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FNV COMPANY MONITOR How socially responsible are Dutch companies in their global

operations?

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CONTENTS

1. FOUR MULTINATIONALS INVESTIGATED 3

Networks being established in companies

2. A COLLECTIVE LABOUR AGREEMENT AT GLOBAL LEVEL 5

Lodewijk De Waal: ‘Keep on with the questioning right down to the nuts on the cornetto’

3. SOCIAL POLICY NOT REGULATED CENTRALLY 9

Huge differences revealed in practice

4. CODES OF CONDUCT, QUALITY MARKS AND PARTNERSHIPS 11

Greater union participation in CSR debate

CONFERENCE CONCLUDES FIRST PHASE OF COMPANY MONITOR 13

Dialogue on CSR started

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1. Four multinationals investigated Networks being established in companies

This is the first public presentation of the Company Monitor, an initiative of FNV Mondiaal and FNV Bondgenoten. In recent years, four Dutch multinationals have been the subject of a number of comprehensive surveys carried out in six different countries. Before the results are presented, the goal of the project will first be explained. The Company Monitor was set up in 2000 to facilitate monitoring of the performance by Dutch multinationals in the area of 'corporate social responsibility’ (CSR). The project seeks not only to improve CSR performance and stimulate discussions on CSR within the Netherlands, but also to establish networks of trade union people and workers. The ultimate aim is for the international union umbrella organisations to be accepted as negotiation partners by the multinationals, themselves operating in an international environment, and for global labour agreements to be signed.

The Company Monitor, a project by FNV Mondiaal, began setting up investigations in six countries in 2001. Four multinationals (Ahold, Akzo Nobel, Philips and Unilever) were selected on the basis of a number of criteria. One was that the multinationals must be major Dutch companies with operations in many countries around the world. Preferably, they should cover a number of different sectors and be well known by the Dutch public. Systematic monitoring is taking place on their behaviour in developing countries – with special emphasis on labour rights, working conditions and labour relations – during the period 2001 to 2006. How do the multinationals treat their employees? At the end of the five-year period, the key question will focus on whether the workers have benefited: have the wages gone up? Have the working hours been reduced? Have the working conditions improved? In cooperation with the Dutch organisation SOMO and via allied trade union federations in other countries, research bureaux were brought in with the aid of a detailed questionnaire. The Centro de Investigaciones Laboral y Asesoría Sindical (CILAS) in Mexico researched Philips and Akzo Nobel. The South African National Labour and Economic Development Institute (Naledi) surveyed Unilever and Akzo Nobel. The Observatório Social, (the Brazilian sister organisation of Observatório Social Europa based alongside FNV Mondiaal Europe), covered Ahold, Akzo Nobel, Unilever and Philips. The South Korean Korea Labour and

Society Institute (KLSI) researched Unilever, two Philips joint ventures and Akzo Nobel. Lastly, the Czech researcher Lenka Simerska and her Polish colleague Karolina Masiak occupied themselves with Ahold’s activities in their respective countries. Country by country, general information was gathered, which led to the selection of a number of locations for more detailed investigations, including interviews of management and workers The investigations, like the resulting detailed reports, were grouped under seven headings: 1. General information on the company in the

country concerned: how many locations and of which divisions, profit and turnover, management structure, strategy, social policy, consultation structures, et cetera. General information is also summarised on the labour relations: any conflicts in the preceding years; which trade unions are actively involved; is collective bargaining carried out? In conclusion, this first section provides an overview of which national labour laws exist and which ILO conventions have been ratified by that country.

2. More concrete data on the labour relations, particularly focusing on the trade unions’ right to freedom of organisation and the right to conduct collective bargaining. A further aim is to seek to form a qualitative assessment of the dialogue between trade union and company as well as such matter as how the management scores in terms of information provision.

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3. What is the situation with regard to working conditions? With special reference to the ILO conventions on child labour, forced labour, discrimination, wages, working hours, health and safety and different types of fringe benefits.

4. How does the company go about restructuring? Do trade unions play an active role in the process? Are there good redeployment/severance schemes and social plans in existence? Does the company have a clear policy in the subcontracting of work?

5. Are there any instances of human rights violations (with particular focus on the immediate vicinity of the factories)?

6. Does the company comply with environmental norms and standards? Does it adhere to particular (ISO) standards and does it report back on its environmental policy?

7. Conclusions Thirteen investigations have now been completed. Chapter 3 outlines the general conclusions. More detailed summaries and the

complete reports of the investigations are available in several languages and can be ordered from FNV Mondiaal. The Company Monitor is, however, more than a compilation of research results. Executive members and workers from many different countries, union committee members and other interested parties are actively involved and are gradually becoming better acquainted. They are establishing international networks inside their own companies as well as further afield. They keep each other abreast of the situation in their factory or workplace and support each other in actions. This process is now underway. In June 2003, they met together at the FNV premises in Amsterdam. Together with their Dutch counterparts, they paid a visit to one of ‘their’ company’s factories and presented the investigation results to the senior management. The final chapter "Conference concludes first phase of Company Monitor" gives an account of this week.

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2. A Collective labour agreement at global level

Lodewijk De Waal: ‘Keep on with the questioning right down to the nuts on the cornetto’

Since the investigations set up a number of years ago by the FNV Company Monitor into four Dutch multinationals – Ahold, Akzo Nobel, Philips and Unilever – corporate social responsibility (CSR) has become an increasingly more topical issue. FNV Chairman Lodewijk De Waal is of the opinion that the findings of these investigations presented further on in the brochure not only provide a useful tool in furthering the debate on CSR, but ‘they can also be used in the ongoing expansion of the international networks of unions and workers in the four companies.’ The ultimate goal: ‘Entering into a global agreement, just like the national collective agreements here in the Netherlands.’

