Showing papers in "International Labour Review in 2002"

Core labour standards and foreign direct investment

Abstract: T here has been a steady expansion of foreign direct investment (FDI) in recent decades. Figure 1 shows inward FD I stock as a percentage of GD P from 1980 to 1998 for the world and for less developed countries (LDCs). The upward trend is particularly strong for LDCs, increasing from 5.4 to 20.0 percentage points over these years and suggesting the increased importance for these countries of FDI, as well as the increased presence of multinational firms. A longside the expansion of FDI have risen concerns regarding competit ion between countries or regions to attract FD I. Some determinants of FDI location, such as market size, are not amenable to short-run policy manipulation and so do not come into play in this regard. These more persistent longrun determinants have been referred to as “classical sources of comparative advantage” with regard to FDI location (Wheeler and Mody, 1992, p. 57). However, other potential determinants are more malleable, among them taxation policy and environmental and labour regulations. The scenario of countries or regions competing against each other by offering investors ever greater tax breaks and ever weaker regulations has been termed a “race to the bottom.” A recent study published by the OE CD on competition between countries to attract FDI seeks to establish whether there is evidence of such a race to the bottom. The study concludes that there is no decisive evidence of “any inexorable tendency towards global ‘bidding wars’ among governments in their competition to attract FDI,” but that the “‘prisoner’s dilemma’ nature of the competit ion creates a permanent danger of such ‘wars’” (Oman, 2000, p. 10). A race to the bottom does not depend on investors being truly attracted to countries with lower labour standards. Perception, true or false, will suffice.

Employment, social justice and societal well-being

Abstract: T he purpose of economic activity is to increase the well-being of individuals, and economic structures that are able to do so are more desirable than those that do not. This proposition might seem anodyne, but on closer inspection it is far more complex. To be sure, all politicians – left, right and centre – pay homage to it. Yet, the policies that are pursued often turn out to be antithetical to it. Much of traditional economics has indeed provided considerable comfort to those politicians who have a different agenda, and created considerable confusion for those who are sympathetic. A second proposition, also deceptively anodyne, is that for a large fraction of the world’s population, work – employment – is important. For individuals who lose their jobs, it is not just the loss of income that matters, it is also the individual’s sense of self. Unemployment is associated with a variety of problems and pathologies, from higher divorce rates, higher suicide rates to higher incidences of alcoholism. A nd the relationship is not just a correlation: there is a causal connection. Some individuals can keep themselves happy and gainfully “employed” without a job. But for many, employment – the fact that someone else recognizes their “contribution” by paying them – is important.1 This article aims to explain how standard economic theory – reflected in much of the popular policy folklore – has served to undermine the above propositions or runs counter to them. The first section shows how policies based on a neoclassical view of the labour market

Good jobs, bad jobs: Workers' evaluations in five countries

Abstract: ow good or bad is a particular job? How good or bad is my own H job? These are questions that everyone has asked or been asked. They are important questions, because they go to the heart of the issues of job quality and personal welfare. One direct way to evaluate the extent to which jobs are good or bad is to rely on the opinions of workers by asking them about their own job satisfaction. Understanding job quality is indeed important for several reasons. First, careful evaluation of labour market policies requires that account be taken of their effects on all aspects of employment, not merely wages and employment levels. In this respect, the value of job satisfaction data stems from the existence of subjective, but important, aspects of the employment relationship, coupled with the near impossibility of measuring all the objective characteristics of a job. And even if measurement difficulties could be overcome, measurements of each characteristic would then need to be combined in order to create what economists call a utility index. In constructing such an index, job satisfaction data allow the job incumbent’s personal values to be used instead of those of the policy-maker or researcher. In short, no simple, externally imposed taxonomy of “good jobs” and “bad jobs” is likely to capture what is obvious to labour market participants about their own jobs. Second, although a number of large-scale surveys have included questions about job satisfaction, 1 there has been relatively little systematic exploration of cross-sectional variation in job satisfaction within large socio-economic groups (as distinct from employees of a specific 1

The greying population: A wasted human capital or just a social liability?

Abstract: O ver the coming decades, the size and age-profile of the population in OE CD countries will undergo substantial changes because of lower fertility rates and longer life expectancy. The proportion of elderly people is forecast to increase dramatically in all industrialized countries, and the size of the population to decrease in many of them. The growing proportion of elderly people raises concerns about the financial sustainability of pension and health-care systems and a possible reduction in economic growth. To counterbalance these effects, some international institutions and national governments have advocated an increase in the length of working life through a postponement of the retirement age. While this policy would reduce the financial pressure on welfare systems, its effects on the labour market are less clear-cut. In many industrialized countries, particularly in Europe, the current level of unemployment is quite high already, so there is concern that an increase in the labour supply of elderly workers could result in even higher unemployment for young workers. Furthermore, increasing the labour force participation of elderly people would not necessarily translate into higher overall employment levels if demand does not adjust to the increase. The aims of this article are, in the first part, to analyse the labour market effects of ageing and, in the second, to discuss the main policy measures needed to cope with this trend. The opening part consists of five sections, the first of which examines projected population and labour force dynamics in the major OE CD countries over the next few decades. The second section discusses the short-run impact of a reduction in the labour force on the unemployment rate, while the third and fourth extend the analysis to the long run by looking at the effects of

Migration for the benefit of all: Towards a new paradigm for economic immigration

Abstract: 2.1 CONSEQUENCES OF DIRECT SPONSORSHIP ....................................................... 229 Market inefficiencies............................................................................................... 229 Rights abuse arising from quasi-ownership ........................................................... 230 Preference for migrants, undercutting of natives ................................................... 230 2.2 THE IMMIGRATION SURPLUS AND THE CONSEQUENCES OF WAGE DEPRESSION. 230 Ghettoization........................................................................................................... 232 Long-term native shortages .................................................................................... 233 2.3 ADMINISTRATIVE AND SOCIAL CONSIDERATIONS: COSTS AND RISKS............... 233 Direct costs of administering an MWP................................................................... 234 Indirect costs and externalities associated with MWPs.......................................... 235