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ISLSSL CONGRESS PANAMA

LABOUR LAW AND SUSTAINABLE DEVELOPMENT

In the last years, labor law and industrial relations are under the pressure of many hostile factors: on one side job killing technologies and global competition on the other political instability and deregulatory policies.

1. Labour law and development: a complex relationship 

  In the last years, labor law and industrial relations are under the pressure  of many hostile factors: on one side job  killing technologies and global  competition on the other  political instability  and  deregulatory  policies. Economic crisis  which  has hit many  developed  and developing  countries  has enhanced  the negative  impact  of these factors on the  real  economy  and on the labor  market. The increased  unemployment is the most  dramatic evidence. 

The traditional protective legislation  is accused of being incapable of meeting the present economic  challenges and even  of representing  an obstacle to innovation and development.

Certainly many of the  historical traits of labor law and of social policies  have to be  redefined in order to face the problems posed by the new economic  and  social context. Here I will  stress the need  of a  major redirection  of the focus of our discipline.

Traditionally  labor law was concerned mainly  with the protection  of workers  and with the distribution of income, on the assumption  that  growth was a self-sustaining  mechanism in  a linear  direction  of development. This  assumption  has been  contradicted by the recurrent  crisis  which have altered  the once stable economic scenario,  both  in developed and  developing countries. 

Labor law  and labor policies,  in order to be effective and accountable  to their stakeholders  need to  share with  other  policy  measures the concern  for growth. More specifically  they must  prove  that  they can contribute  to the sustainability  of development and to  human well-being.

The extent to which  employment  standards  and labor relations  regimes  influence growth,  investment  decisions and job creation, has been  object of extensive  research,  but with  limited  convergent  results. Convincing arguments have been  advanced  to show that  the relationship between labour  regulations and development  is a complex  one. It depends on  many  variables:  on the economic  conditions,  on  the stages of growth  of a given  national system and on  the content  of regulation. The types  of  regulation  have greatly  diversified even   in the legal  system  traditionally  centered  on rigid  mandatory legislation. Different kind of reflexive and soft  regulations have  been adopted in order to better respond to complex economic and social issues and to leave room to flexible implementation  by public  and private actors. To the same  end the  practice of negotiated  regulation has been  widely used in  variable forms, often  innovative  with respect to the tripartite concertation  developed in Europe during  the 70ies and 80ies. Development itself is not a uniform process shaped  after  standard models. Historical  experience, if not blurred  by ideology, confirms that,  although national  systems face  common problems and constraints, the ways in which they respond may  differ considerably  from one country  to another. 

2. Sustainable and human development 

Moreover the objectives and the very  concept of development are undergoing a process  of revision in order to include not only economic indicators (GDP in first place),  but a wider  set of goals and of immaterial goods,  essential for  the quality  of life and associated  with  the concept of human development. According to this concept the performance  of the national  systems should be evaluated not only  on the basis of the traditional parameters,  even less of short term financial accumulation,  but  taking  into account social  and welfare  indicators, such as health  of the  population, life expectancy, diffusion  of education and culture,  degree of equality, public  and private  safety , rate of employment, social  and political  participation, quality of services, etc. 

Some of these  parameters have been elaborated  by various international  organization  and research groups (J. Stiglietr; A. Sen; J.P. Fitoussi, 2009); but they  still meet with widespread resistance or skepticism among  policy markers (and sometime  public opinion). This perspective however represents a great opportunity for labor law and social policy because  our discipline is challenged  to reconcile economic growth and make it compatible with human  development in the wider sense envisaged  by those organizations. 

This is  indeed  the main  orientation  and source  of inspiration  which should guide  the revision of labor law and social policies, our discipline has full title to contribute to a new  direction  of growth  and of development  for the very  fact that decent work  is an essential  condition  (to promote) for sustainable growth.

The range  of innovative  measures  which might  contribute to  sustainable development  covers many areas which go beyond the traditional  domain of our discipline and indeed of legal regulation. They concern all public policies necessary to create  a more inclusive  economic  and a social environment favorable to sustainable  development and to job rich growth. These  policies are  wide ranging  and include, among others:  public  and private  investments necessary   to guarantee quality services and infrastructure and to spread education; innovative  research and dynamic business environment, favorable financial conditions for long term  investments, etc. Moreover,  in order to be consistent with  these objectives all major economic  decisions, not only  at national but  at supranational  level, should take  into account  their  impact on social  and welfare  conditions  of the  people concerned.