Lodewijk de Waal "Multinationals often play a kind of ping-pong game in developing countries. A typical example is where the Brazil management claims that someone has been laid off by head office in the Netherlands. If we look into the matter, they begin laughing and tell us it’s local policy. You’re sent from pillar to post ", says FNV Chairman Lodewijk De Waal. This is one of the principal findings to emerge from the Company Monitor investigations: while companies often organise many kinds of activities on a centralised basis, they allow their social policy to depend on the local situation. "That way, companies can get away with social policy-related issues in developing countries that they simply can’t here. The strange thing is that multinationals sometimes impose stringent environmental standards for the locations in developing countries, but when

it comes to how to treat people, all of a sudden they argue that that depends on the local situation. A lot can be regulated on an international basis. At McDonalds, the recipe for ketchup is laid down by headquarters, but the personnel policy is a local matter." The Company Monitor has carried out investigations into the social policy of four Dutch multinationals in different countries. De Waal explains the whys and wherefores of the initiative: "In the international trade union movement, the tradition is for the country where the head office is located to 'adopt' that company. This is a problem for us, because ours is a small country with many multinationals. It also explains why CSR is so high a priority for the FNV. A case in point is the Company Monitor, which is an initiative of FNV Mondiaal. The Observatório Social Europa and the Brazilian Observatório to which it is linked were also largely set up and funded by the FNV." For De Waal, it’s no more than natural for the trade unions to seek as much international collaboration as possible. "That’s inherent to the nature of the union movement. Our core philosophy is solidarity: achieving together what you can’t do on your own. So for us at FNV it’s only natural to forge bonds across boundaries. We’re fellow workers, worldwide." The fact that not everyone thinks like this came as something of a surprise to De Waal. "Entrepreneurs don’t think in such terms. An example is once when I was visiting Indonesia with a gentleman from an employers’ association and I of course went

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and talked to my union colleagues. My companion had no contacts with the Indonesian employees’ association. In answer to my question as to why not, he said: 'Because they’re our competitors.’ There is no worldwide employers’ association of any significance either." According to De Waal, it would be a good thing if employers in different countries were to do more in the way of information exchange. "They ought to find out more about the conditions in other countries. Then they might get used to our international contacts as well. I do, in fact, see signs of their gradually becoming accustomed to the idea. When the European works council was introduced, the employers had cold feet at first but it’s now been accepted. In the same way as we’re now allowed to visit the foreign establishments of the Dutch multinationals. Strangely enough, that doesn’t work the other way round yet. When we bring over executive committee members to the Netherlands, we have to go to a lot of trouble for permission for them to go into the Dutch companies. The multinationals take the view of: what are they doing here anyway? Although they’ve now got as far as finding it logical for a workplace branch or a works council to meet regularly together to discuss matters relevant to the company, they find it strange for that to take place at an international level as well. Their reaction is: 'But you haven’t got anything to do with each other, have you!'" Cultural differences In the expansion of international networks, the remaining obstacles to be overcome are not restricted to the employers, but are also found in the unions and among the workers. De Waal explains: "The trade unions in the different countries operate from the perspective of a different social position, with different forms of action and a rooting within companies. Actions vary according to the tradition of each country. For example, the unions at Philips in Brazil take extremely radical attitudes and they want to achieve a tremendous amount all at once. I often have a problem explaining to them that over here we’re only too pleased if we can secure a decent collective agreement at Philips. In countries like Brazil, the union often has more power in terms of membership numbers than we do over here. Because of our consensus-based economy and the fact that

we’re able to make use of public organisations as well as the media, we’re sometimes able to get somewhere. On the other hand, in countries like China, there are hardly any independent unions. The state trade unions do nothing more than organise personnel functions." The international company networks have to be built up from the foundation, suggests De Waal. "Trade union people and workers in the different countries need to do an awful lot in the way of mutual exchange. Discussing how things are done in their countries, explaining to the others what the social policy involves in their own countries. Achieving clarity as to where the decisions on the various issues are taken. And then together trying to raise things to a higher level. " In the process of building up the networks, one can learn from the experience acquired in the European works councils."This took a great deal of time, too, and it also brought to light the kind of things you were likely to come across – the language problem for one thing, and the high cost of interpreters, the travelling costs involved in bringing everyone together and the cultural differences between workers. The FNV has now been working for a number of years with the South Korean trade union federation KCTU. But it took us an awful long time to get the hang of how things work there. One thing we just couldn't understand was why anyone would set themselves on fire because of being made redundant. This happens there with a certain amount of regularity. But then when you hear that the people depend on the company where they work for absolutely everything – their medical expenses, their house, their children's school – and that there’s no social safety net at all, then you begin to understand things a bit better. That if you lose your job, you lose everything in one fell swoop. The relative levels of importance there are totally different from here. In South Korea, incidentally, there are two to three hundred union members in prison." Waste bin The FNV now works primarily with the South Korean, South African and Brazilian trade union federations. De Waal would like to see this extended to other partners. "We are very

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interested in China, because many companies are moving their production over there. A while ago I paid a visit to Van Melle’s operations in the Philippines, a company with excellent achievements in CSR. I thought the wages somewhat on the low side, but apart from that, the working conditions were good. However, a year later I heard that the plant had been closed down – with a good redundancy scheme, it’s true – and that they'd moved to China. That tends to be a problem: when a branch closes down, you can't do anything about it. A strike doesn't help, because there’re no more demands you can make. Many multinationals move to countries like China, Vietnam, Laos and Cambodia. These countries are the waste bins of the world. By and large, it tends not to be the Dutch multinationals that do this: though they go to the countries with the lowest wages, they pay better, relatively speaking. There are still plenty of topics to discuss, though, like whether the minimum wage in developing countries is enough to be able to live from and whether you oughtn't in fact to pay more. But on the whole, the Dutch companies do a pretty good job. In China, they are often our only way in, because via the state unions, that doesn’t work. I was talking to a manager working for a Dutch company in China, who thought his employees' wages were very low. He advised the union representative to do something about this, but got a negative answer: 'It only leads to unrest.'" The crux in many countries, including not only China but also South Korea, is trade union freedom. De Waal does not think that multinationals have a duty to put pressure on the governments in question to compel them to allow greater freedom for the unions. “Here, we certainly wouldn’t approve if companies tried to force something on the government. Of course, when the issue is violation of human rights, everyone has a duty to bring his influence to bear. But as far as other situations are concerned, it's better if companies simply just don’t go to a particular country. Heineken, for example, chose not to be in South Africa under Apartheid, because it wasn't allowed to implement its own personnel policy. And on one occasion, Shell called a halt to operations in China when one of their workers was arrested."

