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Liberty Institute Briefing Paper on Trade and Development

November 1999

International Trade and Child Labour: The role of the market

Social and labour conditions have become a highly charged subject, particularly after attempts to link trade and social conditions under the auspices of the WTO. On the one hand, lower labour conditions, including the use of child labour is said to give economic advantage to some countries, and therefore there is a demand for protection in some other countries. On the other hand, these poor labour conditions are said to be the fallout of market reforms and free trade, and therefore there is a demand for restricting trade. No doubt child labour provides an emotive shield for a range of other agendas.

However, rather than a restrictive linkage between trade and child labour, historical experience clearly shows that an open market and free trade are the best instruments for improving the labour conditions, including elimination of child labour.

The Problem

Estimates of child labour in India range from 17.5 million to 200 million. The enormity of the situation is well known to social activists, governmental and intergovernmental agencies. In this regard, many well-meaning initiatives have also been undertaken. The Indian agenda is to end child labour in hazardous industries by the year 2000 and all child labour by the year 2010. But how serious are we? And what can the international community do to help the process?

The existence of child labour is a part of our everyday reality. In spite of restrictions in most nations, children continue to work. This has been so throughout history. Indeed, children as an integral part of the family have always worked, and will continue to work for various reasons, as they do currently even in the developed countries. However, the situation in developing countries needs special attention. A holistic analysis of the contemporary society and choices before the children and their families needs to be undertaken.

The Causes

Policy planners agree that a significant reason for child labour is poverty. Though children are not paid well, they nonetheless contribute to the family income. They are often prompted to work by the parents. Lack of schooling opportunities is a contributing factor. But the reasons are also social and cultural. Many children work because it is an accepted norm within the social structure. Acceptance of such traditional factors as expecting the lower castes or classes to perform manual labour leads children of these classes and castes into manual work at an early age. Rapid migration to the urban areas has further aggravated the situation. However, much of child labour today exists either in the informal or the illegal sector. The laxity of officials in enforcing existing labour restrictions perpetuates child labour. The hard fact is that in developing countries, subsistence and survival takes primacy over anything else.

Good Intentions and Tragic Outcomes

Past experience has shown that where governments implemented a policy of banning child labour under international influence, severe negative and unintended consequences followed. In Bangladesh, for example, a boycott of garments made by child labour caused 50,000 children to loose their jobs. These children then took up even lower paid jobs in other industries, or other demeaning jobs, some even being pushed into prostitution. Clearly, a focus on particular export sectors may lead to an effective political campaign, but does very little to address the real issue. Most children who work do not belong to such sectors but are spread across the spctrum from agriculture to small-scale manufacturing to informal trade and services. An immediate abolition of child labour appears neither practical nor even desirable.

Good intentions are never a sufficient condition for improving social and economic realities. It will be a tragedy if, as a result of well-meaning but hurried policies aimed at prohibiting child labour, children are further victimised because the policies fail to take into consideration context-specific situations of the developing economies.

Human Rights and the Rights of the Child

Recent efforts to link international trade with child labour are also fraught with negative consequences. Is it fair to link trade with child labour? Is this a trade-related agenda? Is the demand a result of an alliance between the "protectionist" lobbying groups who want to safeguard their economic interests, and the short-sighted "morally driven" human rights groups? One can easily condemn one group and applaud the other, but that would lead us nowhere.

What is important is that this issue, like any other violations of human rights, must be treated in their specific economic, political and social context. The approach must be sensitive to the needs of the working children and their families. So it becomes important not to equate child labour with child abuse.

The Self-Inflicted Wounds

The complete eradication of child labour is a noble goal. As with many other issues of rights abuse, there are two ways of looking at the possible solutions. One is the positivistic way, to rely and emphasize the legal and administrative measures, including economic sanctions. The other is the holistic way, to seek to bring about change through creating a suitable environment and a capacity for sustained effort. Solving the problem requires raising public awareness and fostering public demand for change. The problem of child labour simply cannot be wished away by fiats and dictats.

The Indian government has committed itself to face the challenge. However, it can no longer ignore its own role in promoting policies that have stymied economic opportunities for vast majority of our people and perpetuated socio-economic disparities.

For instance, an inflationary monetary policy and efforts to protect domestic industry, distorted the market, stifled economic growth, induced economic inefficiencies, reduced employment and economic opportunities, and led to politicisation of labour. Consequently, under political patronage organised labour has all but priced India labour out of competition. This is best seen in the fact that economic growth in recent years has hardly led to creation of jobs in the organised sector. As a result, barely 15% of Indian workforce is in organised sectors of the economy, and over a half of that are in bloated public sectors and various quasi-governmental organisations. Most of the remaining workforce has been pushed to the margins of economy and subsistence. Is it any surprise then that so many Indian families continue to depend on their children's contribution to make two ends meet?

Role of the Market

No society in history has been able to develop without the labour of their children. At the dawn of industrial revolution, over 95% of children had to work. In less than two hundred years, today's developed and industrialised countries broke away from thousands of years of human history and made child labour mostly redundant by substantial gains in productivity and incomes. In recent decades, some of the newly industrialised countries compressed this process in to a single generation.

Rather than learning from these recent experiences, most developing countries, like India, pursued policies that prolonged the historical process and agony of their children. Clearly, domestic economic reforms must be expanded and accelerated if we are to avoid wasting our most precious resource, our children.

The international community must aid the process of all round development by encouraging free trade, promoting economic prosperity and economic development, and thereby helping developing nations to eliminate child labour forever. Deep-rooted socio-economic problems cannot be done away by legislation alone, by state intervention, or by international economic sanctions.

The need is to create a situation whereby children in developing countries will no longer have to work, where it would be worthwhile for them to attend school, where the parentís income alone will be sufficient to provide for the children. We should not need the WTO to tell us to reform if we are really concerned about improving the lot of our own people.

A version of this paper, co-authored by Dr. Munmun Jha of Indian Institute of Technology, Kanpur and Barun S. Mitra, was published in The Economic Times, 7 December 1999.

Comments and suggestions are welcome. Please write to Liberty Institute.

 Free trade is fair trade, says an international coalition of organisations and think tanks, International Consumers for Civil Society (ICCS).
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