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close this bookJob Quality and Small Enterprise Development - Working Paper No. 4 (ILO, 1999, 35 p.)
close this folder4.0 Lessons from practical experience
View the document(introduction...)
View the document4.1 Increasing training and knowledge
View the document4.2 Integrating competitiveness with qualitative conditions
View the document4.3 Promoting self-help associations and collective solutions
View the document4.4 Developing enabling regulatory environments
View the document4.5 Towards a local, integrated and holistic approach

4.4 Developing enabling regulatory environments

A fourth component in the promotion of quality employment is the design of an appropriate regulatory environment. The complaints, often justified, of stifling bureaucratic regulation on small enterprise are well known, and the need to remove unnecessary ‘red tape’ is clear. There is often a need for more flexible regulatory frameworks, which can be adapted to specific circumstances without undermining basic objectives or core protective measures. The introduction of new regulations may be most usefully combined with promotional actions that improve conditions and increase enterprise capacity and competitiveness in an integrated fashion.

Assistance will be needed by entrepreneurs, workers and the self-employed to understand both the social and economic value of regulatory measures. The development of manuals, the promotion of training programmes and the use of self-help associations to share costs and organise assistance should figure prominently in these efforts.

Assistance might also be given in removing blockages or disincentives to the introduction of measures that raise standards. This may include, for example, measures that counter pressure from customers, such as lead firms, to reduce incomes and conditions, where lead firms are competing strongly on price factors and short-term cost cutting approaches18.

18 For example, as part of a strategy to move the San Franciscan small firm garment industry away from a cost cutting competitive strategy to one based on higher quality and higher value, initiatives in the mid-1990s to provide training and other technical assistance, as well as improved working conditions, were accompanied by efforts to promote compliance with labour regulations. In the past the pressure to not provide adequate working conditions, and not comply with labour laws, is said to have come from a tendency by suppliers to win orders from manufacturers by keeping prices low. Contractors blamed manufacturers for paying insufficient rates, whilst manufacturers said the issue was outside their control and lay in the province of the suppliers. However, manufacturers and contractors were persuaded to come together and cooperate by signing a written agreement which specifies a number of conditions, including, for example, delivery schedules, and compliance with labour laws - including the proper payment of overtime. Surveys have found that between 1992 and 1995 compliance with labour laws rose from 12 percent to 61 percent (Pyke, 1997a).

These situations underscore the fact that a key to the success is through systemic approaches rather than ones that focus entirely on an individual small enterprise supplier or sub-contractor. Within this context, powerful lead firms can play an important part by promoting better conditions in small enterprise suppliers and sub-contractors, sometimes referred to as Ethical Sourcing Strategies. This is where lead firms, possibly through negotiation with trade unions, commit themselves to only source from suppliers around the world that meet certain basic standards, such as, the core standards of the International Labour Organisation19.

19 Within the UN system, the International Labour Organisation has developed an international code of labour standards for member States to use as guiding principles for their own legislation. Of these, 7 are seen as ‘core’ or basic standards, of which nearly 100 states have ratified at least five of them, being: Conventions 29 and 105 on the abolition of forced labour; Conventions 87 and 98 on the rights to freedom of association and to bargain collectively; Conventions 111 and 100 on the prevention of discrimination in employment and equal pay for work of equal value; and Convention 138 on the minimum age for employment (child labour). Source: (ICFTU: 1996)