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date: 29 March 2017

Labor and the Global Political Economy

This is an advance summary of a forthcoming article in the Oxford Research Encyclopedia of Politics. Please check back later for the full article.

Workers play a central role in the contemporary global economy, just as they did in previous eras of economic globalization. Many of the challenges facing today’s workers stem from the immobility of labor relative to capital. While factory owners can credibly threaten to relocate production, workers face legal and other barriers to movement. Workers also frequently face challenges to their ability to form labor unions and to bargain collectively, despite the nominal commitment of nearly all governments to “core labor rights.” And, if governments reduce social protections and safety nets as part of an effort to lower both corporate tax rates and government spending, workers exposed to the volatility of the global economy might suffer more during downturns.

At the same time, the global economy can offer opportunities to workers. Many empirical studies suggest that multinational corporations pay higher wages than domestically owned firms, and transnational rights activists are sometimes able to pressure multinational firms to improve rights and conditions for their workers, especially when consumers and shareholders value the conditions under which products are made. Additionally, in many developing nations, the rise of production for international markets has facilitated the entry of women into the work force. Workers may therefore find participation in the global economy, especially via formal sector employment, to be preferable to work in the informal economy or in the rural sector.

Given concerns about a potential “race to the bottom” in collective labor rights and working conditions, it is important to ask about the conditions under which labor rights are most likely to be respected. The possibilities for protecting workers will likely be greatest when firms worry more about the quality and skill of labor than the cost; when firms are concerned about the reputational consequences of labor rights violations; and when supply chain structures are sufficiently narrow and shallow to allow lead firms and activists to monitor working conditions and hiring practices.

Political institutions and interests are crucial to the possibilities for workers. While many recent efforts—including industry and firm codes of conduct, capacity building for local actors, and the Bangladesh Accord on Building and Fire Safety—rely largely on the private sector, the public sector cannot be ignored. Workers’ rights will be better protected in more democratic political systems, in polities with greater representation for left-leaning political parties, and in countries with a past history of respect for independent labor unions. Where local or foreign elites dominate the domestic political system, governments are unlikely to engage in de facto protection of workers, and their de jure commitments to labor standards may be little more than cheap talk. Relatedly, it is important to keep in mind that workers are not only passive recipients of global forces. While we might ask about the effects of global production on labor’s status, we also should ask about the conditions under which workers can—collectively or individually, and alone or in concert with transnational activists and intergovernmental organizers—reap gains from participation in the global economy.