliance with international labor standards and improving working conditions in global supply chains? How does this system of private voluntary regulation relate to other strategies and regulatory approaches aimed at promoting just working conditions in global supply chains? This paper explores the potential and limitations of private voluntary regulation through a detailed matched pair case study of two factories supplying Nike, the world's largest athletic footwear and apparel company. These two factories have many similarities – both are in Mexico, both are in the apparel industry, both produce more or less the same products for Nike (and other brands) and both are subject to the same code of conduct. On the surface, both factories appear to have similar employment (i.e. recruitment, training, remuneration) practices and they receive comparable scores when audited by Nike's compliance staff. However, underlying (and somewhat obscured by) these apparent similarities, significant differences in actual labor conditions exist between these two factories. What drives these differences in working conditions? What does this imply for traditional systems of monitoring and codes of conduct? Field research conducted at these two factories reveals that beyond the code of conduct and various monitoring efforts aimed at enforcing it, workplace conditions and labor standards are shaped by very different patterns of work organization and human resource management policies. The promotion of these alternative work/human resources management practices can complement traditional monitoring efforts in ways that promoted improved labor standards.

Fair Trade and the Double Movement: The Promise and Contradictions of Improving Labor Standards in the Global South via Market Mechanisms

Fair Trade and the Double Movement: The Promise and Contradictions of Improving Labor Standards in the Global South via Market Mechanisms

Extending Labour Inspections to the Informal Sector and Agriculture

Labour inspections could, in theory, improve labour standards and help countries move towards decent work goals and the elimination of chronic poverty. But, in practice, inspections are either not conducted or do not result in penalties for those who break the law. Using the case of India, and examining labour contracts and standards in selected informal agricultural and non-agricultural occupations, the author identifies the reasons for this state of affairs: corrupt and under-resourced labour departments; subcontracting arrangements where employer–employee relationships are difficult to prove; little political commitment to improving labour standards; and poor coverage of new categories of work by existing labour laws. The paper also documents how, in the absence of an effective labour inspection machinery, civil society organisations and the media have successfully mobilised consumers and NGOs in the West to put pressure on suppliers in global value chains to improve labour standards and eliminate child labour. Those sectors that are being watched include the garment industry, stone quarries, the carpet industry and cottonseed production, all of which have links with rich countries. But occupations in sectors that are not linked to the outside world, such as work in sugar fields and in construction, continue to violate labour laws with impunity. The author concludes that regulation is important in a context where employer–employee relations are highly unequal and where workers in the informal sector are adversely incorporated into markets and value chains. More political commitment from national governments and more resources from governments and donors are needed for improving labour standards, and conventional inspections need to be replaced by multi-party inspections involving the media, researchers, NGOs, advocacy groups and human rights organisations. The author also concludes that, contrary to popular belief, there is a need for new legislation for categories of work that fall outside existing legislation.

Virtue out of Necessity? Compliance, Commitment, and the Improvement of Labor Conditions in Global Supply Chains

Private, voluntary compliance programs, promoted by global corporations and nongovernmental organizations alike, have produced only modest and uneven improvements in working conditions and labor rights in most global supply chains. Through a detailed study of a major global apparel company and its suppliers, this article argues that this compliance model rests on misguided theoretical and empirical assumptions concerning the power of multinational corporations in global supply chains, the role information (derived from factory audits) plays in shaping the behavior of key actors (e.g., global brands, transnational activist networks, suppliers, purchasing agents, etc.) in these production networks, and the appropriate incentives required to change behavior and promote improvements in labor standards in these emergent centers of global production. The authors argue that it is precisely these faulty assumptions and the way they have come to shape various labor compliance initiatives throughout the world—even more than a lack of commitment, resources, or transparency by global brands and their suppliers to these programs—that explain why this compliance-focused model of private voluntary regulation has not succeeded. In contrast, this article documents that a more commitment-oriented approach to improving labor standards coexists and, in many of the same factories, complements the traditional compliance model. This commitment-oriented approach, based on joint problem solving, information exchange, and the diffusion of best practices, is often obscured by the debates over traditional compliance programs but exists in myriad factories throughout the world and has led to sustained improvements in working conditions and labor rights at these workplaces.

