Why We Need a New International Labour Law

"We need a new approach to international labour law: A new system designed for the realities of production today."

9 June 2016

South Indian woman sewing shoes, source: Annie Delaney

South Indian woman sewing shoes, source: Annie Delaney

The peak governing body of the United Nation’s labour arm is currently sitting. This year it is charged with addressing the impact of supply chains on labour conditions. So far, however, it appears likely that the International Labour Organisation will continue to tinker at the edges of the problem when what is required is a bold new initiative to address inequality and promote a global living wage.

We live in a time of inescapable, growing inequality. One of the main victims of this creeping social injustice is a growing group of workers: the large global workforce that toils unregulated by labour laws and which does not receive a living wage. The amount of low paid, insecure work continues to rise in many countries. Informal work has grown dramatically in the EU and beyond since the financial crisis. One cause is labour laws that have not been able to keep up with changes in the way production occurs. They have become antiquated — based on an outdated model in which employers contract directly with workers.  But today, most work occurs in complex supply chains and the person or company passing on the work is unlikely to be calling the shots.

Those higher in the supply chain pressure those lower to produce goods more and more cheaply.  Practices in supply chains are so bad in the clothing industry, for example, that when H&M announced that its strategic suppliers should have pay structures in place to pay a fair living wage by 2018, it looked like a hero.  But this is an admission that living wages are not currently paid in its supply chains.   

Individual countries fear both increasing the minimum wage to a living wage level and enforcing existing labour laws due to a realistic concern that big retailers and brands will look for cheaper labour elsewhere.  

We need a new approach to international labour law: A new system designed for the realities of production today. One that results in living wages throughout supply chains: not just because a benevolent brand announces that it is changing its practices, but because it is a legally agreed upon right. We need a new internationalised labour law system that holds powerful players in supply chains to account when their business practices make the payment of living wages untenable.

What if the ILO were to pass a Living Wage Convention?  Such a convention could work in three steps. First, securing an agreement by every country to work towards a living wage by agreed increments every year. The ILO has already done good work on this, calculating living wages in various countries based on food and service baskets. Second, moving countries toward a global minimum wage, based on purchasing power parity — a key indicator in comparing income across different countries. Third, requiring countries to increase their minimum wage as a percentage of median income each year, until it reached 60 percent of median income, thereby lowering inequality worldwide.

But how could such a Convention have teeth in today’s globalised economy? After all, legal history shows how difficult it can be to enforce laws at any level, let alone the international. Focus in our convention would be split between countries and corporations. Unions and other interested parties would be able to bring international actions against any state failing to enforce living wage laws. The offending state would be ordered to pay any unpaid entitlements to those workers who had not received a living wage. A portion of that amount could be paid to trade unions and representatives bodies as well, providing impetus for them to carefully monitor the situation of vulnerable workers who are currently under-represented by worker organizations. 

Under the convention, each country would be obliged to establish a tribunal with the power to hear disputes arising from pay conditions within a supply chain — between workers and corporations, or between companies themselves. If an employer, a corporation, a contractor, a financier etc had hampered the payment of a living wage, they would be liable to pay unpaid living wages. The tribunal would also be able to compel parties to reduce or remove practices that contributed to remuneration less than the living wage.  As long as it could be shown that the business practices of a party in the supply chain contributed to the payment of less than living wages for workers of the country in which the tribunal was held, it wouldn’t matter that they were domiciled overseas.

We can create a strong series of incentives at a national level. If we give state bodies the right to recover a portion of those wages and entitlements unpaid to workers and others in the supply chain, authorities will actively pursue those not paying fair remuneration. If we give those in the middle of the supply chain the right to contend that the practices of entities around them affected their own ability to pay a living wage, an incentive would exist for different parties to join together to ensure the living wage reaches all workers. 

A living wage is vital to enriching developing nations: in low-income countries, a living wage would be around 2–3 times the current median income.  To put this in context, the UK living wage of £8.25 is roughly 75% of median income. For too long, countries have wallowed in stagnant wages, while seeing the capital generated by their workers sent offshore. But international labour law could give us the tools to remedy this situation. It is time for the International Labour Organization to become a truly international body and begin to tackle the realities of work in a globalized economy. 

Boy works in Rajasthan stone quarry, Source: Naturrsteen Report

Boy works in Rajasthan stone quarry, Source: Naturrsteen Report


Shelley Marshall is a senior lecturer in the Department of Business Law and Taxation at Monash University in Melbourne, Australia. 

Scott Colvin is a writer and policy advocate based in Melbourne, Australia.