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New Industrial Organisation Programme DP/19/1990 (rev. 91) ISBN 92-9014-482-3 First published 1990 The role of labour standards in industrial restructuring: Participation, protection and promotion By Werner Sengenberger

Foreword

I. The controversy over labour standards
1. Labour standards and labour institutions
2. The thrust of contemporary criticism
3. Sources of criticism
4. Labour standards as an opportunity

II. The challenge of global restructuring

III. Industrial restructuring and economic development

IV. Why labour standards are needed for economic development
1. The principal economic function of standards
2. Types and coherence of labour standards and their mutual reinforcement
3. The importance of universalism in standards for development
4. The continuing need for adjustment in standard-setting

V. Standards as ingredients of economic development
1. Eliciting productive forces
2. Making the most of human resources
3. Preventing "social pollution"
4. Promoting socially acceptable international trade

VI. Conclusions

There is a need to reassess the role and significance of labour standards, especially in relation to the ongoing process of world-wide economic and industrial restructuring. In view of widespread criticism of the impact of regulation, and of standards in particular, positive linkages between economic development and standards must be re-established. Labour standards are not only part and parcel of basic human rights - which suffices as a reason to promote them - but in addition they have been shown to contribute positively to productivity and profitability levels. This impact can be demonstrated by reviving conventional arguments, incorporating new ones and providing empirical evidence and illustrations suited to appeal to a wide audience. This objective cannot be achieved singlehandedly but requires concerted and co-ordinated efforts supported by perspectives and experience from various parts of the world. The venture should benefit from the dialogue of researchers and practitioners.

1. Labour standards and labour institutions

The term "labour standard" has two distinct meanings. The first refers to the level or quality of well-being of workers at a particular location and point in time. It describes the actual situation with regard to employment and unemployment, to the level of wages, fringe benefits and non-pecuniary rewards, to the state of social security, employment security, occupational health and safety, and to the level of skill and competence of the workforce.

The second use of the term is a normative or prescriptive one. Labour standards state what "ought to be". They stipulate minimum and maximum terms for the deployment of labour, rights, rules and other forms of regulation. The norms are designed to obstruct behaviour and actions viewed as illegitimate and elicit and promote courses of action seen as desirable. At the core of these norms is a common understanding or agreement. To generate this consensus the collective organisation and collaboration of interest groups is required within structures which may be called "labour organisations". Labour organisations, together with the body of regulation they create, may be termed "labour institutions". Following these definitions, one may re-phrase the central controversy over labour standards by asking whether institutions are necessary to assure forms of economic organisation and patterns of restructuring favourable for the welfare of workers and society at large. Another way of posing this question is to ask whether labour institutions are a prerequisite and essential ingredient of economic development: are they required as an input in order to accomplish the enactment and enforcement of labour standards as an output?

In this paper it will be argued that standards must precede improved economic performance and that rather than working as a constraint upon performance, labour standards present opportunities to improve productivity and profitability, through innovation and flexibility.

2. The thrust of contemporary criticism

Currently in many quarters labour institutions do not have good press. Critics assert that they generate "sclerotic" economies: they add to production costs, restrict flexibility and efficiency, stifle competition, hinder economic growth and impair urgently-required market adjustments. ^{(Endnote 1)} Some go so far as to call into question the very raison d'être of principal labour organisations, the trade unions and, though to a lesser extent, organisations of employers. They are considered the vestige of an era of industrialisation in which their role may have been legitimate; today, however, they are out-dated and employers and workers can represent their own interests, collective organisations simply standing in the way of individual development.

A second line of reasoning, although not principally opposed to labour standards, sees them as an output of economic development. Standards should follow improvements in economic strength and economic results as if they were a reward or "luxury" good. The current period, it is argued, is one in which primary attention should be given to gaining new efficiency and flexibility and once this has yielded economic fruit there would be room for improvement in wages and terms of employment: the economic sphere, in other words, takes priority over the social.

The notion of labour standards as a luxury good is primarily, but not exclusively, held in relation to developing countries. Gary Fields, to quote one leading development expert, argues that Third World countries face a necessary choice between meeting the needs of subsistence and enforcing "decent" working hours. According to Fields, they are bound to choose the former. Likewise if the choice is between child labour on the family farm and a small harvest, children will work long and hard in the fields; "in the opinions of the very considerable majority of workers with whom I have discussed the issue, I have found that whether or not they have a union is not for them a burning issue, nor is coverage under a fair labour standards act ^{(Endnote 2)} .

Following this line of reasoning, one might infer that labour standards are the prerogative of more affluent countries, yet we find the same basic logic applied to them. Full employment, it is suggested, is incompatible with rising real wages ^{(Endnote 3)} . "Better a poor job than no job at all", as the saying goes. Along similar lines, it is argued that maintaining prevailing wage standards in the developed countries would jeopardise their competitive position vis-a-vis the developing countries. Nobody, in other words, can afford labour standards.

3. Sources of criticism

The reasons for the present widespread negative disposition towards labour standards must be discussed and I propose to look into the following three. Firstly, there is an inclination on the part of politicians, academics and business consultants alike to adopt a rather limited, often parochial and static perspective towards social policy and especially towards regulation. Typically, labour standards are viewed and judged from a rather narrow angle, such as from the vantage point of the individual firm, rather than within a wider economic and social context. This somewhat utilitarian perspective easily engenders conflict between economic and social objectives in development. The wider ramifications of economic decisions are frequently neglected. Insufficient attention is paid to the implications of a particular path of restructuring for worker groups indirectly involved, for other firms, other regions, or for future generations. Somehow, social priorities have been eclipsed. It may not be by accident that the major thrust towards social policies and the willingness of governments to take responsibility for them occurred in the aftermath of two world wars when people were affected by the political and social upheavals brought about by economic misery and conflict. These were also the periods in which the ILO made great leaps forward. The interdependence of economic, social and political dimensions that was so important during this era appears to have been eroded in contemporary thinking, however.

Secondly, labour standards are not automatically conducive to improved economic performance. It cannot be denied that here and there rules and regulations may have an adverse effect on efficiency. The literature is replete with "featherbedding" or "restrictive" rules that are hard to justify. Yet, before using these examples to condemn work rules as such, one has to be clear as to what the reasons are behind the restrictions. Why, for example, have unions resorted to job control devices, such as rules of demarcation and jurisdiction or seniority rules that sometimes conflict with flexibility? Frequently one finds that these rules originate in serious problems of employment insecurity or grave deficiencies in the security or recognition of trade unions. One may for instance recall the finding of the Donovan Commission in the UK that, contrary to widespread belief, British industrial relations suffered not from an excess but from a lack of trade union power. This and other examples raise the more general question as to whether it is really excessive institutionalisation and "over-regulation" that are to blame when standards run into conflict with the economic objectives of restructuring, or rather the "under-development" of labour institutions, under-regulation and the insufficient participation of key groups in the process of restructuring.