A similar approach   has been  adopted in the European Lisbon Treaty of 2009  (art.9), which provides that all major economic decisions, at national and international level, should take into account their impact on social and individual welfare. This is an  important  policy  approach  whose implementation  is meeting  many  obstacles  in the actual  national  and European  policymaking. But  it is  a decisive  test  for the  truth of European  social  model.

This vision  has specific implications on many aspects, technical  and political,  of our discipline. Let me indicate  some areas where a revision  of traditional approaches is necessary  to promote  innovative policy-making in employment and social security matters. It is a tentative  list which needs to be enriched by common research. To this research activity  our international society  and its members are committed, as we have witnessed in recent years. In the congress of Capetown seven research  groups have been launched in these directions.


3. The future of protective legislation: more selective and essential

A first area  has to do with the core of traditional  labor law, namely protective legislation. The rigidity  of this type  of regulation is the most controversial  trait which is accused of discouraging  investments  and innovation.

The evidence to support this view is far from conclusive. Nor there is  wides pread evidence of a “race to the bottom”  in labour regulation across the globe directed  to correct  the rigidity of traditional  labor law (A. Verma, 2016) 

The regulatory  trends  are not markedly  different, but rather  convergent,  between  developed and emerging countries. The World Bank it self  has qualified  its previous positions  on the economic impact of labor  law rules (World Bank 2014, 2015) and has asserted the necessity  for some kind of labor regulation as a response to the  failures  and imperfections  which  are inherent in the operation of the  labor market.  Moreover  recent studies  as those presented  by S. Deakin in Capetown, confirm  that  employment  protections laws often  have  the effect of encouraging employers to invest in productivity -enhancing technologies (S. Deakin, 2016).

On the other hand the changing characters not only of informal employment  but also of the standard contracts of work, may well require  new adaptable  types  of regulation. Legal  and collective  decisions are  involved in this search and have followed different  paths, short of sheer  deregulation. 

A major area  of innovation in many countries  has been to differentiate some aspects and types   of regulation according to the different  positions  and needs of employees in order  to capture  non standard  forms of work, or, in the words of ILO, in order “to formalize the informal”. The treatment of atypical  forms  of employment may be  improved  by a  the selective  application  of some  basic standards. 

The policy approach of individual countries to this problem are different; but the best examples have in common the aim of mitigating the dualism of the labor market.

In some countries  this approach has favored a new regulatory approach, simplified, better  finalized  and  more flexible.

A more selective  and simplified type of regulation  may be useful to reduce  the member  of norms of detail which  are burdening  many  legal  systems and to increase  the importance of basic  standards, both  at national  and international  level. According to the ILO these standards  are to be  suited to  the economic conditions of the different  countries. But the essential  core of them  should be universally respected. The commitment to guarantee their effectiveness is a major  contribution of the legal system to decent work, to equality  and to social cohesion.

A different and  difficult  target is to capture  the vast numbers of employees  which, not only  in developing  countries,  work  in the grey areas of  the labor market  and in totally  irregular  or illegal  conditions. This task cannot  be performed  using  only  the controls  of labor  inspectors. 

Financial incentives  aimed  at promoting  a gradual  emergence  of employment  from the black market  have been  introduced in some countries,  with  some but uneven  results. Probably  the legalization of these sectors  of the labor market  can be  pursued  only  by convergent  and lasting  interventions of public institutions  and of social  actors directed  to promote  the culture and practice  of legality. And these  interventions need to be supported  by economic  policies capable of creating local and sectorial  ecosystems  favorable to stable development. 

4. Flexibility: regulated  and skills friendly

Flexibility is  another  controversial  area  where labor law  and industrial relations must  adapt their  traditional  instruments  to meet the changing needs of the enterprises, while maintaining their mission  to guarantee the respect  of workers and to  promote  decent  work.

