International Perspectives On Industrial Relations


With the rapid advancement of industrial relations, International Labour Organisations have issued many regulations and rules to maintain the rights of labours around the world. ‘Since the first ILO convention in 1919 there has been a great increase in the number of conventions and recommendations. There are now 185 conventions and 195 recommendations' (Ewing, 2006:242). More and more commentators and analysts pay much attention on that the adoption of labour standards will have some influences on trade prospects. Some of them may think it would threaten the trade of developing countries. However, it is not very comprehensive to understand the relationship between labour standards and trade. Definitely, labour standards would somewhat threaten the trade prospects of developing countries. Nevertheless, to a large extent it is benefit for trade development around the world. So I do not totally agree this opinion. This essay will critically evaluate the positive and negative impacts that the implementation of labour standards brings to the trade prospects of developing countries and some policy implications.

Some positive and negative impacts that labour standards give to the trade performance. First, according to Elliott and Freeman (2003), labour standards and global economy are complementary, which will enable globalization and increase economic growth among countries, especially in developing areas. Meanwhile, it is benefit for avoiding the abuse of workers which can increase the quality of trade. Second, child labour will change the market structure and it is not good for trade improvement. Limited child labour can improve the skills level of developing countries, and these countries should transfer their export products with higher added value (Organization for Economic Co-operation and Development, 2000). Third, freedom of association and collective bargaining is a good way to enhance living standards of workers and social security, and then maintain a harmonious trade environment (Sengenberger, 2005). Indeed, some negative impacts still exist which would threaten trade prospects. First, the adoption of labour standards put pressure and challenges on enterprises and governments, which rely on cheap labours to gain competitive advantages in international trade context (Hill, 1994). Second, establishing the linkage between labour standards and trade related issues is the heated debate between developed and developing countries, which will decrease the economic growth of developing countries, as well as the whole world economy.

National governments play a significant role in the relationship between labour standards and trade performance in developing countries. They should strengthen the adoption of labour standards and issue some policies to accelerate the development of national and global economy, as it is an efficient way to improve international trade. As far as developed countries, they insist in that the adoption of labour standards should under the WTO framework, in order to maintain human rights and promote the process of trade liberalization around the world. At the same time, some international agencies, like WTO and ILO also play important role in this circumstance. They have to expand their functions to reconcile the conflicts and problems between labour standards and trade prospects, and make them develop together.

Positive Influences

To begin with, Elliott and Freeman (2003) states that the adoption of international labour standards is helpful to enable globalization and it will boost economic growth in developing countries. Under the context of globalization, some formal regulations of international trade have been reinforced by changes, and these changes permit more and more access for world markets and decrease the limitation on international trade (Ryan et al., 2003). Obviously, developing countries' economy is associated with developed countries and the whole world. That means improving labour standards is benefit for enhancing fair competition in world markets, and fewer constrains make developing countries better integration into the field of international trade and join the competition. According to human resource theory, human resource is the most important resources of all, and the role of human capital is greater than that of physical capital in economic growth. And through the investment of human resources, labour productivity will increase a lot. Therefore, improving labour standards of developing countries will not let them lose their competitive advantages, but beneficial for their long-term development and domestic enterprises. At the same time, Elliott and Freeman (2003) also argued that the implementation of labour standards is an effective way to avoid the abuse of workers and it is helpful to improve the quality of labours and trade. For most developing countries, low-quality and low-grade labours is the obstacle which slow down the process of trade. Improving labour standards is meaningful for developing countries increase the national living standards and the quality of life, and to improve labour productivity. Otherwise, for enterprises, employing highly qualified workers will not only increase their production capacity, but also reduce the cost of supervision and management of staff. As a consequence, the quality of labours is related tightly to trade prospects, and they have interaction to each other, and improving the quality of labours is one of the key points to enhance international trade.

In addition, one of the conventions and recommendations of labour standards of ILO is limited child labour, which can improve the skills level of developing countries and also good for trade improvement (OECD, 2000). According to ILO, a person who less than 15 years old seems as a child and the abuse of child labour is a serious problem in developing countries, particularly in poor areas. Generally, the skill level and production capacity of child labours are limited, and they have no ability to do some complicated work and jobs, so it to a large extent hinder the smooth and normal development of trade. Edmonds and Pavcnik (2005) has demonstrated that limited child labour made great contribution to trade development in developing countries, as it established the positive correlation between income and trade. Take India as an example, carpet manufacturing occupies a large share of expert markets in India, and a huge number of child labours participate the process of production. Under this circumstance, some commentators may argue that limited child labour will lead to a significant reduction in the number of production and export of carpets. Nevertheless, it is a good opportunity for national manufacturing to transfer their export products with higher quality and higher added value. As far as concerned, low-skilled workers and low-quality products are not the only advantages that developing countries gain a foothold in the field of international trade. They need a change, and they need to get close to the general tendency of world development. Trade flows mainly rely on the competition of science, technology and productivity, which are major means of trade competition (Flanagan and Gould, 2004). Definitely, improving the quality and added value of products is good for developing countries to upgrade their status of international trade and society. Thus, it seems that the adoption of labour standards is necessary.

