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EMPLOYMENT AND LABOUR MARKET WORKING CONDITIONS IN THE INTERNATIONAL SUPPLY CHAIN IN A GLOBALISED WORLD: LEGAL PERSPECTIVE BY: URVAKSH BARIA
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Article Details
EMPLOYMENT
AND LABOUR MARKET WORKING CONDITIONS IN THE INTERNATIONAL SUPPLY CHAIN IN A
GLOBALISED WORLD: LEGAL PERSPECTIVE
AUTHORED BY:
URVAKSH BARIA,
LLM in
INTELLECTUAL PROPERTY AND TECHNOLOGY LAW
JINDAL
GLOBAL LAW SCHOOL
Abstract
In today’s time laws, regulations and
working circumstances are constantly changing, the abstract focuses on the
complex relationship between these three factors, highlighting the challenges
encountered and the probable solutions to these problems. Globalization has
traced its origin in ancient trade routes to the present rapid technological
advancements and growing cross-border commerce. This article explores how the
International Labor Organization and World Trade Organization and their role in
promoting decent work and equitable globalization by creating global labor
standards. There are issues relating to vulnerability of workforces, risk at
workplace and the need for sustainable practices specifically in textile and
Export Processing Zones (EPZs). This paper also explores the labor legislation
reforms implemented by India along with Wage Code of 2019 and related topic
such as minimum wage determination and self-certification program. There are
some legislative changes suggested like digitization, remote work and changing
employment relationships. Enhancement in suppl chain, women empowerment,
diversity in workplace. This article shall conclude by stressing on the
significance of cooperation and proactive policymaking in achieving a just and
equitable global economy as well as framing a responsive legal framework.
Globalization and
Working Conditions
Since
globalisation is a dynamic and ever-changing phenomenon, it has significantly
altered working conditions and employment policies around the globe.[1]
To properly grasp the complexities of the connection between globalisation and
working conditions, it is crucial to explore the historical backdrop of
globalisation and evaluate the many effects it has had on labour standards and
employment patterns.
Despite
its modern connotations, globalisation has been around for centuries. It has
its roots in the Silk Road and other ancient trade routes that facilitated the
cross-cultural movement of goods, ideas, and even entire civilizations.
However, the present period of globalisation began in the second half of the
twentieth century, and it is distinguished by accelerating technical progress
and increased cross-border commerce.[2]
The
dissolution of the Soviet Union, the development of new communication technologies,
and the deregulation of commerce all contributed to the quickening of
globalisation. Trade barrier lowering and market expansion facilitated the
freer movement of capital, goods, and services across national borders.[3]
Multinational corporations' push into new markets around the world has
increased the complexity and interdependence of supply networks.
International Legal
Framework
Fair
labour practises and safe working conditions are of utmost importance in
today's globalised society, when businesses often operate across international
borders. The International Labour Organisation (ILO) and the World Trade
Organisation (WTO) play crucial roles in establishing and enforcing global
labour standards, which are explored in this section as they relate to the
international legal framework governing such standards and conventions.
ILO Report on Globalisation and Working Conditions
Perspective:
For
millennia, the spread of products and services across international frontiers
has constituted the process of globalisation. The intricacy of globalisation
has been examined by numerous writers and experts, leading to a range of
opinions that range from lauding its advantages to exposing its detrimental
impacts on society and the workplace.[4]
The
International Labour Organization's (ILO) goal has been to advance environments
where all workers can prosper since the organization's founding in 1919. The
ILO, a tripartite UN organisation, promotes communication between its 187
member states' governments, corporations, and labour unions. Encouraging
dialogue on workplace issues and advancing workers' rights, employment
opportunities, and social security are its main goals.
The
idea of “decent work” was first introduced by the International Labour
Organisation. Worker rights, employment, social security, and open
communication between employers and employees are the four interrelated
strategic aims of decent work. These objectives are meant to promote more equal
social structures and working conditions globally. A good employment considers
not just the financial needs of employees but also their social and human
rights requirements. In response to the challenges posed by globalisation, the
International Labour Organisation (ILO) advocates for a democratic
globalisation that benefits people from all nations.[5]
The World Commission on the Social Dimension of Globalisation was established
by the United Nations and the International Labour Organisation to offer a
thorough response to the social ramifications of globalisation.[6]
The objective of this initiative is to better balance, in the context of
globalisation, business objectives with social and labour issues.
The
International Labour Organisation reaffirmed its commitment to a model of
globalisation that safeguards workers' rights in its Declaration on Social
Justice for a Fair Globalisation. Its goal is to create a global economic order
that prioritises social fairness.