A similar argument could be upheld with regard to "bureaucracy", which is often a focal point for criticism where regulation is concerned. Bureaucratic practice usually involves decision-making by a minority and therefore reflects insufficient rather than excessive participation. For this reason it should not be equated with dysfunctional labour standards, for in an ideal sense, it reflects the very opposite of labour standards.

Finally, a third reason why labour standards have come under scrutiny is that they are perceived as outdated and ill-adapted to altered economic and social conditions and, consequently, have lost vigour and legitimacy. This is particularly obvious in periods of rapid and pervasive industrial reorganisation as has been the case over the past two decades. Yet the objection that one could voice about the obsolescence of standards is a relative one. The solution for obsolete standards is modernisation, not elimination.

All three types of criticism raised, independently of their objective truth and validity, must be examined. The third sort of criticism which addresses the need for modernisation seems by far the most difficult to sustain because it requires a vision of the future of the industrial world and a clear notion of the available options. Responding to the first two objections is no easy task. They call for intellectual vigour and the authority of empirical evidence and experience.

4. Labour standards as an opportunity

While the task ahead may be formidable, there are encouraging and stimulating instances of labour standard performance from which we can draw lessons. Firstly, places known for their respect of labour standards have, as it turns out, performed well in their restructuring exercises in the 1980s. This definitely holds for firms or industries in which unions had an active influence, as well as for countries known for their advanced state of development in labour standards. Sweden, for example, which a few years ago was looked down upon as the epitome of "Eurosclerosis", incapable of structural adjustment, has recently got high marks for its successes.

On the other hand, where labour standards were viewed negatively, the results of "de-regulation" of the labour market to restore economic vitality have not lived up to expectations. In the United States, Congress has debated at great length the question of restoring economic competitivity. According to a comprehensive project that reviewed the situation and was guided by the viewpoints and advice of business, labour and community leaders, new thinking - a new "formula" - is spreading which places renewed emphasis on the importance of institutions for economic progress. The report states:

Where the old formula was obsessed with cutting wages, benefits, regulations, taxes and unions, the new formula emphasizes investment - in education, training, infrastructure, technology, amenities and other sources of development capacity - to build international competitiveness.

And further:

......where the old formula saw government as the enemy, the new formula sees government as a partner responsible for building the basic foundations of the economy. ^{(Endnote 4)}

The report looks into the economic performance of the fifty Federal States and finds that it was by no means those states that had a "good business climate", meaning the lack of government regulation and the absence of a labour code, that came out on top for development. In fact, states that combined low taxes, low wage levels, minimal or no unionisation, low or leniently enforced regulation, low public spending, tax abatements, preferential financing rates, regulatory exemptions and other facility "sweeteners" did rather poorly when it came to employment and income growth, job quality, equity and a quality of life index. Conversely, states scoring high on social institutions were the top performers.

Instead of looking at institutions and regulations as mere straightjackets, attention should be focused on the opportunities they provide. Ultimately, innovation and dynamism are not derived from making labour resources cheaper, but from making labour more effective and productive. While enlightened firms may spontaneously follow this practice, commonly agreed and shared standards are needed to diffuse the productive impact of good labour use on a wider scale.

"Industrial restructuring" may be seen as the adjustment or conversion of production and services to cope with non-transitory, primarily qualitative changes in capital, goods and labour markets. It refers, in other words, to the adaptation of an economic unit to its environment. The unit may be a firm, an industry, a region, a national economy or even the international economy. "Structural adjustment" is frequently used in relation to large organisational units such as countries or groups of countries.

The term restructuring emphasizes the "process" character of structural change. While change is more or less a continuous activity, there may be periods of both intensified and pervasive transformation of industrial activities and this is in fact the sense which the term "restructuring" has assumed over the past decade. Thus, it is widely recognised that we are living through and era of large-scale, if not global, comprehensive adjustment in the system of production. The belief that something fundamentally new in industrial organisation is emerging is indicated by frequent use of the attribute "post" in analysis, such as "post-industrial" age, "post-Fordism", etc., which also suggests that we do not really know what comes next. During the 1980s, several writers have taken up the subject of a pending major transformation and, although they may expound very disparate views and explanations of the nature and direction of adjustment, they all presume a historical discontinuity in the process, with the 1980s marking the beginning of profound change. The "long waves of innovation" (Kondratieff cycles), the "new trajectories" of the French regulation school and the "Second Industrial Divide" (Piore & Sabel) are some of the best known examples of thinking along these lines.

Frequently the ultimate idea in these more secular analyses is that a realignment of economic structures and social regimes has to occur to revitalise a somewhat stagnant situation, creating opportunities and forces for growth. Nothing short of a sweeping redivision of labour (between categories of workers, enterprises, regions, countries, etc.) would bring about the transformation.

In the meantime a number of national and international restructuring trends have surfaced that appear particularly significant. These include:

• sectoral shifts in the economy, such as the shift from industry to services, among them producer-related services; and within the manufacturing sector, the shift from (old) industries such as coal, steel, shipbuilding and textiles, to newer ones such as telecommunications, biotechnology, etc.;
• along with qualitatively elevated and more differentiated demand for products, a shift from mass production to flexible specialisation;
• an international redivision of labour, with low-value adding, labour- intensive production moving to developing countries;
• a reshaping of the size and distribution of business organisation involving decentralisation of production leading to smaller units with, at the same time, a continued concentration of capital ownership; and finally, a significantly increased turnover of enterprises, especially among small and medium-sized ones;
• the spread of new micro-electronic information and communication technology, with a vast potential for both intra- and inter-organisational restructuring;
• a reshaping of territorial organisation in the economy, including the progressive international integration of commodity and factor markets and concurrently, the advancement of more regional and local development.

All these trends carry inherent risks and opportunities: risks of greater dependency, disparity and marginalisation, but also intrinsic opportunities to overcome peripheral status and reliance on mono-industries, to build productive and competitive strength on transferable skills and managerial and worker competence, and to open new areas of union influence, such as in the organisation of production.

What should the target of industrial restructuring be? The yardstick most often quoted in this context is "economic growth". I suggest that the objective ought to be "development", which is persistently confused with growth.

