Labor Issues – International Business

One of the important social issues in the developed countries in respect of business with the developing countries pertains to ill treatment of labor and children.

Child labor used in the manufacture of exports from the developing countries is widely criticized by people in the developed countries. There is protest against this in the developing countries too. For example, it is alleged that child labor is used by the carpet industry in India and some other countries and social activist in the developed nations demand ban on the import of goods embodying child labor. Consumers are called upon to boycott such goods.

Similar issue is the sweat labor. The argument here is that goods are manufactured by labor working in inhuman/unhealthy working conditions not getting fair wages should be banned or boycotted. Creating important developing country, like garments, are alleged to be suffering from such problem.

Some multinationals are criticized product from developing countries benefiting from the seat labor.

According to an ILO Report, it is a regrettable feature of many export processing zones that both male and female workers are trapped in low wage and low skilled jobs and labor relations and human resource development remain two of the most problematic aspects of zone function. The frequent absence of minimal standards and poor labor management relations have predictable outcomes, such as high labor turnover, absenteeism, stress and fatigue, low rates of productivity, excessive wastage of materials and labor unrest which are still too common.

Another important issue is trade union rights. Absence of trade union rights in some countries provides them a cost advantage, Should the products of such countries be permitted in other countries? It may be noted that many multinationals are taking advantage of the absence of trade union rights in some countries.

While some of the criticisms are valid, it is also a fact that the developed country firms which are adversely affected by the cheap, blow up the issues to serve their vested interests.

According to the WTO the debate on the interaction between trade and labor standards is in many ways similar to the debate on trade and environmental standards. A concern expressed in some industrial countries is that excessively low standards in certain countries will impose downward pressure on standards, or give the low standard countries an unwarranted competitive advantage. Developing countries, on the other hand, fear that this argument may be used as a surrogate form of protection. As with environmental standards, the WHO was not designed to set labor standards. This was made clear in the Singapore Ministerial Declaration of December 1996, which also acknowledged the competence of the International Labor Organization (ILO) in the matter of labor standards. Specially, the Singapore Ministerial Declaration concluded that (i) Members are committed to the observance of internationally recognized core labor standards, (ii) these standards should be addressed in the ILO, whose work the Members support, (iii) standards are promoted by growth and development, fostered through tarred liberalization; and (iv) members reject the use of labor standards for protectionist purposes and agree that the comparative advantage of countries must in no way be put into question. Members of the ILO recently agreed on a ‘Declaration of fundamental Principle and rights at work’, in which ILO Members agreed to increase the scrutiny of adherence to core labor rights and reiterated the commitment in the Singapore Declaration not to use labor standards for protectionist purposes.

The WTO points out that the debate on labor standards distinguish between so called basic labor rights and less commonly accepted standards. Basic labor rights are part of the ILO Conventions in human rights and labor standards and include the prohibition of forced labor, the freedom of association, the right to organize and bargain collectively, the elimination of child labor exploitation and the non-discrimination in employment. Other less common accepted standard include minimum ages, limits on the hours worked and occupational safety and health standards.