Understanding the case of international labour standards – methodological insights into an ongoing debate

"By globalization, national economies strengthen their ties towards each other; the same process causes growing interdependence" (Duwendag 2003, p. 119). Internationally agreed standards are regularly called for to guide and direct the process of globalisation. E. g. the German Vice-chancellor (who is also the minister responsible for labour market regulation) warned that profit-orientation threatened democracy if it would not allow for social responsibility of employers (Muentefering 2005). The so-called "capitalism-debate" that arose from those remarks was a continuation of the "globalization-debate" which has been boosted by globalization critics such as organised in ATTAC but also by an Enquete-commission of the German parliament 1998-2002. The debate on international standards, e. g. on conditions at the workplace (labour standards), is controversial from the perspective of policy, of theory and of the empirical-methodological approach. From the perspective of policy, to date it has been proven unfeasible to establish a framework that balances the responsibilities and options of interventions between national and international policy bodies. Some argue that the establishment of such a framework is principally impossible and thus an argument against international labour standards. Others take the view that the world is moving towards such a framework, although slowly so. Among others, founding of the International Labour Organisation (ILO) in 1919 was based on the rationale of international labour standards (see Schmidt 2005a, pp 88-91). Some count the debate about and eventual abolition of slavery as a "labour standard success story" (e. g. Elliot and Freeman 2003). The policy perspective shall be explored no further here. From the perspective of theory, "classical" economists have always uphold the view that market outcomes should be the point of reference ("standard") and that these would eventually be welfare-enhancing. However, this view has been challenged by broader perspectives, e. g. that of institutional economics (see e. g. Schmidt 2005b). It is the empirical-methodological perspective that shall be explored in the following paper. It is argued that advocates of politically agreed upon standards base their point of view usually on case studies. On the other hand, proponents of the "market-outcome-approach" point to quantitative studies which overwhelmingly find a positive relationship between globalization and labour standards (see Schmidt 2005a, pp. 53-57 for an overview over quantitative literature). The remainder of the paper organises as follows: Section 2 invites the reader to reflect a moment on the understanding of globalization. Whereas many conclusions about the impact on globalisation are really only about a single channel, globalisation is a multi-channel-phenomenon that can not be understood from one channel alone. Section 3 outlines three exemplary case studies – chemical (BASF), toys (Mattel), furniture (IKEA) – to show the necessity as well as the complexity of politically agreed upon standards. Section 4 discusses challenges of measuring labour standards in quantitative studies. A suggestion to meet those challenges, drawing on two new indicators, is presented in section 5. Section 6 concludes.