skip to navigation skip to content
 

Labour Law & Poverty Alleviation in Low- & Middle-Income Countries

Aims & objectives

The aim of the project is to understand the role of labour law in alleviating poverty in developing countries, with the focus on four country cases, namely Cambodia, China, India and South Africa.

Background

Labour regulation can operate to reduce poverty in two ways: by promoting greater equality of incomes and wealth, and by encouraging the more productive and efficient use of labour resources. A key issue is the effectiveness of labour law regulation in practice. Even if, in principle, labour law rules can serve social and economic goals, they may fail to do so if the capacity of regulatory institutions is limited, if rules lack legitimacy on the ground, or if the laws are ill-suited to economic or social conditions. 

Methods

The empirical strategy for addressing these issues was two-fold. The quantitative dimension of the work took the form of econometric analysis of datasets providing data on legal and institutional variables at national and regional level, alongside relevant economic and labour market indicators (GDP, employment, unemployment, productivity, and so on). The qualitative dimension of the work took the form of interviews with actors in the case study countries. These included interviews with legal knowledge and experience (judges, lawyers, politicians, regulators, civil servants, labour inspectors), private-sector firm-level actors (HR and other managers), and actors in civil society (trade unions, NGOs). These two aspects of the study were brought together to provide comparative data on countries with different levels of industrialisation, economic structures and cultural contexts. 

The project was undertaken with the support of the International Labour Office (ILO), which is providing advice on access in the case study countries, data support, and policy analysis. 

Results & dissemination

We constructed a new dataset coding for changes in labour law in 117 countries over the period 1970 to 2013 (the CBR Labour Regulation Index or ‘CBR-LRI’). The wide reach of the dataset and its decades-long time series make it unique in the field. Its nearest equivalent, the OECD’s Employment Protection Index, codes for a times series only from the mid-1990s, and does not cover working time or most aspects of collective labour law. The CBR-LRI provides data on for five areas of labour regulation (different forms of employment, working time, dismissal, employee representation, and collective action) using a series of original coding algorithms. All codings are precisely sourced to specific laws or regulations. 

We then carried out time-series and panel data econometrics in conjunction with the new dataset to estimate the effects of changes in labour laws on economic outcome variables. Exploratory analysis using the pooled mean group regression model suggests that strengthening worker protection generally increases the labour share of national income (after controlling for GDP growth and for differences in institutional quality as proxied by ‘rule of law’ indices). Improvements in employee representation and dismissal protection generally have positive effects on productivity and employment. The picture is more mixed for strike law. Overall the research suggests that worker-protective labour laws can contribute to poverty alleviation both directly, through their impact on distribution, and indirectly, through their effects on growth, but that these effects depend on context and may not be present consistently across all countries. 

Qualitative fieldwork was undertaken on the operation of labour laws in MICs and LICs. The Chinese case suggests that legislatively-mandated labour standards can be successfully implemented if there is effective state capacity, but also illustrates the limits of legal strategies in the context of global value chains. The Cambodian, Chinese and South African fieldwork highlighted the importance of labour arbitration systems for providing unions and workers with low-cost access to justice. The Cambodian case illustrated ways in which legislated standards interacted with monitoring by NGOs. The Indian case illustrated the problems that can arise from political deadlock over labour law reform. 

A number of methodological advances were made. The project demonstrated the potential of quantitative approaches to the study of legal institutions (‘leximetrics’) to generate new knowledge and opportunities for statistical testing of law-economy interactions. It also demonstrated the value of multiple-methods approaches, combining quantitative and qualitative analysis. 

Impact

In 2015 project findings were used by the International Labour Organization in the preparation of data and reports on global trends in labour regulation and its economic and social effects. This joint work was reported in the ILO's 2015 World Employment and Social Outlook. In addition, in 2015, the PI was able to contribute to a discussion on labour law reform organised by leading officials of the European Commission. In 2016 team members contributed to a discussion of benchmarking of employment protection laws organised by the European Commission and to a workshop at the OECD to discuss proposed reforms to its Jobs Strategy. In 2015-16 the data were made available to the Asian Development Bank for econometric analysis. All the above relationships are ongoing.

During 2015 Simon Deakin used part of the findings in the course of consulting work on labour law reform for the Vietnamese government. This work, connected to reforms of labour dispute resolution procedures, was presented by Deakin at workshops in Hanoi and Ho Chi Minh City, in March 2015.

Journal articles

Adams, Z., and Deakin, S. (2015) ‘Quantitative labour law’, in A. Ludlow and A. Blackham (eds.) New Frontiers in Empirical Labour Law Research (Oxford: Hart). 