Flexibility is a necessity in modern systems of production which cannot  simply be ignored. But the use of flexibility needs to be regulated in order to be compatible with decent work. This objective  requires  to prevent  excessive pressure  on the  stability  of working life. Equally  important  is to finalize the various forms of flexible  employment  to the enrichment of the content  and value  of work.

A significant example  in this direction can be found in some recent legislations which have committed the employers  to provide specific  training to the employees involved  in horizontal and vertical  mobility, with the aim  of enabling them  to perform  the new  jobs  assigned to them. A virtuous use of “functional  mobility”  assisted  by specific  training  is essential  to prevent  the professional  obsolence  of those employees who are faced with  rapid  organizational  and technological change.  

Such a practice  is  important  also to reduce  the risk that employees  whose  position have  been  modified  or abolished,  be  hit by economic  dismissals. Quite a few examples  of socially  responsible enterprises confirm  that  a similar   finalization of mobility may contribute to make dismissals an “extrema ratio”. On the other  hand employing  a mobile  and multiskilled  work  force  increases  the  capacity  of enterprises to face  the shocks  of the markets using their  permanent  employees insteald of temporary  and fixed term contracts. 

It is up to the law  to fix  the basic  principles concerning  mobility. These  principles  might on one side  recognize the possibility  to assign  workers  to different jobs also outside  the boundaries  of the traditional  classifications, which have often become anachronistic. On the other hard the law should demand that employers provide  adequate  training  to their  employers. 

The actual  implementation  of these  principles and the management  of mobility is better left to  the practice of labor  management relations  in the workplace, through consultation and agreement between employers and workers  representatives. Similar principles could be followed also to promote a virtuous use of flexibility of working  time. 

The protection  of employees  against  unfair dismissals has been   a basic  tenet of labor law.  Some  countries  have introduced  legislation  directed  not to contradict  the principle  but to reduce the sanctions  for its violation. In order not to nullify the legal protection, the reduction  of sanctions should not deprive them  of their dissuasive  effectiveness; a principle  endorsed  by   decisions  of the European Court of Justice (ECJ).  

A more profound adaptation  of law labor  is necessary  to cope with  economic dismissals. Sanctions against abuses  are necessary here too. But the  most urgent  need is to provide  legal  and economic instrument to prevents these  dismissals and to protect the employees from the loss of employment. 

Some countries have introduced innovative policies in two directions. In the first place employers  have been  obliged to include in their  business  plans  the expected  trends of  employment  including  the impact of possible  downturns. The plans are  also requested  to implement  in due time the measures  necessary to reduce  this impact:  training  and retraining  programs  for the employees  most at risk  of unemployment, mobility  and reorganization of work  finalized   to adapt  the use of workforce to the  new business needs. In addition the law  has often  provided  forms of temporary suspension of work  and of short time duly subsidized to allow time for business adjustments.  When  dismissals cannot be avoided,  the law and collective agreements usually provide  for procedures  to regulate   the order and the consequences of these dismissals, with  the aim  of guaranting a fair  selection  of workers to be dismissed, and the  possible remedies. The best national practices indicate  that the support should include not only guarantees of income, but personalized assistance in the search of work opportunities, including  the opportunity to enrich and update their skills according to their personal capacities and the trends of the labor market.

5. Employment support in transitional  markets

The impact of economic  crisis but also the recurrent business  and labor market changes  have increased the pressure on the national systems of employment  protection and security. Monetary indemnisation and assistance have become often  an unbearable burden on the public budget.  In any case they are insufficient to support the employees in the periods of transition which  are becoming a normal feature of modern labor markets. For this reason more resources  and organizational efforts should be devoted  to active  labor policies  and specifically to the  retraining and replacement of displaced  employees.

The capacity  to implement effective  policies  of this  kind is a major testing ground  for labor law and social welfare. The success  of these  policies  is necessary  to balance  the flexibility required  from  the employees  and to justify  the much  proclaimed idea  of “flexicurity”.

