Trade and Employment From Myths to Facts - International Labour ...

Trade and Employment: From Myths to Facts
A recent variant on the codes of conduct approach is the Better Work programme,
which is a joint initiative of the ILO and the International Finance Corporation (IFC)
of the World Bank. The programme, currently being implemented in several developing
countries, is based on the idea that compliance with labour standards is good
for business. Better Work was originally implemented as the Better Factories Cambodia
programme, which grew out of the trade agreement negotiated between the
Cambodian and US Governments in 1999. This agreement was the first to explicitly
assign a monitoring role to the ILO, as Cambodia agreed to allow the ILO to inspect
its factories to ascertain progress toward decent working conditions, upon verification
of which the United States would increase Cambodia’s export quota of garments.
In the post-ATC era, when use of quotas is no longer a trade policy tool, the
programme relies on the incentive for supplier factories to reach buyers interested in
sourcing from suppliers with better working conditions. There is evidence that companies
that source from developing countries attach a premium to labour standards
monitoring via the ILO. 18 As a result, since 2007, the Better Work programme has
been extended through the partnership of the IFC and the ILO. A number of
countries – Haiti, Lesotho, Jordan, Nicaragua and Viet Nam – have voluntarily entered
the programme and most have required all garment factories to participate in the
programme as a condition for export.
Evidence based on factory inspection reports indicates that under the Better
Factories programme, Cambodia has achieved improvements in working conditions
while at the same time increasing garment exports and employment (Polaski, 2009;
Berik and Rodgers, 2010). Chief among the achievements is the correct payment of
wages (minimum wage or overtime wages) in the garment sector, which is a major
step forward, given widespread reports of non-payment or incorrect payment of wages
in garment factories globally.
However, Cambodia’s programme does not monitor wage growth in supplier
factories but only their compliance with the minimum wage law. A crucial complement
for the programme to achieve sustained improvements in standards of living in local
terms could, therefore, consist in encouraging periodic and adequate adjustments in
the minimum wage and upholding of union rights so that wage growth can proceed
commensurate with productivity gains. These policy goals, in turn, reinforce the need
for a factory-level programme such as Better Work to be well integrated with nationallevel
implementation of labour laws and for the ILO’s tripartite process to work at
the national level. Moreover, there may be scope for adjustments in the Better Work
approach itself. For example, the identities of buyers and of factories that source them
could be disclosed and factory adherence to laws regarding union rights could be
more closely monitored. Finally, to be effective in increasing wage levels and raising
18 According to a 2004 World Bank survey, Cambodia’s key overseas buyers rated highly the credibility
of ILO monitoring and expressed their preference to source from Cambodia over Bangladesh,
China, Thailand and Viet Nam due to the working conditions of the Cambodia’s Better Factories
programme (Foreign Investment Advisory Service, 2004).
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