Levelling the Playing Field - the Mandate of Multilateral Development Banks to Apply Labour Standards

Abstract: This thesis examines five Multinational Development Banks (MDBs) mandate to apply labour standards in their operations. The MDBs are international organizations often set up with a mission to enhance economic growth and reduce poverty. An overwhelming majority of the members of the MDBs are also members of the UN and ILO. One of the ways UN works to reduce poverty is through the Millennium Development Goals (MDGs). The MDGs consists of eight goals to be achieved by 2015. Each goal has one or more targets that will contribute to the achievement of the goal. The first goal is to eradicate extreme poverty and hunger. The second of the goals three targets is to “achieve full and productive employment and decent work for all, including women and young people”. The ILO has successfully promoted the concept of decent work during the last decade. Decent work encompasses the four strategic components of employment, social protection, social dialogue and international labour standards. Even if international labour standards cover more than the Core Labour Standards, the latter predominantly have been included in the MDBs work. The Core Labour Standards include freedom of association and collective bargaining, the elimination of forced labour, the abolition of child labour and the elimination of discrimination. These four issues are also contained in the Fundamental Principles and Rights at Work that members of the ILO, by the virtue of their membership, are expected to respect, promote and realize. The thesis also shows that there has been a growing trend of committing to labour standards by the MDBs during the last couple of years but the application of labour standards is not without controversy. There seems to be a dichotomy between developed and developing countries regarding the approach to the application. Labour standards are often associated with increased costs and while low labour costs are considered a comparative advantage, the absence of labour standards might pose a risk to both workers and investments. The application of labour standards is uneven between the Banks. Two of the five examined banks, the African Development Bank (AfDB) and the Inter-American Development Bank (IADB) do not apply labour standards in their operations in any material way. One of the banks, the Asian Development Bank (ADB) has put a lot of energy into promoting CLS, both within the Bank and towards its member States without much success. The last two banks, The International Finance Corporation (IFC) and the European Bank for Reconstruction and Development (EBRD) both applies labour standards and both aims to constitute best practice. The examination shows that labour standards, within IFC and EBRD, are mainly used as a promotional instrument and a risk assessment tool. Looking at the composition of the Banks in respect to developed and developing countries in combination with the scope of the applied labour standards it appears to be the banks with the most developed member countries that favour the promotion of labour standards and that the standards are a way of levelling the playing field, reduce risks and protecting investments.