From seed to end product The biggest problem does not lie with the multinationals’ local establishments themselves, but with the supplier companies. "In my opinion, the whole chain should be mapped out, from seed to end product. That, however, is no easy task. I once went into the free-trade zone in Shenzhen via Hong Kong. I paid a visit to a small company that made cables and plugs. I asked who they were making them for. 'America', was the answer. That's all they knew themselves. Another time, we were visiting a Unilever ice-cream factory in Vietnam. A magnificent factory, run by an Australian. Everything looked perfect. The ingredients for the ice cream – the milk, for example – also underwent careful inspection. Until we asked about the nuts on the cornettos. They didn't actually know where they came from. Since that time, we’ve had the motto: ‘Keep on with the questioning, right down to the nuts on the cornetto’." The international contacts can help unions find out more about supplier companies. "In the end, however, the responsibility lies with the head office of the multinational. Here, after all, is where the circumstances are created that actually enable the supplier to comply with the social conditions. For example, it’s up to the multinationals to make it possible for suppliers to pay reasonable wages. If things still keep going wrong, then the multinationals should take action." De Waal is of the opinion that corporate social responsibility has now secured a permanent place in companies' day-to-day operations. "Every company is different. The ones who target themselves more at consumers, like Ahold, Unilever, Shell and Heineken, are

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concerned about their image, and therefore do more in the way of CSR. I don't agree with what's sometimes said, that CSR becomes less important when the economy is slowing down.

With multinationals like Heineken and Shell, CSR has become so much a part of their way of life that they're not so likely to do a U-turn."

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3. Social policy not regulated centrally

Huge differences revealed in practice

Thousands of pages of investigation reports and many hundreds of interviews cannot be summarised in a page or two. Even the brief summaries on the following pages do not do full justice to the huge amount of information that has emerged from the investigations set up by the Company Monitor. Nonetheless, a number of general tendencies can be distinguished and one or two conclusions can be drawn from the thirteen reports.

The most important general conclusion is that the social policy pursued by Ahold, Akzo Nobel, Philips and Unilever is highly diverse and fragmented. Not only matters such as marketing, but also the environment and health and safety policies are often organised from the head offices. This tends not to be the case in matters of policy relating to unions, collective bargaining and wages. All the multinationals investigated are hard at work on further improvements to their codes of conduct, which in theory apply to all the company units – and in some cases even to the suppliers. But when it comes to social practice, it seems that no clear policy is being laid down. The positive exceptions would seem not to be the result of any deliberate decisions from head office, but of the situations in which the local operations take place. On all points, South Africa stands out, in a positive sense: this would appear to be because of a strong union and better labour legislation. The reverse applies to South Korea, with its highly repressive trade union laws. The attitude displayed by the four companies vis-à-vis the Company Monitor investigators varied considerably. At the start of the research, the Dutch head offices of Akzo Nobel, Ahold, Philips and Unilever were contacted. In the countries that formed the subject of the investigations – Brazil, Mexico, South Africa, South Korea, Poland and the Czech Republic –the local management was also approached with requests for information. In these countries, the reaction by Philips was by and large positive. At Philips Amazonia in Brazil, they even went as far as to stop the production line. At Akzo Nobel, the degree of openness varied considerably, both from one country to the next and even from one location to the next. Unilever displayed a similar picture: in South Africa, although documents

were made available, no interviews were given. In Brazil, the reverse happened. Industrial relations In the field of industrial relations, totally diverging results can be reported. Across the board, a high proportion of the labour employed consists of temporary workers, who have to work under much less favourable conditions of employment and for lower wages. They are also far more difficult to organise. The common feature in the investigations is that the local management is given a free hand by the head offices of the multinationals in dealings with the unions. The situation often reflects the legislation of the countries and the position of the trade union movement. The differences between South Africa, for example, where there is generally a good relationship between trade union and management, and South Korea, where the unions are subordinate to the management, can to a large extent be explained by the power of the unions and their rights. An exception is Unilever South Korea, where union and management are on good terms. In Brazil, the relationship is highly polarised. In some cases – Philips for example – this leads to pressure being placed by management on trade union members. In Mexico, the situation varies from one company to the next. The common denominator in the locations with good labour relations would appear to be the presence of democratic and independent trade unions. Things go rather less smoothly in the companies where the unions are dominated by the former government party PRI. ILO conventions The four multinationals were measured against standards contained in the ILO conventions.

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None of the companies has been found to be using child or forced labour. In this area, they are doing a good job. The suppliers are the great uncertainty. They were either not investigated or else insufficient facts and figures were available. In the area of discrimination on account of gender or colour of the skin, no widespread abuses were found. In a considerable number of cases, this could not be checked via salary data. What was striking, however, was that the interviews – undoubtedly conducted predominantly with male managers and trade union representatives – gave little indication of discrimination, while the figures paint a different picture. Women frequently earn substantially less for the same work and they are strongly underrepresented in the higher positions. A striking exception is one of the Philips factories in Mexico - Construlita the Querétaro – where, across the board, as many women as men are employed. In the field of health and safety, all the companies scored reasonably to well. This invariably comes down to the existence of a clear, uniform policy. Training instruction is provided for the personnel and many precautionary measures are taken. Only at Philips in South Korea does the high pressure of work still lead to health risks. In Brazil, the pressure of work at Philips, Unilever and Ahold seems to be the cause of an increasing number of cases of RSI or other occupational illnesses. In most cases, the environmental policy of the four multinationals is also relatively good, even though the main focus of interest was on the environmental measures taken by the companies and not on the consequences and impact on the environment, certainly not outside the local establishments. A negative exception is Philips in South Korea. All the companies do badly when it comes to pay. The wages are low in practically all the cases. The employees at the bottom of the

