Monitoring International Labor Standards Human Capital Investment

An increasingly globalized world economy creates new economic, cultural, and social opportunities. Globalization also poses the challenge of ensuring that workers throughout the world share in these opportunities. In 1998 the International Labour Organization (ILO) adopted the Declaration on Fundamental Principles and Rights at Work, a set of core international labor standards embodying basic workers' rights. Carrying out this commitment to workers' rights requires an understanding of labor conditions and country-level compliance with these standards. The U.S. Department of Labor (DOL) contracted with the National Research Council (NRC) of the National Academies to advise the U.S. government on the design of an integrated and comprehensive system to monitor country-level compliance with these core international labor standards. The NRC has convened the Committee on Monitoring International Labor Standards (CMILS) to provide expert, science-based advice on monitoring compliance with international labor standards.

This new report provides a framework within which to assess compliance with core international labor standards and succeeds in taking an enormous step toward interpreting all relevant information into one central database. At the request of the Bureau of International Labor Affairs at the U.S. Department of Labor, the National Research Council's Committee on Monitoring International Labor Standards was charged with identifying relevant and useful sources of country-level data, assessing the quality of such data, identifying innovative measures to monitor compliance, exploring the relationship between labor standards and human capital, and making recommendations on reporting procedures to monitor compliance. The result of the committee's work is in two partsâ€"this report and a database structure. Together, they offer a first step toward the goal of providing an empirical foundation to monitor compliance with core labor standards. The report provides a comprehensive review of extant data sources, with emphasis on their relevance to defined labor standards, their utility to decision makers in charge of assessing or monitoring compliance, and the cautions necessary to understand and use the quantitative information.

In February and March 2003, the Committee on Monitoring International Labor Standards (CMILS) of the National Research Council (NRC) convened regional forums in Costa Rica, Sri Lanka, and South Africa. Participants included representatives from the International Labour Organization (ILO), national governments, workers' and employers' organizations, nongovernmental organizations (NGOs), and the academic community. These meetings were designed to provide the CMILS with a broad range of international perspectives on the many complex issues related to monitoring compliance with international labor standards, particularly within developing countries. The CMILS has convened similar forums in the United States and held workshops examining data quality, assessing national legal frameworks, and exploring linkages between human capital development and compliance with labor standards.

Over the past half century, the international flow of goods, services, and capital has grown rapidly. Globalization creates new economic, cultural, and social opportunities, but also poses the challenge of ensuring that workers throughout the world share in these opportunities. Responding to this challenge, the U.S. government carries out a variety of policies and programs aimed at encouraging greater recognition of worker rights around the globe. The U.S. Department of State monitors worker rights abroad and reports on the status of those rights as part of its annual report to Congress in the Country Reports on Human Rights Practices. Building on this history of monitoring and encouraging worker rights around the world, the Trade Act of 2002 includes on the list of overall trade negotiating objectives of the United States, promote respect for worker rights. Monitoring International Labor Standards provides expert, science-based advice on monitoring compliance with international labor standards. This report identifies relevant, valid, reliable, and useful sources of country-level data on labor standards; assesses the quality of existing and potential data and indicators that can be used to systematically monitor labor practices and the effectiveness of enforcement in order to determine compliance with national labor legislation and international standards; identifies innovative measures to determine compliance with international labor standards on a country-by-country basis and to measure progress on improved labor legislation and enforcement; explores the relationship between labor standards compliance and national policies relating to human capital issues; and recommends sustainable reporting procedures to monitor countries' progress toward implementation of international labor standards.

Over the past half century, the international flow of goods, services, and capital has grown rapidly. Globalization creates new economic, cultural, and social opportunities, but also poses the challenge of ensuring that workers throughout the world share in these opportunities. Responding to this challenge, the U.S. government carries out a variety of policies and programs aimed at encouraging greater recognition of worker rights around the globe. The U.S. Department of State monitors worker rights abroad and reports on the status of those rights as part of its annual report to Congress in the Country Reports on Human Rights Practices. Building on this history of monitoring and encouraging worker rights around the world, the Trade Act of 2002 includes on the list of overall trade negotiating objectives of the United States, promote respect for worker rights. Monitoring International Labor Standards provides expert, science-based advice on monitoring compliance with international labor standards. This report identifies relevant, valid, reliable, and useful sources of country-level data on labor standards; assesses the quality of existing and potential data and indicators that can be used to systematically monitor labor practices and the effectiveness of enforcement in order to determine compliance with national labor legislation and international standards; identifies innovative measures to determine compliance with international labor standards on a country-by-country basis and to measure progress on improved labor legislation and enforcement; explores the relationship between labor standards compliance and national policies relating to human capital issues; and recommends sustainable reporting procedures to monitor countries' progress toward implementation of international labor standards.

This new report provides a framework within which to assess compliance with core international labor standards and succeeds in taking an enormous step toward interpreting all relevant information into one central database. At the request of the Bureau of International Labor Affairs at the U.S. Department of Labor, the National Research Council's Committee on Monitoring International Labor Standards was charged with identifying relevant and useful sources of country-level data, assessing the quality of such data, identifying innovative measures to monitor compliance, exploring the relationship between labor standards and human capital, and making recommendations on reporting procedures to monitor compliance. The result of the committee's work is in two partsâ€"this report and a database structure. Together, they offer a first step toward the goal of providing an empirical foundation to monitor compliance with core labor standards. The report provides a comprehensive review of extant data sources, with emphasis on their relevance to defined labor standards, their utility to decision makers in charge of assessing or monitoring compliance, and the cautions necessary to understand and use the quantitative information.

Work is constantly reshaped by technological progress. New ways of production are adopted, markets expand, and societies evolve. But some changes provoke more attention than others, in part due to the vast uncertainty involved in making predictions about the future. The 2019 World Development Report will study how the nature of work is changing as a result of advances in technology today. Technological progress disrupts existing systems. A new social contract is needed to smooth the transition and guard against rising inequality. Significant investments in human capital throughout a person’s lifecycle are vital to this effort. If workers are to stay competitive against machines they need to train or retool existing skills. A social protection system that includes a minimum basic level of protection for workers and citizens can complement new forms of employment. Improved private sector policies to encourage startup activity and competition can help countries compete in the digital age. Governments also need to ensure that firms pay their fair share of taxes, in part to fund this new social contract. The 2019 World Development Report presents an analysis of these issues based upon the available evidence.

The idea of viewing individuals’ knowledge and abilities as an asset—as human capital—can be traced back to the work of Adam Smith in the 18th century. But human capital is intangible, and hence hard to define and measure. Increasingly, however, policymakers are calling for ways to understand and quantify human capital, in order to better understand what drives economic growth and the functioning of labour markets, to assess the long-term sustainability of a country’s development path, and to measure the output and productivity performance of the educational sector. Devising a robust methodology for the monetary valuation of the stock of human capital is especially important as studies suggest that human capital is by far the most important component of the total capital stock in most advanced economies. This Guide on Measuring Human Capital discusses conceptual, methodological and implementation issues and challenges. The recommendations are a first attempt to come up with a way to estimate and record the role of human capital in a way that is aligned with the principles of the national accounts and that is comparable across economies.