Economic growth, at least in its conventional sense of incremental gross national product or gross domestic product, ignores the manner in which improvement is generated. It is usually more centred on quantitative than, qualitative change and is normally more preoccupied with short term rather than long term development, the question of whether growth in one area furthers or diminishes the prospects for growth in another being largely disregarded. Most important of all, economic growth alone is no indication that poverty, mass misery, world hunger and the disparities between living conditions of the rich and the poor are being overcome. Growth may be a vital ingredient, but it its not a sufficient condition.

Development, by contrast, emphasizes the idea that the process of restructuring ought to have a direction, particular qualities and specific outcomes. Development, as it is understood here, signifies a process which:

• builds on the full mobilisation and utilisation of endogenous resources, especially on human labour; and
• meets the criteria of comprehensive, balanced and sustained progress; restructuring should not proceed at the expense of others, be it other workers, firms, regions, countries or future generations. This does not imply the elimination of competition but calls for the "social control" of competition. Labour institutions, as will be argued in the section below, are an essential element of this control.

The endogeneity, comprehensiveness, balance and sustainability characteristic of development are both a desirable end in themselves and a means to further improvements. In other words, the restructuring process should be oriented not merely towards producing a desirable outcome in a certain period of time - which is the concept of growth - but at the same time towards generating means and resources to ensure positive results in follow-up periods. This is the notion of sustainability. The history of labour is replete with instances of massive forced early retirement after over-extraction of effort in the early phase of peoples' working lives or the waste of a whole generation of workers, at the expense of growth prospects in the next one.

Development implies specifying, next to economic growth, other targets as explicit objectives of restructuring. Among these could be:

• meeting basic needs such as employment, education, housing, health;
• economic independence and individual autonomy;
• involvement and participation of workers in decision-making;
• equality of treatment regardless of race, gender, religion, nationality, etc.;
• full employment and full use of existing capabilities of the labour force;
• joint conflict resolution;
• social entente;
• a healthy environment for work and life;
• cultural identity.

Taking these criteria as yardsticks for development will make the distinction between developing and developed countries a spurious if not entirely misleading one. Practically every country appears underdeveloped, at least with regard to some of these targets and all therefore require development.

Taking "development" as the goal of restructuring would also imply a revamping of prevailing national accounting systems for measuring economic progress. It would suggest looking not merely at rates of growth in GDP or GNP, but also at more qualitative (e.g. job quality), distributional, and equity measures as indicators of performance.

1. The principal economic function of standards

There are essentially two principal philosophies concerning the effective organisation of economic processes. The first, which has recently been revived, is "individualistic" and goes back to 19th century utilitarian rationality. It maintains that the best result is achieved if individual economic agents - producers, workers, and consumers - are given unlimited freedom to behave as they like. Each member of the economic community will do his best, using his innate talents to achieve optimal results for himself, and this will automatically lead to the optimum outcome for society as a whole. Collective organisation, common rules of conduct, collective agreement, and regulation alike are alien to this philosophy, producing only detrimental effects and sub-optimal performance.

The alternative view is founded upon the notion that economic organisation is profoundly "social" in nature and that restructuring is a social process. In this view the outcome depends crucially on how the actors get along, whether they co-operate, share risks and costs, distribute equitably the economic returns, or whether they strive on the other hand to limit others' opportunities or exclude them from the restructuring process entirely. According to this philosophy people are aware that the failure of others will produce collectively harmful results and therefore such failure must be obviated. The key to economic success in this framework is the "social contract", i.e. common understanding and the collective designation of actions as legitimate or illegitimate. A collective voice, intervention into, and regulation of, the economic process, factors which individualist philosophy sees as paving the "road to serfdom" (Hayek), are perceived by "social" philosophy not only as inevitable but as essential in assuring civilised common conduct. If the society fails to establish or agree upon this code of conduct, economic and political conflict with potentially disastrous consequences is likely to ensue.

The attainment of freedom and autonomy for the individual requires joint organisation, common understanding and social control. The social model is, therefore, by no means anti-individualist, but merely implies a different approach. A key institution in which social relations manifest themselves in the economic process is competition. While under the individualist model competition should be unfettered, under a social model it needs to be subjected to control, through labour institutions and regulation.

Competition is Janus-faced, possessing both destructive and constructive components. Constructive competition means to note what others do, to compare oneself with them, to learn from them, and to remain at a similar stage of development to them, without falling too far behind. Such competition is the driving force behind dynamism, innovation, improvement.

The destructive face of competition implies deterioration, marginalisation or even loss of economic resources and consequently constitutes a threat to the social and political status quo. Competition is destructive when people fail to co-operate and exclude one another from economically gainful processes. This can happen to firms as well as to workers. It occurs, for example, in the course of competitive bidding by communities for the location of plants by outside firms. If factories or offices are lured into a particular state or municipality through low wages, tax exemptions and other monetary incentives, this will not benefit the development of the community as a whole. It is destructive in the sense that it neither builds indigenous productive resources nor enhances adjustment capacity.

Competition can, moreover, be viewed as destructive when workers who - for whatever reason - fail to cope with adjustments and restructuring, becoming victims of disintegration: they lose their jobs, become repeatedly redundant or long-term unemployed and are finally discouraged from any further attempt to reintegrate.

In very general terms the function of labour standards is to promote "constructive" and deter "destructive" economic competition. While there are many different types of standards, such as technical standards, environmental standards, etc., labour standards have to ensure that competition does not channel in a downward direction. If there is no floor to wages and other elements of labour costs, or no protection, labour will be in abundant or excess supply because there will be a natural tendency to lower the wage rate; people will be forced to sell their labour and offer their services unconditionally to make a living. There is little or no incentive for firms to make improvements; it is only when labour becomes scarce that any systematic interest emerges to treat labour in a decent way and to improve its productive capacity.

The role of labour standards, then, is two-fold: they have to ensure that competition is not primarily based on squeezing labour but rather on promoting the productive capacity of the workforce, thereby improving chances for competing through better products, processes and market opportunities. To achieve this, depressive, downward-tending competitive forces have to be curbed by way of a general minimum floor to wages and terms of employment, as well as the assurance of compliance with set standards.

At the same time, labour standards can help to promote constructive competition. The key instrument for that is co-operation and its concomitants: involvement, participation and conflict resolution. Again, this is a social affair that has to occur on various organisational levels, thus necessitating collective organisation. Co-operation which involves the exchange of knowledge, skills and know-how will not come about if workers are likely to incur individual disadvantages as a result of it. The most serious impediment to co-operation is insecurity. It is only if people feel fairly sure that they will not incur losses, or at least that they will gain more than they lose, that they will begin to co-operate.

