This document discusses international labor rights and their relationship to development. It begins by outlining several core labor rights established in international conventions. It then discusses the debate around whether honoring these rights could cause developing countries to lose competitive advantages by increasing costs. While textbooks argue this could harm sales, the document notes efficiency wages and market power are not accounted for. It also discusses how destructive competition occurs between countries with large labor supplies and pressures to adopt export-led growth. Empirical evidence from carpets and theory suggest rights that raise wages above market levels threaten competitiveness, especially between similar economies. Therefore, developing countries may only be able to raise standards through multilateral agreements rather than isolation. The document concludes by mentioning the Asia Floor Wage

1. DAAD – Alumni
Webinar
The Social Dimension of Global Governance
–
Rights and Voice for Labor
Do international labor rights contribute to
development?
29. January 2015
Prof. Dr. Christoph Scherrer

2. Core Labor Rights
Freedom of Association and Protection of the Right
to Organize Convention, 1948 (No. 87; 129)
Right to Organize and Collective Bargaining
Convention, 1949 (No. 98)
Forced Labor Convention, 1930 (No. 29)
Abolition of Forced Labor Convention, 1957 (No.
105)

3. Core Labor Rights (cont’d)
Discrimination (Employment and Occupation)
Convention, 1958 (No.111)
Equal Remuneration Convention, 1951 (No. 100)
Minimum Age Convention, 1973 (No. 138)
Worst Forms of Child Labour Convention, 2000 (No.
182)

4. Core Labor Rights in International Law
ILO Conventions (129-161, by 2002)
ILO Declaration of Fundamental ...
Rights
UN Covenant on Economic ... Rights
UN Covenant on Civil ... Rights
UN Covention on the Rights of the
Child

5. I
N
D
I
A
Christoph Scherrer

6. 1 Unresolved Issue
(among many)
Southern Concern:
Honoring Core Labor Rights
= Loosing Competitive Advantages?

7. Loosing Competitive Advantages?
Text Book:
imposed increase in production costs
harms sales prospects
Economic Models:
No recognition of
– efficiency wages (long run)
– market power

8. Destructive South – South
Competition
Structural oversupply of labor power:
• rapid population growth
• displacement of subsistence agriculture
• end of communism: supply shock
• debt crisis: pressure to adopt export
oriented strategies
• barriers to market exit
– subsistence agriculture is no alternative
– lack of social protection

9. Global Labor Pool
Source: Illustration and calculations by Beck/Scherrer 2012, based on data provided by the U.S. Bureau of
Labor Statistics, ILO KILM Ed. 7 & ILO LABORSTA
Belgium /
Switzerland /
Germany
Canada / Japan
/ UK
Brazil
ChinaIndia Indonesia
0
20
40
60
80
100
120
140
0,0 0,5 1,0 1,5 2,0 2,5
Accumulated Labor Force Age 15+ (billions)
LaborCostsManufacturing(US=100)
Labor Costs in Manufacturing 2009
(US = 100)
Weighted Average Labor Costs

10. Some empirical evidence for hand-
made carpets
• Trade dominated by few companies
• Survey: Price rise by
more than 15 % leads
to switching source
• Replacement of
traditional market leader Iran

11. Theoretical Argument
Core workers’ rights that push wages
above the market-clearing price in
the short run threaten
competitiveness.
Most acute if competing regions
compare in factor endowment and
market position.

12. Theoretical Conclusion
Therefore, developing countries
cannot raise their social standards in
isolation but only in conjunction with
other countries by multilateral
agreement.

13. Asia Floor Wage Campaign
An Answer to Relocation Threats