Labour standards and labour law reforms in the rising powers: trends and prospects in public and private regulations

Professor Simon Deakin, Director, Centre for Business Research, University of Cambridge narrates and speaks about his work in this two-part audio documentary on the workshop. The researchers are interviewed by Boni Sones OBE.

In Part One we hear from Simon Deakin and: Parisa Bastani, Louise Bishop, Prabirjit Sarkar, Bimal Arora, and Corinna Braun-Munzinger.

In Part Two we hear from Simon Deakin and: Boya Wang, Enying Zheng, Natalie Langford, Matthew Alford, and Khalid Nadvi.

New research findings from two of the UK’s top Universities Cambridge and Manchester reveals giving workers employment rights increases productivity and profitability

Labour Standards and Labour Law Reforms in the Rising Powers: Trends and Prospects in Public and Private Regulations

We live in a globalised world and buy products produced by workers’ from all over the world. Increasingly consumers are demanding that those who produce our goods are employed on decent terms and conditions whether they work in Europe, Africa, India, Russia, China or South America. Sweatshop labour used in one continent is often named and shamed in another and these reputational effects can affect demand for goods. But as consumers ask for more fairtrade goods from the developing world, workers in the so called global North  are finding that their employment is more insecure, as greater numbers are employed on zero hour contracts, while all workers are finding it harder to access employment tribunals to enforce their employment rights.

The Centre for Business Research at the University of Cambridge has turned conventional wisdom on its head, and through a series of quantitative research projects over a number of recent years, has constructed a new database that reveals how improvements in labour rights can lead to increased productivity and employment as well as greater equality in society. These datasets are now online for others to access and use.

International organisations are taking note of these findings and national governments would do well to consider them.  Globalisation, rather than inducing a so called ‘race to the bottom’ as many commentators predicted, is making governments more aware of the need for improved protections for workers, and of the importance of enforcement. Better informed and discerning consumers who are switched on to the web and social media where they can check the sourcing of the products they buy, along with campaigning civil society groups and NGOs, are helping to enforce these values.

The statistical studies carried out by the CBR complement qualitative research carried out by the Global Development Institute at The University of Manchester.

In a recent CBR workshop held in Cambridge in September 2016 researchers from both Universities discussed the findings from ESRC-funded research on labour law reforms, labour standards and corporate social responsibility (CSR) practices in Rising Powers, including China, India, South Africa and Brazil.

Many commentators have doubted that worker-protective labour laws can be made effective in developing countries with high levels of informal work and weak states.  This has led to interest in alternative modes of regulation including codes of practice and consumer boycotts focused on global supply chains. But this focus neglects important changes on the ground in low- and middle-income countries in Africa and Asia which over the past decade have been implementing systematic reforms to their labour laws and codes, sometimes after much publicised strikes.

Admittedly the aims of these reforms are diverse: they include promoting industrial peace, encouraging employers to invest in training, and cushioning the effects of labour migration.  Often these interventions have had the effect of encouraging formalisation of work and building state capacity. They have also operated in conjunction with, rather than in opposition to, voluntary measures and soft-law initiatives aimed at improving labour governance in value chains.

Encouragingly, while there are still many difficulties associated with the operation of labour standards in emerging markets, empirical work is revealing a more complex and differentiated picture than that frequently presented. There is good reason to be optimistic about these trends.

The two-day workshop, presented findings of two main types:

  • Results from quantitative research analysing a unique dataset of labour laws around the world, constructed at the CBR in Cambridge.
  • Research from fieldwork conducted in case study countries, including China, Brazil, India, and South Africa, by teams based respectively at the Universities of Cambridge (Simon Deakin and colleagues) and Manchester (Khalid Nadvi and colleagues).

The research undertaken by the Cambridge team deploys a unique dataset, the CBR Labour Regulation Index, which codes for labour laws in 117 countries over the period 1970 to 2013 (43 years).  It is the first time that the laws of so many countries have been coded in this way and the dataset will be of very considerable interest to research users and policy makers.

The fieldwork research also breaks new ground in offering in-depth analyses of the implementation of labour law reforms in such contexts as Guangdong province in China, and on the interaction of labour laws with private labour standards operating in global supply chains.

The qualitative case studies undertaken by the Manchester team explore how lead firms in the rising powers engage with labour standards and CSR practices in their now increasingly global supply chains, and investigate the influence of civil society actors as well as the state in the development of private regulatory initiatives and in framing the discourse on labour standards.

Overview key quotes from podcasts:

Workshop Chair: Khalid Nadvi, University of Manchester, Professor of International Development, The Global Development Institute. The Director of Research for the School of Environment, Education and Development. Research programme co-ordinator for the ESRC Rising Powers and Integrated Futures Research Programme:

Nadvi overview: “What was very interesting in this workshop was that we were able to bring together work from two projects under the ESRC Rising Powers Integrated Futures Programme. We looked at labour standards, but from different disciplinary angles and different methodologies. What we have learned is that by bridging across the disciplines of legal studies, law and development, as well as development studies, and by bringing quantitative and qualitative methodologies to the work, we end up with a much richer set of insights on how countries like China, India, South Africa, and Brazil engage with questions around labour regulation and labour standards, and the issues around Corporate Social Responsibilities. “

Nadvi concludes: “In the future we need to look at these countries more specifically and to look at regional variations within these countries. However, I think at the same time the traditional North South view of the World and the traditional ways in which we were thinking about or fearing that these countries might begin to challenge the consensus that had emerged in the global north around social and environmental standards, that fear is a little bit over emphasised and we need to unpack that a bit better.

“In the countries where we have done our research the qualitative research in Manchester or the quantitative research in Cambridge we are beginning to see that there are improvements taking place – it is slow – in terms of the regulatory framing of labour rights and also the implementation of them. These outcomes will have some impact on workers in these countries. There are still problems, and the workers’ struggle continues, but both studies in Cambridge and Manchester suggest that this is a much more nuanced, much richer and more varied terrain than we had earlier expected.”

Simon Deakin, University of Cambridge, Professor of Law and Director of the Centre for Business Research.

Deakin overview: ”We know there is a lot of interest in these CBR datasets, they are online and people can use them. It is the only dataset of its kind to provide a continuous time series of changes in labour laws across a range of 117 developed and developing countries over 43 years. There may be issues in how to use the datasets, and there maybe disagreement about what weights to attach to particular data and how to combine them, but this is now in the public domain and people can decide what to do with it. We are very happy to advise and there is a code book and paper with a lengthy explanation. It is critical that the wider social science community and international agencies and governments’ begin to use the data; that is why they were created.”

Deakin concludes: “In the Rising Powers – which have now risen – as they have become more capitalist, we see tensions in terms of previously protected markets becoming subject to global competition and turbulence particularly in China which has seen amazing rates of growth, and South Africa and India. I would say as the BRICS become more capitalist and more market orientated they need strong labour laws but they may not always get them. This is a process which went on in the global North a Century ago, and there are some similarities. The lesson from this are that the institutions of labour law, labour rights, employment contracts, labour courts, are developing quickly today in China, South Africa and India. This is where much of the action is.”

Listen to the podcasts from the two-day workshop

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