International Labour Organization (ILO)
The ILO came into existence as part of the Treaty of Versailles, the agreement that brought the First World War to a close. For the initial framers, only lasting “social justice” amongst nations could prevent further deadly conflicts. The Constitution was drafted between January and April 1919, with representatives from nine countries signing onto the document. The ILO Constitution’s Preamble listed numerous areas of improvement for involved nations, including regulation of work hours and labor supply, equal pay policies, and protections for vulnerable laborers. Following the Second World War, the ILO’s mission expanded dramatically under the purview of the United Nations (UN). In the thirty-year period following WWII, the budget expanded five-fold and cooperation extended to developing countries. United States membership and funding was withdrawn in 1970 due to disputes over Soviet involvement, but a full relationship resumed in 1980 as the ILO agreed to take on a less interventionist agenda.
While the organization did shift to the center (politically) following American pressure, the ILO maintains interventionist leanings. One prominent example is minimum wage legislation, which the ILO frequently supports despite noting uncertain, “controversial” impacts on employment. Despite reiterating the “importance of country-specific programmes,” the organization has spearheaded global pacts and conventions pressuring countries to provide minimum hourly rates for workers. The Minimum Wage Fixing Convention of 1970, for instance, “Requires ratifying states to establish a minimum wage fixing machinery capable of determining and periodically reviewing and adjusting minimum wage rates having the force of law.” And, the 2009 Global Jobs Pact repeatedly mentioned minimum wages as a way of responding to global economic “imbalances.” These mixed messages are harmful to participating countries, given the academic literature on the dis-employment effects of minimum wage legislation. Recent high-quality studies demonstrate that minimum wage hikes lead to fewer opportunities, and result in diminished training capacity.
The organization has also been at the forefront of ensuring “fair” labor contracts, enshrining the principle that “employment of a worker should not be terminated unless there is a valid reason for such termination connected with the worker's capacity or conduct…” While this is a valid concern in developing countries with weak contract enforcement mechanisms, the ILO gives short shrift to the equally-pressing problem of labor market rigidity. Reports criticize measurements of “economic freedom” by organizations such as the Fraser Institute, without adequately discussing evidence on the impact of strict labor market regulation. As is the case with the minimum wage, the highest-quality studies indicate job displacement effects stemming from government labor rules.
As a specialized agency within the UN, the ILO produces excellent data reporting on a variety of socioeconomic indicators across the globe. This comprehensive reporting can be supplemented by a more careful weighing of the evidence on labor market regulation and minimum wage laws.