ILO
In re Natarajan (No. 2) Judgement 1875 noted that
the IAEA's Staff Regulations and Staff Rules do not contain any particular
provisions that specify a thorough process to address a harassment claim of the
kind, first covered in the previous consideration. The IAEA was required to
respond to the complainant's allegation of harassment in line with the pertinent
case law of the Tribunal as there was no legal, comprehensive method for
handling such a claim within the IAEA's Staff Regulations and Staff Rules. The
body of case law has clearly established that an international organisation is
required to give its employees a secure and suitable workplace. Furthermore,
"an international organisation has an obligation to initiate the
investigation itself given the serious nature of a claim of harassment" (ILO
Judgement 3347, consideration 14).
Furthermore,
the inquiry needs to be started right away, completed completely, and the facts
need to be ascertained impartially and in the context of the whole. The
complainant is entitled to a response from the Administration regarding the
harassment claim following the investigation's conclusion. Furthermore, as the
Tribunal determined in Judgement 2706, consideration 5,
"an international organisation is liable for all injuries caused to a
staff member when the victim is subjected to treatment that is an affront to
his or her personal and professional dignity" (ILO Judgement 2609
In re Abreu de Oliveira Souza). This is because the supervisor was
acting in the course of his or her duties. As a result, an international
organisation needs to act appropriately to shield a harassing victim.
The Need for Sustainable Working Conditions in Global
Supply Chains
One
striking illustration of the difficulties related to labour standards in
international supply networks is the textile sector. Although labour-intensive
textile production should benefit low-income nations, the reality frequently
falls short of aspirations in these areas. The sector is plagued by ongoing
reports of major accidents, unsafe working conditions, and breaches of human
rights.[7]
The
following are major issues faced by the textile sector:
·
Susceptible Workforce: Young, female,
and lowly educated workers in the textile industry make up a disproportionately
susceptible population with little negotiating leverage.
·
Workplace Hazards: The lack of
fundamental health and safety standards, exposure to dangerous substances, and
insufficient protective gear all contribute to the prevalence of health and
safety hazards.
·
Low Wages: Wages that do not meet
living expenditures are frequently given to workers, which raises concerns
about fair compensation and human rights violations.
·
Child Labour and Modern Slavery:
Modern slavery is a problem that persists in the cotton industry in many ways,
while child labour is a constant issue in the production of cotton.
Initiatives
like the Accord on Fire and Building Safety, which sought to raise safety
standards in Bangladesh's textile sector, are only one example of the efforts
made to solve these issues. But structural problems still exist, such as the
repression of employees' rights, the absence of union representation, and
abusive work practises.[8]
The Future of Export Processing Zones (EPZs):
Export
Processing Zones, often known as EPZs, have been instrumental in promoting
international trade and foreign direct investment. But in recent times, they
have come under scanner, mostly because of worries about the working conditions
in these zones.
Financial
incentive programmes utilised in EPZs have been the focus of international
accords, such as the World Trade Organization's (WTO) Agreement on Subsidies
and Countervailing Measures. These agreements raise concerns about the
viability of the conventional EPZ incentive structures by attempting to tie
payments to the state's degree of development. To comply with sustainable
development frameworks and the Sustainable Development Goals (SDGs), EPZs are
also under pressure to enhance their social and environmental components.
Numerous EPZs have come under fire for failing to sufficiently advance the
social and environmental facets of these objectives.[9]
Export
Processing Zones, which have been essential in promoting international trade,
are confronting changing difficulties. A change to sustainable and responsible
practises is required in order to meet the demands of improving environmental
and social elements and to be in line with sustainable development goals.
International organisations, governments, and corporations must work together
in the pursuit of a just and equitable global economy to guarantee the
preservation of labour standards, the enhancement of working conditions, and
the realisation of the goal of decent work for everyone. The basis for
accomplishing these objectives is provided by the international legal system,
which is governed by institutions like the ILO and ideas like sustainable EPZs.[10]
National Legal
Framework
In
2004, India initiated a transformative effort through the formation of the 2nd
National Commission on Labour Reforms. The goal was to simplify, amalgamate,
and rationalize the provisions of the 44 central labour legislations. Over a
decade later, in 2014, the process gained momentum, with the state of Rajasthan
introducing labour law reforms in 2015. These reforms, however, faced strong
opposition from trade unions.
Fast
forward to recent months, and several Indian states have made amendments to
labour laws in response to the COVID-19 pandemic. These changes include
increasing maximum working hours and suspending labour laws temporarily. The
central government, since 2004, has cited reasons for labour reforms, such as
improving the ease of doing business, worker protection, technological
advancements, and labour cost reduction.
One
of the key developments in this journey is the Wage Code of 2019. It
consolidated four major wage-related laws, aiming to simplify definitions and
authorities involved. While the Indian labour market has a substantial informal
sector, the Wage Code brought into focus critical issues, particularly in the
wake of the COVID-19 pandemic.
