How Environmental Policies Can Affect Employment Opportunities and Workers’ Health and Safety Worldwide
by Harn Wei Kua
The impact of national/international environmental policies on employment opportunities and working conditions worldwide cannot be ignored in our quest for a sustainable future. As testified by the recent occurrence at the WTO Summit in Mexico (Cancun), international policies are as much affecting as being affected by fundamental concerns related to the employment and economic well-being of the participants in the global economy. In this essay, some of the ways in which national policies that are aimed at improving the environment have affected the global employment development are discussed. Attention is paid to the impact on the skilled and unskilled workers of the developed and developing countries.
Many studies have been done before on the best ways to encourage technological innovation for a more sustainable environment. Notably, Ashford (1994) proposed an innovation-based approach for achieving environmental sustainability goals for industries; in the same spirit, a thorough study carried out by a MIT team (Ashford, 1999) put forth the concept that technology-forcing via well-designed and executed government regulations are the best strategy for compelling industry compliance. Reijnder (2003) also cited ecotaxes and selective tax reductions as effective policy instruments to spur industrial transformation. If the incumbents are the proverbial dinosaurs that will take too long to evolve via niche management (Kemp et al., 1997) into a desirable state, then new entrants should be looked upon to be the key responders to embrace innovations that meet the stringent environmental regulations (this is in line with the disruptive technology concept put forth by Christensen (1997) and the central thesis of Reinhardt (1999)). These new entrants may, while reaping the first mover advantage from such innovations, inspire the rest of the industry to follow suit to a certain extent. Henceforth, governmentâ€TMs policies should focus on the removal of barriers to entrance by new players and any ceiling for wage increase, which, according to Kleinknecht (1998), will result in mediocre innovations in the long run.
There is indeed much motivation for a government to do so, for recent microeconomic studies (Kleinknecht, 1998) suggest that innovators create more jobs of better quality. Besides, in battling the effects of globalization and flexibility of labor market, which had collectively led to the decline in relative demand for unskilled workers in the developed nations, substantial jobs in the environmental sectors can also be created by the government (EC, 1994). These may include cleaning-up, standard-setting, enforcement and maintenance. In short, by creating an employment domain out of the very environmental regulations it sets, it gets to kill two birds with one stone. In fact, such a future scenario may actually push the current job training/educational system to new dimensions; this is because many of the solutions will be quite novel and in order for the unskilled to benefit as much as the skilled, employers have to create an upgrading/learning program that is progressive enough so as to tap into even the current older unskilled workforce (in order to achieve maximum efficiency in the transformation pathway).
The Negative Effects of Stringent Environmental Regulations in the North and they are affecting the South
One of the main negative impacts of such regulations may be the ‘exports of hazardsâ€TM to developing countries with more lax regulatory requirements (Frumkin, 1999), thus setting up the race to the bottom. Not only is this akin to condoning the deterioration of working conditions for workers in these countries, fewer jobs will remain for the unskilled workers in the North. These outcomes may offset any improvement made by the government, who will also be weaker in imposing any regulatory control over these companies, to create jobs for the unskilled in public projects. Any resultant income redistributive measures to check the wage differentials between the skilled and unskilled, the format of which depends on the intrinsic rigidity of this differential in a country, will eventually affect the skilled and employed in some ways (Wood, 1994).
Developing countries will also suffer from this unhealthy race for global market. Besides being subjected to adverse working conditions (mostly caused by cost-minimization measures of companies to increase relative competitiveness), workers are often poorly paid (Lee, 1996). It may even be worse if the North chooses to erect its import barrier to the South, hoping to force the latter into adopting regulations the former finds acceptable. There is not much motivation for the governments (of developing countries) to eradicate this opportunistic exploit when domestic political pressures originate from unemployment and associated social discontent. The Southâ€TMs conviction that the North should keep their consumptions in check in order to ensure global sustainability exacerbates this dearth of coordination. Nonetheless, I think a good model of policy may be found in the way some NGOs in Africa and South Asia empower local communities (through job creation) and promote off-the-grid energy systems in single efforts. Thus, the key to successful implementation of sustainable environment-employment policies in some of the poorest countries in the world will lie in the incorporation of these measures into the solutions of more fundamental problems — most of which concern basic survival issues like availability of clean water, food and energy. Comparatively, work safety may be regarded as distant and so not as ‘urgentâ€TM.
