The ripple effect: peer ILO treaty ratification, regional socialization, and collective labor standards.

Author:Kahn-Nisser, Sara
Position:International Labour Organization - Essay

The article analyzes labor standards using a new dataset and finds a peer effect of treaty ratification, and a positive effect of relationship with the EU. The article examines the ILO's and the EU's labor rights promotion activities since the late 1990s. It reviews international causes of changes in countries' labor standards. It draws on literature on the role of global and regional institutions in shaping country level policies and formulates research hypotheses regarding labor standards. The article describes the new dataset and the spatial-OLS estimation method used. The results indicate that the causes of labor rights protection levels in Europe are different from those identified in other regions and stem from institutional transnational factors rather than from trade and foreign direct investment. Keywords: peer effect; treaty ratification; labor standards; spatial econometrics.


In what ways and under what conditions do international treaties affect countries' policies? In this article I take up these questions from an institutional spatial econometric perspective and focusing on countries' protection of collective labor standards (CLS) in Europe. Protection of labor rights improves income distribution, (1) improves corporate accountability, (2) and mitigates social-economic cleavages. (3) Yet collective labor rights is the most commonly violated subset of human rights and it is violated in democratic as well as authoritarian regimes. (4) The questions of why this is the case and what international institutions can do to improve labor protection, on which this article is focused, are of crucial policy and conceptual importance. I identify seven potential avenues through which two organizations--the International Labour Organization (ILO) and the European Union (EU)--strive to affect countries' CLS protection. These include the peer effect in which regional ratification rates of ILO fundamental conventions send compliance intention messages and reassure countries against defection; communication of norms from the ILO to each of the studied countries; the EU's trade conditionality; the EU's financial conditionality; the EU's accession conditionality; socialization of EU-acceding countries; and soft coordination among member countries. Each of these instruments is coded as are countries' CLS policies.

The relative effect that each of these instruments has had on CLS in the studied countries is estimated, using multiple methods including fixed effects, dynamic fixed effects, and instrumental variable regression analysis. The findings indicate that increased regional rates of ratification have positive effects on countries' CLS protection. Interactions with the EU, whether in the form of trade agreements, through the accession process, or in the form of membership also have positive effects on CLS protection. These findings are conceptualized as a ripple effect in which country-level practices are influenced by regional processes and, in turn, influence other countries in the region. These findings have conceptual implications: this article shows that ratification is significant because of its effect on peers. Another conceptual significance is that my findings show that, contrary to widely held belief, regional integration does not have a negative impact on workers' ability to act collectively, and quite the contrary, the EU has a positive impact on CLS in virtually all of its partner countries. The findings are important from an empirical point of view because they uncover, based on empirical data, the impact of the ILO's 1998 declaration and because they identify the factors that shape CLS in Europe, which previous research has not been able to determine. Finally, the findings have important policy implications. They indicate that in their efforts to promote compliance with treaty norms, international institutions should focus their efforts on multilateral pressure directed at groups of countries rather than on bilateral pressure from the institution toward individual countries. Indeed, I show in this article that directed messages from the international institution toward a specific country, in the form of monitoring, are quite inconsequential. Furthermore, labor-focused political actors, such as labor parties and trade unions, might be advised to abandon their traditional opposition to regional and economic integration because such integration seems to benefit labor.

This article is organized as follows. First, I draw on the literature on the role of global and regional institutions in shaping country-level standards and policies, and formulate research hypotheses regarding labor standards in Europe. Then, I examine the ILO's and the EU's activities in the field of labor rights since the late 1990s, as well as the factors that were found to be associated with labor standards in previous research. Next, I describe the research design, data, and method. Finally, I present and discuss the findings. I show that changes in levels of labor protection are positively associated with peers' ILO treaty ratification and with a deepened relationship with the EU.

Conceptualizing International Institutions and Country-level Standards: Research Hypotheses

International treaties improve compliance with the norms coded in them because they specify the appropriate legal model to give the norm effect. (5-8) Signing a treaty enables leaders credibly to signal their intention to engage in compliant behavior. (9,10) Furthermore, in policy areas

where the success of the adopted standards depends on the standards prevailing in partner countries, and where incentives to defect from the standards are high, ratification of international treaties by peers provides reassurance against defect and improves compliance. Treaty ratification bolsters the credibility of countries' commitment to the norms coded in them. (11) In such cases--and labor standards with the ever present threat of a race to the bottom is certainly such a case--peers' ratification of the international treaty determines country-level policies. (12) If by ratifying treaties countries communicate their intentions to comply, and if it is through the assurance against defect that treaties shape country-level behavior, then more ratification by peers should improve countries' level of compliance. The more vociferous is the message transmitted through peer ratification, the higher the level of protection a country can safely provide for its own workers, without risking loss of foreign investment. Hypothesis 1 is therefore that the more fundamental treaties ratified by peer countries (the term peers is commonly used in spatial econometrics and refers to all countries in the sample excluding the country under observation, (13)) the higher a country's labor rights score.

In order for an international treaty to be properly implemented, target countries must understand what the norm is, what constitutes violation, and accept the norm as legitimate. International treaties usually require additional specification to enable such understanding. Monitoring provides this specification and enables governments and stakeholders to better understand the meaning of the norm and to improve compliance. (14-16) Hypothesis 2 is therefore that the higher the level of ILO monitoring of a country, the higher that country's labor rights score.

Regional actors, such as the EU, are important in promoting members' compliance since they act as coordination, socialization, and conditionality agents. (17-19) For such processes to unfold, countries must be vulnerable to material rewards or sanctions from outside or to symbolic pressures. These conditions are particularly prevalent in countries that belong to, or aspire to belong to, a supranational community. European countries with their relatively dense transnational environment are therefore particularly prone to increased compliance with international norms through socialization. (20) Furthermore, regional organizations and the EU in particular can offer a strong incentive for compliance in the form of enhanced relationships, often with trade and financial benefits attached. The EU combines material and symbolic incentives in exerting pressure over its partner countries. However, the extent of incentives it is able to offer, the strength of the link between compliance and rewards, the extent of cross-country interaction it triggers, and the subsequent degree of influence it is able to exert vary across the various types of institutionalized relationships it offers to nonmember countries (see the section "The ILO, the EU, and Labor Standards in Europe"). Hypothesis 3 is therefore that variances in the types of institutionalized relationships countries have with the EU are associated with variances in their labor standards.

The ILO, the EU, and Labor Standards in Europe

The ILO has been active since 1919. Its effectiveness in inducing labor policy change is intensely debated. (21) One of the most important functions performed by the ILO is the formulation of treaties (conventions) and recommendations. Another important activity is the preparation of annual compliance reports by the Committee of Experts. The reports are examined by the International Labour Conference (ILC). The latter may, in theory, decide on sanctions against noncompliant countries, but it has done so only once. (22) Through treaty formulation and monitoring, the ILO facilitates the cross-national diffusion of standards and articulates models of labor protection. (23-25) These functions have arguably been enhanced by the declaration on core labor standards, which the ILO issued in 1998. The declaration designated eight of the ILO's treaties as fundamental conventions that formulate "core labor standards." It named six core norms (trade union freedom, collective bargaining freedom, the right to strike, nondiscrimination, abolition of forced labor, and...

To continue reading