The Wage Code 2019: An Unclear Solution
The
Wage Code was intended to address the complexities surrounding wage
regulations, but it raised concerns in several areas:[11]
Fixing Minimum Wage
One glaring issue with the Wage Code is the lack of a defined
methodology for fixing an adequate minimum wage. The formula recommended by the
Indian Labour Conference in 1957, reiterated in subsequent conferences, was
ignored. This omission leaves the setting of minimum wages at the discretion of
administrators, endangering the rights of workers to dignified wages.
Floor Minimum Wage
The minimum floor wage, set at INR 178 per day, has been criticized as
insufficient and termed a “starvation wage.” It is only marginally higher than
the previous national minimum wage. Moreover, allowing state-level minimum
wages different from the central floor wage, grants discretionary power to
state governments, potentially leading to a race to lower wage rates, further
disadvantaging labour.
Factors for Determining Wage
The factors considered for determining wages, such as skill,
arduousness, and geographical location, are challenging to measure accurately.
This leaves room for bureaucratic red tape and potential misuse at the state
level.[12]
Schedule of Employment
The Schedule of employment, which specified industries covered by
minimum wage regulations, has been eliminated. The new standardized minimum
wage, applicable to all sectors, may lead to wage reduction in industries that
previously enjoyed protection through the Schedule.
Employers’ Self-Certification
The introduction of a web-based self-certification scheme for employers
to certify their compliance with labour regulations raises concerns. In a
country like India, where compliance is a challenge, self-certification might
not accurately reflect the state of compliance. This shift diminishes the
effectiveness of inspections and regulatory oversight.
New Establishments
Expanding the definition of new establishments may exempt them from
paying bonuses, eroding the rights of existing employees.[13]
A glaring fault of the
Wage Code is its failure to define or outline the methodology adopted for
fixing an adequate minimum wage. The formula, recommended unanimously by the
Indian Labour Conference (“ILC”) in 1957 and reiterated in the 44th and
46th ILCs in 2012 and 2015, respectively has been blatantly
ignored.
A concept of web-based self-certification scheme, where
employers can certify themselves as being compliant to the provisions of the
Wage Code has been introduced. “Self-certification scheme is presumptuous of
employees being keen towards employers of willingly complying with regulations.
India is not a mature manufacturing market where self-certification could be an
accurate depiction of the status of compliance. Dismantling the inspections
system have already been in action in some states for inspecting compliance to
several labour laws following which violations have allegedly increased.” In
its endeavour to include a permeable minimum wage concept, the GoI has taken a
completely contrary view from Supreme Court judgements like Sanjit
Roy v State of Rajasthan where that non-compliance with
minimum wages amounts to forced labour, which is constitutionally, prohibited.[14]
Reducing criminal liabilities could aid ease of doing business for the
MNC employer, but on-ground management will largely be at the hands of the
managers with misuse and manipulated use, becoming rampant.
It has been held by the
Bombay High Court in the case of Bombay Gas Public Ltd. Co. V/s. Papa
Akbar and Anr.[15]
that “the provisions of Sec. 4 (6) (a) of the payment of Gratuity Act do not
come into force unless there is a termination of service. Merely stating that
the employee went on strike and thereby caused a heavy loss to the company
could not be a ground to deny gratuity to the employees. Re-employment under
same employer under fresh contract will not militate against concept of
gratuity. When an employee retires and earns gratuity and the same employer
offers such employee a job under a fresh agreement and the new agreement
provides for the payment of gratuity, that would, in no way, militate against
the concept of gratuity if such gratuity is paid on the first retirement - CIT
v. Smt. Savitaben N. Amin.”[16]
Steel Authority
of India v. National Union Water Front[17], it was held that “Central / State
Government can issue notification u/s 10 abolishing contract labour only after
following prescribed procedure regarding consultation etc. It was also held
that even if such a notification is issued, the employees with contractor will
not be automatically absorbed in the employment of the company, if the contract
was genuine. However, company will give preference to them. However, if the
contract was not genuine but a mere camouflage, the so called contract labour
will have to be treated as employees of principal employer.”[18]
Challenges and
Opportunities
In
the pursuit of improving working conditions in a globalized world, several
legal challenges and opportunities arise. As the global landscape evolves, it
becomes essential to adapt and respond to emerging issues while also addressing
long-standing labour concerns.
Digitalization and Changing Nature of Work
Digitalization
and automation are rapidly transforming industries and employment patterns.
While these technological advancements offer efficiency gains, they also raise
concerns about job displacement and the erosion of traditional labour rights.
Contract work through digital labour platforms has created a new category of
workers with limited job security and social protections. Legal frameworks can
adapt to these changes by extending labour protections to gig workers and
fostering dialogue between technology companies, labour unions, and
governments. Policies should encourage the responsible use of technology to
enhance working conditions, ensure data privacy, and protect workers from
exploitation.