The results so far obtained  are uneven also in those Europeans countries which have  greatly  invested in flexicurity. Keeping   this balance  is difficult because it is not simply a matter of resources  and of efficient organization  of employment services. It requires  a widerspead  consensus  on the need and on the ways  to promote  good  employment opportunities for workers and indeed a new labor  market  governance  based  on the active  participation  of public  institutions  and of social parties. Such a tripartite  approach  has been  experimented in a few countries  with success in the past. Now it needs to  be enriched by more personalized  services  and by  increased social investments in order  to meet  the needs of a diversified  working population and to promote their  active  presence  in the “transitional  markets” of modern economies. Employment  and welfare services  should  follow individual  workers rather than being  tied to specific jobs and industries. 

Such demanding  task requires  even  more  than in  the past  lasting   commitment of public  powers and a full  recognition of the role  of trade unions in labor market governance: both conditions which  are  far from being   fulfilled in many countries.

6. Innovations in welfare policies: costs and investments

A redefinition  of scope is equally  necessary for the law of employment  and  for welfare policies. The institutions  of social security  have played  a major role  in protecting  the workers  against the risks of economic life. So they  have  contributed not only to social cohesion  but also  to promoting  equality  among the  different groups of population and the inclusion  of workers  in the formal  labor markets. Hence indirectly then  have  favoured societal well-being and  economic growth.

The hystorical  dimensions  of social security adopted  mainly in European  countries are now being threatened by many  adverse  factors:  financial cointraints,  demographic transformations such as the aging of population, the pressure of global migrations and, on a different level,  the decline  of solidaristic institutions and ethics. On the other  hand welfare  measures capable of protecting and reassuring  individuals and communities  in front of these  transformations are mostly in need. 

Public institutions  will be called to compensate for the lack  of protection  provided by  traditional  labor law,   particularly to non core  and to  informal workers. At the same time a more committing task  requested  to our discipline is  to reinforce the  legal protections  with  measures  promoting equal opportunities and social inclusion  also of standards workers. Because equal  opportunities  and social inclusion  are essential components of human development. 

In this perspective  the transformation  of labour  law will have  to go hand  in hand with  the search  for new welfare  measures  shaped  not as  passive  costs but as  social  investments in the personal  qualities  of their  beneficiary  useful to maximize their capacities (or “capabilities”). This approach has to find the ways to exploit  the potentials of individuals  and of groups  to support personal  trajectories in the various life cycles and also to shape  a new welfare  mix based on private  collective  initiative capable of mobilize resources in addition to those  provided by public contributions. How to proceed in these  directions  is an open    issue debated among  the policy  makers of  booth developed and emerging countries. 

The latter  needs not reproduce  the  patterns adopted  by the historically  industrialized  countries. Possibly the experience of mature  systems  should teach how to  avoid  the increase  of costs and of burocracy which  have burdened  traditional  welfare  states. Some initiatives  of emerging countries  indicate  the importance  of group support and of micro finance to promote and spread new experiments of  community  welfare. Mutualism assisted by public support and incremental improvements will probably be a way to build  institutions  of social  security  in these  countries (M. Asher, 2015),  more  appropriate  than top  down legislation. Public  interventions  might concentrate the available resources to provide  minimum  standards of protection and of welfare  for the citizens, first  and foremost directed  to contrast  the most  seriuos  cases of poverty and deprivation.


7. Insurance based schemes  and fiscal support

The possibility  to establish pension schemes like those  adopted  in some  developed  countries based on  contributions  by the  social parties (workers and employers)  in the unionized  sectors, will have to be  tested on the basis of the economic evolution  of the various  contexts  and of the  economic options  open to the parties. Even in OECD  countries  this type of sectional  welfare  based on insurance  schemes is being weakened by the changed  market and political  conditions: increased  unemployment, low growth  and declining  incomes  of the working  population. These  new  conditions  are suggesting a new direction of policy  in quite a few developed  countries, namely the need to combined  the existing  insurance  schemes with  welfare  provisions  financed by the  general fiscal  budget  and directed to provide  income  and services  to workers and citizens  in need. 

It is worth noticing that  some  of these  countries  are introducing  various  forms of basic income,  usually conditioned on  means testing, to poor citizens and low-paid workers, who are now among  the “loosers” of global  competition. 