Multinational Corporations' Role in Improving Labour Standards in Developing Countries

This paper revisits the discourse on the roles of various stakeholders in improving labour standards in developing countries, paying particular attention on the role of multinational corporations (MNCs). standards is a multifarious issue, often misunderstood as overlapping motivations from a plethora of actors like the nation state, national and international labour unions and donor agencies are inter-engaged in complex political-economic contexts and have yet to agree on universal labour standards. None of the actors have sole responsibility or can unilaterally improve labour standards. While MNCs are seeking profit, developing countries are caught between foreign direct investment and overall economic growth through global trade. To substantiate, this article considers representative examples from mass produced consumer goods industries, which are major foreign exchange earners in developing countries, and are positioned at the centre of North-South and SouthSouth competition in the complex matrix of global trade.

The Promise and Perils of Private Voluntary Regulation: Labor Standards and Work Organization in Two Mexican Garment Factories

What role can private voluntary regulation play in improving labor standards and working conditions in global supply chain factories? How does this system relate to and interact with other systems of labor regulation and work organization? This paper seeks to address these questions through a structured comparison of two factories supplying Nike, the world’s largest athletic footwear and apparel company. These two factories have many similarities - both are in Mexico, both are in the apparel industry, both produce more or less the same products for Nike (and other brands) and both are subject to the same code of conduct. On the surface, both factories appear to have similar employment (i.e., recruitment, training, remuneration) practices and they receive comparable scores when audited by Nike’s compliance staff. However, underlying (and somewhat obscured by) these apparent similarities, significant differences in actual labor conditions exist between these two factories. What drives these differences in working conditions? What does this imply for traditional systems of monitoring and codes of conduct? Field research conducted at these two factories reveals that beneath the code of conduct and various monitoring efforts aimed at enforcing it, workplace conditions and labor standards are shaped by very different patterns of work organization and human resource management policies.

Virtue Out of Necessity?: Compliance, Commitment and the Improvement of Labor Conditions in Global Supply Chains

Private, voluntary compliance programs, promoted by global corporations and non-governmental organizations alike, have produced only modest and uneven improvements in working conditions and labor rights in most global supply chains. Through a detailed study of a major global apparel company and its suppliers, this paper argues that this compliance model rests upon misguided theoretical and empirical assumptions concerning the power of multinational corporations in global supply chains; the role information (derived from factory audits) plays in shaping the behavior of key actors (i.e., global brands, transnational activist networks, suppliers, purchasing agents, etc.) in these production networks; and the appropriate incentives required to change behavior and promote improvements in labor standards in these emergent centers of global production. We argue that it is precisely these faulty assumptions and the way they have come to shape various labor compliance initiatives throughout the world - even more than a lack of commitment, resources, or transparency by global brands and their suppliers to these programs - that explains why this compliance-focused model of private voluntary regulation has not succeeded. In contrast, this paper documents that a more commitment-oriented approach to improving labor standards co-exists, and in many of the same factories, complements the traditional compliance model. This commitment-oriented approach, based upon joint problem solving, information exchange, and the diffusion of best-practices, is often obscured by the debates over traditional compliance programs but it exists in myriad factories throughout the world and has led to sustained improvements in working conditions and labor rights at these workplaces.

