Promoting Labour Standards in MNEs: Voluntary v/s Negotiated Initiatives

Issues for discussion

What are the key voluntary standards?

Inter-governmental

ILO MNE Declaration

OECD Guidelines

UN Global Compact

UN Framework for Business

and Human Rights

Types of “voluntary standards”

Private

Company codes , e.g., NIKE, Walmart

Industry initiatives, e.g., BSCI (Business Social

Compliance Initiative), EICC (Electronic Industry Citizenship

Coalition)

Multi-stakeholder initiatives, e.g., ETI, Workers’

Rights Consortium, Clean Clothes Campaign,

ISO 26000, IFC Performance Standards on

Social & Environmental Sustainability

Role of Public regulation v/s

Private voluntary initiatives?

ILO MNE Declaration (adopted in 1977 and amended in 2000)

Objective:

« to encourage the positive contribution

of MNEs & FDI and to minimize

difficulties caused by their operations »

Tripartite & the only global instrument agreed to by G,

E & W, provides for

Principles that MNEs should respect in host countries,

especially in labour and social matters

Seeks to promote synergies between public & private

policies

MNE Declaration offers

Framework for:

Decent Employment with rights @ work

Skills training for employability

Good working conditions

Sound industrial relations

MNE Declaration Provisions

Concerning promotion of good industrial relations (IR),

Governments should:

Apply the principles of Freedom of Association

Not include in their incentives to attract foreign investment

any limitation of the workers' freedom of association or the

right to organize and bargain collectively.

Speaking mainly to « host » governments where

companies are operating

MNE Declaration Provisions

Concerning promotion of good industrial relations (IR),

MNEs should:

Observe IRs no less favourable than those observed by

comparable employers

Respect FoA & the right to collective bargaining, provide the

facilities & information required for meaningful negotiations

Support representative employers’ organizations.

Provide for regular consultation on matters of mutual

concern.

Examine the grievances of worker(s), pursuant to an

appropriate procedure.

MNE Declaration « Interpretation »

Procedure For disputes over the meaning & application of the

provisions of MNE Declaration

Voluntary process which is promotional in nature

Limitations—requests go to tripartite committee on

receivability, which must UNAMIOUSLY conclude that the

request is receivable

Complaints are outside the scope, but can be referred to

other parts of the ILO for action.

New « dialogue facilitation » procedure

ILO Helpdesk for Business

Service launched in March 2009

To assist company managers and workers’

organizations to align private standards with ILS

Programme comprised of two services:

Individual requests from managers or workers’

representatives assistance@ilo.org

Access to the wide range of expertise and

resources across the Office

www.ilo.org/business

MNE Declaration Advantages and disadvantages

Most comprehensive concerning labour rights

Addresses both business and government

Global instrument & tripartitely agreed

But

Not widely known,: but new EC CSR strategy will

require EC to invite all EU MNEs to adhere to the

principles

No remedy for violation of rights

OECD Guidelines for MNEs

First adopted 1976; last revised May 2011

Aligned with the UN Guiding Principles on Business

and Human Rights of the ‘Protect Respect and

Remedy” Framework

Signed by governments (45, including 11 non OECD

countries) – not by MNEs

Provide (non-binding)recommendations to MNEs

Apply to MNEs with headquarters in countries that have

signed the Guidelines, wherever those MNEs operate

Cover subsidiaries as well as suppliers, investors and other

business partners of these MNEs (new concept – “adverse

impacts”)

Chapters of the OECD Guidelines

I. Concept and Principles

II. General Policies

III. Disclosure of Information

IV. Human Rights

V. Employment and Industrial Relations

VI. Environment

VII. Combating Bribery, Bribe Solicitation and Extortion

VIII. Consumer Interests

IX. Science and Technology

X . Competition

XI. Taxation

National Contact Points

Governments that sign the Guidelines are required to

establish National Contact Points (NCPs) to resolve

issues arising under the Guidelines including handling

cases/complaints of breaches of the Guidelines:

Complaints mechanism:

1. Conciliation/Mediation (problem-solving)

2. Recommendations on future implementation of the GL

3. Examination to determine a breach of the Guidelines

Complaints mechanism is a unique characteristic of the

Guidelines

Filing Cases/Complaints

No complaints mechanism at the OECD

Complaints filed with the National Contact Points

If the violation takes place in a country that has signed

the Guidelines – then the case should be filed with the

host country NCP

If the violation takes place in a country that has not

signed the Guidelines then the case should be filed with

the home country NCP

Landmark successes : IUF and Unilever

Unilever (food): Brooke Bond & Lipton’s tea factory

NCP: UK - Factory in Pakistan (Khanewal)

Issue: precarious work/abusive use of temporary contracts/

agency work (22 v 723):

Provisions of the Guidelines: right to organise (V. 1a)