As mentioned above,  globalization is affecting  most aspects of our economic life and of  the world of labor. One of the most  dramatic impact has been the increase  of inequalities among  nations, among  groups  of people and among  individuals. All the traditional economic  and social policies  of the  world are challenged  to react. Infact  these inequalities represent a major obstacle not only to growth  and development  but also to political stability, as is proved  by the pressure  exerted by popular reactions on  many nationals governments. The existing  welfare systems including  the Europeans which are considered to be “universal”,  have  not been able to redress the  new types of poverty  nor to reduce  the risk of empoverishment  which  is increasing  among  the once secure  middle  class. 

Recent  research indicates  some  critical areas  for  reform,  but few answers. How  to change  the financing  and selection of welfare  benefits to make them capable  at facing  the risk of poverty  and of  emargination. How to target  the groups mostly at risk and to  redistribute  the resources  and services  accordingly. Would it be possible  and to  what extent  to differentiate   the contributions  of the various  groups  of workers to social  security. How important  could it  be  the role  and participation  of private organizations in shaping  and administering  certain  areas  of welfare?

The young generations are among the most  seriously  hit  by unemployment.  A   reorientation  of active  labor policies, training, and welfare  protections is urgent to give them equal opportunities. 

The changing  demography, with  the rapidly  aging  of population  is  posing an unprecedented  pressure  to even to the most  entrenched  systems of health care  and  of personal assistance. Most  of these  risks  will hardly be faced by  the traditional  social  insurance schemes.  A   different policy mix between  insurance- based benefits  and welfare  measures  financed by the  national budget  will be needed to provide income  support  and basic services to all citizens.

8. Education and the  accumulation of human capital

Protection  and equitable income  redistribution  remain  essential functions of present  welfare. But  labor law  and welfare  systems  are called  to develops new functions if they  want  to be not only  compatible  but functional  to sustainable  growth  and human  development. The contribution  of our discipline  to this  end depends  on the capacity  to intercept  and sustain  the general  strategies mentioned above  which  can promote  human development.

The measures  which  are specific  to our  discipline are first of all  those  which can  promote  among workers and citizens the human and social  capital. In the present “knowledge society” the accumulation  of human capital  is based on education   and continuous education.  Education and  training are  essential to enable  individual  workers to fully realize their capacities, to  contribute to  the common  development and to  have access to the benefits  of growth. Income distribution  itself is greatly influenced  by the education and by  the skills of workers. Those  highly skilled  benefit most from new technologies, while the poorly educated are the loosers.

The education and professional skills necessary to be in line with  the needs  of present society, are  greatly  superior  to those  sufficient  in the past  industrial era. New  employment and training services are required to meet the needs of an increasingly variable workforce, often quite distant from the traditional users: the increasing number of women and of old aged, the multitude of immigrants and  the educated knowledge workers, which may be semi autonomous but still in need of help. Moreover the provision of these services is not occasional as it was in the past but may be recurrent in the life of the individuals due to the volatility of the markets and also to the variable personal and family needs.   

The  private  and public  investments in the education and training  will have  to grow accordingly, in parallel  with the equally decisive investments  in research and productive innovation. For the same reasons education and training  should  become  the very basis of an active  welfare  and the same  time  an essential  part of the public  policy of growth. Quite a few emerging countries seem to have  adopted such a strategy  more clearly than some developed nations.

9. Social cohesion and collective actions

Individual capacities are  essential for human development, but they  don’t exist in  a social vacuum. Social cohesion which is necessary for the accumulation  of social  capital  is equally  important. Indeed it is  a condition also  for promoting  the capacities and the opportunities  of the individuals.  The welfare of the XX Century resulting  from a  comprehensive  social and political compromise, has been decisive  in sustaining  social cohesion in many developed countries. The transformations of the last years have altered  the very basis  of this compromise,  because they have changed  the balance of power between  social actors  to the detriment  of organized labor.  Even more in depth  the individualization  of working  life  and of  identities  is favouring  a decline of collective  experiences. I  firmly  believe that  social  cohesion  is  a common good  conducive not  only  to the well being  of people  but  also to  sustainable  development.  It is a major  responsibility  of policy makers  to create  the  conditions  to keep our society cohese even in the present turbulent environment.

