IMF/WORLD BANK Meetings discuss labour standards

ICFTU ONLINE..., 218/981012/WO, 12 October 1998

Washington, October 9 1998: The current financial and social crises facing the world economy are forcing the International Financial Institutions (IFIs) to review their traditional reticence to include labour standards as part of their remit. They are now showing a readiness to open up a dialogue on the role of labour standards in the global economy. As part of the program of seminars at the Annual Meetings of the IMF and the World Bank, held in Washington DC(6-8 October 1998), a Seminar was held on October 6th entitled: Labor Standards: Who Really Benefits? Panelists comprised: Katherine Hagen, Deputy Director General of the International Labour Organisation, John P. Martin, Deputy Director of the Directorate for Education, Employment, Labour and Social Affairs, of the Organisation for Economic Cooperation for Development(OECD), Govindasamy Rajasekaran, Secretary General of the Malaysian Trades Union Congress(MTUC), and Douglas Cahn, Vice President of the Human Rights Program at Reekbok. Moderating the session was Kaushik Basu, economics professor at Cornell University.

Prof. Basu said there was general agreement that substandard working conditions and exploitative forms of child labour were wrong, but beyond that there was little agreement as to what should be done about it. Considerable divergence of views existed as to the relative merits of voluntary or mandatory codes for companies, unilaterally or multilaterally applied rules of engagement in trade, and the stick or carrots approach to enforcement. Hence the importance of continuing dialogue.

Factory managers needed to understand that there was a positive link between core labour standards and quality work-places said Cahn of Reekbook. This in turn had positive effects on worker motivation and productivity, and was therefore good for markets. J. Martin felt that the OECD was making positive contributions to the debate on labour standards, by providing empirical studies on the correlations between trade, labour standards and economic growth. Contrary to some views, said Martin, there was no empirical evidence to suggest that upholding core labour standards had negative effects on a country’s trading position.

Katherine Hagen commented on the progress being made in increasing cooperation between the ILO and the Bretton Woods institutions in dealing with core labour standards, particularly in light of and in response to the Asian economic crisis. She announced that a high-level meeting between the World Bank and the ILO was scheduled to take place on 28 October, to further explore ways of enhancing the cooperation of the two institutions on the social underpinnings of reforms, including the promotion of core labour standards.

G. Rajasekaran, Secretary General of the MTUC(Malaysia), contended that inclusion of core labour standards in the multilateral framework of rules governing trade and investment [was] the best way to ensure that protectionist pressures were removed, and that workers reaped a fair share of the benefits of trade liberalization. The current economic crisis had demonstrated as never before that the search for solutions and the introduction of measures to build recovery could not be carried out successfully in the absence of a consensual framework, including the involvement of workers’ representatives through strong, representative and independent unions, he pointed out.

Rajasekaran said that core labour standrds should be part of the new archtecture for governance of the global economy. He supported the recent call made by Gordon Brown, U.K. Chancellor of the Exchequer, for the IMF and the World Bank to adopt a code of practice on social policy, along with codes of practice being adopted or under discussion on transparency, fiscal and monetary policy and corporate governance. This should further inform the policy and lending instruments of the Fund and the Bank, Rajasekaran maintained, including the article IV consultations, the Policy framework Papers, and the Country Assistance Strategies. The full text of Rajasekaran’s presentation to the seminar can be found on this website.