ladder – and that tends to be the majority of the workforce – are below the minimum living wage in all the countries investigated, even though wages are nowhere less than the statutory minimum. This was also true of Ahold Polska, but workers there do miss out on part of the pension contributions on account of a part-time arrangement. The wages at Akzo Nobel and Philips are lower than the average in these countries – with the exception of Philips South Korea. In South Korea Unilever is below the average, in South Africa above the average and in Brazil it differs from one company to the next. On fringe benefits for the permanent workforce, the companies investigated score reasonably well. The package is not always comprehensive, certainly, but in general the evaluation is positive. In line with expectations, no shocking conditions were encountered in the four companies. It should be noted, however, that a picture has only been created of the working conditions of the permanent workforce at the four multinationals. Little or no investigation has taken place on the suppliers and subcontractors, and it was difficult to get information about them. In recent years, the companies have divested themselves of a large number of units and then proceeded to re-contract them. The same applies to the workers: greater use is made of temporary personnel, who have far fewer rights and lower wages than the permanent staff. .

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4. Codes of conduct, quality marks and partnerships

Greater union participation in CSR debate

The discussion on corporate social responsibility (CSR) is very much alive. Many companies are making serious endeavours to draw up codes of conduct for their global operations. But all too often, these codes of conduct are too vague, are not subject to control, and not known to the workers, which means that the picture in practice is not yet perfect everywhere. The investigations presented by the Company Monitor in this brochure may be of assistance in raising the debate on CSR to a higher level. Both the Dutch and the international union movements should and must make a much greater contribution to this debate.

A distinction can be made between corporate social responsibility and social involvement. Involvement relates to activities outside the company's core business and often has the nature of charitable or voluntary work during working hours. In the best-case scenario, there is a small school or clinic on the company premises. CSR, on the other hand, emphatically relates to the core business and the effects of the company policy on the well-known Triple P: People, Profit, Planet. One of the means most frequently used by companies in CSR is the drafting or upgrading of a code of conduct. FNV Mondiaal describes in its booklet ‘Corporate Social Responsibility’ what factors a code of conduct should comply with. Key elements are: explicit reference to the ILO conventions, the involvement of not only the shareholders but also of other 'stakeholders', and independent monitoring. The International Confederation of Free Trade Unions (ICFTU) has formulated a model code in cooperation with the different international union umbrella organisations (the Global Union Federations). The ICFTU policy has in the meantime shifted. The aim is no longer restricted to good codes of conduct but has been extended to cover international agreements (Framework Agreements or Global Agreements). The great difference is that a code of conduct is unilaterally formulated by the company, while a Framework Agreement is drawn up and signed in conjunction with the union umbrella organisation concerned. In practice, this means that the Global Union Confederation also plays a part in the monitoring process. In the Netherlands, one Framework Agreement has

already been concluded: between Ballast Nedam and the International Federation of Building and Wood Workers.

Quality marks and partnerships In addition to codes of conduct, there are also many quality marks or certification initiatives in the social and environmental fields. There is considerable variation, as well as in the structure and content of the quality marks. To mention but a few: FSC timber (where work is underway on the introduction of social norms alongside the environmental norms), SA8000, Max Havelaar, and there is even a social quality mark for flowers, the ICC. In addition, there is the Fair Wear Foundation (FWF), an initiative in the clothing sector, membership of which is open to companies. FWF is seeking to improve working conditions in clothing production, particularly in developing countries.

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Dutch or international trade unions are involved in some of the quality mark initiatives. For example, FNV and FNV Bondgenoten are members of the Fair Wear Foundation, FNV Bondgenoten is involved in initiatives in the flower sector and coffee, and the Bouwbond (building workers) participates in FSC. The latest trend in CSR is partnerships – between private companies and local governments and public organisations. Partnerships were promoted as the new motor for development, in particular, during the 2002 Johannesburg summit on sustainability. The idea was that, in consultation with government and semi-governmental bodies and/or public organisations, companies could make investments aimed at contributing to development. A number of partnerships are already in existence, mainly focusing on water and energy in developing countries. Nuon is in partnership with Novib with regard to the water supply in South Africa. ICCO works alongside Ahold in the marketing of agricultural products from West Africa. Trade unions In the discussions on CSR, greater emphasis needs to be placed on the role of the trade unions. A term frequently used is 'stakeholders': a broad-based group of parties involved in the policy of the company. These are consumers, neighbours, suppliers, workers and shareholders. Companies are increasingly willing to enter into partnerships or dialogues with NGO’s. In many cases, however, not a

word is mentioned about trade unions, even if the issue is more or less entirely a social one. For example, many companies discuss human rights and workers’ rights with Amnesty International, while many of these same companies are much less willing to discuss these issues with the unions. In the debates on sustainability reports or social annual reports – which an increasing number of multinationals have begun issuing in recent years – it isn’t always automatically assumed that the trade unions and representative bodies will be participants. FNV Mondiaal is sometimes invited, whereas it would be much more logical to approach the union concerned. The companies and other organisations are not solely to blame for this. The unions, too, need to give serious thought to their role. The FNV and the unions alike should place CSR much more prominently on the agenda and claim a role in the related processes. This could be achieved by introducing CSR issues into collective bargaining or by discussing the code of conduct within the employees' council. Initiatives can be taken by the unions in setting up partnerships or projects with companies. The unions can also play a role in monitoring compliance with the codes of conduct or the discussions on social and environmental reports. Particularly when working actively on building up international networks in the companies – one of the most important objectives of the Company Monitor’s activities vis-à-vis Ahold, Akzo Nobel, Philips and Unilever – they can make an effective, useful contribution to the discussions on corporate social responsibility.

