Labor Standards and Trade

Amy LuinstraSocial Protection

World Bank August 2004

Labor Standards

Prohibition of forced labor Elimination of child labor Equal opportunity and non-discrimination Right of association and Right to organize and

bargain collectively Health and safety Payment of wages (minimum, in full, on time) Hours of work Social security payments

Regional Distribution of Child Labor

0

50

100

150

200

250

Persons (millions)

Asia Africa LatinAmerica

ChildWorkers

Cambodia – US scheme 1999-2005Cambodia – US scheme 1999-2005

5

1999 US – Cambodia Trade AgreementCambodia earns quota bonus for demonstrated improvements in working conditions.

 2000: ILO Garment Sector Project Objective: increased compliance with labor law.

Strategy: monitor working conditions in factories; provide synthesis reports to US Govt.

Uniqueness: 100% of factories; transparent.

Weaknesses: (i) bonus not awarded to best factories; (ii) productivity gains not monitored.

Cambodia’s perceived strengthsCambodia’s perceived strengths

6

1 2 3 4 5

Union rights

Quota

Laborstandards

Importance

Cambodia

Bangladesh

Thailand

Vietnam

China

Very poor Very good

CSR Drivers for MNEs1.

2.2.

3. 3.

4.4.

Growing influence of Corporate Social Responsibility

(CSR)

Much more influential

42%More influential46%

Equal influence9%

Don't know/NA1%

Much less influential

1%

Less influential1%

Most important issues

0 10 20 30 40 50 60 70 80 90

Percentage of respondents identifying issue

Land rights

Human rights

Corruption

Labor rights

Environmental Mgmt.

Agribusiness Extractive Manufacturing

Relative influence of CSR compared to cost, quality, delivery time.

Don't know/NA6%

Much more influential

8% More influential8%

Equal influence45%

Much less influential

9%

Less influential24%

"CSR Issues Have Led Our Company To…"

0 10 20 30 40 50 60Percentage of sector that has taken relevant action

Choose one partnerover another

Withdraw from apartner

Choose one hostcountry over another

Withdraw from acountry

Agribusiness Extractive Manufacturing

“Do strong laws on CSR issues make it easier to conduct your business?”

Don't know12%

Yes61%

No27%

No19%

Don't know

6% Yes75%

“Does it help your business if the CSR-related laws are well-enforced?”

Codes of Conduct

Forced labor Child labor Wages, benefits, terms of employment Hours of work Discrimination Harassment, abuse, and disciplinary action Freedom of association collective bargaining Health and safety policies

Where go from here?

Bilateral Trade Agreements Incentive-based (US-Cambodia Textile Agreement) National-law focused (e.g. US-Jordan/Singapore/Chile)

Resources and capacity building to developing countries to improve standards

Enhance ILO resources/authority to monitor and assist in labor standards compliance

Allow sanction for egregious violations (intentional repression of LS for competitive adv).

Corporate Codes of Conduct