What holds for workers holds for firms as well. A firm will co-operate only to the extent that it is convinced other firms will not "cheat" by undercutting labour costs, violating labour laws or evading social security obligations. To deter deviant behaviour an atmosphere of trust is required, something which normally evolves from long-standing relationships and from the embodiment of business relations in more encompassing social relations. Where such social links have not yet crystallised, contractual relations based on converging interests can go some way towards filling the gap and creating a base for trust-building.

Only under these circumstances will firms release information about the design and efficiency of new equipment or their experience with new products, and will no longer singly have to devote considerable resources to the discovery of new knowledge. If co-operation actually comes about and individual producers are no longer obliged to "reinvent the wheel", considerable expense could be avoided.

2. Types and coherence of labour standards and their mutual reinforcement

The experience with labour standards from an economic point of view is not universally positive. Within the system of "job control", for example, certain elements such as rules of demarcation and jurisdiction, or certain seniority rules, have been increasingly considered to be in conflict with the requirements of flexibility. Yet it would be a fatal mistake on the basis of such experience to go so far as to say that any form of labour standard is detrimental for restructuring.

A useful working hypothesis is that labour standards run into conflict with economic objectives of restructuring not because of "over-regulation", but on the contrary, as a result of the underdevelopment of labour institutions and under-regulation. It may be argued that labour standards tend to have favourable effects on restructuring where the following three categories of standards co-exist and work in concert.

1) Standards of organisation and participation - For the relevant parties and significant actors in the adjustment process these standards provide the rights of collective organisation and representation of interests, information, involvement and participation at various organisational levels of decision-making. They also provide the necessary organisational machinery for the resolution of conflicts over rights and interests.

2) Standards of protection and security - These comprise all kinds of rules and regulations that protect the work force from various types of work-related risks, such as sickness, accidents, hazardous materials, redundancy, unemployment, under-employment, old age, wage loss, etc.

Their function is to preserve workers' full physical and mental capacities and to prevent them from being forced to sell their labour at any price, in inferior work conditions, undercutting prevailing standards of skills, employment and income.

3) Standards of promotion - These cover rules and regulations, but also real services, that provide support, financial or otherwise, for making the workforce more productive and versatile, thereby increasing the number of options for coping with adjustment. While standards under (2) foreclose certain unacceptable or illegitimate paths of adjustment, the promotional standards encourage and facilitate solutions that are considered "legitimate".

An illustration of this would be an allowance for short-time working that helps prevent worker redundancies while retaining for the firm its experienced workforce; another example would be the vocational guidance and placement services of the public employment exchange, which serves to ease structural change.

Labour standards do not merely represent a collection of regulative interventions in various fields of the labour process. Instead, protective, promotional and participatory standards complement and reinforce one another to form a coherent package of regulatory instruments and institutions. They should be seen as interactive. Should one of these three components be under-developed or absent, it would greatly impair the regulative capacity of the others to achieve social objectives.

For example, protective and promotional standards can yield synergetic effects. Protective provisions are aimed at foreclosing particular avenues of labour force adjustment - as in avoiding massive layoffs in recession periods. Yet while this may deflect adjustment heading in undesirable directions, it does not by itself ensure a desirable path of action. This is far more likely if, in addition to prohibitive actions, desirable routes are identified and promoted and enabling or facilitating institutions established. The problem of recession-led excess labour in a firm can be resolved by applying such measures as short-time working, anti-cyclical worker training and using the slack for maintenance and repair work. These measures permit the retention of an incumbent, experienced workforce over the recession period while keeping it more fully employed.

Sweden provides a good example of this interplay of socially legitimate incentives and disincentives. Under the solidaristic wage policy followed, an effective universal wage floor was set for all industries, regions and firms. It forced all businesses to attain approximately the same minimum productivity standards to remain competitive and stay in the market. It was anticipated that some firms might be unable to reach this efficiency standard and would be squeezed out. While this was viewed as desirable because it would raise the general efficiency level, care had to be taken to avoid friction and unemployment. Active support for a skill-enhancing labour market policy, with the objective of reallocating workers to more productive use, provided a socially acceptable solution. When the industrial sector could no longer absorb the displaced labour, the rechannelling was directed deliberately towards social services. In this way, full employment was combined with high productivity levels and advanced adjustment capacity.

The Federal Republic of Germany forms another example of a country in which wage regulation and comprehensive wage floors, training policies and co-operative worker-management relations combined to allow within the firm internal adjustment and reconversion to new activities, high levels of productivity and international competitiveness. In contrast to Sweden, however, insufficient economic management at the aggregate level of the economy, due largely to the inadequacy of macro-type tripartite machinery, meant that the country failed to expand service employment and thereby avoid unemployment.

The examples illustrate first of all that it is simply not true to argue flatly that labour regulation restricts flexibility and adjustment capacity. To be sure it creates barriers to certain socially unacceptable outcomes, yet it opens up new doors, especially if promotional standards are in place for facilitating solutions which find broad social consensus. The example demonstrates, furthermore, that the underdevelopment of one social instrument, in this case lack of participation of unions in macro-economic policy in Germany after the discontinuation of the "concerted action" scheme, has created an obstacle to attaining an employment record consonant with that of Sweden.

3. The importance of universalism in standards for development

Next to the principle of complementarity of labour standards, the principle of universalism is of key importance for socially desirable development. Its objective function is to allow and ensure balanced, even and indigenous and sustainable growth.

If labour standards are partially or selectively applied, the spectre of economic dualism or segmentation is immediately raised. We see many different illustrations of this: union versus non-union employment sectors; regulated versus "free enterprise" zones; regional disparities; regular versus non-regular employment contracts; core and peripheral economic sectors.

Dualism is built on the prevalence of an unregulated sector of economic activity which provides an easy competitive outlet for firms. If labour is available at any price and any condition firms can always resort to lowering labour costs to stay in business, instead of seeking competitive advantages through the better use of resources, through innovation, or in better products and processes: in this way non-regulation actually retards development. In addition, it poses threats to the regulative framework in which the advanced, more productive sector operates. Double standards in the terms of labour create incentives to shift activities from the regulated to the non-regulated sector and thereby accentuate destructive price competition. In addition, it can lead to a decline in the real wage level and the loss of purchasing power, reinforcing the depressive spiral.

From this it follows that labour market regulation, particularly the setting of an effective minimum floor for wages and conditions throughout the economy, are essential requirements for balanced development. Eventually, the unregulated low labour cost sector tends to pose threats to the regulated sector in which employers and workers' organisations bargain collectively and where wages and working conditions are standardised. The threats stem from the large scope this sector presents for evading, undercutting and supplanting going practices and current labour standards.

This leaves trade union organisations in an insecure position even where formal rights of association and collective bargaining are assured. It may lead the unions to gain and retain security by protecting and defending particular areas of employment, or to apply other methods of "job control" geared to restricting the substitution of labour.

