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Labour Legislation and Waged Agricultural Workers: Policy advice by the World Bank

Labour Legislation and Waged Agricultural Workers: Policy advice by the World Bank

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Published by Oxfam
This report attempts to summarise World Bank's approach and policy advice regarding labour legislation in the Agriculture sector of six different countries, Indonesia, Philippines, Bangladesh, India, Morocco and Chile which were selected as country cases by the Oxfam International Labour Rights team. The report identifies the 'cautious' and the 'less cautious' approach employed by the World Bank and relates these strategies to the Agriculture sector of these countries. It looks at labour rights issues, minimum wage, cost of hiring and firing of workers and the effect of these on agricultural workers in the selected countries. The review discovers that World Bank's Policy and advice for India, Morocco, Chile and Indonesia follow the less cautious approach which does not necessarily comply with 'Core Labour Standards' and labour legislation while in Bangladesh, the cautious approach which focuses on compliance with Core Labour Standards and protection of workers is being implemented. On the other hand, World Bank documents regarding the Philippines lack any reference to labour legislation and core labour standards.
This report attempts to summarise World Bank's approach and policy advice regarding labour legislation in the Agriculture sector of six different countries, Indonesia, Philippines, Bangladesh, India, Morocco and Chile which were selected as country cases by the Oxfam International Labour Rights team. The report identifies the 'cautious' and the 'less cautious' approach employed by the World Bank and relates these strategies to the Agriculture sector of these countries. It looks at labour rights issues, minimum wage, cost of hiring and firing of workers and the effect of these on agricultural workers in the selected countries. The review discovers that World Bank's Policy and advice for India, Morocco, Chile and Indonesia follow the less cautious approach which does not necessarily comply with 'Core Labour Standards' and labour legislation while in Bangladesh, the cautious approach which focuses on compliance with Core Labour Standards and protection of workers is being implemented. On the other hand, World Bank documents regarding the Philippines lack any reference to labour legislation and core labour standards.

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Published by: Oxfam on Apr 12, 2011
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09/03/2013

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Labour Legislation and WagedAgricultural Workers
Policy Advice by the World Bank
Research commissioned by Oxfam Novib
Carlos MontesAnja Linder
September 2007
www.dev-strategies.comCambridge, UKThe authors accept sole responsible for the contents of this report
 
Legislation and Waged Agricultural Workers
 
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Executive Summary
This is a summary of the report on “Labour Legislation and Waged Agricultural Workers:Policy Advice by the World Bank.” The report was commissioned for the OxfamInternational Labour Rights Team by Oxfam Novib, to inform its thinking on agricultureand development as well as to provide country based information to Oxfam nationalprogrammes in Indonesia, Philippines, Bangladesh, India, Morocco and Chile. The workfor this report was carried from late August to late September 2007.The report reviews key World Bank documentation to summarise the World Bankapproach and policy advice regarding labour legislation. This is done for World Bankadvice in general as well as for World Bank advice related to the six country casesreferred to above. The report also presents some discussion, for each of the countrycases, on how labour legislation relates to the agriculture sector as well as the analysisand recommendations of some other actors. The aim of the research is extremelyrelevant and ambitious. However, our work has focussed only on collecting the initial setof information.
Labour Legislation: The approach and policy advice of the World Bank.
The findings in this section suggest that it is not easy to talk about a general approach ofthe World Bank to labour legislation. On the one hand, we found that the World Bank’sLabor Market Group and the Social Protection Unit, together with other officialdocuments, such as the World Development Report 2006 on Equity and Development,often follows a “cautious” and evidence based approach, i.e noting clearly the trade-offsbetween flexibility and workers protection (see below). On the other hand, we found thatthe very influential Doing Business project follows an approach and policy advice onlabour legislation that is generally less “cautious” -also reflected in the WorldDevelopment Report 2005 “A Better Investment Climate for Everyone.”
A cautious approach 
: The Social Protection Unit is responsible for supporting the Bank’ssocial protection agenda, and its documents generally recognise that there are strongdifferences of opinion about the costs and benefits of employment protection policiesand proposes that market policies must get beyond ideological positions and rely moreon empirical studies. Under this “cautious” approach, the World Bank has also providedsome support to the International Labour Organisation’s (ILO) “Core Labour Standards”(freedom of association and the right to collective bargaining, elimination of forcedlabour, child labour and equality and non discrimination). This had been requested bythe countries providing funding to the World Bank. The Bank has included Core LabourStandards in its rating of countries for the purpose of resource allocation, (the CountryPolicy and Institutional Assessment, CPIA), and has also developed a toolkit for theincorporation of labour standards into the Country Assistance Strategies. However,there is some evidence that the use of the toolkit on recent Country AssistanceStrategies is limited and that Bank operations generally do not place significantemphasis on Core Labour Standards. By contrast, the Asian Development Bank hasrecently launched a much more comprehensive and systematic handbook on corelabour standards.The “cautious” approach to labour markets was also followed by the World Developmentreport 2006 which noted that “There is an international consensus that core labour
 
