Labour law, development and poverty alleviation in low and middle-income countries

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The aim of this project is to understand the role of labour law in alleviating poverty in developing countries, with the focus on four country cases, namely Cambodia, China, India and South Africa. Labour regulation can operate to reduce poverty in two ways: by promoting greater equality of incomes and wealth, and by encouraging the more productive and efficient use of labour resources.  A key issue is the effectiveness of labour law regulation in practice.  Even if, in principle, labour law rules can serve social and economic goals, they may fail to do so if the capacity of regulatory institutions is limited, if rules lack legitimacy on the ground, or if the laws are ill-suited to economic or social conditions. 

The empirical strategy for addressing these issues is two-fold.

The quantitative dimension of the work takes the form of econometric analysis of datasets providing data on legal and institutional variables at national and regional level, alongside relevant economic and labour market indicators (GDP, employment, unemployment, productivity, and so on).  The qualitative dimension of the work takes the form of interviews with actors in the case study countries.  These include those with legal knowledge and experience (judges, lawyers, politicians, regulators, civil servants, labour inspectors), private-sector firm-level actors (HR and other managers), and actors in civil society (trade unions, NGOs).  These two aspects of the study will be brought together to provide comparative data on countries with different levels of industrialisation, economic structures and cultural contexts.

The project is being undertaken with the support of the International Labour Office (ILO), which is providing advice on access in the case study countries, data support, and policy analysis, and in close collaboration with researchers based at partner institutions, principally Monash University. 

A preliminary workshop was held at the ILO in February 2013 and work on data collection began in June 2013.  Fieldwork has been carried out in each of the case study countries and a 'leximetric' dataset coding labour laws for117 countries has been completed and exploratory econometric analysis undertaken. Impact related activities carried out in connection with the project include data coding work for the ILO and Asian Development Bank, and a report on labour court reform in Vietnam.Results from the project will be held at a conference in Cambridge in September 2016.

The beneficiaries of the research will include officials of the International Labour Office (ILO) charged with the responsibility for giving technical advice on labour law-related matters to national governments and other parties concerned with the application and operation of labour standards; officials of international financial institutions, in particular the World Bank, who have an interest in the implications of labour law regulation for the nature of the business environment in developing countries; to government officials, particularly in developing economies, interested in the conditions for the effective application of labour law rules; officers of trade unions and employers' organisations, at national, regional and global level, with an interest in the operation of labour law systems; managers in firms concerned with the interaction of labour law rules with other institutional and economic factors in shaping the business environment of developing countries; investors with an interest in understanding the legal, economic and political dimensions of countries in which they are considering making an investment; members of civil society organisations and NGOs involved in poverty alleviation; and the poor in low and middle-income countries, who will be in a position to benefit directly from the more effective implementation of labour law rules aimed at poverty alleviation and wealth redistribution. In the immediate term, impact will take the form of dissemination of research findings through user workshops in the case study countries and a user conference planned for the summer of 2015, and of the diffusion through ILO and CBR working papers and national and international media outlets. In the medium term, the research has the potential to inform the work of ILO officials who give technical advice on the implementation of labour standards to the governments of ILO member states. The provision of technical advice has been one of the major functions of the ILO since the inter-war period (Bronstein, 2005). In recent years a substantial body of technical advice has been provided to countries at various stages of development, and in particular to low-income countries where difficulties of the transplantation and diffusion of labour law norms are often at their most acute (Fenwick and Vargha, 2011). The ILO recognises the principle that programmes of labour law reform need to be tailored to local country and industry conditions and should be based on a dialogue involving government and the social partners. The development of a robust analytical framework for identifying the conditions under which labour law rules can be made effective and thereby contribute to poverty alleviation will accordingly be of direct interest to the ILO. The ILO commissioned the research by Marshall (2010) and Deakin (2010a) which led to the formulation of the analytical template that will be developed further in the course of the current project. ILO officials have been centrally involved in developing the current project application and will play a major part in the conduct of the research. It is anticipated that the development of the refined template will contribute to operational change in the ILO, in particular in the way that it provides technical advice on labour law reform. In the longer term, the research has the potential to address interests of wider concern in the debate over the relationship between labour standards, international trade, and economic and human development. A robust and empirically grounded account of the conditions under which labour laws can be effective in meeting their explicit goals of extending social protection and addressing the needs of some of the poorest and most vulnerable members of society will be of interest to a range of policy makers and government officials, and of practical value to the poor in low and middle income countries.

Primary theme: 
Themes: 
Grant Reference: 
ES/J019402/1
Project Status: 
Active
Grant Category: 
Research Grant
Lead Organisation Department: 
Centre For Business Research
Fund Start Date: 
Sunday, March 31, 2013
Fund End Date: 
Thursday, March 31, 2016
Fund Currency Code: 
GBP
Fund Value: 
393777
employment
inequality
Labour-Law
Labour-Market-Institutions
Law-and-Poverty
Productivity
Social-Safety-Nets