Does Monitoring Improve Labor Standards? Lessons from Nike

Using a unique data set based on factory audits of working conditions in over 800 of Nike's suppliers across 51 countries over the years 1998–2005, the authors explore whether monitoring for compliance with corporate codes of conduct—currently the principal way both global corporations and labor rights non-governmental organizations (NGOs) address poor working conditions in global supply chain factories—achieved remediation, as indicated by improved working conditions and stepped-up enforcement of labor rights. Despite substantial efforts and investments by Nike and its staff to improve working conditions among its suppliers, monitoring alone appears to have produced only limited results. However, when monitoring efforts were combined with other interventions focused on tackling some of the root causes of poor working conditions—in particular, by enabling suppliers to better schedule their work and to improve quality and efficiency—working conditions seem to have improved considerably.

Impacts of Corporate Code of Conduct on Labor Standards: A Case Study of Reebok’s Athletic Footwear Supplier Factory in China

This study examines the social impacts of labor-related corporate social responsibility (CSR) policies or corporate codes of conduct on upholding labor standards through a case study of CSR discourses and codes implementation of Reebok – a leading branded company enjoying a high-profiled image for its human rights achievement – in a large Taiwanese-invested athletic footwear factory located in South China. I find although implementation of Reebok labor-related codes has resulted in a “race to ethical and legal minimum” labor standards when notoriously inhumane and seriously illegal labor rights abuses were curbed, Chinese workers were forced to work harder and faster but, earned less payment and the employee-elected trade union installed through codes implementation operated more like a “company union” rather than an autonomous workers’ organization representing worker’ interests. In order to explain the paradoxical effects of Reebok labor-related codes on labor standards, I argue the result is determined by both structural forces and agency-related factors embedded in industrial, national and local contexts. To put it shortly, I find the effectiveness of Reebok labor-related codes is constrained not only by unsolved tension between Reebok’s impetus for profit maximization and commitment to workers’ human rights, but also by hard-nosed competition realities at marketplace, and Chinese government’s insufficient protection of labor rights. Despite drawing merely from a single case study, these findings illuminate key determinants inhibiting the effectiveness of labor-related CSR policies or codes in upholding labor standards, and hence two possible way-outs of the deadlock: (1) sharing cost for improving labor standards among key players in global supply chain; and (2) combining regulatory power of voluntary codes and compulsory state legislations.

Do workers benefit from ethical trade? Assessing codes of labour practice in global production systems

Corporate codes of labour practice have proliferated as a result of trade union and ngo campaigns against poor labour conditions in global production. Analysis of global production systems highlights the complexity of commercial networks and the wider social and institutional environment in which codes operate. It posits tensions between a corporate approach focusing on compliance with outcome standards and a civil society approach focusing on process rights. A detailed study of codes operated by companies in the UK Ethical Trading Initiative finds that codes have led to improvements in outcome standards but little change in process rights for workers. The authors conclude that corporate codes have a role to play in improving labour standards, but are currently doing little to challenge existing commercial practices or embedded social relations that underpin poor labour standards in global production systems.

Labour standards, global markets and non-state initiatives: Colombia's and Ecuador's flower industries in comparative perspective

The recent wave of global economic expansion was triggered to a large extent by the relocation of labour-intensive industries in developing countries with low labour costs. While there is no doubt that this relocation has created employment, most of it is in low quality jobs. Non-state actors (private companies and ngos) have made efforts to improve labour standards in labour-intensive industries, but so far these have met with limited success. This article examines labour relations and non-state initiatives in Colombia's and Ecuador's flower export industries. It is argued that cheap labour and low labour standards are important, even though not the only, factors behind the relocation of flower production to Andean countries. It is also suggested that the effectiveness of non-state initiatives is undermined by disagreement between business organisations and ngos: while the former adopt a narrow technical perspective on labour standards, the latter support worker participation in monitoring and verification.

The Death of Labor Law?