The collective  actors  - unions and  employers -  which have  supported the social  compromise  of the past  are responsible  for adapting  their  strategies in order to reaffirm their role  to this end.  The revitalization of collective  actions  and  of labor unions is a  difficult and  indeed  uncertain objective. But I am convinced that this is still a major social  and political target to be pursued for the cause  of social  justice. Research  findings confirm  that  legislative support to collective  employee representation  and the growth of collective  action  are correlated  with  more equalitarian wage  bargaining  and  with an increased  labor  share in national  income (S. Deakin, 2016). Here again  there is no ready- made and uniform  model to follow. I suggest  two  major  directions of policy  which have been  developed  in previous research.

One: innovative initiatives  in industrial relations  might require not only changes in  the contents and in the structure of collective  bargaining, but the search for  forms  of  collective  action based on new   motivations  of the variable workforce of today. This  might  require a multidimensional  approach  - bilateral and trilateral -  to the regulation of individual  and collective  relations  of the  various  groups, possibly  involving  not only  working condition but also  other aspects of working  life. 

Two: I believe that the adverse factors  which  are weakening  collective  actions both in developed and developing  countries, can be opposed  only by the concurrent action  of public  institutions and of social  actors.  The full recognition by national legislators  of individual  and collective rights  - freedom  of association, right to bargain  and to strike - remains an essential condition to legitimize  and promote  collective  action in  democratic societies.

The experience  of some  countries  indicates that the  effectiveness  and quality  of collective action can be  facilitated  by promoting workers participation within the enterprises  and in the public  institutions, national  and local, which are active  in employment  and welfare services. In the countries  where this kind of participation  has been  widely  adopted, it  has  contributed  to improving  labor management relations and  to increasing  both the welfare  of employees  and the productivity  of the system. Indeed  the involvement  and the empowerment of workers in the relevant areas of their  life are important  factors of human development.


10. The role  of states in a globalized world

Most areas  of policy  innovations indicated  in this  paper  involve  the responsibility  of national legislators and social  parties. Certainly in a globalized  world these actors have to face unprecedented contraints,  not only  financial  but  coming from the  increased  productive  and regulatory competition among nations.

In spite of  this, national states and actors  maintain a major role  particularly in shaping labor policies. This is confirmed by the persistent  diversity  in the various regulations which  reflect the specific  conditions of each  country. Some national  legislators  and governments have recently reasserted  their  authority  on these  issues, responding to the growing pressures of their constituencies  who are resisting to restrictive  supranational  directives.

The reasons for  these national reactions are  different  and not always  socially  oriented. But even  international experts who are not  biased against globalization  recognize that  global trades  should  be subject to some limits and scrutiny taking into account to  fundamental national interest. Such a scrutiny would be useful to counterbalance global pressures and make for a more “intelligent” globalization  (D. Rodrik, 2010). In many  international  trade  negotiation and agreements the national negotiators have in fact  requested  the respect  of basic standards, mainly in labor and environmental issues which  they consider of paramount importance  for the economy,   the  quality  of life and even for the cultural identity of  their countries. 

The recent  Transpacific  Trade agreement (TPP)  and the present  negotiations aimed at signing  a Transatlantic Trade agreement (TTIP)  are significant examples.

The European  Parliament  has posed to  the negotiators of TTIP strict conditions to be respected  particularly in labor  and environmental matters. It  has declared  non negotiable the safeguard  of the existing European  and  national labor  standards, and has  requested  a periodical  “sustainability  impact  assessment” (SIA) of the social  and environmental  effects  of the treaty.

The national  negotiators of the TPP have included in the agreement a social chapter  more assertive than the clauses of previous treaties, committing  the parties to “adopt and maintain  basic social rights in regulations and practices”, and  to guarantee “acceptable conditions of work with  respect to minimum wage, hours of work, occupational safety and health (acceptable  as determined by each national signing party). 

The existing differences  of national  regimes  in the major issues  of labor law, including  the protection  of employment  and the regulation  of labor management relations, confirm that the convergence among  different  legal systems envisaged by some  scholars still meets many obstacles.

Some countries are reluctant to   fully to recognize the fundamental  collective  rights, particularly  the rights to strike, as requested  by the ILO  conventions. Signs of regression in this area are present  in some  African countries  as commented during the  Capetown  Congress,  but also  in a few eastern  European states  whose policies are  hardly respectful of the principles  of social Europe.

