Not performing to standard: The IFC’s social conditionality and freedom of association

Conor Cradden

The potential for private or non-state regulation to improve labour standards has been much canvassed in recent years. It has been argued that working conditions in developing economies can be upgraded by making supply or investment contracts conditional on labour standards compliance. Alternatively, this can be achieved by offering access to premium price markets through product labels that certify the successful completion of a social auditing process. Nevertheless, it remains in dispute whether this kind of private regulation is effective from the perspective of workers. Existing research has found that while firms are often prepared to make modest improvements to pay for working conditions in pursuit of some market advantage, they remain unwilling to accept any significant increase in the capacity of workers to influence management decisions about employment conditions and the organisation of work. The research we report here confirms that as long as private regulators do not see it as their role to address the power imbalance between workers and employers, they will have little durable impact on labour standards.