Late industrializing countries have benefited from their respective methodology of government intervention (Amsden, 1992). Although most had neglected the environment in the past, the fact that government intervention remains important late into industrialization implies that if the governments are really convinced of the sustainability and workersâ€TM safety/health causes, policies may get implemented easily. Of course, whether disruptive innovations can ensue in this controlled environment, even with subsidies and incentives, is another question. Externally-bred disruptive technologies may find it hard to enter controlled markets. As linking up with external partners is a must for capacity building (Lall, 1992), many such countries have at different pace opened up previously heavily guarded industries. An excellent example is the deregulation and privatization of the energy markets in many ASEAN countries in the past 2-3 years. One can expect these governments to try to buffer any drastic effects on their local employment by taking new measures to keep the resultant income distribution as equal as possible in order to optimize labor productivity (Amsden, 1992) — a strategy that has worked so well in the past for many of them . Then again, since many of them have already embrace free trade and the globalization of labor market, they will still to some extent face the similar risks of the North — losing unskilled jobs to global competitors.
Conclusions
Employment is without doubt an important element of the social aspect of sustainability. As it is closely tied to the economic performance of a country or region, it is crucial for decision makers to profoundly understand the possible repercussions of sustainability policies on the global employment profile.
Harn Wei Kua
P.S.
Reference:
Amsden A., ‘A Theory of Government Intervention in Late Industrializationâ€TM, A Survey of Sustainable Development, 308-312, 1992
Ashford, N. A., ‘An Innovation-based Strategy for the Environmentâ€TM, in Worst Things First? The Debate Over Risk-based National Environmental Priorities, A. M. Finkel and Golding D. (eds.), Resources for the Future, Washington, DC, 1994, 275-314.
Ashford, N. A., ‘The Porter Hypothesis Re-examinedâ€TM, July 1990
Christensen, C. M., The Innovatorâ€TMs Dilemma. When New Technologies Cause Great Firms To Fail, Harvard Business School, Boston, 1997
European Commission, ‘ Chapter 8: Turning Growth into Jobsâ€TM, Growth, Competitiveness, Employment: The Challenges and Ways Forward into the 21st Century, Brussels: European Commission, 1994
Frumkin H., Across the Water and Down the Ladder: Occupational Health in the Global Economy, Occupational Medicine: State of the Art Reviews 14(3), 637-663, 1999
Kemp R., Schot J., Hoogma R., ‘Regime Shift to Sustainability through Processes and Niche Formation: The Approach of Strategic Niche Managementâ€TM, in: Technology Analysis & Strategic Management, vol. 10, no. 2, 175-195.
Kleinknecht A., ‘Is Labor Market Flexibility Harmful to Innovation?â€TM, Cambridge Journal of Economics, Cambridge Political Economy Society, New York: Oxford University Press, 1998, v.22, n.3, 387-396.
Lall S., ‘Technological Capabilities and the Role of Government in Developing Countriesâ€TM, Greek Economic Review 14.1, 1-36 (1992) Lee E., ‘Globalization and Employment: Is Anxiety Justified?â€TM, International Labor Review, 485-497, 1996
Reijnders L., ‘Policies Influencing Cleaner Production: the Role of Prices and Regulationâ€TM, Journal of Cleaner Production, 11, 333-338, 2003
Reinhardt , F., Market Failure and the Environmental Policies of Firms, Journal of Industrial Ecology. (31)1, 9-21
Wood, A., North-South Trade, Employment and Inequality: Changing Fortunes in a Skill-driven World, IDS Development Studies Series. New York: Oxford University Press/Claredon, 1994
Tue, Nov 18, 2003
Vision Journal