A way out of this dilemma would be to provide, through public policy, broader political recognition and security to worker organisations. This would allow unions to operate not just on the decentralised level but on a more central plane of decision-making.

Germany provides, in various phases of its development, an illustration of the impact of dualism. Between the first and second World Wars, the economy was characterised by the co-existence of a modern industrialised sector and a traditional subsistence sector, largely comprised of agriculture, the crafts and other small business. This latter sector had significantly lower wages and inferior terms of employment and served as a cheap reservoir of labour to the modern sector. The "iron law of wages", according to which inadequate labour income and inadequate social security lead to an unlimited increase in labour supply, discouraging "upward"-directed pressures of competition, was widely in force. In contrast to the years before the first World War, when an externally instigated export boom generated substantial flows of labour from the traditional to the industrial sector, the period between the wars witnessed no such shift and even saw a partial backflow of labour. In the Weimar years, productivity improvement was extremely weak and the real wage level was stagnant and even declining in parts of the economy. Initial political moves which were clearly intended by the Weimar constitution to raise social standards, through broadly based collective labour agreements and the formation of a welfare state, fell victim to opposing political forces. In the years just before 1933, the trade unions were forced under the emergency decrees of Brüning to accept wage cuts. The political and social disaster in which this culminated is well known.

Look then at what happened from the 1950s onwards. Under much more favourable political conditions, notably under a unified labour movement, institutional arrangements were enforced that allowed for dynamic development on a wide front. Essentially the iron law of wage depression was intercepted. Through collective bargaining reforms, approximately equal minimum wage standards were provided for virtually the entire economy; improved welfare provisions provided a fairer social wage to all employees, at more or less the same social cost to employers. Along the lines of "New Deal"-type active wage policies, wage improvement was tied to productivity improvement and this, in turn, generated the effective demand to absorb increased output. Unlike the 1920s, employers no longer rejected wage increases. Anti-cyclical demand management and welfare state policies went some way towards maintaining income levels and purchasing power in recession periods; they provided a ratchet against entering a new depressive spiral of development. Equally important, the greater universalism of labour standards entailed more even productive development in all economic sectors, in all regions, for large and small firms alike. Wage and employment standards permitted all firms to recruit and retain qualified labour, while inducing them to improve labour quality through training efforts. Most important, however, was the enhanced political participation and the representation of interests of broader strata of society in the decision-making process, which gained a more democratic profile as a result. Unfortunately during the last decade, despite the lack of evidence that a regulative framework does in fact damage competitivity, arguments and policies have emerged which favour its relaxation and there is talk of a need to "deregulate" the labour market.

It is characteristic of dualistic development that it tends to provoke a cumulative economic and social crisis. Those who in the first round appear to be winners under such a regime may end up as losers, because the demise of the retarded sector diminishes economic opportunities, ultimately making all parties worse off. The logic of creating and observing a widely agreed code of labour norms and behaviour is to make it unprofitable for firms to use market opportunities to lower the terms and conditions under which labour is utilised. The more opportunity there is to compete on the basis of wages, labour costs, etc., the more this will undermine the basis for co-operation among and between employers and workers. The same arguments in favour of applying standards universally are, of course, valid for the global economy.

4. The continuing need for adjustment in standard-setting

The task of setting and implementing labour standards to achieve particular objectives is never complete. There is a constant need to revise standards or create new ones in order to ameliorate, or at least maintain, their regulative power.

Whilst certain norms exist that are held to be constantly and universally valid, such as the prohibition of child labour or forced labour, many others are much more contingent on particular historical circumstances. This is not surprising if one sees standards as compromises for settling particular conflicts of interest over particular issues at certain points in time. Labour and market relations are characterised by dynamism and mobility; they are not static and as such the norms controlling them must respond with equal speed to changes in their nature or circumstances. Standards themselves generate new economic realities in which actors will seek to gain competitive advantages by exploiting an unregulated niche or by breaking out of the regulative regime in some other manner, giving rise to a new competitive situation which may require new forms and institutions of regulation.

Two examples may serve to illustrate this point:

1) A substantial number of statutory and contractual rules of employment protection in Europe (e.g. requirements of advanced notice of dismissal, prohibition of "unfair" or "socially unwarranted" dismissal, restrictions on mass lay-offs, rights of indemnification, etc.) hinge to a greater or lesser extent on the existence of a regular employment relationship between the worker and a particular employer: once the relationship is terminated, the protection tends to be lost.

Employment regulation which was created or extended largely in the 1960s or early 1970s was fairly effective so long as employment and production at the enterprise level were stable or increasing. Since then, however, employment relations have become much more volatile. Non-standard employment has increased in volume, production has often been vertically disintegrated and new inter-firm linkages have been created that allow easy shifts across firms, thus threatening the stability on which protection at work is based. To restore effective employment protection, new regulation sensitive to such new practices would be required.

2) A new competitive situation in both the product and the labour markets arises out of the accelerated process of company mergers and the growing transnational character of many enterprises in Europe. The concentration of power and increased opportunities for capital mobility across borders which is entailed, weakens, or altogether eclipses social control through national legislation and even EC-wide regulation.

More generally, standards cease to strike effectively if they lose touch with the arena in which the competitive forces exert themselves. The nature and location of competition constantly shift: regulation therefore needs to be adjusted.

In the following section some key elements of development are selected and the respective contribution of labour institutions discussed.

1. Eliciting productive forces

"The Productivity Puzzle - Numbers Alone Won't Solve It" was the title of a study that reviewed research into sources of productivity improvement. ^{(Endnote 5)} It was found that standard economic models, based on the stock and vintage of capital, R & D investments, economies of scale, etc., were unable to explain fully why one country or region did well while another fared poorly.

Much of the thinking and theorising on restructuring and on development in general is preoccupied with levels of capital and physical resources: those who inject the most capital and use the most advanced technology will have the leading edge. Most economic and industrial policy rests on this assumption and material incentives are provided to this end.

Against this tenet it can be argued that the factor of prime significance is not the level of resources per se but what is made of them, how well they are utilised. The mechanical "meat-grinder" model of production, according to which you draw from the system in a transformed state what you put in, is gravely misleading. Research has established that enormous differences in efficiency can be observed between production processes that apply the same technology and equipment and use the same amount of labour. One crucial determinant here, of course, is worker skill.

The decisive element in the performance of productive systems today, however, is co-operation, among workers, between worker and management and across firms. The incidence and importance of productive systems in which individual worker productivity - the one man-one machine relationship - determined the level of productivity has declined, as can be seen from the shrinkage of individual-oriented incentive schemes and payment-by-result schemes. Production has become more "systemic" in nature, i.e. tasks, functions, jobs, departments, etc., are interdependent, because they are integral parts of an extended division of labour and thus need co-ordination.

