LABOUR ADMINISTRATION MACHINERY

Introduction: the origins and development of labour administration

INTRODUCTION The global financial crisis that began in 2008 and the economic crisis that ensued have had substantial and potentially long-lasting implications for the extent and nature of state intervention in the labour market and, by extension, for public administration activities and institutions relating to work and employment. These activities and institutions, which collectively comprise systems of ‘labour administration’, involve a variety of state bodies, including labour ministries (or their functional equivalents), public employment services, labour inspectorates, dispute resolution services, and vocational education and training institutions. Systems of labour administration vary in terms of their complexity, degree of centralization and the extent to which non-state actors (e.g. private and third-sector organizations, employer organizations and trade unions) contribute to governance and service delivery. They provide the institutional channels through which labour market policies are elaborated, implemented and monitored. However, while some components of labour administration systems, such as public employment services, have been the subject of a considerable amount of research, there have been few attempts to describe and make sense of wider developments in labour administration.

 THE CONCEPT AND SCOPE OF LABOUR ADMINISTRATION Labour administration is defined by the International Labour Organization (ILO) in its Labour Administration Convention, 1978 (No. 150) as ‘public administration activities in the field of national labour policy’. This includes institutions, activities and outcomes across the entire field of labour policy, including employment policy, labour law, social protection and industrial relations. The Labour Administration Convention and the accompanying Recommendation, 1978 (No. 158) provide the only universally recognized conceptual framework for labour administration. Both the Convention and the Recommendation are typical ‘promotional’ standards: while they have a very clear normative content, they mainly provide policy guidelines and objectives to be given concrete form in specific measures adapted to national conditions. They are based on the assumption that ‘adoption in a country of labour laws and regulations might be ineffective if that country does not have at its disposal a competent and efficient labour administration, entrusted with the tasks of following the development of the social situation, of supervising the implementation of legislation and of ensuring the operation of existing machinery’

The ILO Labour Administration Convention makes a distinction between ‘labour administration’ and ‘national systems of labour administration’. Labour administration, as defined in the preceding paragraph, is a function, consisting of the elaboration and implementation of labour policies.

 HISTORICAL OVERVIEW OF LABOUR ADMINISTRATION Key junctures in the development of labour administration have tended to occur during periods of economic and social difficulty, when established thinking has been challenged and policy-makers have been forced to develop new practical measures. Each time this has happened, some measures have subsequently been phased out once the period of crisis has ended, while others have become institutionally embedded and outlasted their initial purpose. The key social policy milestones in this area have been: + the period of debate relating to the ‘social question’ in the late nineteenth century; + the First World War and subsequent social unrest; + the Great Depression of the 1930s; + the Second World War; + the economic difficulties of industrialized countries in the 1970s and 1980s; and + the Asian financial crisis of the late 1990s.

During these periods of turmoil, new policies were developed, new schemes were created or old ones adapted, new institutions were founded to administer measures and new management methods were promoted. Attempts by the state to force employers to abide by minimum labour standards stretch back at least as far as 1802, when the first in a series of Factory Acts was passed in the United Kingdom (UK). During the nineteenth century, concerns relating to the conditions of labour, the growth of trade unions, the spread of industrial action and social unrest, and the formation of political parties committed to promoting the interests of workers, in some cases through revolutionary means, served to focus the attention of policy-makers on relations between labour and capital, particularly during the period from 1880 to the end of the First World War (Kaufman, 2004: 37). The social insurance reforms introduced by the German government under Chancellor Bismarck are sometimes taken to symbolize the beginnings of the modern history of labour policy. The reforms, which related to sickness, accidents, invalidity and old-age insurance, were introduced in the 1880s and 1890s.3 This period also saw the creation in Germany of labour exchanges, which in turn encouraged their establishment elsewhere in Europe. Unemployment insurance schemes also began to emerge. The British government introduced compulsory unemployment insurance in 1911 and over the next quarter of a century compulsory unemployment insurance schemes were introduced in a number of other European countries.4 All these policy reforms were accompanied by the creation of corresponding administrative structures, albeit very modest ones to begin with. The functions of government labour offices, which were first established in the 1880s to inform policy-makers and provide legislators with necessary background information, were initially confined to research and the collation of statistics. A Commission for Labour Statistics was created in Germany in 1882, and similar bodies were subsequently established in Spain (1883), the USA (1884) and the UK (1887). These offices can be regarded as prototype labour ministries, the first full-blown example of which emerged in Belgium, where a Ministry of Industry and Labour was created in 1894. In several other countries, labour departments were created during this period as organizational units of ministries with larger competencies, such as the Ministry of Public Work in the Netherlands (1901), the Ministry of the Interior in Argentina (1907) and the Department of the Interior (and later the Departments of Commerce and Labor) in the USA (1903). The mandate of such bodies was initially limited to inspection of employment conditions in factories and mines and was only gradually extended to other functions and services, especially job placement.

