Social Development and Public Governance > Social Development > Labor Markets
Core Labor Standards and Foreign Direct Investment in Latin America and the Caribbean
By Christian Daude, Andrew Morrison, Jacqueline Mazza (10/03, En, Es)
The majority of Latin American and Caribbean countries have ratified key conventions of the International Labor Organization (ILO), committing themselves to uphold four core labor standards. These core standards -- prohibition against child labor, forced labor, the right of free association and collective bargaining, and freedom from discrimination--have become synonymous with fundamental labor protections and rights worldwide. But ratifying an ILO convention and fully enforcing it in a proactive manner is another matter: violations of core labor standards can be seen in nearly every country in the world, including the most developed nations.
There is no doubt that enforcement of these four core labor standards is less systematic and more uncertain in developing countries. One of the key attractions developing countries hold for foreign investment is their lower average wage costs. Are lax enforcement of labor standards perceived to keep labor costs down? Are Latin American and Caribbean countries then compelled to compete, not by improving labor conditions and productivity, but by removing labor protections in an attempt to lower wage costs? Is lax enforcement of labor standards a criteria that really counts for investors in deciding whether and where to invest? If this were true, one might imagine seeing more so-called ?horizontal? investment decided in this manner. Horizontal foreign investment is made across countries largely on the basis of labor and production costs.
Last updated: 05/23/07