As long as there was a clear trend towards centralisation in production, with establishments growing larger, intra-organisational co-operation was the key to higher efficiency. Industries or countries that had institutional arrangements for worker involvement and decision-making in production clearly appeared to be at an advantage. Also, employment stability, generated by various sorts of statutory or contractual employment protection, contributed favourably to productivity growth. In my own research work I have demonstrated a positive link between workforce tenure and productivity growth in the period 1969 to 1982 ^{(Endnote 6)} . The reasons for this link are mainly the familiarity of the workforce with the machinery, equipment and plant layout but also team work and the capacity for problem solving through collaboration, all of which requires fairly consistent and stable employment relations. Furthermore, with the increasingly systemic nature of production and increased capital investment in work places, any machine down-time or other discontinuity in the production process becomes costly and collaboration is vital to minimize such disturbances. Finally, flexibility for adjustment in the face of product market turbulence and rapid qualitative shifts in demand call for a stable, experienced and versatile workforce that can easily and quickly shift to new products and processes. It is an illusion to believe that greater adaptive power can be derived from instituting casual and precarious employment.

With the halt or reversal of the centralising trend in production and the shift to subcontracting, vertical disintegration and new information and communication technologies, the focus on productive organisation has switched to a division of labour between firms. But here again it appears that superior performance is shown by those that manage in some way to combine competition and co-operation. Notable cases are the industrial districts in Italy and a number of other European countries. Industrial districts are communities of small firms with standards of wages and working conditions and with a level of efficiency, innovation and competitiveness far in advance of that typical for the small firm sector.

Co-operation between firms presupposes labour market regulation. Good economic performance appears to depend increasingly on an extended division of labour and more elaborate exchange and co-operation among firms. It is hard to imagine how this inter-firm co-operation and the relations of trust that it requires, can come about in the face of an unregulated labour market which responds to the volatility of continuous short-term adjustments to supply and demand conditions. Just like co-operation within firms, co-operation between firms requires stability and continuity of employment relations which would be jeopardised by opportunistic attempts by any one firm to undercut given wages and other terms of employment.

The improvement of production processes can also be spurred by minimum standards of health and safety. Unfortunately the latter are frequently seen too simply and exclusively as a cost burden and rarely are the true implications properly considered and assessed. To mention but one example: in 1974 the U.S. Occupational Safety and Health Administration (OSHA) proposed tightening the standard concerning the exposure of workers to vinyl chloride, reducing from 500 parts per million of air to 1 part per million the legal exposure level in the industry. The head of the largest manufacturer of the substance argued that the revised level could not be obtained "at this time or in the future". Industry estimated that 2 million jobs would be lost and that the cost to the U.S. economy would be $65 billion because vinyl chloride would no longer be produced and industries using it would be unable to find a substitute. Yet after the standard was introduced, manufacturers quickly developed new technology for controlling vinyl chloride exposure and recovering residues for reprocessing. The industry was soon in compliance with the standard and by 1976 production rose to record heights. New plants were opened, no workers were laid off and the total cost of the transition was about one two-hundredth of what had been predicted. ^{(Endnote 7)}

This case squares with a good deal of others in which the introduction or the raising of standards boosted productivity, competitiveness and, in the last analysis, employment. The general reason for this boost may be sought in the fact that standards are thought-provoking. They oblige management to become more imaginative and creative about production, with a tendency for beneficial multiplier effects to be unleashed in the process. Controls for one hazard may help to control another; it is rare that effort to rationalise production merely has the one intended result - more typically it leads to a variety of improvements, with the final efficiency effect exceeding that initially intended. Thus, the introduction of emission standards in Japanese industry in the late 1970s did not lead to a loss of competitiveness as feared by many, but to a significant improvement in the country's international position.

2. Making the most of human resources

The effective use of human labour is the most crucial determinant of economic progress. But while this is increasingly accepted in theory, its practice remains moderate. This holds even for much highly mechanised or automated production, where the capital stock per employee is very high and any disturbance of the process very costly.

There are both quantitative and qualitative components in the use of human resources. In respect of the former, the objective is to make use of all the members of the labour force, i.e. to accomplish full employment. With regard to qualitative aspects, the labour force may be said to be fully employed to the extent that workers' and managers' competence is fully developed and fully utilised. This requires general and vocational education, work organisation and job structures which enable this competence to be utilised and the avoidance of discrimination in access to training and employment opportunities.

Labour standards are vital for achieving full employment. A recent ILO report of the Employment Committee finds that countries pursuing active labour market policies have a better record with regard to employment levels ^{(Endnote 8)} . Of course there are different routes to employment growth. The much applauded employment "miracle" in the United States during the past two decades owes much of its dynamism to a comparatively low minimum wage floor - the statutory minimum wage has been frozen since 1982 - which makes low paying jobs profitable. Yet this approach tolerates poor productivity improvement, which amounts to less than full development of the country's productive capacity, shows up in poor or negative real wage growth and contributes to a lack of international competitiveness.

The opposite approach has been followed in Sweden, where minimum wage standards have been kept high and the resulting cost pressures have forced sizeable investments in the rationalisation of production, allowing real wage improvement to occur. The potential unemployment problem due to the labour displacing effect of rationalisation has been avoided through interventionist policies to expand the service sector, particularly social services. To operate this strategy and to make the interplay of real income growth and productivity improvement work requires a degree of national accord between capital and labour, i.e. a sort of incomes policy.

Another way of considering the two approaches is in terms of "flexibility". The standard prescription advocated by economic orthodoxy for flexibility in the labour market is to free the wage-setting process and employment as much as possible from regulation so that the allocation of labour can adjust freely to market forces. This allows the possibility of arriving at very large wage differentials and of achieving rates of worker remuneration at the lower end of the scale which are so low that, firstly, very low productivity jobs become profitable and secondly, the supply of job seekers increases, since in order to make a living individuals and households need to compensate for poor wage rates by working longer hours. In this event, the prime source of labour market flexibility is one of adjustment to changing wage rates at various stations of employment.

The alternative option consists of two elements: to limit strictly by means of minimum wage standards and compressed wage differentials the scope for wage adjustment and, in so doing, block the "downward" movement central to the above-mentioned approach; and to promote adjustment through comprehensive training and worker competence. This implies that the flexibility so important for adjustment resides in adaptable work organisation and in the versatility and transferable skills of the workforce.