Executive Summary
Legislation and Waged Agricultural Workers
 
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standards…have such an intrinsic value that they should always be pursued” this WDRalso brought up the example of Cambodia, noting the positive effects of Core LabourStandards there. The WDR 2006 is also supportive of trade unions as the “cornerstoneof any effective system of industrial relations” and highlights the positive impact theyhave had on the situation of landless agricultural workers in north-eastern Brazil.Another example of World Bank following a “cautious” and evidence-based approachcan be seen in the recent report on Informality. The report finds that attempting toreduce the weight of labour legislation by creating special classes of less protectivecontracts can often effectively create a parallel, unregulated “formal” sector thatdisplaces formal contracting. It also concludes that rigorous enforcement of aredesigned labour code that combines strengthened safety nets, well designed workerprotections, and worker representation with the flexibility firms need to adapt in a globaleconomy, has the potential to expand formal employment and reduce opting out. Moregenerally, the World Bank also supports activities on labour standards through itsdialogue and capacity building with social partners and through its research agenda.There are some good reasons to support a “cautious” and evidence-based approach tolabour markets. For example, in a January 2007 Institute for the Study of Labour, IZA(Bonn) and World Bank workshop, Gary Fields a leading labour market expert,presented a paper that stated that “the status of labor market analysis and labor marketpolicy in the development economics community now is similar to the status of povertyanalysis and anti-poverty policy two or three decades ago. At the time, the professionknew that it wanted to take on poverty more fully but most in it didn’t know how.” Hewrote that a well formulated labour market policy proposal would answer questionsabout (a) the specific labour objective (b) the particular model to be used (c) theavailable empirical evidence. He concluded that “If I were your manager it is only afterthese questions are satisfactorily answered that I would feel comfortable authorizing youto make policy proposals to a client country. Typically, labor market policies have beenproposed without such questions being answered.”
A less “cautious” approach: 
The Doing Business project has been extremely influentialsince its inception (2004) and is used in the CPIA and influences World Bank analysis,country strategies as well as operations (see next Section). The indicators are attractivebecause their methodology is simple, they compare and rank 175 countries and theyalso provide simple, general and straightforward policy recommendations, i.e. improvingon specific indicators will lead to a more favourable business climate.The approach of the Doing Business project to labour markets is less cautious and is notgenerally context-based. For example, the indicator on “Employing Workers” whichassesses the labour market does not rely on a carefully constructed labour marketmodels (as above) but on indicators that simply measure the rigidity of employment interms of the difficulty of hiring and firing and the rigidity of working hours and the level offiring costs. The scoring rewards countries where firms can use fixed term contracts forany type of tasks and can be extended for long periods; it rewards unrestricted night andweekend work and work weeks longer than 5 days or 50 hours; and also rewards theright to fire workers due to redundancy and without notification to third parties. With thismethodology, compliance to “Core Labour Standards” is not relevant. In fact, a numberof the 2007 top performers in terms of the index of employing workers are not evenmembers of the International Labour Organisation.

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