NCP Role: Provided external mediation - led to an

agreement between IUF and Unilever – providing for

200 permanent positions at Khanewal, in addition to the

existing 22 positions at this facility AND use of contract

agency workers (labour engaged through third party service

providers) only in case of ancillary, non-manufacturing and

seasonal positions http://www.bis.gov.uk/files/file49308.doc

BUT FAILURES TOO - High to low performing NCPs

- NCPs have common rules

- visible, transparent, accountable, impartial,

predictable and equitable

- No common performance

- Challenge: Strengthen NCP Performance

- Key obstacles to success

- Other legal proceedings (parallel proceedings)

- Timescales

- Getting parties (companies) to mediation

Key Resources for OECD Guidelines

TUAC web site on trade union

cases and NCP performance:

http://www.tuacoecdmneguideline

s.org/home.asp

OECD Watch web site on NGO

cases: http://oecdwatch.org/

OECD web site:

http://mneguidelines.oecd.org

UN Global Compact

Backed by the United Nations

Supported technically by other international

organizations, including ILO

« Labour Working Group » secretariat includes

representatives of ITUC and IOE

Global Compact Labour Principles

1 Support & respect internationally proclaimed human rights

2 Ensure that their operations are not complicit in human rights

abuses

3 Uphold FoA & recognition of the right to collective bargaining

4 Uphold elimination of forced or compulsory labour

5 Uphold effective abolition of child labour

6 Uphold elimination of discrimination in employment & occupation

7 Support precautionary approach to environmental challenges

8 Undertake initiatives to promote environmental responsibility

9 Encourage the development & diffusion of environmentally

friendly technologies

10 Work against all forms of corruption, including extortion & bribery

Business should...

IFC Performance Standards

1: Social & Environmental Assessment & Management System

2: Labor and Working Conditions [ apply to employees, non

employee workers & also in supply chains]

3: Pollution Prevention and Abatement

4: Community Health, Safety and Security

5: Land Acquisition and Involuntary Resettlement

6: Biodiversity Conservation and Sustainable Natural Resource

Management

7: Indigenous Peoples

8: Cultural Heritage

Areas of ILS covered in PS2

Wages and benefits

Hours of work

Sickness and maternity leave

Annual leave

Workers’ Organizations: national law or parallel means

Non-Discrimination and Equal Opportunity

Retrenchment

Grievance Mechanism

Child Labor

Forced Labor

OHS

UN "Respect, Protect and Remedy"

framework « Ruggie Framework »

Governments duty to PROTECT people from human rights abuses, including in connection with business activity; businesses responsibility to RESPECT; & Obligation of both government & business to provide a REMEDY for violations of rights Addresses both companies and governments

MNEs responsible for supply chain operations

Approach: Instead of naming & shaming, knowing & showing: due diligence requires companies to give special attention to high-risk sectors and countries

Obligation to provide remedies has great potential for Trade Union action

Working Group on business & human rights set up to follow up

UN Business and Human Rights Framework:

Limitations

Companies are encouraged, but not obliged, to respect

human rights

Guidance isn't enough – mechanisms needed to

scrutinize how companies & governments apply these

principles

Too early to tell how the Working Group on business &

human rights and annual Forum on business & human rights

will operate

No working group members have labour backgrounds

ISO 26000

Guidance on social responsiblity

Voluntary international standard on CSR developed by International Organization for Standardization (ISO)

Provides guidance, not for certification

Covering 7 core subjects of social responsibility, including labour practices

In core subject on labour practices:

1998 ILO Declaration

MNE Declaration and

other ILO Conventions

ISO 26000 Guidance on social responsiblity

Advantages

Contains some provisions which go beyond ILS

Reaches companies which may not otherwise be

reached, e.g., companies operating in Asia and Arab

States

Disadvantages

Much like a management system

No enforcement

No remedies available

Codes: What happens in practice

Codemonitoringremediationreporting

Monitoring has brought about limited change

Issues of poor training, hasty assessments, lack of

input from workers or worker coaching, corruption

« static » snapshot taken only periodically

No sanction for non-compliance

Procurement officers typically ignore findings

Remediation rarely based on IR approach

Limits of voluntary standards Not a rights-based approach

Creates a lottery approach to respect for workers’

rights

Risk that governments will off-load their

responsibility to protect workers’ rights

Reinforces notion that market solutions are always

better than government solutions

Paternalistic model doesn’t address, and often

aggrevates, power imbalances

Negotiated Instrument:

International Framework Agreements

Negotiated between a GUF and an MNE, with

joint oversight of implementation

Formal recognition of social partnership

Can apply to MNE employers, supply chain

workers or both

Compliments national and local agreements

(baseline for collective bargaining)

Current number – over 100

What to do?

“Voluntary standards” should reinforce the institutions

which strengthen respect for workers’ rights

Most important is good industrial

relations

Ratification of ILO Standards & their

implementation

Respect for FoA & CB