This latter option outstrips the former in several respects. It avoids employment at a poor productivity level and facilitates what is now called "functional flexibility", i.e. the rapid adjustment to new qualitative job demands as a result of heightened market turbulence, as well as encouraging innovation in products and processes. In contrast, the wage adjustment method may, for the reasons stated above, temporarily boost job creation. But it carries with it serious drawbacks. It may lead to increased poverty, create serious inequalities in the sense that workers of equal productivity receive differential remuneration and create a lack of competitiveness due to poor human resource utilisation and low productivity growth. Given an increasingly global economy, it exposes a country to the arena of international competition on the basis of labour costs, increasing its vulnerability.

At a period in which least-cost mass production and Taylorist-type work organisation face limits, human resource development appears paramount. Yet this cannot be left as the sole responsibility of individual enterprises. Instead, encompassing public training policies are required - for two reasons. One is that without general standards employers tend to arrange their training in such a way that it leads to narrow, job- or plant-specific skills that are of little use outside the firm, thus hampering the mobility and substitutability of labour. Public intervention is required in order to standardise training and to make skills marketable beyond the realm of the enterprise. Secondly, when left to individual firms, the training function tends to remain rather limited in incidence and scope. Many firms, especially smaller ones, fear the possible loss of return on their investment and therefore remain passive. To resolve this problem, public policies (or at least large-scale collective agreements on an industry-wide basis) are needed to propel human resource development beyond the narrow confines of individual employers and to specify rules that "socialise" the cost and risks of training investments.

3. Preventing "social pollution"

Any comprehensive, balanced and sustained development needs to be based on indigenous resources and capabilities and avoid placing costs and risks on others. Economic history is replete with instances in which temporary growth and prosperity was accomplished by relying too heavily on external funds, technology or resources for an extended time, but when this was no longer possible, the country found itself on poor ground to redevelop the domestic economy. Colonialism is one striking case in point. There are many ways in which advantages may be acquired at the expense of others, drawing on their resources, or using them to externalise risks. Where this is happening labour standards are usually lacking and, as a consequence, no barrier exists to prevent the exploitation or misuse of others to gain advantage. This we may call "social pollution".

To deepen our understanding of the significance of labour standards and to properly evaluate them, it would be helpful to emphasise the "ecological" dimension of economic and social development. For instance, if a firm needs higher quality labour in the course of introducing new technology, it faces the "make" or "buy" option. While the latter may be cheaper for the firm, particularly in a slack labour market, it may also imply drawing qualified workers and managers off from other areas of the economy, thereby diminishing the potential for revitalisation in those areas. In a similar vein a firm may ignore standards of occupational safety and health to save costs (of safety equipment) whilst claiming to safeguard jobs. This may permit temporary cost relief, but what will the ensuing cost be? Higher accident rates, lower morale among the workforce and quits may outweigh the temporary savings and will surely add to the social bill.

The same logic could be applied to larger organisational units, such as industries, regions, countries, etc. Any restructuring process involves decisions about how many resources to generate and how to distribute the costs and risks of using these resources. Who, in other words, is to pay for restructuring and who benefits from the process?

The "ecological" analogy may be revealing because there is today relatively wide recognition of a need for regulation and standard setting in order to protect the environment, whereas with regard to labour standards such recognition remains scant. Take, for example, the problem of poisonous substances as a by-product of chemical and pharmaceutical production; the seemingly easy and cheap solution is to simply dump the stuff. People have learned, however, that this "solution" may not only be very expensive in the long run, but uncontrollable. The substances may gradually trickle into the ground and poison the fresh water reserves or they may be carried away in streams and rivers and consequently affect other communities. They create, moreover, debts of uncertain scope for future generations. The problem amounts to what economists call negative external effects.

The alternative is to "internalise" the solution of the waste problem by means of recycling, with the cost of recycling being borne promptly, by the producer of the waste. In this manner the problem is less likely to get out of hand, "beggar thy neighbour" practices are avoided and people are sensitized to the fact that there is a waste problem to be dealt with and a price to be paid to avoid costly pollution. There is also an incentive then to anticipate the negative effects and generate less harmful ways of producing in the first place.

Industrial restructuring poses essentially the same type of questions. It requires resources and produces waste which can be resolved either through social dumping, or through recycling and preventative measures. The first places the costs and risks on others, which may entail incalculable conflicts. The latter enforce a more socially responsible attitude and encourage indigenous solutions.

That the ecological analogy is not that far-fetched is shown by recent reports according to which hazardous industrial waste from European production was dumped in Western African countries with the twin effects of environmental and social damage. The price for that solution amounted to a fraction of the expense that recycling would have entailed. To some people this may still constitute "sound" economics, because it accords with the logic of "competitive advantages" for European and African countries. But the true cost of the dumping remains hidden, for an unlimited period, the unpaid bill of which will have to be faced by future generations of Africans.

4. Promoting socially acceptable international trade

The total volume of international trade has expanded enormously in the last decades and much national and international policy is directed at increasing it further. Very often there is the tacit or explicit assumption that free international trade is a good thing per se.

Like technology, international trade is an instrument of economic development that by no means automatically produces desirable outcomes. It generates beneficial effects to the extent that it helps to promote regional and global divisions of labour which take into account different states of development, different sorts of productive capabilities, different climatic conditions, different cultural and institutional traditions. The whole world would benefit if each country did what it can do best.

Yet, this ideal is not easily accomplished and we remain far from achieving it. The division of labour between the Northern and Southern hemispheres, to cite the most important dimension in the international division of labour, is far from satisfactory and has in many ways disappointed the poor countries. After intense efforts in the 1980s to integrate sub-Saharan Africa and Latin America into the world economy, observers now speak of a "lost decade". They point to a sharp fall in living standards, rising poverty and a deterioration of further development prospects due to a highly unbalanced and in many ways dependent economic structure. Many Third World countries are today indebted and, Asian countries apart, the gulf of income and welfare between the affluent and the poor economies is widening rather than narrowing.

International trade bears considerable risks and dangers if it proceeds on an unequal basis. These dangers, if not averted, threaten mutual understanding, trust and co-operation in international relations and may stir up tensions, distrust, or end in violent international conflict.

To reap the potentially positive effects of trade and to avoid destructive outcomes, social control of the trading process is absolutely essential. International labour institutions and international labour standards will have to be a part of it.

Today we face reservations about, or even opposition to, the further dissemination of international labour standards from two important sources: firstly, from certain policy-making and decision-making authorities in the highly industrialised countries and some international development organisations. They look at labour standards as creating barriers to development in developing countries (frequently also to "developed" countries). Secondly, objections against labour standards are issued by the developing countries themselves. A number of governments look at international standards as an infringement of national autonomy. This is understandable after their disenchanting experiences with the way relations between the North and the South have evolved. Often, the assumption underlying their resistance is identical to that in the West: standards are essentially obstacles to development. Above all, they are said to deter domestic and foreign investors. Some suspect that enforcing labour standards could act as a concealed, protectionist device on behalf of the developed world to limit the export opportunities of poorer countries.

