Academic journal article
By Pires, Roberto
International Labour Review , Vol. 147, No. 2/3
Can workers' rights and social protections be reconciled with firms' competitiveness and productivity? In contrast to current development policy advice, which emphasizes the "flexibilization" of labour laws, this article contributes to an ongoing debate about styles of inspection by exploring the causal links between different regulatory practices and economic development and compliance outcomes. Findings from subnational comparisons in Brazil challenge established theories about the behaviours of firms and regulatory agencies, and indicate that labour inspectors have been able to promote sustainable compliance (legal and technical solutions linking up workers' rights with firms' performance) by combining punitive and pedagogical inspection practices.
In the past two decades, government regulatory activity has been increasing in regions as diverse as southern Europe, North Africa and Latin America, in a movement that has been recently characterized as a "regulatory renaissance" over the receding waters of neoliberalism (Piore and Schrank, 2006 and 2007). Policy-makers in France, Spain, Morocco, Argentina, Brazil, Chile, the Domin- ican Republic and other Latin American countries have devoted new resources to the enforcement of their labour and employment laws, in some cases even doubling the size of their labour inspectorates (Piore and Schrank, 2008).
The increase in government regulatory activity has moved the debate between labour rights activists and business beyond considerations of the desirability of government regulation, and one can currently observe a revival of scholarly production about models and styles of inspection and enforcement of regulation. Scholarly attention to variations in the implementation of laws and regulations by street-level inspectorates has increased as researchers have been trying to explain how and why regulatory agencies adopt a more stringent, punitive or a more flexible, educative approach in the performance of their legal mandates.
However, we still know very little about the causal links between these different styles of regulatory practice and the outcomes observed. The exploration of these links is the focus of this article, which reports on the findings of subnational comparative research carried out in Brazil - a country often referred to as a textbook example of the perverse effects of labour regulation on economic development. These findings challenge established theories about firms' compliance with regulation and the behaviour of regulatory agents. Explanations based either on raising the costs of non-compliance (deterrence model) or on providing advice and guidance to firms on how to comply with the law (pedagogical approach) fail to account for the behaviour of inspectors when they bring up positive change in industries that have traditionally operated out of compliance. Rather, I suggest that sustainable compliance solutions - those capable of reconciling workers' rights with firms' performance - result from a combination of both coercive and pedagogical enforcement strategies (e.g. fines and education/assistance). I argue that combined enforcement strategies allow labour inspectors to learn about the obstacles preventing firms from complying with the law and to develop innovative local solutions. These compliance solutions include technological improvements, adaptations of the regulation to local/industry circumstances, and the sorting out of unnecessary, costly and inapplicable bureaucratic requirements from relevant institutions protecting workers and organizing markets.
This article aims to contribute to the ongoing debate by improving our understanding of how different regulatory practices (or styles of inspection) affect economic development and compliance outcomes. First, I review the debate in the literature about variation in styles of inspection and point out the lack of understanding about how inspection styles are causally associated with compliance outcomes. …