Deakin, S., and Haldar, A. (2015) ‘How should India reform its labour laws?’ Economic and Political Weekly, 50(1), 48-55. 

Deakin, S., and Adams, Z. (2015) International Experience in Settling Labour Disputes: A Comparative Review Report to the Justice Partnership Programme, Vietnam.

Adams, Z., and Deakin, S. (2014) ‘Institutional solutions to inequality and precariousness in labour markets’ British Journal of Industrial Relations, 52: 779-809. 

Deakin, S. (2014) ‘Labour law and inclusive development’, Indian Journal of Labour Economics, 57: 19-34. 

Deakin, S. (2014) ‘Labour law and inclusive development’, forthcoming, Indian Journal of Labour Economics. 

Deakin, S., Malmberg, J. and Sarkar, P. (2014) ‘How do labour laws affect unemployment and the labour share of national income? The experience of six OECD countries, 1970–2010’ International Labour Review, 153: 1-27. 

Book chapters

Adams, Z. and Deakin, S. (2015) ‘Freedom of establishment and regulatory competition’, in D. Chalmers and A. Arnull (eds.) The Oxford Handbook of EU Law (Oxford: OUP). 

Deakin, S. (2015) ‘Law as evolution, evolution as social order: common law method reconsidered’, in S. Grundmann and J. Thiessen (eds.) Law in the Context of Disciplines (Tübingen: Mohr Siebeck). 

Deakin, S., Fenwick, C. and Sarkar, P. (2014) ‘Labour law and inclusive development: the economic effects of industrial relations laws in middle-income countries’, in M. Schmiegelow and H. Schmiegelow (eds.) Institutional Competition between Common Law and Civil Law (Frankfurt: Springer), 185-209. 

Deakin, S. (2013) 'Droit social et travailleurs pauvres dans la Grande-Bretagne: une perspective historique', in P. Auvergnon (ed.) Droit social et travailleurs pauvres, pp. 143-162 (Brussels : Bruylant).

Working papers

Deakin, S, Mollica, V and Sarkar, P. ‘Varieties of Creditor Protection: Insolvency Law Reform & Credit Expansion in Developed Market Economies

Zheng, E., and Deakin, S. (2016) ‘Pricing labour capacity: the unexpected effects of formalising employment contracts in China

Zheng, E., and Deakin, S. (2016) ‘State and knowledge production: industrial relations scholarship under Chinese capitalism

Adams, Z., Bishop, L., Deakin, S., Fenwick, C., Martinsson, S, and Rusconi, G. (2015) ‘Labour regulation over time: new leximetric evidence’ , working paper, in progress. 

Deakin, S., and Haldar, A. (2015) ‘How should India reform its labour laws?’ CBR Working Paper No. 469, March 2015. 

Deakin, S., and Sarkar, P. (2015) ‘Does labour law increase youth and total unemployment? Analysis of a new dataset for 63 countries’ working paper, in progress. 

Deakin, S., Adams, Z. and Bishop, L. (2015 ) CBR Labour Regulation Index for 117 countries. 

Adams, Z., and Deakin, S. (2014) ‘Institutional solutions to inequality and precariousness in labour markets’ CBR Working Paper No. 463, September 2014. 

Sheng, A., Mirakhor, A. and Singh, A. (2014) ‘Future of Islamic finance: theory and practice’, working paper, in progress. 

Singh, A. (2014) ‘Competition, competition policy, competitiveness, globalisation and development’ Centre for Business Reseach Working Paper No. 460, June 2014. 

Singh, A. (2014) ‘New developments in the world economy: a tough agenda for MICS?’ CBR Working Paper No. 461, June 2014; MICS Challenges, Seoul Debates 2013: 76-83. 

Singh, A. and Singh, G. (2014) ‘Almost steady East Asian rise; implications for labour markets and income distribution’ CBR Working Paper No. 456, June 2014. 

Singh, A. (2014) ‘Alice Amsden, an outstanding American political economist’, working paper, under review. 

Deakin, S., Malmberg , J. and Sarkar, P. (2013) 'Do labour laws increase inequality at the expense of higher unemployment? The experience of six OECD countries 1970-2010' Centre for Business Research Working Paper Series WP No. 442, June.

Deakin, S. (2013) 'Addressing labour market segmentation: the role of labour law', working paper commissioned by the ILO, in progress.

Conference/Workshop papers

Bastani, P., McGaughey, E., presentation to European Commission on employment law metrics, April 2016. 

Deakin, S. (2016) presentation to OECD on employment law metrics, June 2016. 