The First World War had a catalytic effect on the development of the state’s role in regulating working conditions and labour markets. While national governments were concerned to mobilize workers for industrial production while maintaining social peace, wartime privations and mounting inflation led to a wave of strikes and unprecedented demands for shorter working hours and better conditions (Jacoby, 1985). The Russian Revolution of 1917 and the fear that a similar upheaval might occur elsewhere in Europe also served to focus policy-makers’ minds on social reform. The responses of governments during and immediately following the war took the form of government commissions and the establishment of new public bodies, including a first generation of advisory councils involving representatives of workers and employers in the examination and planning of labour policy. The creation of the ILO in 1919 was the first serious step towards global governance of labour affairs and had a far-reaching impact on the development of labour administration systems, as the ILO Constitution (which constitutes Chapter XIII of the Versailles Peace Treaty) presupposed the existence of specialized bodies dealing with labour matters.5 The inter-war period was punctuated by a series of economic and social difficulties that ultimately led to the further substantial consolidation of labour policies and related administrative frameworks. The massive rise in unemployment that followed the financial crisis of 1929 and continued through the Great Depression made apparent the inadequacies of support for unemployed workers, encouraging reforms of existing unemployment insurance measures and the further adoption of compulsory schemes where these were not already in place. Only a handful of governments entered the crisis period with pre-existing unemployment insurance legislation,6 while others had only old-type relief schemes. By 1933, however, compulsory or voluntary insurance schemes, and corresponding administrative bodies, were operating in 17 countries. The different reform paths that were taken reflect differences in the traditions and ideologies of national trade union movements and their relationship to the state. In Britain, for example, the Trades Union Congress (TUC) was strongly in favour of raising the level of benefits available under the existing insurance scheme and removing qualifications (Allen, 1960: 241). By contrast, the President of the American Federation of Labor (AFL) viewed compulsory unemployment insurance as a ‘union wrecking agency’ – a threat to the autonomy of the union movement (Lichtenstein, 2002: 12). The introduction of unemployment insurance in the USA thus took place in the face of opposition from both business and the national trade union federation. Nevertheless, policy-makers’ desire to

find an accommodation with labour was an important spur to the reforms that comprised Roosevelt’s New Deal programme. The New Deal introduced a number of bodies and policy measures that remain in force today, albeit in modified forms. The principal examples are the National Labor Relations Act (NLRA) adopted in 1935, the National Labor Relations Board, which was established to supervise labour management relations and enforce the rules of the NLRA, the Fair Labor Standards Act (1938), which introduced new regulations relating to working hours and introduced a federal minimum wage, and the Social Security Act (SSA) of 1935, which created a legal basis for the Social Security Administration that continues to administer social security programmes. More generally, the development of measures relating to employment, labour relations and social protection resulted in the spread of corresponding administrative arrangements. While compulsory unemployment insurance schemes were administered by state funds and agencies, voluntary systems were typically administered through a number of mutual benefit funds, often managed by unions7 and supervised by various state bodies. The economic crisis of the inter-war period was also a factor in the establishment and improvement of placement services and the expansion of programmes of public work (the New Deal inaugurated the largest programme of public works ever implemented), although public employment services played only a limited role until the Second World War. The ILO also played a role in encouraging the expansion of administrative support for labour policies and the creation of ministries with a specific labour policy remit. In 1928 a resolution was adopted inviting governments to set up an adequate and specialized department, capable of performing successfully, widely and fully the task of preparing, amending and securing the application of all the acts and regulations relating to labour, and specially as regards inspection services, relations with the International Labour Office, advisory bodies and the supply of information, the peaceful settlement of industrial disputes, and the compilation and publication of statistics, reports and all other documents dealing with labour. (ILO, 1928: 710)