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Conference concludes first phase of Company Monitor

Dialogue on CSR started

At the end of June 2003, the investigation reports were finalised and were able to be presented to the executive boards of Ahold, Akzo Nobel, Philips and Unilever. 20 employees, trade union people and investigators from Brazil, Mexico, the Czech Republic, South Africa and South Korea had come to the Netherlands for this purpose, but in particular for an exchange of experiences. This made a firm basis for intensification of the collaboration and for the dialogue with the four companies on their social operations in developing countries.

They looked slightly unsure of themselves, standing around in Philips’ reception hall in Roosendaal on 24 June: senior managers, central company council and works council members, and the foreign contingent, each in its own corner, all talking among themselves and uncertain of who was supposed to be approaching whom. But, hesitantly, the discussion got going, and eventually it became a serious dialogue. Preparations for the Philips visit had been made the day before. At the FNV’s offices in Amsterdam, Philips employees from Mexico, Brazil and South Korea – like the workers from the other three multinationals – had agreed what they wanted to say to the management at the official presentation of the investigation reports. The multinationals too had been holding talks, it emerged during the visit to Ahold’s headquarters in Zaandam. The reception committee let slip that in consultation with the other companies investigated they had decided not to attend the public debate that the FNV’s Company Monitor had organised for the end of the week in Amsterdam – officially because they hadn’t had enough time to prepare for it. It also became clear that they had agreed amongst themselves on the level at which the foreign delegation would be received: not by the very top, but one step down, just below the level of the management boards of Ahold, Akzo Nobel, Philips and Unilever. Most of the foreign guests were reasonably satisfied: in their own countries they were unaccustomed to having those in charge talk to them personally, so the fact that the man

responsible for CSR at Philips, Arthur van der Poel had driven down from head office in Amsterdam to the southern town of Roosendaal specially to see them was a good sign. The Brazilians in the delegation expressed their satisfaction at how well Philips had cooperated in many cases: at the Manaus factory, they’d even gone as far as to halt the production line to allow the investigators the opportunity to give an explanation. The South Koreans in the group said that there was a great deal of uncertainty about whether Philips' code of conduct also applied to the LG and Philips joint venture. The answer from the Philips management was a decisive no, but added that efforts were underway to have the code introduced at LG Philips and it looked as if this would be successful. The management indicated that all the Philips companies worldwide had the duty to comply with the recently revised code of conduct. Anyone can submit a complaint about this via national telephone lines and will receive a prompt reply, except, of course, in the case of an anonymous complaint. Every country has a national compliance officer, required to make a twice-yearly report to headquarters. Antonio Hernández-Oviedo (48) Company: Industria Montacargas S.A. (Philips), C.V. Zona Industrial Benito Juárez, Querétaro, Mexico Currently employed: 15 years Present position: Operator B, various production activities Number of working hours a week: 47 Monthly salary: approximately 3000 pesos (approximately 257 Euro)

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"Because companies like Philips are globalising, it is necessary for the trade unions to do so as well. This enables you to familiarise yourself with labour relations in other countries. In Mexico, the first step is to achieve greater cooperation at a national level between unions active at Philips. Because of the specific situation of the unions, this is best done via the research institute SILAS, which has a wide range of contacts and is working to achieve coordination between them. Many workers have become disillusioned by the traditional trade unions, which are corrupt and work hand-in-glove with the government and the management. The result is that we, as a democratic and independent union, have tremendous trouble regaining their confidence. International cooperation could also be sought starting from SILAS. In my opinion, we need to begin by working more closely together in Latin America, and I think that the unions in Asia and Europe should begin at a regional level. There are a number of problems facing us. Firstly the language, though Mexicans and Brazilians can, in fact, understand one other. You could, for example, opt to write up

important matters in four languages and circulate them by post. The financial resources are another obstacle: not much money is available for these sorts of projects. In the first instance, they should come from the grass roots, and that means that I have to get them interested. This is a lengthy process. I'm now going back and will be reporting on this exchange of ideas to my colleagues, the trade unions and workers at Philips. This sort of international discussion will, by definition, always be abstract. You have to make sure you come down to the level of the workers, make sure they understand. We are now in the process of training forty members, who’ll represent our trade union in a variety of districts and companies. Part of this training includes learning about the international links. Before I began the investigation, I explained to them what the intention of the Company Monitor was. Half of them showed quite a lot of enthusiasm." Positive dialogue What was true of the Philips visit was also true, by and large, of the visits to Ahold, Akzo Nobel and Unilever. The atmosphere was generally positive, and the visitors from abroad had the feeling people were listening to them. The consensus was that this was the start of an ongoing dialogue about the way the social policy of companies all over the world could be improved. The multinationals promised to study the reports seriously and consult with local management to determine whether the facts in them were accurate. If it became clear that companies were not meeting the ILO’s basic standards and the OECD’s guidelines, steps would be taken to rectify matters. In many cases concrete agreements were reached about how the investigation reports would be handled from now on. In letters to the executive boards, these agreements will be recapitulated. A number of Dutch union executive members who were present to visit ’their’ companies put themselves forward as coordinators or contacts for their colleagues from abroad. These expressed their thanks for the solidarity of the trade union people and of the Dutch workers who were present at the meeting.

