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Labour Standards and Poverty Reduction

Author: Department for International Development
Date: 2004
Size: 38 pages (211 Kb)

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Summary

How can labour standards contribute to poverty reduction? This paper, written by the UK Department for International Development (DFID), focuses on the nature and impact of labour standards in developing countries. Effective and well-judged implementation of labour standards can play an important role in reducing global poverty and achieving the Millennium Development Goals (MDGs). A commitment to core labour standards is part of a broader rights-based approach to poverty reduction.

Labour standards are the rules that govern working conditions and industrial relations. There are core labour standards regarded as fundamental human rights and freedoms, universally applicable, as well as 'substantive' standards, whose content and implementation vary.

Various social and economic arguments exist for labour standards, though these are contested. While certain standards should be enforced internationally through improving methods for enforcement, others must be implemented sensitively on a country basis. This is to ensure that they do not disadvantage the poor, informal sector workers, or certain nation states. Local, national and international cooperation between a range of institutions is necessary to achieve this.

There are both social and economic reasons why labour standards contribute to poverty reduction.

• The right to participation promotes social inclusion for disadvantaged groups. Other key standards reduce risks of social and political instability by enhancing equity and social justice.
• Standards covering women home-based workers can combat gender discrimination. Substantive standards covering social protection and occupational health and safety have a role in public policy for poverty reduction.
• The international basis of the standards creates a framework for global action and solidarity for social justice. A robust system of labour institutions, rights and standards is also important for political development.
• Improved social and political stability can contribute to higher levels of private investment. Other standards support effective functioning of markets and raise economic efficiency.
• Substantive standards can raise productivity through improving workers' health, motivation and morale and through the adoption of new business strategies.
• Standards may lead to higher labour costs or slow the growth of formal sector employment. However, appropriate implementation and internationally coordinated efforts should counteract these possible effects.

The different organisations and instruments for promoting labour standards for global poverty reduction have strengths and weaknesses. To improve the global community's approach the following are key:

• Policy dialogue, including the use of new instruments of development cooperation such as budget support and PRSPs. The World Bank could put more emphasis on this.
• Technical assistance and capacity-building of developing countries to set and monitor effective standards. The international sharing of experiences and skills to protect the most vulnerable is potentially valuable. Cooperation can also support the capacity of workers to organise and for justice and regulatory systems to respond effectively.
• The extension of the labour movement to the most vulnerable: workers in the informal economy, home-workers and migrants.
• Strengthening international political and legal mechanisms to address states that persistently abuse human rights. This must include the UN and the ILO and, subject to debate, multilateral trade agreements.
• Broadening the global coalition for poverty reduction, and placing greater emphasis on workers' rights as an effective mechanism for poverty reduction. Equitable globalisation may increase the pressure for this, and would help counter charges of Northern protectionism from developing countries.

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Source: Department for International Development, 2004, ‘Labour Standards and Poverty Reduction’, Issues Paper, DFID, London
Author: Department for International Development (DFID), http://www.dfid.gov.uk