state in the regulation of the labour market increased tremendously and continued to grow during the post-war period, with public employment services in many countries acquiring a quasi-monopoly on job placement. More importantly, social policy abandoned its narrow ‘protectionist’ role and was increasingly required to become one of the driving forces in economic and social progress. Objectives of social justice, full employment, social security, and better working and living conditions were embodied in key international treaties. Documents such as the Atlantic Charter (1941), the Declaration of Philadelphia (1944), the Charter of the United Nations (1945) and the Universal Declaration of Human Rights (1948) provided a basis for social reforms throughout the world. Of particular significance was the Declaration of Philadelphia, which included the proclamation that labour is not a commodity and elevated social objectives to the ‘central aim of national and international policy’ (Paragraph IIb). The desire of policy-makers to avoid the economic and social disruptions of the inter-war period encouraged a widespread acceptance of the necessity of state intervention in the economy. With regard to the labour market, many governments embraced the policy prescriptions of Keynesian economics and accepted that it was essential to manage aggregate demand if full employment were to be delivered and maintained. The welfare state, financed through progressive taxation, was expanded as policy-makers sought to achieve social outcomes that market forces could not deliver. The attention given to social objectives such as full employment, the improvement of working conditions and the extension of social security during the post-war period also encouraged the recognition and consolidation of a comprehensive role for ministries of labour and an expansion of the financial and material resources available to national labour administration systems. Labour ministries and their agencies became responsible for a substantial proportion of state budgets, which made them a powerful and influential part of the governmental machinery. However, new economic and social pressures emerged in the late 1960s and 1970s. The crisis of industrialized countries that followed the first oil shock in 1973 and affected most industrialized countries until the 1980s was different from the Great Depression of the 1930s in terms of the reaction of public authorities and specifically of labour administration. While the oil price shock was unanticipated and linked to political instability in the Middle East, the crisis revealed the underlying fragility of some national economies. In the face of macroeconomic difficulties, governments’ willingness to intervene in industrial relations increased sharply, especially in relation to the imposition of incomes policies

SCOPE OR FIELDS OF LABOUR ADMINISTRATION

Labour administration has been on the ILO agenda ever since the organization was founded 90 years ago. The creation of the ILO in 1919 led to the formation in many countries of ministries of labour, which went on to play a pivotal role within the broad framework of promoting good governance, shaping government activity on various levels. More recently, in the last two decades labour ministries in many countries have responded to contemporary challenges by formulating employment policies, providing employment services, building consensus on emerging labour issues, putting in place effective labour inspection systems and promoting sound labour–management relations. There is no doubt that the development of labour administration has been strongly influenced by international labour standards as embodied in the ILO Conventions and Recommendations.

The ILO has a long-standing commitment to strengthening labour ministries with the overall goal of enabling them to make significant inputs into broader economic and social policy-making as well as carrying out their regular functions with greater efficiency and impact. Labour ministries are the main interlocutors between the ILO and the governments of its member States. The ILO relies on the labour administration in each country, as well as the social partners, to highlight the importance of the ratification and implementation of international labour standards. At the national level, the labour ministry has the main responsibility for ensuring that the social partners have a place in policy-making and are recognized by government as major interlocutors. Today, the labour administration finds itself at the centre of the challenges and constraints resulting from the rapid changes affecting the world of work.