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The Unilever management team said they were not ill disposed towards a meeting between the four companies investigated and the unions to discuss further details of corporate social responsibility policy. The result of the visit to Ahold clarified a number of issues. The Brazilian workers asked the management to call a halt to the redundancies at Bompreço. The Ahold management replied that these redundancies were part of a reorganisation process that is to be completed in April. FNV Bondgenoten union representative for Ahold, Jos Brocken, said that for the Bompreço workers, a great deal will depend on the future buyer of their supermarkets. He expects that Ahold will do its best to find a buyer with similar social behaviour – Tesco, for example. During the conversation, it also became clear that despite the rumours going around in the Czech Republic, there are no plans to close down Ahold Central Europa (ACE). Vlasta Kallupova (55) Company: Supermarket Ahold, Prague, the Czech Republic Currently employed: 4 years Current position: checkout assistant and chairman of the executive committee of the Trade Union of Commercial Workers (OSPO) Number of working hours a week: 40 Monthly salary: approximately 500 Euro

"This is the first time that I've been at an international exchange of this sort. It’s very important for me. It offers the opportunity to compare the working conditions in our own country with the 'mother country'. Unfortunately, I’ve been obliged to accept that there are huge differences between what goes on here and the Czech Republic. There’s a lot less of everything in our country. Here, I just couldn’t believe my eyes. I spent a long time as a checkout operator. The checkouts here are much more comfortable. In our country, you have to go through a lot more actions. Not very long ago, one of our shops was refurbished, but nobody consulted with us about the layout. They said that wasn’t possible because everything was laid down in advance in Holland. Another thing I notice here is that the Ahold management hasn’t much idea how the local management operates. They say they don’t want to be a complaints department and they refer us back to our managers. So you’re just sent from pillar to post. There are other differences, too. Here, the shops don't open until 8 o'clock, but back home they open at 7, which means that the staff has to be there at 6. There are 180 people working in the shop in Zaandam and each department has sufficient staff. In our country, all the departments are always understaffed. Officially, we work an eight-hour day, but we often work longer hours without the right compensation. Another thing is that it’s not unusual for people to work longer than twelve hours a day (twelve hours is the maximum that you're allowed to work by law). In Holland, Albert Heijn employees are given a meal and they’re allowed to buy products from the shop cheaper. That's not possible in the Czech Republic. Over the last few weeks, the temperature was over 30 degrees in Prague. When that happens, under the collective labour agreement, we’re entitled to ask for water, but when we did, we weren’t given any, and were told that we had to make do with the air-conditioning. To strengthen the international networks, a great deal of mutual communication is called for: talk, talk, talk. Exchange of information and experiences. This gives us a base for putting pressure on our management back home. There's a language problem, but that's

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much more the case for my generation, who only speak Czech (and Russian). It's important for us to take language courses, otherwise you’re left by the wayside. The young people can also speak English and German, but then again they've got a lot less experience than we have. I've been working in the shop sector for thirty years so I can compare different situations. In the first case. I should like to strengthen trade union cooperation in Europe. First with Poland and Slovakia, then with Holland and other west European countries. I think that in Europe, we have far fewer problems with differences of culture. For myself, it's much more difficult to understand what the set-up is in, say, Brazil. I can’t really imagine how I'd be able to work with them. I've never been there and probably never will." Local or global? But even if the atmosphere was generally positive, employees and employers did not, of course, agree on everything. One subject that kept cropping up was the difference between local and global management. Companies operate on a worldwide scale and much is decided from head office – so why not have worldwide guidelines for local operations when it comes to social policy? Why don’t companies insist that in whatever country they are, local managements must conduct an open dialogue with the unions on substantive matters, that employees must be free to organise themselves as they wish, and that all workers must be paid a reasonable wage – things that are all taken for granted in the Netherlands? In general, companies thought that most of the social problems identified by the investigations were the responsibility of management in the countries concerned. As Philips top man Van der Poel put it: "Our policy is that global themes are dealt with on a centralised basis, but implementation is done on a local basis. For example, a few years ago, we drew up a global code of conduct. The company management was in agreement. This was communicated to all the countries and divisions, which are obliged to implement the code of conduct. They are required to submit twice-yearly progress reports. The report has

just one or two items that seem to be global issues, but most of them are local ones. So in these cases, it’s counter-productive to try to regulate them from Amsterdam or Eindhoven." The opinions differed as to whether all these problems did in fact depend on local labour laws. Jan Adriaans, chairman of the European Philips Forum and secretary of the central company council, observed that the majority of the proposals put forward by the foreign contingent were global rather than local issues. Mexican investigator Luis Bueno Rodriguez argued that "union freedom is a globally recognised right, so you can’t let it depend on the local situation". It was agreed that the delegation, represented by Joke Hubert, the union representative at Philips for FNV Bondgenoten, will send a letter recapitulating the agreements that had been made. Philips promised to respond to the report in writing. If answers are received at local level in the different countries, they will be sent to Hubert, who from now on will be responsible for the coordination, in collaboration with FNV Mondiaal. She explained to the foreign contingent that if anything wasn't clear, they should take it up with her. "If no solutions are forthcoming from the local management, then pass this on to FNV Bondgenoten. Then we’ll do what we can in Holland." When asked, Philips executive van der Poel said the company’s central management board "will try to exercise influence on local management to see that solutions are sought. Not to say which solutions – that is something we cannot dictate from here. We’ll make sure answers are delivered, but won’t tell them what they should be. Union freedom Van der Poel’s colleague Rob Prins, chairman of the management board of Akzo Nobel Nederland, admitted that the Mexican legislation was no justification for restrictive union policy. Before that, the complex Mexican trade union structure had been explained to him: In Mexico, by law, you can only have one trade union per company. In many cases, this is the union that’s affiliated to the former government party PRI, which not