On the  other hand emerging  Asian nations, including  India and China, have  introduced widely debated  reforms  of their labor  legislation.

Labor legislation in Latin America has a long history, influenced  by particular  by European  and North  America examples. It has  undergone recurrent changes often  correlated  with  the evolution  of democratic political  institutions. In recent years quite a few countries have introduced major reforms in individual and collective  labor law which have  favoured  an increase  in the  coverage rate. 

The persistent importance of state action is confirmed by the  fact that the necessary  international  projection of labor policies  and the strengthening of the international organization, ILO  in the first place,  cannot proceed  without the support of the national governments, beginning  with  those most influential  in the international  economic scenario.


11. The instruments of transnational  labor regulations: commercial  and investment treaties

The development of transnational regulations, in spite of many attempts, in still at an infant  stage. The recent  experience  of the European Union, which  is a relatively homogeneous area, indicates  the difficulties  to harmonize even the  basic traits of national  legislations, particularly in the most  sensitive  social issues. The so called  “European  model” is suffering    from the pressure  of the restrictive austerity measures imposed  by the monetary  authorities, which  indeed do not correspond to the official  commitments to promote stability  and growth.  Even  the measures advocated by the major international organizations (ILO, OECD, World Bank) and by the repeated summits of the governments finalized to promote sustainable  development have been partially implemented if not totally disregarded. 

The possibility to proceed along the path of transnational  labor regulations and social policies  depends on many variables and on  a myriad of public  and private  decisions. A multiplicity of actors are involved  and different instruments may be  combined according to the specific issues and areas concerned.  

Commercial  and investment  treaties  in different  forms  are a major vehicle of transnationalism. And the  social chapters which  are now  regularly  inserted in these treaties have contributed to promote  in international  trade at least the  basic social  principle  recognized by the ILO  core conventions.  Some recent  agreements have  strengthened  the language  of these  social clauses and the commitment of the signing  states.

But the procedures for the  enforcement  of these  commitments  are usually weak and the implementation of even  the fundamental  right has  proved uneven. On the other hand, hardly  any attempt has been made to insert in the treaties promotional clauses which might commit  the parties  to improve their social  policies  according  to the best national and international  practices. Multiple  strategies have been proposed to increase the effectiveness  of social clauses: promote  and extend  the ratification of core ILO conventions, provide  direct  access of social  organizations,  trade unions and workers to dispute- settlement procedures, introduce more  effective  instruments of enforcement and sanctions, promote innovative forms of litigation  in national courts and in  front of international bodies. 

12. Multinational enterprises and company agreements 

Multinational enterprises  have become a key vector of global  development  and also  a decisive  player capable of  promoting  the transnational  regulation of employment. They  are already using different  instruments to perform their supranational  role, hereby  contributing to the innovation  also of legal techniques: unilateral ad hoc initiatives, stable programs in economic and social domains, guidelines of corporate social responsibility of variable content and impact, collective agreements with representative organizations of their employees (works councils, national and international unions).

Transnational company -wide agreements can be an important vector of regulation across the borders in many labor and social issues.  This type  of agreements may have an impact on employment conditions more direct than transnational agreements concluded between the national or territorial organizations of employees and of employers in specific productive sectors. These latter agreements, according to the present legal regimes, have no legally binding effects on the individual companies and on their employees. Transnational company agreements,  like  national company agreements, have a “comparative advantage” in this respect,  because their regulatory impact on employment conditions depends on the power of the employer to determine these conditions;  power which the employer may  exercise  at his discretion or according to the terms of the agreement that he has signed with the legitimate representatives of his employees.

The agreements signed  by transnational companies with the European works councils (EWC) have  provided  different evidence  of their  impact and contents. But  they have proved  to be an effective vehicle of transnational regulation in many issues of employment and of welfare. In some cases they have promoted good innovative practices of work organization and of workers participation. Often they have managed to regulate  matters which have proved intractable at sectional or territorial levels, in spite of the support given by the European Union to collective bargaining and to social dialogue.

This is the case e.g. of issues concerning  the  restructuring and reorganization of firms or of groups of enterprises,  the consequent redundancies, and in general the various processes of outsourcing of work, subcontracting and organizations of supply chains.