Remote Work and Telecommuting
The
COVID-19 pandemic accelerated the adoption of remote work, blurring the lines
between work and personal life. Remote work poses challenges related to worker
isolation, mental health, and the right to disconnect from work-related
communication outside of working hours. Labour laws can be updated to address
remote work challenges, emphasizing the importance of work-life balance and the
right to disconnect. Employers should be encouraged to provide suitable remote
work environments and mental health support for remote workers.
Shifting Employment Relationships
The
gig economy and the prevalence of short-term contracts have disrupted
traditional employment relationships. Workers in non-standard employment
arrangements often lack access to benefits like health insurance, retirement
plans, and paid leave. Legal reforms can redefine employment relationships to
ensure that gig workers receive appropriate labour protections and social
benefits. Policies can encourage collective bargaining for non-standard workers
and promote portable benefits that move with the worker, irrespective of the
job.
International Supply Chain Complexity
Global
supply chains span multiple countries and jurisdictions, making it challenging
to enforce labour standards consistently. Subcontracting practices and the lack
of transparency within supply chains can lead to labour exploitation without
accountability. International agreements can require companies to trace and
disclose their supply chain networks, enabling better oversight and enforcement
of labour standards. Collaboration between governments, businesses, and
non-governmental organizations can drive responsible sourcing practices.
Recommendations
To
address the legal challenges and leverage opportunities for improving working
conditions in a globalized world, policymakers, international organizations,
businesses, and other stakeholders can consider the following recommendations:
1. Enhance
Supply Chain Transparency: Governments can require companies to
disclose their supply chain networks and monitor compliance with labour
standards. Auditing mechanisms and sanctions for non-compliance should be in
place.
2. Empower
Women and Promote Diversity: Enforce equal pay laws and
strengthen anti-discrimination legislation. Encourage diversity initiatives
within organizations and set diversity targets.
3. Support
a Just Transition to Sustainability: Develop
policies that balance environmental sustainability with labour interests.
Facilitate reskilling and job placement for workers affected by industry
transitions.
4. Strengthen
International Cooperation: Collaborate with international
organizations such as the ILO and the WTO to harmonize labour standards
globally. Promote cross-border information sharing and best practices.
Conclusion
The
challenges and opportunities associated with improving working conditions in a
globalized world underscore the need for dynamic and adaptable legal frameworks.
As technological advancements, changing employment relationships, and supply
chain complexities redefine the world of work, the legal landscape must evolve
in tandem. The COVID-19 pandemic has accelerated changes in the workplace,
emphasizing the importance of adaptability and resilience in labour laws.
Ensuring the protection of workers' rights, regardless of their employment
arrangements, is imperative for a fair and just global economy.
In
conclusion, addressing labour issues in a globalized context is an ongoing and
multifaceted endeavour. The legal challenges are considerable, but the
opportunities for positive change are equally significant. Through
collaboration between governments, international organizations, businesses, and
civil society, a future with improved working conditions and labour rights on a
global scale is achievable. Continued research, dialogue, and proactive
policy-making will be essential in navigating this complex and ever-evolving
landscape.
[1] Robertson, Raymond. “Globalization
and Working Conditions: A Guideline for Country Studies.” Unpublished,
World Bank, Washington, DC (2007).
[2] Flanagan, Robert J. Globalization
and labor conditions: working conditions and worker rights in a global economy.
Oxford University Press, 2006.
[3] Hiba, Juan Carlos, Marina Jentsch,
and Klaus J. Zink. “Globalization and working conditions in international
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(2021): 146-154.
[4] Rossi, Arianna. “Applying the GVC
framework to policy: The ILO experience.” Journal of International
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[5] D'Souza, Errol. “World employment:
ILO perspective.” Economic and Political Weekly (1998):
2537-2545.
[6] Lerche, Jens. “A global alliance
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(2007): 425-452.
[7] Antonini, Carla, Cornelia Beck,
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[8] Sanders, Nada R., et al.
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(2019): 229-240.
[9] Engman, Michael, Osamu Onodera,
and Enrico Pinali. "Export processing zones: Past and future role in trade
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[11] Satpathy, Anoop, Xavier Estupinan,
and Dr Bikash K. Malick. "Wage code and rules–Will they improve the
effectiveness of minimum wage policy in India?." Available at SSRN
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[12] Siddaramu, B. "Labour Reforms
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(2021): 7-10.
[13] Marshall, Shelley. Living
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Article Information
EMPLOYMENT AND LABOUR MARKET WORKING CONDITIONS IN THE INTERNATIONAL SUPPLY CHAIN IN A GLOBALISED WORLD: LEGAL PERSPECTIVE BY: URVAKSH BARIA
Authors: URVAKSH BARIA
- Journal IJLRA
- ISSN 2582-6433
- Published 2024/04/29
- Issue 7
About Journal
International Journal for Legal Research and Analysis
- Abbreviation IJLRA
- ISSN 2582-6433
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