Increasing focus on regional economic integration and free trade agreements in the Americas, such as the North American Free Trade Area (NAFTA) pact, raises the question of the impact of such new deals on Latin America's labouring population. Do workers benefit as a matter of course from the resulting economic growth? Recent studies by researchers from the School of Oriental and African Studies at the University of London show how hard it can be to assess the impact of labour integration in isolation, as this trend forms part of a wider process of policy change. Findings imply that a freer trading system that embodies the rights of labour is possible, workable and may even lead to greater efficiency.

Distribution of the benefits of economic growth resulting from regional integration in Latin America depends on the relative bargaining strengths of different classes of society. In the past, the labour movement has met with stiff opposition in the region. In most countries the right to strike is restricted in law. When work stoppages occur, strikers can expect violent confrontation either with hired agents of employers or agents of the state. Membership of a trade union invites discrimination or dismissal. Further, organising a new union is often very difficult, sometimes dangerous.

Recent economic and social trends associated with economic integration in the region, include recovery from the debt disaster of the 1980s, associated demand compression measures, such as higher taxes or public spending cuts, a shift in ideology from active fiscal policy to reliance on monetary instruments, and a rise in the economic power of capital relative to labour.

Most economic integration schemes tend to have a significant pro-capital bias, underlined by the way that authorities consult extensively with business but little with labour representatives. This need not always happen, but to transform integration schemes from the projects of capital to projects for the general good of society, specific policy measures are required. External regulation of economic policy is often presented as a virtue of freer trade agreements. But if such deals are not to create more losers than before, a more hands-on approach may be required. The SOAS research findings suggest that:

• Economic growth is a very blunt instrument by which to measure labour conditions. Freer trade creates the possibility of gains for labour, but these do not automatically result from market forces.
• In the absence of specific and effective guarantees of workers' rights, FTAs and other integration schemes in the Americas tend to display a strong bias in favour of capital.
• Labourers in the region have had to pursue their interests against the grain of these developments.
• Workers are not necessarily opposed to integration. On the contrary, at national and international levels, trade unions in the region have a positive record of endorsing freer trade.

Fundamental policy implications stem from these observations, among them:

• Governments and international bodies can reasonably intervene to ensure that the appropriate balance between capital and labour is reached.
• Some of these interventions may push up labour costs if (for instance) they prohibit employers from repressive actions or boost the bargaining power of labour but that is no reason to avoid them.
• Minimum action on labour rights would be enactment in national legislation of core ILO (International Labour Organization) Conventions along with pledges on rigorous enforcement.
• Enforcement should include mechanisms at the multilateral level to bring sanctions against offenders, equivalent to the sanctions that exist for offences against the right of capital to mobility.

Source(s):
Report submitted to ILO, January 1998

Funded by: International Labour Office, Geneva (1997)

id21 Research Highlight: 1998-06-07

Further Information:
Professor John Weeks
Centre for Development Policy and Research
School of Oriental and African Studies (SOAS)
University of London
Thornhaugh Street
Russell Square
London
WC1H 0XG
UK

Tel: +44 (0)171 637 2388
Fax: +44 (0)171 436 3844
Contact the contributor: jw10@soas.ac.uk

School of Oriental and African Studies (SOAS), UK