Minimum Labour Standards in a Globalized Economy
Keywords: Labour standards, labour markets, globalization, economic development, deregulation
The recent financial and economic crisis has put a big question mark behind the neo-liberal paradigm. For a long time the prevailing approach was deregulation, leaving everything to the market. At least as far as financial markets are concerned, there seems to be a change of perception. The change of paradigm should not be confined to the financial market. It also should be applied to labour markets. Even if many long-term benefits are indirect and difficult to measure, empirical evidence shows that labour standards result in improved health and human capital which increases the productivity potential of workers. It particularly shows that fair working conditions result in improved motivation and willingness of workers for high performance. Long-term and stable relationship between the worker and the company provides incentives to companies to invest in training of their workers because the company is able to recover returns from training. Job security provides incentives to workers to share their knowledge and skills with colleagues, in particular with young people and apprentices. In addition, it allows the workers to cooperate and increase productivity without fearing the loss of their job. Also at the macro-economic level empirical evidence is available for a positive effect of labour standards on trade competitiveness and growth. It is becoming evident that effective international labour standards are of utmost importance. The question is whether the institutional arrangements developed so far are sufficient to meet this urgent need or whether they are to be modified or amended. This is the topic to be discussed in this contribution.