Another criticism which is to be taken seriously is that the international standards in place are fundamentally unsuitable for developing countries. They are said to be rooted in Western, especially Atlantic (French and Anglo-Saxon) cultural traditions and institutional peculiarities which are alien in many other parts of the world. Legalistic procedures for conflict resolution, a very Western institution, are an obvious example. The solution to this problem of diversity is not to say, however, that developing countries are unprepared for labour standards. Rather the conceptual notion of labour institutions and standards should be broadened and sensitised to the social and institutional fabric of non-Western countries. The ILO, for its part, has again and again wrestled with this conflict between the principle of global universality of standards and the diversity of economic and social institutions.

What seems clear is that international trade cannot evolve at the expense of workers' rights. This would not only constitute a violation of human rights but would effectively inhibit the longer-term prospects of international trade because it would - and already does - intensify calls for national and regional protectionism. The root problem in many poor countries appears to be surplus labour, which defeats and undermines attempts to raise levels of wages and social security and removes incentives to "develop" human resources. So, contrary to prevailing development strategies that are built on the abundance of cheap labour in the Third, World, one could argue that labour somehow has to be made scarce and more valuable in order to break the vicious circle of population growth on the one hand and poverty and other depressive economic forces on the other ^{(Endnote 9)}

.

Further reflection is required to see how this could be done, including the possibility of shielding, at least temporarily, countries or regions from exposure to aggressive international trading. Some thinkers have proposed the idea of promulgating more auto-centric development which would require provisional closure to develop a balanced, less dependent economy. They refer to instances of successful development, as for example in Asia, which were enabled through temporary isolationism. They also show that very few countries have succeeded in their development while following a regime of free trade. Most developed countries did not adopt a free trade position until they had attained a leading international economic position. Their international trade grew out of domestic growth, rather than the growth following international trade ^{(Endnote 10)} . From this angle free trade amounts to an ideology of the leading economies.

Another route that has been proposed for socially acceptable trade concerns a "social clause" in GATT. This has been suggested by trade union organisations and was also endorsed by the European Parliament in 1986. ^{(Endnote 11)} GATT does not currently include any explicit requirement on the freedom of economic agents in member countries, except for one article which restricts trade in "products of prison labour". ^{(Endnote 12)}

Under the notion of a social clause, governments, notably in the NIEs, should be sanctioned in their trading relations if they interfere unfairly in the labour market by suppressing trade union rights, collective bargaining, the right to strike, or if they maintain unduly poor working conditions to gain trading advantages. Governments from developing countries have dismissed this device as yet another external imposition on them and another protectionist move on the part of the developed world.

This view of economic development and labour standards as conflicting, wherein improvements in wages and working conditions allegedly impair efficiency, competitiveness and growth, is clearly not tenable. It takes an unreasonably narrow perspective, looking at one firm only, one group of workers, one region, one country, one generation. This particularistic approach is exactly what labour standards, especially if they are formed on the principle of universalism, must overcome. History tells us that labour standards are not an obstacle but a prerequisite to broad, balanced and sustained economic development. It is, however, true that under a regulative framework economic development may proceed in different directions and with different outcomes.

There is, furthermore, a false assumption that the regulative effects of labour standards generally interfere with entrepreneurial or managerial freedom of action and, consequently, with adaptive capacity. Behind this view is stubborn denial of the significance of stability and security in economic and social development. It is by no means the case that the firm or the industry is unrestrained in its choice of actions and it is also not the case that the free market opens up all doors for manoeuvring. Rather, in order to operate in a particular arena actors need to have assurance of a certain amount of invariability or constancy to counteract the risks of innovation and adaptation. But to be sure that things are stable for some foreseeable period, social arrangements are required, based on agreements with actual or potential competitors. This is one objective economic function of the social contract. The other is that without it, co-operation, which is an essential ingredient to efficient and dynamic economies, is unlikely to occur. Without the social contract, room is always left to engage in "destructive" competition by gaining advantages through lower wages and working conditions, instead of enjoying "constructive" competition through a more effective use of better trained human resources, improved manufacturing processes and better products.

Endnote 1:
See for example, the critical attitude of the World Bank towards labour market regulation as a barrier to adjustment and growth in the world economy. World Development Report, Oxford University Press, 1988.

Endnote 2:
Fields, Gary S.: "Labour Standards, Economic Development and International Trade: Links between the Newly Industrializing Countries and the US" Paper prepared for the Symposium on Labour Standards and Development, Washington D. C., 12 & 13 December 1988, p. 4.

Endnote 3:
See, for example, Layard, R.: "Minimum Wages: a cautionary tale of North and South", Financial Times, 22 November 1989, p. 19.

Endnote 4:
The Corporation for Enterprise Development: Making the Grade - The development report card for the States, Washington D. C., March 1987.

Endnote 5:
See Alder, Paul S.: in Monthly Labour Review, October 1982.

Endnote 6:
See Sengenberger, W.: Struktur und Funktionsweise von Arbeitsmärkten - Die Bundesrepublik Deutschland im interntionalen Vergleich. Frankfurt/New York, Campus Verlag, 1987, p. 203.

Endnote 7:
See Witt, Matt: "Dangerous substances and the US workers: Current practice and viewpoints", in

International Labour Review, Vol. 118, March-April 1979.

Endnote 8:
ILO: Recovery and Employment, Report of the Director-General, Geneva, ILO, February 1989.

Endnote 9:
In Sub-Saharan Africa, the population is predicted to nearly double between 1980 and the end of the century. ILO labour force projections reveal sharp divergences in world trends. The annual rate of growth of the economically active population in the developed regions is expected to fall from 2.43 per cent in 1985 to 0.02 per cent in the year 2025, when it will be negative in Western Europe; in the less developed regions as a whole, it is expected to fall from 2.43 per cent in 1985 to 1.03 per cent, but within Africa itself, it is expected to rise from 2.48 per cent to 2.80 per cent.

Endnote 10:
Senghaas, Dieter: Von Europa Lernen; Entwicklungsgeschichtliche Betrachtungen, Frankfurt/Main, 1982, pp. 58-62.

Endnote 11:
See, for example, International Metal Workers' Federation: Trade and workers' rights - Time for a link, Geneva, 1988.

Endnote 12:
For details, see Steve Charnovitz: "The influence of international labour standards on the world trading regime", in International Labour Review, No. 5, 1987.