The Impact of IMF and World Bank Programs on Labor Rights

Abstract

What effect do International Monetary Fund (IMF) and World Bank programs have on collective labor rights? Labor rights advocacy networks and organized labor groups have long been critical of neoliberal policy prescriptions attached to loans by international financial institutions (IFIs), claiming that they harm the interests of workers. IFIs dispute these claims, noting that they work with relevant labor organizations and that many of their arrangements call for compliance with core labor standards. Yet very little research has been devoted to whether IFI programs affect labor laws and the actual labor practices of recipient countries. We argue that IFI programs undermine collective labor rights. Specifically, recommended policy reforms, as well as the broader signals connoted by participation in the programs, undermine labor organizations and the adoption of protective laws. To substantiate these claims, we use time-series cross-national data for a sample of 123 low- and middle-income countries for the years 1985 to 2002. Our findings suggest that programs from both IFIs are negatively and significantly related to labor rights, including laws designed to guarantee basic collective labor rights as well as the protection of these rights in practice.

Current collective engagement stakeholder strategies for South African labour relations

“…Growth-favouring labour market institutions include the following as part of the payment package: portable pension plans and other job tenure rights, health insurance untied to the current employer, individualised wage-setting and public income insurance systems that encourage mobility and risk-taking. Blanton, Blanton and Peksen (2015) stated that organised labour has consistently been critical of International Financial Institutions (IFI) policy prescriptions attached to loans, as such policies harm workers' interests. On the contrary, these financial institutions refute the organised labour claims, arguing to the contrary that they work with relevant labour organisations and that many of their arrangements call for compliance with core labour standards (Blanton et al, 2015).…”

“…Blanton, Blanton and Peksen (2015) stated that organised labour has consistently been critical of International Financial Institutions (IFI) policy prescriptions attached to loans, as such policies harm workers' interests. On the contrary, these financial institutions refute the organised labour claims, arguing to the contrary that they work with relevant labour organisations and that many of their arrangements call for compliance with core labour standards (Blanton et al, 2015). It seems that very little research has been devoted to whether IFI programmes affect labour laws and the actual labour practices of recipient countries.…”

Financial Crises and Labor: Does Tight Money Loosen Labor Rights?

“…In this case, the factors that compromise labor rights during a financial crisis may prove persistent, with labor playing a diminished role in the new equilibrium between the state, capital, and labor. Such an outcome might be particularly likely in cases where the state made specific labor-related commitments to secure external capital, as often occurs when crises are followed by interventions by the IMF or World Bank (Abouharb & Cingranelli, 2007;Blanton et al, 2015;Caraway, Rickard, & Anner, 2012).…”

“…Previous research explored how domestic political institutions and political stability affect labor rights (Mosley & Uno, 2007). Others examined the effect of external factors such as trade and foreign capital (Blanton & Blanton, 2012;Kucera, 2002;Mosley, 2011), international laws and treaties (Cole, 2013), IMF and World Bank policies (Abouharb & Cingranelli, 2007;Blanton, Blanton, & Peksen, 2015) and transnational labor movements and norms (Murillo & Schrank, 2005). Other research has provided further insights into how collective bargaining groups mobilize and respond to potential threats related to globalization (Kim & Kim, 2003).…”

“…While our focus is on financial crises, there could be other factors that might have indirectly undermined labor rights laws. There are indeed studies suggesting that structural adjustment policies (SAPs) (Blanton et al, 2015) and bilateral investment treaties (BITs) (Allee & Peinhardt, 2014) contribute to the deterioration of labor rights laws and practices. 7.…”