Globalisation and labour standards: A look at Asia

Has globalisation led to a downward spiral where competition drives standards down in a "race to the bottom"? Should a "social clause" be introduced in the World Trade Organisation (WTO) in order to prevent such a development? This article examines the development of labour standards in China, South Korea and Indonesia in the last decades. In these countries, export-oriented growth led to significant improvements in employment and income levels. The analysis suggests, however, that labour conditions except wages (working hours, safety etc.) matter for competition in labour-intensive industries. In China and Indonesia, investors from other Asian countries have put a downward pressure on labour conditions in some such industries. On the whole, however, globalisation has contributed to better labour standards in East and Southeast Asia.