Industrial relations in emerging economies

Susan Hayter, ILO Senior Specialist on industrial relations

A book recently published by the ILO looks at the institutionalization of industrial relations in emerging economies and its contribution to development. Industrial relations in emerging economies: The quest for inclusive development, focusses on five countries.

Between 2010 and 2015, waves of strikes broke out in China, Brazil, India, Turkey and South Africa – which together comprise 42 per cent of the world’s labour force. A remarkable feature of these strikes was that they were all ‘spontaneous’, or ‘wildcat’ strikes, occurring outside the formal procedures and institutions designed to facilitate sound industrial relations.

Unions are present, and in some cases, growing. Collective bargaining covers many formally employed workers. That raises a number of questions. What role do these formal procedures and institutions play in managing conflict in large emerging economies? Does an industrial relations system help or hinder economic development? And, given that these countries have long experienced the type of labour market insecurity and inequality now on the rise in much of the industrialized world, what can we learn from the role that governments and the social partners play in delivering inclusive labour protection?

We try to answer these questions in the newly released book Industrial relations in emerging economies: The quest for inclusive development, which looks closely at developments in the five countries.

The first point is that industrial relations is as important in emerging economies as it is in industrialized ones. Like in the industrialized countries, these institutions are a reflection of the political and economic processes of the past decades. In Brazil and South Africa, for example, trade unions played a significant role in the transition to democracy, and the subsequent strengthening of labour standards. The institutional power that workers’ and employers’ organizations enjoyed helped them achieve a degree of ‘regulated flexibility’, allowing them to better manage the process of integration into the global economy.  In India and Turkey, on the other hand, the deregulation of labour markets, decentralization of bargaining and, in the case of India, the proliferation of unions, diluted the potential role these organizations could play in balancing economic and social objectives during the process of economic liberalization.

Thousands of workers take part in a national strike against a government proposed minimum wage on April 25, 2018 in Johannesburg. @MUJAHID SAFODIEN/AFP

Second, a high degree of informality and late or limited industrial development in emerging economies have produced patterns of industrial relations that differ from those in advanced economies.  To fully understand these patterns, we need to focus on wider labour relations, involving all who work. Unwritten codes of behaviour and norms, and informal institutions can be as significant as formal institutions and industrial relations systems. Economic liberalization may have placed limits on formal industrial relations’ procedures but they have not dulled the appetite for collective voice and action outside the formal economy. For example, India is home to the world’s largest organization of informal workers, the Self-Employed Women’s Association (SEWA). In Brazil and South Africa there are organizations which represent the collective interests of some of the most vulnerable workers, including street vendors, waste pickers, seasonal agricultural workers and domestic workers. They have secured entitlements to basic amenities such as street lights and sanitation, and improved the incomes of these workers.

This leads to the third important takeaway from this volume, which is the role that social dialogue and collective bargaining have played in helping to deliver innovative and effective labour protection for all who work. In South Africa and Brazil, social dialogue has played an important role in inclusive wage policy, which combines participatory (e.g. collective bargaining, tripartite social dialogue) and protective labour standards (e.g. minimum wage). In 2017, South Africa adopted a tripartite Declaration on Wage Inequality and Labour Market Stability that introduced a minimum wage and measures to promote collective bargaining and to address protracted and violent strike action. In Brazil, adjustments to the minimum wage in 2007, immediately improved the incomes of workers at the bottom of the income distribution, including those relying on various forms of social security that were linked to the minimum wage. They also served as a benchmark for wage-setting in collective bargaining. The adjustment was consulted with a range of actors and strongly advocated by organized labour. In China, sectoral wage agreements in the Jiangsu province produced both coordinated wage bargaining and a hybrid model of workplace representation.

Social partners have a key role to play in forging inclusive patterns of development. The question is how to expand the scope of and potential contribution of the social partners and of labour relations and social dialogue to deliver inclusive labour protection.

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