Labour and international accounting standards: A question of social justice

Published date01 March 2020
DOIhttp://doi.org/10.1111/ilr.12165
Date01 March 2020
International Labour Review, Vol. 159 (2020), No. 1
Copyright © The author 2020
Journal translation and compilation © International Labour Organization 2020
*Associate Professor, Grenoble School of Management; Permanent Fellow, Nantes Institute for
Advanced Study, France, email: samuel.jube@grenoble-em.com.
Responsibility for opinions expressed in signed articles rests solely with their authors, and
publication does not constitute an endorsement by the ILO.
Labour and international accounting
standards: A question of social justice
Samuel JUBÉ*
Abstract. As the international guardian of social justice, the ILO is witnessing a
global revolution in accounting, which has culminated in international account-
ing standards (IAS-IFRS). Previously, accounting measured the economy in relation
to the capacities and responsibilities of workers and their employers. Today, the
exact opposite is the case: the IAS-IFRS no longer measure work and enterprises,
referring instead to the abstract concept of a cybernetic entity capable of constant
restructuring, at the cost of unprecedented inequality. The author points to the inco-
herence of this system and to the need to restore the full carrying value of labour.
Keywords: international labour standards, accounting, reporting system,
corporate social responsibility, working conditions, regulation, role of ILO, value
of labour.
Stating that “labour is not a commodity”, the Declaration of Philadelphia, which
was adopted in 1944 and annexed to the Constitution of the ILO to clarify
its goals and objectives, seeks to emphasize that labour cannot be reduced
to a carrying value (Supiot, 2010). There are, however, two problems in the
interpretation and the implementation of this principle. The rst arises from
the well-known fact that the rules that seek to balance out market forces to
guarantee the respect of human dignity are still too often ineective. The
second, less obvious problem comes from the fact that labour is not a carrying
value in the rst place, or at least not in the current framework of accounting.
Labour does gure in company accounts for a given amount, but it appears
as an expense rather than an asset. In other words, it decreases a company’s
carrying value, rather than contributing to it. This second problem is just
as detrimental to labour conditions as the rst and, as this article attempts to
demonstrate, deserves the ILO’s full attention.
This raises the initial question of whether the ILO is competent to consider
the formulation of the rules of accounting. If so, a second question relates to
International Labour Review
96
what considerations and measures need to be taken in this regard. The first ques-
tion, although not a straightforward one to answer, will be addressed in this in-
troductory section; the second will be the main subject of the rest of the article.
Part II of the aforementioned Declaration states that “it is a responsibility of
the International Labour Organization to examine and consider all international
economic and financial policies and measures” to ensure that they “promote
and [do] not hinder” the right of all humans beings “to pursue both their ma-
terial well-being and their spiritual development in conditions of freedom and
dignity, of economic security and equal opportunity”. The question is therefore
whether the accounts that private enterprises produce for interested third
parties – now known as “financial accounting” – are part of those “economic and
financial policies and measures” that are to be examined by the ILO and aligned
with the objective of social justice.
Admittedly, in 1944, this was not a question, or at least it was not framed
in the same terms. At the time, financial accounting was not subject to inter-
national rules. The situation has, however, changed considerably since. Political
initiatives started to be taken in the 1960s to harmonize accounting standards
across regions, first in Francophone Africa (with the adoption of the accounting
standards of the African and Malagasy Common Organization in 1970) and then
in the European Economic Community (with the adoption in 1978 and 1983 of
the first directives on accounting). In 1973, following the collapse of the Bretton
Woods international monetary system, various accounting organizations1 came
together to create the International Accounting Standards Committee (IASC) in
London. The objective of this private organization was to develop global ac-
counting standards that would be applicable around the world. A comprehen-
sive framework known as the International Accounting Standards (IAS) was
progressively developed. In 2001, the accounting standards became known as
the International Financial Reporting Standards (IFRS) and the IASC became
the IFRS Foundation. Its headquarters remained in London but it was incorp-
orated in the State of Delaware. The formulation of standards was entrusted to
a council of independent experts (International Accounting Standards Board,
or IASB). These experts are appointed by the Foundation’s trustees on the basis
of their individual expertise. Since 2009, this is subject to approval by a moni-
toring board comprising some of the chief authorities on the regulation of fi-
nancial markets.
The IAS-IFRS were initially presented as technical rules that sought to im-
prove the quality of financial information by providing the framework within
which private enterprises were required to prepare and present their accounts.
They established a body of transnational regulations, flexible in their design but
rigid in their application. Although they were developed in the private sector and
are not intrinsically binding, they have now been made mandatory by national
and regional authorities in at least 144 countries (12 others accept them and
other countries have aligned themselves with them), making them something
of a lingua franca economica. They were endorsed by the International Organ-
1 These accounting organizations were established in Australia, Canada, France, Germany, Ire-
land, Japan, Mexico, the Netherlands, the United Kingdom and the United States.

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