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only rakes in part of the profit, but has as good as no contact with the workers and is authorised to put forward for dismissal workers who are members of or active in another union. Prins concluded that this wasn’t a workable system: "It's a lethal model, I agree, if a trade union concludes an agreement for life with the company." The conclusion drawn from the investigation report by the Akzo Nobel management was that the company was “a respected employer and complies broadly with the basic norms it has set itself. Beyond that, there are still a few flaws that need to be sorted out." Prins stated that when the complaints had been checked out – on excessive overtime for example – and if they were found to be justified, the company would take action." The policy principle is clear: if it's true that they work a sixteen-hour day in Brazil, then we must do something about it." He said that a senior manager would be travelling to Brazil at the end of August and would bring up the points in a meeting with the general managers of the Akzo Nobel companies. National discussions Another recurring subject in the discussions was the question of the wide diversities in the working conditions and wages in the different establishments of a multinational within the same country. The workers called for a national dialogue in their own countries as well as regular national meetings between the unions and the local establishments of the Dutch multinationals. In this way, the wide individual differences could be levelled out. It emerged that the structures of the companies do not always lend themselves to this kind of national negotiation. Senior executive Prins explained why this would be a complex matter for his company: "Akzo Nobel has a rather unusual structure. We’re made up of three completely different divisions. The practical organisation is conducted via eighteen business units, all with differing cultures. It would be rather difficult for them to work alongside each other within the same country." The request for a general provision to be incorporated in the Business Principles urging the management to enter into dialogue with the trade unions was met by assurances that efforts were being made.

Unilever in Brazil already has a kind of national dialogue. The Brazilian guests emphasised the importance of the National Committee of Unilever trade unions that conduct talks jointly with the various Unilever companies in the country. The hope was expressed that this propitious beginning would eventually lead to a dialogue on important themes. The Unilever management board promised to press the Brazilian management to bring this about. Exchange Whether this positive start actually bears fruit, only time will tell. Follow-up investigations by the Company Monitor and allied institutions, coupled with periodical monitoring, will have to show whether the problems identified are being dealt with. You cannot expect everything from the head offices in the Netherlands, remarked various foreign guests during the evaluation meetings. Workers and unions in each country will have to resolve their own situations. They must build up support within the local companies and from there, try to achieve concrete progress in dialogue with the management. One vital ingredient in all this will be contacts and exchanges between workers and unions in the other countries, and particularly in the mother country, the Netherlands. Establishing and expanding such international networks inside multinationals is one of the Company Monitor’s main goals. The meetings played an important part in that process. The visitors from abroad had an opportunity to see at first hand what labour relations are like in the Netherlands. They could see and hear from their Dutch colleagues that workers and unions are relatively well endowed with rights. During their guided tours they could see for themselves how labour relations actually work in Holland’s factories and shops. They could talk to their Dutch counterparts about things like noise in the workplace and RSI. At Philips they were confronted with the fact that much of the work of production is carried out by robots. In Brazil, for example, RSI is a major problem with production workers, but, thanks to automation, not any more in the Netherlands. But computer operators are still at risk.

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At Akzo Nobel, FNV Bondgenoten executive member Ben Roodhuizen outlined what worker participation involved. He was aided by a number of members of Dutch works councils, central company councils and European works councils as well as by European works council chairman Bob Welham, who had come over from England. As Roodhuizen explained: "Employees at Akzo Nobel are in a good position. There are many contacts with the management at all levels. We’re given a great deal of freedom to do our work, enough time, facilities and expense allowances." He was very much aware that it was quite a different story in other countries. "I had the opportunity to see that with my own eyes in 2002, while on an official visit to the Akzo Nobel Coatings factory in São Paulo in Brazil. In the Netherlands, the conditions are reasonably good. Our aim is to extend this to other countries, too." Roodhuizen pointed out that there are great differences inside Europe as well. "In Great Britain, for example, the trade union movement has got far less of a foothold, and there are no works councils as such." Roodhuizen reiterated the advice to the visitors that they should not hesitate to contact the Dutch company council and European works council members if and when they felt the need. A solution would be found to any language problems. Sérgio Luís Marcandes Carasso (32) Company: Akzo Nobel, São Bernardo de Campo, São Paulo, Brazil Currently employed: eight years Current position: paint division inspector and active executive member Chemical trade union A.B.C, São Paulo Number of working hours a week: 44 Monthly salary: 1200 Real (approx. 378 Euro) "If a company is international in its structure, then we as trade unions and workers obviously should be as well. This would allow us to exchange information with each other. When a company sets up local operations somewhere, it models itself on the country of origin – the Netherlands, in the case of Akzo Nobel. So it’s vitally important for us to get a clear idea of how things work in these countries, so that we can draw parallels and have the same frame of reference as the managers that we, in Brazil, will be dealing with.

This conference has helped us a lot. Via Observatório Social and the FNV, we have built up contacts with trade union people in Holland and other countries and with works council members. They have spoken up for us in discussions with the central management and brought up problems that we face – the long working days, for example. I’ve also heard a whole lot of things that were new to me in the discussions and meetings of the past few days. One thing was the level of cooperation and consultation between the Dutch trade unions and the company. The unions are a lot more autonomous here and there’s a much more mature and equal relationship than in Brazil. This is the first step. More meetings like this are needed in the future. We have little mutual contact. This needs to be gradually expanded." It was not only a story of differences, however: there were similarities too. In both Holland and Brazil, it is the weakest and the sick who go first in any reorganisation. And at Philips, workers in all countries have to contend with the same basic problem, articulated by Marta Oreja from Mexico: "Philips is moving more and more production to the Far East. This applies to Mexico and the rest of Latin America, and it also applies to Western Europe. We are often blackmailed by Philips: ‘If your demands are too high, we shall pull out.’ So we must use a worldwide meeting to

