How incorporating labour standards in trade agreements helps women get more jobs and better pay

By Team: Private Sector Engagement 02nd Aug 2016
Workers in a garment factory in Cambodia Workers in a garment factory in Cambodia

A new ILO report on trade agreements which incorporate labour standards points to rising women’s participation in the labour force and a reduced gender wage gap in the countries participating in those trade agreements – without any adverse effect on the ability of the trade agreement to boost trade between the signatories of the agreement.

The ILO has recently published a new “Assessment of labour provisions in trade and investment arrangements”. It sets out the dramatic rise in trade agreements over the past two decades, with the result that today more trade is conducted within the framework of trade agreements than outside (almost 55 percent of goods exported took place within that framework in 2014). A growing number of these agreements reference labour standards.

The ILO Assessment establishes that “on average, trade agreements that contain labour provisions impact positively on labour force participation rates, bringing larger proportions of male and female working-age populations into the labour force and, particularly, increasing the female labour force. In particular, the emphasis on gender equity (mostly through the principle of non-discrimination in employment and occupation) found in some labour provisions will have had some impact on the closing of gender gaps.” It provides the example of the Cambodia-US Textile Agreement, which ties the positive incentive of increased trade to improvements in working conditions at the firm level – based on a strategy of focusing on direct intervention at the firm level due to a weak  institutional environment. “The result is improved wages at the firm level, including a reduction of the gender wage gap, and some strengthening of the right to freedom of association.”

This is against a background where, as this Assessment references The World Employment and Social Outlook 2015 report on the changing nature of employment, “in a large part of the trade conducted through global supply chains (GSCs), trade tends to generate economic benefits for firms (in terms of higher productivity) but not necessarily for workers (in terms of wages). This disparity is due partly to the asymmetric power dynamics between supplier and lead firms in GSCs, and partly to the weak capacity within governments to implement and monitor labour rights and working terms and conditions effectively.” Therefore, “Trade-related labour provisions can be regarded as one option to boost the benefits of growth, minimise costs and tackle inequalities” by overcoming these power dynamics and weak capacity.

And this is in the context of another key finding of the report that “…no evidence is found … to support the claim that implementation of labour provisions leads to a reduction or diversion of trade flows. Trade agreements boost trade between members of the agreement to a similar extent, irrespective of the existence of labour provisions.”

All of this suggests that ensuring strong labour provisions in the growing number of international trade deals is an important step to improving the situation of the women workers in developing countries who participate in global supply chains. Sitting in London, amid the Brexit process, that may be a challenge for UK civil society!

Gerry Boyle

Gerry Boyle is CARE International UK's Senior Policy Adviser on Private Sector Engagement. He has previously been Head of Business Relations at Oxfam GB, and before that was a management consultant for 30 years, including being a Consulting Partner at Deloitte and leader of their UK Consumer Business Consulting Team for several years.

He has worked extensively with global blue chip organisations on both mainstream commercial projects and on development issues, with a particular focus on financial inclusion and value chains.

He has an MA in Law from Oxford University and an MSc in Philosophy and Public Policy from LSE.

Follow Gerry on Twitter: twitter.com/GerryBoyle10

Email: boyle@careinternational.org