Conference Agenda

Trade has historically been viewed as an engine of economic growth and prosperity since it creates jobs and increases productivity. However, this progress has also been accompanied by certain challenges and globalization, in general, and trade, in particular, have been subject to significant backlashes. Key issues in this regard are pervasive labour market trends associated with trade (and technology), such as job polarization and rising income inequality in many advanced economies, and informality, exploitative work and regional inequality in developing and emerging economies.

A considerable number of studies have focused on the distributional effects of trade on the labour market, looking specifically at employment and wage outcomes (including inequalities between and within capital and labour; countries; regions; types of firms and workers). Far less research has been undertaken on the effects of trade on working arrangements, working conditions and other aspects of employment, all of which fall under the scope of “decent work”. This is a multifaceted concept and refers to work that is productive and delivers a fair income, together with rights at work, social protection and the promotion of social dialogue.

Against this backdrop, the objective of this panel is to examine the implications of trade for labour markets and explore policy options to ensure that trade contributes to – rather than hampers – decent work. In this context the panel presents case studies from three countries – Mexico, Viet Nam and Malawi, that study the impact of trade liberalization, trade restrictions, participation in global supply chains, and exporting in firms on different aspects of decent work ranging from working hours to social protection provision, informality and female employment. Based on data relating to the period before the COVID-19 pandemic, the findings of these studies can serve as benchmarks to analyse the links between trade and labour in its aftermath. As such, the papers can contribute to the design and implementation of more effective policies that will help achieve the objective of building back better.

This paper investigates the impact of trade liberalization and exposure to globalization on three elements of decent work – adequate earnings, decent working time and women’s labour participation – in manufacturing industries in Mexico between 2003 and 2018, using data from the national labour force and industrial establishments surveys. Through panel data and three-stage least squares estimations it is found, on the one hand, that firms in the manufacturing sector that are more exposed to globalization have better working conditions; and on the other hand, that while further trade liberalization in the form of non-preferential tariff reductions may have contributed to lowering working poverty and excessive working times for the tradable industries as a whole, this has not been necessarily the case for the manufacturing industries in particular, and that female inclusion in both the workforce and management positions has also not improved accordingly.

The study examines the impact of international trade on the firm-level demand for labour and working conditions in Viet Nam. It uses data from a survey on small and medium-sized enterprises conducted through the period of 2011 to 2015. In addition to containing information on firms, this survey questions workers from a randomly selected list of enterprises in the sample, which makes it possible to analyse firm-level worker outcomes in relation to decent work. The paper employs a Heckman selection model to deal with the selection bias and endogeneity issues arising from the fact that only a small number of firms engage in trade. It finds that international trade is positively correlated with the demand for labour and with a range of decent work outcomes related to formal employment and social protection coverage.

Considering the agrarian nature of the economy of most developing countries, and the role that women play in agriculture particularly in sub-Saharan Africa, it is of paramount importance to study the gendered impact of trade restrictions on the labour market. For this purpose, this study uses a simple static CGE model focused on the agricultural sector and a behavioural top-down micro simulation approach. Results show that a move towards trade restrictions, such as the imposition of high tariffs, encourages low-profit economic activities, leading to a decline in labour demand across all sectors. When the results are passed on to the micro-simulation, we find that a 50 per cent increase of the most favoured nation tariff could result in over one million job losses, affecting primarily women across the labour market but more markedly in agriculture. Thus, trade restrictions in a more flexible labour market tend to increase unemployment.