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ensure that we develop a common union strategy to combat this." The first steps in this difficult process have been taken. Trade union executive member Joke Hubert explained that FNV Bondgenoten and the international trade union movement had had the first worldwide meeting with Philips in January 2001, and that a second meeting was scheduled for the end of the summer, this time with trade union representatives from all the continents. In this week of meetings, it also became clear how important personal contacts are in building up networks like this. Even where there is great solidarity between the workers, there will still be wide divergences. A Dutch works council member who was present at one of the presentations, was very honest about this: "It sounds awful, but I feel I have more in common with the Dutch management board than with my counterparts in the developing countries." He wasn't referring so much to the management’s way of thinking as to the differences in culture and affluence. Dutch workers and managers literally and figuratively understand each other much better than Dutch and, say, Brazilian workers do. All the more important, then, for the workers worldwide to communicate with each other with greater regularity and at greater length. This cannot fail to be productive: the same works council member said a couple of days later that he understood a whole lot more about the foreign visitors now that he’d heard stories of the conditions in their countries. Bennet Gregory D’Costa (47) Company: Unilever, Bombay, India Currently employed: 25 years Current position: Vice Chairman All India Council of Unilever Unions, General Secretary Hindustan Lever Employees Union, Number of working hours a week: 48 Monthly salary: 15.000 Rupiahs (approximately 300 Euro) If a worker has a problem on the shop floor and it can't be solved, then he takes it to the factory manager, who now has just as much power as the worker used to have. He merely carries out instructions and no longer takes decisions. For that, you have to go to the international management. In the factory, all

you can talk about is how to carry things out, but if it’s other decisions you're looking for, then you have to go to the top. In the days when we took our problems to the factory manager, it wasn’t as an individual. This was because you need expertise, a firm base and support. In other words, a trade union. But a local union nowadays has just as much power as the individual worker used to in the old days. What you really need to do is organise yourself at an international level. Because the policy makes the same impact on people, whether in Brazil, India or South Africa. Our goal is an international representative body in which the workers are properly represented. It's a global economy, so workers and unions need to have a global perspective, too. This even applies to local problems, because local management tends to point to global tendencies and international competition. The problem is that organisation on an international basis is much more difficult than collaborating at factory level used to be. There aren’t any international institutions or structures either, and not enough know-how. You’ve got a language problem and cultural differences. To take an example close to home: it's very difficult to get workers and unions from India and Pakistan to work together.

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Workers often have exactly the same prejudices as you find in the rest of the population. An American employee is highly patriotic and will find it difficult to get along with a Frenchman. Added to that is the fact that the companies often make this even worse because of a divide-and-rule strategy. One way to achieve better international collaboration is by setting up institutions like the Observatório Social. This should be done in more countries. Where you need to begin is at regional level, meaning Asia, in my case. Not only looking at your own country, then, like the Observatório Social in Brazil does, but at the whole of Latin America. In some countries, organisations like this already exist, but they don't always act with the same degree of professionalism. They can enhance information exchange via digital networks and carry out more research. Information provision can in fact do with a lot of improvement. It is of vital importance that not only a small group of trade union leaders are involved, but the workers themselves as well. That means greater attention to the quality of the information provision. Better websites, with an accessible language and level of information: in detail for the leaders and experts, and general for the workers.

One thing these institutes could do is carry out research into best practices. Which companies do the best job in which areas. And which countries have the best laws and regulations and negotiation models? Take, for example, worker representation in Holland. There are plenty of examples in India, as well: one of our federal states has a law on redundancies that’s subject to a lot of conditions. It’s now under great pressure, the argument being that nowhere else in the world is there such a stringent law and that it's standing in the way of our competitive position." The way forward? The week of meetings marked the completion of the first phase of the Company Monitor project. But more than that, it was a beginning. Everyone was in agreement that what we’ve achieved so far will only really mean something when it's taken further and

expanded. The investigators want to continue their monitoring of the four companies, to observe whether they actually do anything about solving the problems that have been observed. The investigations have also revealed the need for more investigations, into suppliers, for example. They would also like to carry out comparative research into other companies and in other countries. In order to raise the research to a higher level, they would like to create a platform or network for discussion on methodology and research frameworks. The workers and trade union people sat down together again, company by company, at the end of the week to discuss how they want to carry on after this. Obviously, a close watch needs to be kept on what the companies do with the investigation results. If necessary, additional pressure will be exerted. A little further down the line is the idea for an international committee of workers in each company to meet together on a regular basis. This will follow the establishment of international networks, which would also need to be extended to suppliers and thus contribute to a better understanding of their working conditions as well. From all the groups came a call for a greater structural exchange of information between unions and employees, such as via an electronic bulletin or e-mail list. This would enable information to be exchanged on the multinational in different languages. A suggestion as to how this could be done was by collaboration with the international union umbrella organisations to which the companies concerned are affiliated. The idea was also put forward to have a book with texts and photographs published clearly revealing the differences in working conditions between the different countries. In conclusion, many of the workers emphasised the great value of international conferences like this one, which had been highly instructive. Of particular importance were the joint meetings of workers from the same company – possibly from even more countries in the future or even with workers employed by the direct competitors. Everyone was already enthusiastically looking forward to the next international meeting. .

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Colophon Published: FNV Mondiaal/ FNV Press Foundation www.fnv.nl/mondiaal Project coordination: Astrid Kaag Text: Frans Bieckmann (text and research bureau Wereld in Woorden, www.wereldinwoorden.nl) Photographs: Chris Pennarts Production / Printing supervision: FNV Mediabureau September 2003

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The Company Monitor

The Company Monitor is a programme launched in 2001 and scheduled to

run for a number of years, focusing on the Dutch multinationals Unilever,

Philips, Akzo Nobel and Ahold. Its aim is to investigate the nature of their

social behaviour and to study ways in which trade union networks can be

established within the companies. Ultimately, a form of international

discussion with the local companies needs to be developed, as well as

agreements on a code of conduct that will include workers’ fundamental

rights.

The first round of investigations has now been completed. The findings of

these investigations were presented to the senior management of the 4

multinationals in June 2003 by international delegations consisting of

employees and investigators from the countries where the investigations

were carried out.

This brochure presents an outline of the results of these investigations and

reports on the visit by the foreign delegations.

The Company Monitor

FNV Mondiaal

P.O. Box 8456

1005 AL Amsterdam

Telephone: +31-20 –5816 300

Fax: +31-20-6844 541

E-mail: iz@vc.fnv.nl

Website: www.fnv.nl/mondiaal