At last, Sengenberger (2005) indicates that it is important to protect human rights, improve labours' living standards and social security through the adoption of labour standards, which is benefit to establish a good trading environment around the world. All along, the human rights issues are controversial in developing countries, and people would naturally link the human rights and productivity and trade prospects of nations together. Freedom of association and collective bargaining is another way to admit people have right to negotiate with their employers, organizations and national governments, and all workers could complain their dissatisfaction. According to Salamon (2003), collective bargaining is significant for establishing a good employment relationship, and employees can legitimately express their own interests, and keep their own rights through trade unions, and then as much as possible to reduce the conflict within the organization. In other words, when workers feel satisfaction, they will treat their jobs with serious attitude and do more effective, then productivity has been improved which can promote the country's economic growth, as well as the whole world. In particular, in some export-oriented countries, improving the quality of export products will lead to better economic effects which can directly influence the ability of importation. That is a knock-on effect of trade prospects. Simultaneously, maintaining a harmonious trading environment and social security are rather essential for developing countries to gain competitive advantages in international trade context. The adoption of international labour standards make developing and some poor countries gradually unify the regulations and rules of their own and keep up with the developed countries. When workers can acquire the best wages and better working conditions, their rights have been fully respected (Liemt, 2004). Organizations and national manufacturing have spaces and opportunities to increase research and development investment, and strive to improve scientific and technological contents of products and added value. This can fundamentally change the status of simply relying on low-priced export products to gain advantages of developing countries, and to create a good trading environment. As a consequence, the standardization of labour standards is somewhat beneficial for economic growth and trade prospects in developing countries.

Negative Impacts

At the first place, the adoption of labour standards threatens some developing countries' benefits which largely depend on cheap labours and low-price export products to gain competitive advantages and profits in international trade (Hill, 1994). Ewing (2006) argued that minimum wages and working time at a certain extent limited the behaviour of using lower cost in exchange cheaper sources of labour and lower wage competition. At this stage, most developing countries gain price advantages through giving workers little salary and forcing them do jobs for so many hours, as well as providing them bad working conditions. Meanwhile, many developing countries establish the factories and manufacturing in these areas aim to gain lower cost and cheaper labours. Take China as an example, China's lower technological content of export products, such as toys, clothes, textiles and something else mainly rely on low-price advantage to win the overseas market. Nevertheless, according to China's national condition and legal environment, if the domestic companies fully in accordance with international labour standards in production and operation, it will be completely unable foothold in international trade. O' Higgins (1997) claims that ‘labour is not a commodity', which clearly stated the importance of human right protection and the implementation of labour standards. However, this is a difficult and challenge that developing countries have to treat seriously, because of the relative backwardness of economy and they are still in the process of developing. Labour-intensive industries mostly located in developing countries, and they lack of other means of competition. In terms of the greatest reduction in production and operation cost to seek competitive advantages, they often sacrifice corporate ethics and benefits of labours. Facing the challenge from the implementation of labour standards, those developing countries need to re-evaluate the comparative advantages of labour sources, and from a strategic height to adjust domestic industrial structure, and optimize the export products mix. Otherwise, developing countries will lose their trading status and competitive advantages in international trade environment with the adoption of labour standards.

At the second place, some developing countries think that the adoption of labour standards is a disguised way that developed countries set trade protectionism, which will constrain their economic growth. Almost all developing countries own the common views which pursue equally trade agreement and negotiation, and some new forms are still not covered by the rules of WTO (Krueger, 1999). With the continuous advance of global economic integration, discussion of issue of labour standards have become the heated debate on relationship between labour standards and trade related issues between developed and developing countries. Developed countries utilize ‘social dumping' and ‘human rights protection' to advocate establishing the linkage between labour standards and trade under the WTO framework. And developing countries consider it is a mean of trade protectionism and increased tariff barriers. Once the increasing of the labour standards, developing countries will face high risk. Some domestic enterprises will not bear the increased cost of production and tariff problems, and thereby decelerate the speed of economic growth. Kaul, et al. (1999) stated that open market and free trade flow is significant for developing countries maintain their trading advantages and status. If developed countries insist in improving labour standards, some of developing countries will be forced to ‘maintain higher tariff barriers and restrictive quotas' (Kaul, et al., 1999:130). And these problems definitely contravene the principles and regulations of WTO and GATT. Thus, the debate on the improving of labour standards or not intensify the conflict between developing and developed countries, which is bad for the development of international trade and globalization.