13. Regional regulations and regional Funds 

Different and more direct  forms of supranational projection of  labor law and social  policies have been introduced  within some regional  areas, in Europe, in the Americas, and more recently in Asia, which have set up common institutions and legal regimes.

The European  Union  has proceeded  most in the direction of  creating  a common social  sphere, through a variety  of legal  techniques. The resulting  social  model  includes  some traits inspired to the objectives of sustainable growth and human  development. The pursuance of this model has produced positive  results in many countries but also set backs  due to  various obstacles: weak  recognition and legitimation of the European initiatives in these matters, specially vis a vis the commitments to financial integration, increasing pressures of centrifugal forces and forms of resurgent nationalism. 

The instruments of hard law such as the directives have given way to the open method of coordination (OMC) and to loose guidelines, which share the value and the limits of other forms of soft law. 

In spite of the obstacles  so far  experienced,  the continental regions seem to be  a manageable  dimension  and a possible  intermediate  step on the road to global  policy making. 

It is also worth  noticing that some regional institutions have endorsed direct forms of transnational action  aimed at promoting innovative social  policies and at  sustaining  common goals of development. The European  Union is a case in point. Their authorities have set up a series of Funds and to be  used by member states and by social  actors for common  social and economic targets. Among the most important are the social fund for education, training and promotion of employment; the fund for regional  development, more recently the fund for the 'adjustment  to globalization', which is a first transnational measure to counteract the negative effects of globalization on national enterprises and on their employees. 

A major investment program directly financed by Union resources have been recently  announced by the president of the European Union with the aim of improving  the weak performance of the European economies.

Finally, proposals have been advanced to establish a common  system of unemployment benefits  for the European workers financed with European funds. Such a fund would be an important sign of cross- border solidarity and  would function as an automatic economic stabilizer for the recurrent periods of crisis.

Similar funds could be experimented in other regional areas by way of bilateral or multilateral agreements with the  aim of extending   across the borders selected forms of welfare, and of sustaining national welfare systems.  Welfare systems need transnational solidarity,  particularly when they are in an early phase of development and in the fields where they mostly suffer the consequences of economic crisis and underdevelopment: fight against poverty, guarantee of minimum levels of income, promotion of young employment, special programs to support basic an professional  education.

Short of interventions of  supranational forms  of government  which  are not in sight, the internationalization  of labor law and of social policies  will proceed  by the  extension and improvement of the different instruments mentioned  here (social clauses  transnational  company agreements, codes  of conduct, regional  directives and direct interventions): not  ready-made global regulations, but a web  of rules gradually created by different  national and international actors.


14. Some policy priorities

The present although partial  analysis provides sufficient evidence  of the challenges that  the great transformations of present times pose to  our discipline. As we indicated lately in Capetown, common  research is  necessary to deepen our  understanding  of the future  of work  and to contribute to new  policy- making in  employment and social  security matters.

Some legal and  social  instruments adopted by national  practices have proved to be particularly useful. 

Our discipline have a major  role in promoting the well being of workers and sustainable development, provided that  it does not limit itself to react to external economic  pressure and  to defend  its glorious  traditions, but it dares to use in a innovative way  the specific  tools of the law and collective action. 

Our common  discussions have given significant,  even tough tentative, indications on how labor law and industrial relations can contribute  to this goal.

 A few policy priorities need  to be stressed again; the protection of workers from old and new social risks, the promotion  of decent  employment  and of the quality of work which are  the basis of sustainable development; the diffusion of investments in education  and personal capacities, which are   an  essential  road to equal  opportunities, an active  use of public and  private  welfare institutions, finalized to increase personal opportunities  and to  fight inequality and poverty;  the promotion of collective  voice and of employee participation  in the working  place  and in the public scene; the endorsement of work place  flexibility  and productivity combined  with measures to guarantee security in the labor markets;  the support of labor friendly use of organizational  and technological innovations.

For the reason already indicated, national states  and social actors  maintain the major responsibility for the implementation  of these policies. But their responsibility includes an  increased commitment to promote the social dimension and the democratic character of globalization. 






 
















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