23 Indus. L.J. 289 (1994)
Rights vs Efficiency - The Economic Case for Transnational Labour Standards

handle is hein.journals/indlj23 and id is 303 raw text is: Rights vs Efficiency? The Economic Case for
Transnational Labour Standards
SIMON DEAKIN* and FRANK WILKINSON*
1. INTRODUCTION
In the course of the debate flowing from the adoption of the European
Community Social Charter and Social Action Programme in 1989, a vigorous
argument has been made against any further extension of European social policy
on the grounds of its harmful economic consequences. Regulation of the labour
market at European level, where it is not simply an irrelevance, is said to be
unjustified on efficiency grounds and likely to hamper the prospects for
economic development and job creation within the single market.' At the same
time, those who would not, in principle, take such a critical view of regulation
have expressed concern about the prospects for the social dimension as long as it
continues to be linked to the wider goal of economic integration: 'subservience
to the process of market integration fatally hinders the development of a
rationale for Community action in the social policy field'.2 From this perspective
it would seem imperative to separate the case for social policy from the
economic arguments sometimes made in its favour, and in particular from the
imprecise notions of 'social dumping' and 'distortions of competition'.
This paper will consider the rationale of transnational labour standards and
will argue that an economic case can and should be made in favour of
harmonization of social policy within the European Community. The argument
for labour standards essentially rests on their role as in input into economic
development and the maintenance of the dynamic competitiveness of economic
systems. Increasing 'globalisation' of economic relations and rapid technological
change, which make transnational standard-setting more important than ever,
are nevertheless the very same factors which make consensus between nation
states in this area difficult to achieve: there can be no expectation of smooth
and rapid progress, at European level or otherwise. This makes it important that
* ESRC Centre for Business Research, Department of Applied Economics, University of
Cambridge. This is a revised version of a talk given at a meeting of the Labour Law Section of the
SPTL at Trinity College, Cambridge in May 1994. The authors are grateful for the comments made
on that occasion.
' J.T. Addison and W.S. Siebert, 'The Social Charter of the European Community: evolution and
controversies' (1991) 44 Industrial and Labor Relations Review 597; 'The Social Charter: whatever
next?' (1992) 30 British Journal of Industrial Relations 495.
2 P.L. Davies, 'The emergence of European labour law', in W.E.J. McCarthy (ed.) Legal
hItervention in Industrial Relations: Gains and Losses (Blackwell, 1992) at p. 346.
hnluturtal Lull Jourt.al Vol 23. No. 4. December 1994                   289
C Industrial Lam Socaetq

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