International Labour Organization finally faces reality

Something quite dramatic occurred at the International Labour Organisation (ILO) in June this year. This peak body of world-wide labour regulators accepted for the first time that labour regulations should not interfere in commercial transactions.

As sensible and obvious as this might seem it in fact represents a huge conceptual leap for the labour regulation community. It is an historic development of significant proportions. In some respects it heralds a further unravelling of the moral foundations of leftist ideology.

Most importantly however it holds out long-term prospects for more practical business and labour regulations globally that will aid grass roots economic activity and job creation. It has immediate implications in Australia because it secures a moral and legal underpinning to the Federal Government’s new independent contractor law.

What are the issues, how did this situation unfold at the ILO and globally, and why is this development so important?

The ILO

The ILO was formed in 1919 at the end of World War I, on a belief that the war was in part a consequence of conflict between labour and capital. This was an understandable view early last century. The Marxist concept of class warfare was in the ascendancy. The old order in Europe was collapsing. Monarchs were being overthrown and organised labour played a major revolutionary role particularly in Russia. World War I seemed to emerge from this chaotic revolutionary environment.

The ILO was formed on a belief that if labour, capital and governments could get together and talk in a structured way conflict could be diminished. Following World War II the ILO survived to become a division of the United Nations. The ILO’s principals and structures remain based on the 1919 vision. It operates on a highly formalised “tripartite” dialogue between unions, employer bodies and governments.

However with the UN now having the all encompassing “world peace” agenda, the core task of the ILO has narrowed. Effectively the ILO is the international standards setter for labour regulation.

The ILO operates constantly but in June each year its activities culminate in a three-week session in Geneva, Switzerland. Government, union and employer representatives from across the globe meet to make the big decisions.

At the heart of every ILO consideration is the idea that class warfare at work is inevitable and that governments must regulate to manage the conflict. The underlying conceptual orthodoxy is that employers will always want to exploit and employees will always be subject to potential exploitation.

Consequently the ILO has developed a large list of “standards” covering the role of unions, collective bargaining, child labour, work safety, equal opportunity, anti-discrimination and so on.

Unions, labour lawyers, academics, and government policy bureaucrats all take immense interest in ILO deliberations and decisions. The ILO directly impacts on the design of national labour laws. For example most Australian industrial relations, equal opportunity and anti-discrimination laws make direct reference to and draw upon ILO Conventions and principles. Hardly any academic discussions on labour issues will occur without reference to ILO standards. The ILO matters!

Diminishing reach

However in the mid 1990s concern was being expressed by unions, labour academics and regulators that the reach of employment law and regulations was being restricted. The problem identified was the apparent rise of independent contractors. These are working people who are not employees. They are the smallest of small business people being businesses of one.