Policy Implications

As far as the policy implications concerned, national government's functions and roles of developing countries can not be ignored. Lewis, et al. (2003:173) argued that governments and states establish ‘the wider economic and social framework' which effectively controls and promotes the industrial relations and economic growth, as well as political policies of the nation. Some of the developing countries would prevent their goods and services enter into developed market economies and opposite the labour standards connect with trade issues (Ryan, et al., 2004). They do not have good understanding on the relationship between these two, and facing the challenges from labour standards and international society, governments should take positive measures to deal with these challenges, rather than simply to avoid and prevent them. National governments need to deeply understand and obey the rules of international labour standards, and promulgate domestic laws and regulations related to labour. According to labour laws and regulations, organizations will pay highly attention on easing the conflict of industrial relations, improving human rights and working conditions (Jenkins, et al., 2002). Meanwhile, it is a good method for enterprises to avoid the risk of labour-management conflict, legal sanction and trade barriers. Then, governments should lead organizations strengthen scientific and technological innovations, and transfer labour-intensive advantages into technical superiority. In most developing countries, export products mainly rely on low-price to win, and with lower technical skills and added value. Under the premise of obeying core labour standards and domestic labour laws, enterprises have to improve the technical content of products and change the current situation in order to gain international competitiveness.

The role of developed countries also has significant influences on the development of labour standards and international trade. In recent years, the USA and other developed countries have repeatedly emphasized the WTO agreements should include ‘social clause', which in the purpose of implementing labour standards through trade sanction, and achieve trade liberalization (Haworth and Hughes, 1997). The trade unions of developed countries strongly opposed to the current international trading system, as they believe this system allowed and encouraged developing countries do ‘social dumping' to developed countries. Some opponents argued that low-cost labour is the comparative advantages of developing countries in international trade, and ‘social clause' is considered as a disguised way that developed countries practice trade protectionism (Wet, 1995). That is not very comprehensive. From another perspective, though making the adoption of labour standards under the WTO framework somewhat hindered the process of trade liberalization, it is beneficial for developed countries to implement the human rights protection. There is no right or wrong, and it needs a balance point between developed and developing countries. As a result, developed countries need to create relatively good conditions that can make sure developing countries boost their trade with the implementation of labour standards in a fair environment.

According to Engerman (2003), as cited in Basu, et al. (2003) suggests that ILO takes responsibility and plays a role to enforce and develop international labour standards. And development of labour standards of ILO has coordinated, guided and regulated the domestic legislation of all member states. Under the international trade context, WTO is the most important international economic organization which as a responsible for managing the smooth functioning of the multilateral trading system. Bamber, et al. (2004) states that as UN organizations, both ILO and WTO have equal status, and trade issues and employment relations are separate from each other. However, the relationship between international trade and labour rights protection has become a hot topic in these years. There are so many voices on putting labour standards into the multilateral trading system. On the one hand it reflects that the current relationship between these two has entered into a new historical stage and also reflects their intersection. On the other hand, developed countries might embody in the new trade barriers under the pretext of labour rights protection. Bamber, et al. (2004) also argued that the ILO might lack of efficient at the adoption of core labour standards, and has little awareness that international trade regulations would have vital influences on employment relations. Definitely, these require the ILO continuously strengthen its role and function, and enhance the cooperation with the WTO to reduce the conflict between labour standards and trade issues and also create a good trade environment. Therefore, as the major international agencies of promotion labour standards and international trade, the ILO and WTO have to perform their own obligations and responsibilities, and maintain corporative relations with each other. This will play a leading role for their member states, and improve the adoption of labour standards and the development of international trade.


To sum up, as far as topic concerned, the adoption of international labour standards would threaten the trade prospects of developing countries is unilateral to analyze the influences that labour standards brings to trade prospects in developing countries. There are some positive connection between labour standards and trade. Such as the adoption of labour standards largely increase the process of globalization and economic integration. And then some developing countries can commendably increase the added value of export products with limited child labour. It is also helpful for developing countries enhance workers' living standards, job security and maintain a good trade environment. Absolutely, some potential weaknesses of the adoption of labour standards will threaten the trade prospects in developing countries. National governments and enterprises of developing countries would face big challenges and difficulties, because they rely on low-price export products and cheaper labours to gain competitive advantages in international trade. And the debate and differentiation of labour standards between developed and developing countries is continues to heat up, and it might worsen the relationship between labour standards and trade of developing countries.

National governments of developing countries should play a good regulatory role to enhance the development of trade, and support the implementation of labour standards, as it is good for protecting human rights. As well as developed countries, they might carry out hegemonism, and force to put core labour standards under the agreement of WTO, which as a certain extent undermined the interests of developing countries. Some international agencies, such as ILO and WTO also play significant roles on labour standards and international trade. They need to aim to reduce the conflict between developed and developing countries, labour standards and trade, and create a fair and good trade environment, which can improve the economic growth of the whole world.


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