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Which Labour? Whose Standard?
The role of free trade in empowering labour
Barun Mitra, Liberty Institute

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The basic questions

  • The legal question: should trade action be permitted as a means of putting pressure on countries considered to be severely violating core labour rights?
  • The analytical question: if a country has lower standards for labour rights, do its exports gain an unfair advantage?
  • The institutional question: is the WTO the proper place to discuss labour?

WTO and Labour Standards

There is no social clause in the WTO agreement, yet the debate rages on.

  • Marrakesh, 1994
  • Singapore, 1996
  • Seattle, 1999

The broader response

  • Global Compact
  • Voluntary standards
  • Mandatory standards
  • International institutions

Globalised protests - seeking moral high ground

  • Core labour standards
  • Environmental standards
  • Debt relief
  • Developmental aid
  • Capacity building, etc.

Do Such Measures Help the Poor?

India's major exports

  • Traditional areas: agriculture, textiles and garments, carpets, leather,
  • New areas: IT services, call centres, transcriptions (Could fall foul of labour standards?)

Textile export quotas

Quotas have lowered competitiveness in exporting countries

  • Made technological upgradation that much more difficult
  • Slow productivity growth has meant that employment has not grown as rapidly
  • Working conditions have not improved significantly
  • Sweat shops have continued in many places

Textile export quotas

Domestic and international protectionist measures have ensured that economic and employment growth have been slow

  • Lack of new opportunities have meant that the gulf between those who are employed, and those that do not have formal employment has widened.
  • Prevalence of child labour, as parents cannot support families with their own income
  • The anti-child labour law in the US forced many children, particularly girls, onto the streets

Impact of international trade restrictions

  • Increased costs
  • Slowed economic growth
  • Slowed productivity growth
  • Slowed economic transition

Impact of domestic trade and economic restrictions

  • Skewed economic transition - the economy has shifted, although slowly;
    labour has not
  • Restricted economic opportunities
  • Lowered productivity
  • Lowered employment opportunity
  • Created the gulf between organised and unorganised sector employment
  • Politicised labour relations

Jobless growth in India

  • 8.7 million entering the workforce every year between 1991 - 2001
  • 80 million have been engaged in the unorganised sector
  • 1.3 million have found employment in the organised sector
  • 360,000 thousand have entered the public sector
  • 1.1 million have been gainfully employed by the private sector

Impact of Open & Competitive Market: Which Labour?

  • Organised or Unorganised labour
  • Human Rights
  • Child labour
  • Migrants

Child labour

  • Perception by contrast, not facts
  • Focus on the wrong end of the problem
  • Certification schemes like 'Rugmark', may push the problem under the carpet.
  • International labour laws can't make substantive difference
  • Domestic laws already exists to stop children working, particularly in hazardous work environment
  • Enforcement is almost impossible, without serious political, social and economic repercussions
  • Politicisation of the issue

Child labour - the facts

  • Less than 1% of child labour in India work in export industries
  • School enrollment has increased o Drop out rates are still very high
  • Given the employment situation, little incentive for most parents to invest in children's education
  • Children work because of low productivity and lack of gainful economic opportunity facing their parents
  • Those segments of society that perceive an economic opportunity do invest in education

Which labour?

  • In poverty, a larger proportion of the population, including children, have to work to survive.
  • Low productivity, and underemployment is the norm for vast majority of the workforce.

Whose standards?

  • Concern about labour, should primarily be about this large majority of the workforce in the unorganised sector, and not the privileged few in the organised sector, nor those in the richer countries

Free Trade Protects Labour

  • Free Trade enables the consumer to choose between products and services
  • Free trade empowers labour to choose the standard
  • Free trade induces employers to improve on labour conditions in order to attract and retain the best workforce

In the Interest of Labour

  • Protectionist policies in the name of social clause will perpetuate the very divide that separates the 'haves' and the 'have nots'.
  • Free trade will help bridge the gulf between rich and poor, and protect the interest of the whole workforce.


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