Labour administration, in particular labour inspection, has enjoyed an increasingly high profile in recent years, both nationally and internationally. Much of the increased interest is from governments, recognizing that in a globalized world labour administration is a key actor in the elaboration and implementation of national economic and social policies. Labour administration is an important source of information in its fields of competence for government, employers and workers alike; it is an active intermediary in the prevention and settlement of labour disputes; it is an informed observer of the trends in society by virtue of its special links with the social partners; it is a provider of effective solutions to the evolving needs of its users. It already bears responsibility for an increasing part of public expenditure; yet employers and workers are now calling for better resources for ministries of labour and labour inspectorates, to promote fairness and a “level playing field”, and to make decent work a reality.

A specific interest in good governance and compliance also means increasing expectations of labour ministries and inspectorates. The World Commission on the Social Dimension of Globalization (2004) asserted the importance of responding to globalization through good governance, emphasizing that “the behavior of nation States as global actors is the essential determinant of the quality of global governance. Their degree of commitment to multilateralism, universal values and common goals, the extent of their sensitivity to the cross-border impact of their policies, and the weight they attach to global solidarity are all vital determinants of the quality of global governance”. Similarly, the 2008 ILO Declaration on Social Justice for a Fair Globalization reaffirmed the need to “strengthen the ILO’s capacity to assist its Members’ efforts to reach the ILO’s objectives in the context of globalization” and to promote “social dialogue and tripartism as the most appropriate methods for … making labour law and institutions effective, including in respect of the recognition of the employment relationship, the promotion of good industrial relations and the building of effective labour inspection systems”(ILO, 2008a).

Through its new Labour Administration and Inspection Programme (LAB/ADMIN), launched on 31 March 2009, the ILO pursues technical assistance and technical cooperation programmes with a view to assisting its constituents, in particular ministries of labour and labour administration /inspection systems, to play their crucial role in improving working conditions, ensuring compliance with labour legislation, preventing and settling labour disputes, promoting tripartism, working towards the transparency and fluidity of the labour market, modernizing employment services and developing adequate vocational training systems. To perform these functions most effectively, labour administration/inspection systems and ministries of labour need regularly to review and adapt their actions and services; they also need to develop new forms of organization, management and intervention. This new programme assists them by providing comparative information and advice based on ILO standards and international best practice. In addition, it carries out its technical assistance and activities with a view to assisting labour administrations, including labour inspection systems and employment services, in the design and implementation of more effective policies and measures for the protection of workers and the improved functioning of labour markets. It also ensures that labour inspection concerns are addressed in the Decent Work Country Programmes.

Within its mandate, and on the invitation of national governments, the Labour Administration and Inspection Programme conduct audits. The findings and results of these audits are made available to the tripartite constituents with a view to raising awareness of current challenges and recommending possible solutions. Action plans are then formulated in collaboration with the ministry of labour and the labour inspectorate of the country concerned.

In pursuing its work along these lines, the LAB/ADMIN Programme aims at:

building the capacity of labour administration to implement the ILO Decent Work Agenda through elaboration and implementation of labour policies;strengthening labour inspectorates so that they are modern and effective, with adequate compliance mechanisms;establishing and strengthening the legal and institutional framework of labour administration, including employment services and labour inspection systems;ensuring an efficient coordination of the various administrations and agencies dealing with social matters and policies;promoting relevant international labour standards;ensuring the consultation and participation of workers and employers in labour administration and inspection systems.

The LAB/ADMIN Programme leads the ILO’s work on technical support and advisory services, mobilizing the relevant expertise across the ILO, and works though networks across technical sectors and regions to enhance the assistance offered to constituents.

Against this background, the purpose of this volume is to spell out the main principles of labour administration, and the challenges facing it in implementing the Decent Work Agenda. It describes ways in which these challenges can be met through policy, organization, coordination and management. It also identifies some best practices in selected countries with well-performing labour administration systems. It emphasizes the need for a professional approach to labour administration to ensure effective governance of the labour market. It addresses labour administrators, labour inspectors, conciliators, employment service officials, governments, workers, employers, researchers and professionals. I hope that this publication will bring the efficiency of labour administration to the forefront of the debate on good governance in the world of work.