Linking funds to labour standards worries India

NEW DELHI: India is under fresh pressure from the developed countries, which are seeking to link multilateral development funds to labour standards, a move that may restrict financing of key projects.
For years, the West has sought to use labour standards in emerging and developing countries, seeking to link trade with the issue. Developing countries have resisted such attempts but some of the Asian Development Bank members are now trying to get labour standards to once again occupy the centre stage.

While no formal proposal has come to the board of the Asian Development Bank ( ADB), large donors to the multilateral development have kicked off the move to link labour standards to funding.

At a recent annual meeting of ADB in Germany, the Federal Ministry for Economic Cooperation and Development (BMZ) said it is lobbying to get the internationally recognized core labour standards of the International Labour Organization (ILO) firmly established in the financing conditions of all multilateral development banks and will continue to push this topic in G20 circles. Germany is the largest European shareholder in ADB.

“The proposal has not come to the board formally. We will try to convince them not to bring in new standards. It is a kind of non-tariff barrier,” said a senior government official, who did not wish to be identified.

He said the latest move by large donors to push this topic is being seen as an attempt to get companies from developed countries to bag contracts. Stringent conditions may disqualify domestic companies whose standards may not match those in developed countries. “The standards may vary from country to country. We will informally try and convince them,” said the official, adding that opposing the proposal formally may not be a correct approach. He further saisd that the India and China are among the largest borrowers from multilateral development banks.

International labour standards are legal instruments drawn up by ILO’s constituents — governments, employers and workers — setting out basic principles and rights at work, according to a document of the ILO. “They are either conventions, which are legally binding international treaties that may be ratified by member states, or recommendations, which serve as non-binding guidelines,” the ILO document said. These standards cover basic human rights at work, respect for safety and health, and ensure that people are paid for their work.

But, Indian officials lauded the move to link loan condition to vocational training which they said will help in bridging skill gaps and improve standards.