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How Do International Labor Issues Affect Personal Finance Decisions?

International Labour Organization was established in 1919. It is a significant institution renowned for bringing together governments, employers, and employees from across the seas.

The organization aims to develop specific policies that focus on development in labor status. It was set up as a specialized institution by the United Nations and concentrated on sole advancement in every kind of labor standard of living.

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ILO constitutes 187 member states who propound and implement international labor standards in their respective territories.

These programs may comprise of ratification of existing cases, if deemed necessary, penning down essential labor laws to shield the interests of workers, and defining rights and boundaries for employers and employees in a work environment.

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Defining International Labour Standards and Issues

International Labour Standards (ILS) are rules drawn up with mutual understanding and discussions about labor issues. Every standard is a consequence of experience in the real world. It is a framework that safeguards the interest of labor and prevents them from extreme exploitation. 

ILS recognizes the fact that “Labour is not a commodity.” Furthermore, the notion extends until labor can not be negotiated for the highest profits or lowest prices. The right to a uniform basic remuneration shall guard the labor from future manipulation.

Not only does ILO protect the dignity of a laborer, but it also creates a bubble for the ecosystem, where a cordial relationship develops between the employers and employees. This congenial environment has been oriented to check the mental and emotional well-being of the workers. 

It is believed that economic advancement shall not just set in with a highly technological or prosperous economy. The initial step to undertake economic progress is to improve the life of human beings dwelling under the system.  

Example of A Labor Issue

When the economy was at the peak of globalization, back in the mid-1990s, companies expanded across borders. This gave them a chance to set up in underdeveloped nations and take benefit of lower wage rates flowing in that demography.

The trend raised significant concerns since it disrupted the flow of the economy. Money started gathering in the hands of a few individuals rather than a regulated circulation within the system.

Utter victimization for lower wages was nothing less than abuse due to unawareness and compulsion from the ends of the victim. The land of origin witnessed a fall in employment rates.

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Keeping in mind issues like those stated above, The ILO was established at the Treaty of Versailles. The ILO identifies eight core standards that indicate fundamental human rights. It is also a regulatory body whose responsibility is to check the implementation of the standards across borders.

Such investigation may involve rectification of the existing laws and publicizing the findings. However, the ILO can not retaliate with trade measures. Hence, it provides support and assistance needed to follow the rules laid down by the body.

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How do International Labor Issues affect Personal Financial Decisions? 

Well, let us begin from the root of the matter. Personal Financial Decision is a step-by-step strategic breakdown of how an ordinary and prudent person runs their household with resources that he acquires by working in an economy.

To put it in a macro sense, financial decisions are taken to organize expenditures and investments so that coordination is developed at the micro-level.

This coordination links together and forms a macrostructure of spending, savings, and investments. An eye on the macro-level forces us to locate the cause in a micro household structure. 

A macroeconomy considers factors like government and dynamics of the business environment too. While, at a micro level, we understand the transactions are held in a vacuum, comprising just the concerned parties. In this manner, a relationship is developed between incomes and expenditures.

To be precise with the phenomenon, one needs to understand that while, for example, labor laws shall establish harmony with basic pay, it is still a matter of concern as to how the payment shall be spent in the course of time.

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Will it be enough for everyone steering the economy? Is it understated for laborers of developed nations? Would it consider the rising prices? And many more. 

The above relation states precisely what we shall discuss.

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Here are some International Labor Issues that affect personal financial decisions.

Level Playing Field

The crux of the Issue

Globalization opened gates to a competitive market. For businesses to succeed, they needed to acquire an edge over the others.

Price was considered one of the most relevant factors that affected a more extensive market area, especially India. Corporations, to increase their sales and profit margins, decreased their costs. Labor costs in such a case are inclined to take a resounding hit. 

Recognition of the problem

Hence, ILO understood it better to safeguard the interests of the labor by propounding a specific minimum price that ought to be paid.

The minimum amount proposed must be paid under any circumstance or temptation to gain a comparative advantage by lowering labor costs. 

Effect

To look at it on a micro-level, a minimum wage rate guaranteed household security, opportunity to acquire better skills, and stabilized the labor turnover ratio.

It enhanced the standard of living across the globe and paved the way for a robust and more equal economy. It also safeguarded an individual laborer from severe exploitation.

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Improving the Economy 

The crux of the Issue

A workplace with depressed and unsatisfied employees witnesses a higher labor turnover. It becomes tough to survive in an atmosphere where employees are not rewarded and appreciated. Success rarely comes to organizations that do not value their human resources. 

Recognition of the problem

ILO acknowledged the impact of a stressful atmosphere and laid down regulations that created a space for informal communication and abolished the notions of ‘slavery.’

Employees were now recognized with respect and dignity. To reward the workforce, corporations put forth monetary incentives like social protection schemes, health insurance schemes, and other labor market policies. 

Effect

The impact of appreciating and motivating a company’s manpower was better than expected. The labor turnover ratio dropped instantly.

Employees felt connected to the businesses they worked for. Furthermore, social protection schemes, coverage of medical expenses, and health insurance helped them cover regular expenditures.

Compounded with the labor market orientation, these added schemes have assisted the labor strata in achieving improved living standards. 

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Reducing Poverty 

The crux of the Issue

With the advent of technology, manpower was replaced by machines and materials. The economy saw a drastic change that preferred capital investment over regular variable expenditure.

This led to significant lay-downs in diversified industries. As a consequence, poverty kicked in. The cycle of unemployment brought in recessions. 

Recognition of the problem

International Labor Organization answered the concerns by implementing various policies. A framework was defined that empowered the federal agencies to govern a fair share of the market.

The government introduced incentives and reasonable labor practices to create extensive employment opportunities. Training and development sessions were also put forward as part of the plan, which enabled the workforce to develop their skills.

The informal labor sector was converted into a formal and organized sector. This mechanism was followed considering the best interests of human resources. Standards laid by ILO aided the workers to speak from a position of strength. 

Effect

Reduced poverty and hunger are in themselves a good indicator of how finances were generated and circulated amongst the labor class of the ecosystem. Skilled workers were always preferred over the unskilled labor force. Yet it was the responsibility of the central powers to control them and aid them.

The flow of income was improved by ILO and its curated framework, which ultimately supported the personal financial decisions of the employees. Not that it only supported their opinions, instead it formed the foundation of their decision.

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Conclusion

If we analyze the historical progression of International Labor Standards and Laws, it is undeniable that we have come a long way. The human resource of a company is primarily valued and admired.

Impeccably, Labor is the source of creativity, initiative, and innovation. Maybe some organizations comprising the informal and formal sectors around the globe still succeed in accomplishing a competitive advantage by exploiting their staff.

The severe practices followed by supervisors need to be checked on. A strong representation and implementation of labor standards will lead to an enhanced distribution of income, ultimately affecting the economy’s growth. 

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