Worldview Commentary No. 290 on Chicago Public Radio, 91.5 FM WBEZ

“International Labor Standards: More Effective Protection for Workers”

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Economic globalization pushes up profits for transnational companies, but drags down real wages and benefits, as well as the bargaining power of labor, in the formerly industrialized nations of the North. Offsetting benefits for workers in developing nations have not made up for this loss, largely because labor regulation in the global South is toothless.

Suppose a transnational company invests in, say, Guatemala. Not only are wages lower and hours longer for workers, but labor inspectors are under-staffed, underpaid and often corrupt. Governments are dominated by business interests, not by labor. And any hint of a crack-down on labor rights violators can be squashed by the company’s credible threat to move to another country.

True, the International Labor Organization, now an agency of the United Nations, has issued international labor standards since 1919. But the ILO enforces its standards mainly by pressing national governments to enact them into law, and then to enforce them through government agencies and courts. In other words, ILO standards are supposed to be enforced in Guatemala by Guatemala. This means they are mostly not enforced.

This gap is not likely to last indefinitely. Just as labor organized to take on capital in the United States in the mid-20th century, the labor movement and its allies are increasingly challenging global capital in the 21st century. Just as American labor fought for the National Labor Relations Board during the New Deal, the labor movement globally is beginning to support creative mechanisms to strengthen international protection of labor.

The ILO identifies four fundamental labor standards which, it says, all its member countries must enforce:

• Freedom to form labor unions and to engage in collective bargaining
• No child labor
• No forced or compulsory labor
• No discrimination among workers based on race, color, sex, religion, political opinion, national extraction or social origin

Because the ILO, working through national governments, has often proved unable to enforce these standards effectively, there has been pressure to create new enforcement mechanisms. Three of the most promising come, respectively, from governments of wealthy countries, international banks, and the United Nations.

Thirty of the world’s wealthiest nations, including the US, comprise the Organization for Economic Cooperation and Development, or OECD. Since the 1970s the OECD has issued guidelines for multinational enterprises on labor and other social standards. As revised in 2000, these guidelines call on companies not only to respect the ILO’s four core labor standards, but also to ensure health and safety in the workplace, to refrain from threats to move in response to union organizing or bargaining, and to give reasonable notice of plant closings.

New in the current version of the guidelines is the establishment of National Contact Points – designated agencies or officials of OECD member governments, to whom unions or workers can submit complaints that a company is violating the guidelines. The government officials are then supposed to pursue mediation to resolve the complaint. While not a court, or even an administrative agency, this new procedure could become a first step toward more effective regulation by more capable governments.

A second new approach involves the so-called Equator Principles, developed by the World Bank and now adopted by private banks like Bank of America, Barclay’s, Citigroup and JP Morgan Chase. Under these principles the banks commit not to finance any project worth more than $10 million – effectively any project by a major multinational company – unless the company commits to meet minimum social and environmental standards, including the ILO’s four core labor standards, plus standards for workplace health and safety.

Like the OECD National Contact Points, the Equator Principles are so new that experience to date is too scant to assess their effectiveness. But if they turn out to be too weak, that will only bring pressure to strengthen them.

That is the lesson of the third new development – a promising push for United Nations labor standards, subject to enforcement by national courts and, perhaps, international mechanisms. Five years ago a UN Subcommission on Human Rights issued what it called legally binding human rights norms, including labor standards, for companies doing business internationally.

The Norms went too far, too fast, provoking a backlash from business that forced the UN to shelve them. But the controversy prodded the UN to appoint a special expert on multinational corporations and human rights, Professor John Ruggie of the Kennedy School at Harvard, then a close adviser to Secretary-General Kofi Annan.

Ruggie has patiently consulted with business, government, human rights groups and others, documenting the extent of corporate violations of labor and other human rights, and compiling “best practices” on how to prevent and manage them.

His most recent report proposes a three-part framework: a responsibility of States to protect human rights – including labor rights; a responsibility of business to respect them, i.e., not to violate them; and the need for effective remedies in case of violation. This summer his framework was endorsed by the UN Human Rights Council, which asked him to continue his work.

If international law does not yet require business to respect basic labor rights, there seems to be a trend in that direction. Even if it will take decades more of blood, sweat and tears, workers around the world may one day gain effective protection of their fundamental rights.

Doug Cassel’s commentaries are generally broadcast Wednesdays during the noon hour of the Worldview program on Chicago Public Radio, 91.5 FM, and rebroadcast at 9 PM in the evening. Views expressed are personal views of the author and not necessarily those of Notre Dame Law School, the Center for Civil and Human Rights or Chicago Public Radio.