▪ Abstract This review tells three interlocking tales of decline, each with its respective prognosis for recovery: the declines of labor law scholarship, labor law, and organized labor. The relationship between the latter two and the role that a reformed labor law might play in reviving organized labor are matters of continuing controversy. In the meantime, two developments on the ground suggest a way forward for organized labor, labor law, and labor law scholars. Activist unions have found success with a new organizing model: neutrality and card-check agreements. Elsewhere, antisweatshop activists are developing increasingly sophisticated supplier codes and monitoring schemes to improve labor standards in developing countries. Both strategies, with their basically contractual architecture, exemplify what regulatory scholars are calling new governance. These strategies suggest a potential way around the roadblocks that meet labor law reform proposals and toward more agile and responsive forms of workplace governance.

Does Monitoring Improve Labor Standards?: Lessons from Nike

Using a unique data set based on factory audits of working conditions in over 800 of Nike's suppliers in 51 countries, this paper seeks to explore whether or not monitoring for compliance with corporate codes of conduct - currently the principal way both global corporations and labor rights non-governmental organizations (NGOs) address poor working conditions in global supply chain factories - actually lead to remediation in terms of improved working conditions and enforced labor rights. The evidence presented suggests that notwithstanding the significant efforts and investments by Nike and its staff to improve working conditions among its suppliers, monitoring alone appears to produce only limited results. Instead, our research indicates that when monitoring efforts are combined with other interventions focused on tackling some of the root causes of poor working conditions - by improving the ability of suppliers to better schedule their work and improve their quality and efficiency - working conditions appear to significantly improve. This suggests that the current (highly polarized) debates over monitoring and labor standards need to be recast and new, more systemic approaches towards tackling these problems need to be pursued.

International Labor Standards, Soft Regulation, and National Government Roles

In this article, we briefly describe the different approaches to the regulation of international labor standards, and then argue for a new role for national governments based on soft rather than hard regulation approaches. We argue that this new role shows potential for significantly enhancing progress in international labor standards, since it enables governments to articulate a position without having to deal with the enforcement issues that hard regulation mandates. We justify this new role for governments based on the increasing use of soft regulation in the international arena. Of course, this approach is not without its own problems, but given that existing approaches have all provided imperfect solutions to the problem of improving labor standards globally, re-visiting the role of national governments is in our view, highly important.

Wage Differentials, Monopsony Labor Markets, and the Trade-Labor Standards Debate

This paper uses a simple theoretical model confined to reasonable parameters to investigate the implications of improved labor rights and benefits (i.e., standards) in the export sectors of the developing nations (the South). Given the strong opposition to a broad trade-labor linkage, it is likely that any externally imposed improved labor standards will be restricted to trade-impacted goods. That being the case, the only standards that are likely to significantly impact trade are improved union rights and living wage campaigns. The effects of improving these labor standards vary depending on whether initially there is a wage differential that the standard reduces or whether the standard creates a new differential. The degree to which an existing differential is due to monopsonistic labor markets is also important. It is found that if a standard improves worker welfare in one region, that it reduces worker welfare in the other region; thus improving labor standards effectively pits workers in the South against workers in the North. An exception to this is possible under certain monopsony situations. In what is the most realistic case, implementation of the labor standard improves the welfare of Northern workers and lowers the welfare of Southern workers. If the objective is to improve Northern workers’ welfare, a Northern tariff is a more efficient policy tool than is a higher Southern labor standard.

Globalization, Financial Crisis, and Industrial Relations: The Case of South Korea

The South Korean case shows that the globalization trend in the 1990s and the 1997–1998 financial crisis had two contrasting effects on labor rights. First, these developments resulted in negative labor market outcomes: increased unemployment, greater use of contingent workers, and widened income inequalities. On the other hand, they led international organizations such as the Organization for Economic Co‐operation and Development (OECD) and the International Labor Organization (ILO) to play important roles in improving labor standards in Korea. Also, continued restructuring drives prompted unions to merge into industrial unions and wage strikes with increased frequency and intensity. Contrary to the common belief, the Korean case shows that globalization and intensified competition resulted in stronger and strategic responses from labor by stimulating employees’ interest in and reliance on trade unionism.