The benefits of International Labour Standards

The challenges of globalization have made international labour standards more relevant than ever. What benefits do they provide today?

A path to decent work

International labour standards are first and foremost about the development of people as human beings. In the ILO's Declaration of Philadelphia of 1944, the international community recognized that "labour is not a commodity". Indeed, labour is not like an apple or a television set, an inanimate product that can be negotiated for the highest profit or the lowest price. Work is part of everyone's daily life and is crucial to a person's dignity, well-being and development as a human being. Economic development should include the creation of jobs and working conditions in which people can work in freedom, safety and dignity. In short, economic development is not undertaken for its own sake but to improve the lives of human beings; international labour standards are there to ensure that it remains focused on improving human life and dignity.

An international legal framework for fair and stable globalization

Achieving the goal of decent work in the globalized economy requires action at the international level. The world community is responding to this challenge in part by developing international legal instruments on trade, finance, environment, human rights and labour. The ILO contributes to this legal framework by elaborating and promoting international labour standards aimed at making sure that economic growth and development go along with the creation of decent work. The ILO's unique tripartite structure ensures that these standards are backed by governments, employers, and workers alike. International labour standards therefore lay down the basic minimum social standards agreed upon by all players in the global economy.

A level playing field

An international legal framework on social standards ensures a level playing field in the global economy. It helps governments and employers to avoid the temptation of lowering labour standards in the belief that this could give them a greater comparative advantage in international trade. In the long run such practices do not benefit anyone. Lowering labour standards can encourage the spread of low-wage, low-skill, and high-turnover industries and prevent a country from developing more stable high-skilled employment, while at the same time making it more difficult for trading partners to develop their economies upwards. Because international labour standards are minimum standards adopted by governments and the social partners, it is in everyone's interest to see these rules applied across the board, so that those who do not put them into practice do not undermine the efforts of those who do.

A means of improving economic performance

International labour standards are sometimes perceived as entailing significant costs and thus hindering economic development. A growing body of research indicates, however, that compliance with international labour standards often accompanies improvements in productivity and economic performance. Higher wage and working time standards and respect for equality can translate into better and more satisfied workers and lower turnover of staff. Investment in vocational training can result in a better-trained workforce and higher employment levels. (Note 1) Safety standards can reduce costly accidents and health care fees. Employment protection can encourage workers to take risks and to innovate. Social protection such as unemployment schemes and active labour market policies can facilitate labour market flexibility; they make economic liberalization and privatization sustainable and more acceptable to the public. Freedom of association and collective bargaining can lead to better labour-management consultation and cooperation, thereby reducing the number of costly labour conflicts and enhancing social stability.

The beneficial effects of labour standards do not go unnoticed by foreign investors. Studies have shown that in their criteria for choosing countries in which to invest, foreign investors rank workforce quality and political and social stability above low labour costs. At the same time, there is little evidence that countries which do not respect labour standards are more competitive in the global economy. (Note 2)

A safety net in times of economic crisis

Even fast-growing economies with high-skilled workers can experience unforeseen economic downturns. The Asian financial crisis of 1997, the 2000 Dot-Com Bubble burst and the 2008 financial and economic crisis showed how decades of economic growth could be undone by dramatic currency devaluations or falling market prices. For instance, during the 1997 Asian crisis, as well as the 2008 crisis, unemployment increased significantly in many of the countries affected. The disastrous effects of these crises on workers were compounded by the fact that in many of these countries social protection systems (notably unemployment and health insurance), active labour market policies and social dialogue were non-existent or under tremendous pressure. Taking an approach that balances macroeconomic and employment goals, while at the same time taking social impacts into account, can help to address these challenges. (Note 3)

A strategy for reducing poverty

Economic development has always depended on the acceptance of rules. Legislation and functioning legal institutions ensure property rights, the enforcement of contracts, respect for procedure, and protection from crime - all legal elements of good governance without which no economy can operate. A market governed by a fair set of rules and institutions is more efficient and brings benefit to everyone. The labour market is no different. Fair labour practices set out in international labour standards and applied through a national legal system ensure an efficient and stable labour market for workers and employers alike.

In many developing and transition economies, a large part of the work- force is active in the informal economy. Moreover, such countries often lack the capacity to provide effective social justice. Yet international labour standards can be effective tools in these situations as well. Most standards apply to all workers, not just those working under formal work arrange- ments; some standards, such as those dealing with homeworkers, migrant and rural workers, and indigenous and tribal peoples, actually deal spe- cifically with areas of the informal economy. The extension of freedom of association, social protection, occupational safety and health, vocational training, and other measures required by international labour standards have proved to be effective strategies in reducing poverty and bringing workers into the formal economy. Furthermore, international labour standards call for the creation of institutions and mechanisms which can enforce labour rights. In combination with a set of defined rights and rules, functioning legal institutions can help formalize the economy and create a climate of trust and order which is essential for economic growth and development. (Note 4)

The sum of international experience and knowledge

International labour standards are the result of discussions among governments, employers and workers, in consultation with experts from around the world. They represent the international consensus on how a particular labour problem could be tackled at the global level and reflect knowledge and experience from all corners of the world. Governments, employers' and workers' organizations, international institutions, multinational companies and non-governmental organizations can benefit from this knowledge by incorporating the standards in their policies, operational objectives and day-to-day action. The standards' legal character allows them to be used in the legal system and administration at the national level, and as part of the corpus of international law which can bring about greater integration of the international community.

Note 1 - OECD, OECD Skills Outlook 2013: First Results from the Survey of adult skills, Paris, OECD, 2013.
Note 2
- D. Kucera: "Core labour standards and foreign direct investment", in International Labour Review, Vol. 141, No. 1-2 (2002), pp. 31-70.
Note 3
- World of Work Report 2013: Repairing the economic and social fabric, International Institute for Labour Studies, ILO, Geneva, 2013.
Note 4
- ILO: Transitioning from the informal to the formal economy, Report V(1), International Labour Conference, 103rd Session, Geneva, 2014.