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The Social Dimension of Global Governance–

Rights and Voice for Labor

Do international labor rights contribute to development?

29. January 2015Prof. Dr. Christoph Scherrer

Core Labor Rights

Freedom of Association and Protection of the Right to Organize Convention, 1948 (No. 87; 129)

Right to Organize and Collective Bargaining Convention, 1949 (No. 98)

Forced Labor Convention, 1930 (No. 29)Abolition of Forced Labor Convention, 1957 (No.

105)

Core Labor Rights (cont’d)

Discrimination (Employment and Occupation) Convention, 1958 (No.111)

Equal Remuneration Convention, 1951 (No. 100)

Minimum Age Convention, 1973 (No. 138)Worst Forms of Child Labour Convention, 2000 (No.

182)

Core Labor Rights in International Law

ILO Conventions (129-161, by 2002)ILO Declaration of Fundamental ...

RightsUN Covenant on Economic ... RightsUN Covenant on Civil ... RightsUN Covention on the Rights of the

Child

INDIA

Christoph Scherrer

1 Unresolved Issue(among many)

Southern Concern:

Honoring Core Labor Rights = Loosing Competitive Advantages?

Loosing Competitive Advantages?

Text Book: imposed increase in production costs harms sales prospects

Economic Models: No recognition of – efficiency wages (long run)– market power

Destructive South – South Competition

Structural oversupply of labor power:• rapid population growth• displacement of subsistence agriculture• end of communism: supply shock• debt crisis: pressure to adopt export

oriented strategies• barriers to market exit

– subsistence agriculture is no alternative– lack of social protection

Global Labor Pool

 

Source: Illustration and calculations by Beck/Scherrer 2012, based on data provided by the U.S. Bureau of Labor Statistics, ILO KILM Ed. 7 & ILO LABORSTA

Belgium / Switzerland /

Germany

Canada / Japan/ UK

Brazil

ChinaIndia Indonesia

0

20

40

60

80

100

120

140

0,0 0,5 1,0 1,5 2,0 2,5

Accumulated Labor Force Age 15+ (billions)

Labo

r Cos

ts M

anuf

actu

ring

(US

= 10

0)

Labor Costs in Manufacturing 2009(US = 100)Weighted Average Labor Costs

Some empirical evidence for hand-made carpets

• Trade dominated by few companies

• Survey: Price rise by more than 15 % leadsto switching source

• Replacement of traditional market leader Iran

Theoretical Argument

Core workers’ rights that push wages above the market-clearing price in the short run threaten competitiveness.

Most acute if competing regions compare in factor endowment and market position.

Theoretical Conclusion

Therefore, developing countries cannot raise their social standards in isolation but only in conjunction with other countries by multilateral agreement.

Asia Floor Wage CampaignAn Answer to Relocation Threats