Adams, Z., Bishop, L., Deakin, S., Fenwick, C., Martinsson, S, and Rusconi, G. (2015) ‘Labour regulation over time: new leximetric evidence’ paper presented to the 4th conference of the Regulating for Decent Work network, ILO, Geneva, July 2015. 

Deakin, S., and Sarkar, P. (2015) ‘Does labour law increase youth and total unemployment? Analysis of a new dataset for 63 countries’ presented to SASE Annual Conference, LSE, July 2015. 

Deakin, S. (2014) ‘Labour law and inclusive development’, V.V Giri Memorial Lecture, Annual Conference of the Indian Society of Labour Economics, New Delhi, December 2013. 

Deakin, S., Fenwick, C. and Sarkar, P. (2014) ‘Labour law and inclusive development: the economic effects of industrial relations laws in middle-income countries’ paper presented to the Regulating for Decent Work conference, ILO, Geneva, July 2013. 

Singh, A. attended the Conference of the Indian Society of Labour Economics, New Delhi, 16-18 December 2013. At this meeting, organised by the Institute of Applied Manpower Research (now the National Institute of Labour Economics Research and Development), Ajit gave the 2nd Gautam Mathur Memorial Lecture. 

Singh, A. attended the National Conference 'India's Industrialisation: How to Overcome the Stagnation', organised by the Institute for Studies in Industrial Development in association with the Indian Council of Social Science Research, New Delhi. Ajit gave a Special Address 'Some Brief Notes on the State of the Indian Economy'. 

Singh, A. presented a paper at the Stockholm International Conference on 'Entrepreneurship and Regulation'entitled 'Full Employment in Western Europe and the Regulatory Regime: An Institutional and Historical Analysis Together with a Commentary on Government as an Entrepreneur'. The paper is currently under review for publication.

Singh, A. was also a discussant of a paper 'The Impact of Judiciary Efficiency on Entrepreneurship: A European Perspective' by Allessandro Melcarne. 

Singh, A. attended and spoke at the Marshall Society Conference at Cambridge University Union, January 2014. 

Singh, A. attended the IPPR Round Table 'Reforming British Innovation Policy' June 2014.

Singh, A. attended the TUC seminar 'Beyond Shareholder Value' July 2014.

Singh, A. attended a workshop 'New Perspectives on Industrial Policy for a Modern Britain, sponsored by Oxford University Press and the IPPR. February 2014 

Deakin, S. (2013) 'Do listed firms have different HRM from non-listed ones? Evidence from Workplace Employment Surveys', presentation to Drucker Seminar, Nanjing Business School, 22 May.

Deakin, S. (2013) 'Addressing labour market segmentation: the role of labour law', presented to workshop on Labour Market Segmentation, ILO, Geneva, 25 April.

Deakin, S. (2012) 'Legal perspectives on labour market segmentation', presentation to workshop on Employment Quality in Segmented Labour Markets, ILO, Geneva, 10-11 December.

Deakin, S. (2012) 'Labour law during and after neoliberalism' presentation to conference on New Socio-Economic Paradigm, New Social Policies, Korea Labour Institute, Seoul, 19 October.

Workshops attended

Deakin, S. (2012) attended workshop on the legal theory of finance, Columbia University, September.

Deakin, S. (2012) attended workshop on labour market indicators, ILO, Geneva, 10 October. 

Social Europe Journal: Social policy will be critical to a sustainable EMU

European policy-makers have some vitally important decisions to make in the coming weeks. The June meeting of the European Council is due …

Read more

Financial Times: European Court’s Pringle judgment: good law, bad economics

Courts don’t often try to decide the direction of economic policy. However, in effect, this is what the European Court has recently …

Read more

Progress Online: Rejoining the north European mainstream

The campaign to increase the £6.19 an hour national minimum wage to a living wage of £8.55 in London and £7.45 in …

Read more

Financial Times: Shares for rights: why entrepreneurial firms need employment law too

Under the government’s current proposals for employment law reform, employees will be able to give up rights concerning unfair dismissal, redundancy pay, …

Read more

Labour standards and labour law reforms in the Rising Powers: trends and prospects in public and private regulations

Professor Simon Deakin (November 2016)

Read the blog post

Project leader

Simon Deakin

Co-investigator

Shelley Marshall (Monash University)

Research fellows

Enying Zheng

Research associates

Ajit Singh
Prabirjit Sarkar (Jadavpur University)
Ewan McGaughey (King’s College, London)

Project status

Ongoing

Project dates

2013-2016

Funding

ESRC (DFID-ESRC Joint Scheme on Poverty Alleviation)