Governing Regulatory Discretion: Innovation and Accountability in Two Models of Labour Inspection Work

Abstract

Contemporary debates on the role of labour market regulation have been strongly influenced by the neoclassical economic tradition that considers this type of state intervention to be inimical to economic growth (Lee and McCann in this volume). Mainstream development economics has long advocated for an unavoidable trade-off between the extension and enforcement of labour regulations and the ability of firms to compete in increasingly globalized markets. A now vast literature (for example, Johnson et al. 1998; Schneider and Enste 2000; Friedman et al. 2000; Batra et al. 2003) argues that extensive workers’ rights and job protection regulations are associated with firms’ inefficiency, growing unemployment rates, and the expansion of the informal sector.¹ In this view, not only do labour regulations ‘distort’ the market, but their enforcement is often depicted as legalistic, bureaucratic and ineffective, and the discretion enjoyed by law enforcers is often portrayed as a major source of corruption and economic inefficiencies, particularly in developing countries.²

I would like to thank the Department of Labour Inspection (Secretaria de Inspeção do Trabalho) at the Brazilian Ministry of Labour for the cooperation and feedback at various stages of this research.