2014 project annual report · 2014 project annual report - i - project on improving industrial...

Project on Improving Industrial Relations in Cambodia’s Garment Industry Phnom Penh Center, Building F, 2nd Floor, Sihanouk &Sothearos Blvd, P.O. Box 2642, Phnom Penh, Cambodia

Tel. +855 23 220 817 Fax. +855 23 221 536

E-mail: [email protected] www.ilo.org/asia

PROJECT ON IMPROVING INDUSTRIAL RELATIONS IN CAMBODIA’S GARMEMT

INDUSTRY

2014 PROJECT ANNUAL REPORT

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TableofContentsI. General Background information ..................................................................................................... 1

II. Project Strategy and Objectives ...................................................................................................... 2

III. Overview ........................................................................................................................................ 2

IV. Project Implementation Activities ................................................................................................. 3

1. Enterprise Level Activities .......................................................................................................... 3

Industrial Relations Mapping in Participating Enterprises ...................................................... 3

Industrial Relations Challenges ............................................................................................... 3

Signing of Enterprise Level MOU/ULP Agreement ................................................................ 4

Enterprise Level Training ........................................................................................................ 5

Enterprise Level Training Outcomes ....................................................................................... 6

Enterprise Level Training Evaluation ...................................................................................... 7

Enterprise Level Training: Conclusions and Recommendations ............................................. 7

2. Industry Level Activities ............................................................................................................. 8

Promotion and Dissemination of Industry-Wide MOU ........................................................... 8

MOU Review Meeting and Renewal of Industry-Wide MOU .............................................. 11

3. National Level Activities ........................................................................................................... 11

Database Development ........................................................................................................... 11

National Level Training Outcomes and Evaluation .............................................................. 12

Trade Union Law ................................................................................................................... 13

IR Policy Development and Review of Existing Regulations and Procedures ...................... 13

V. Monitoring and Evaluation - Performance Plan ........................................................................... 14

Key Performance Indicators (KPIs) ............................................................................................... 14

3-Month Reported KPIs ................................................................................................................. 14

6-Month Reported KPIs ................................................................................................................. 16

VI. Sustainability, Risks and Mitigation Measures ........................................................................... 18

Sustainability ................................................................................................................................. 18

Risks and Mitigation Measures ..................................................................................................... 18

VII. Project’s Budget, Expenditure and Procurement ....................................................................... 19

Budget ............................................................................................................................................ 19

Certified Financial Statement ........................................................................................................ 19

Local Procurement of Equipment or Services ............................................................................... 20

External Collaboration Contracts .................................................................................................. 20

Anti-Fraud Policy .......................................................................................................................... 21

VIII. Workplan .................................................................................................................................. 21

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I. General Background information Reporting period: 1 January 2014–30 April 2015 Project Title: Improving industrial relations in Cambodia’s garment industry Geographical Coverage: Cambodia Funding: $491,037 (SIDA); $348,790 (H&M) Starting Date: January 2014 Duration: 3 years Contact Person: Mr. John Ritchotte Specialist on Labour Administration and Labour Relations, ILO Regional Office for Asia and the Pacific Bangkok, Thailand Tel: +622 288-2226

Email: [email protected]

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II. Project Strategy and Objectives The project aims to improve industrial relations in the garment industry through a mixture of policy advice and capacity building at three levels: at the enterprise level, at the national level, and at the industry level. At enterprise level, the project collaborates with an international garment brand (Hennes & Mauritz, H&M) to seek commitments to implement in selected enterprises a Memorandum of Understanding on Improving Industrial Relations in the Garment Industry within those enterprises, and to eliminate so-called “unfair labour practices”, and promote good labour practices, including collective bargaining and gender quality. At industry level, the project works with the Garment Manufacturers of Cambodia (GMAC) and major union con/federations to raise awareness of the MOU and of relevant aspects of the labour law, as well as training to managers and unions to improve communication and negotiation skills. At national level, the project works with the Ministry of Labour and Vocational Training to improve conciliation skills, support legal and regulatory reform, clarify rules and procedures concerning industrial relations, and continue to build a database on union registration and Most Representative Status certifications, and collective bargaining agreements. The Ministry will benefit from improved confidence of our conciliators, more accurate and transparent record keeping, and improved application of laws and regulations. The two broad objectives of the Project are:

1. To promote sound industrial relations through genuine collective bargaining, and to strengthen the regulatory and policy framework governing industrial relations and collective bargaining.

2. At three different levels: enterprise, industry and national, the Project will use a

combination of policy advice and capacity building at all three levels, so that training is oriented toward moving stakeholders to implement more sound and appropriate policy approaches.

III. Overview The report covers all activities carried out by the Project during the first year period (January 2014 – April 2015. The project’s starting date was January 2014, while the funding agreement with SIDA was actually signed on 15 February 2014. However, with the earlier funding agreement with H&M signed in November 2013, the Project was able to begin its start-up activities from January 2014. These activities include the office set up and staff recruitment, the consultation meetings with the relevant project stakeholders, the establishment of the Project Steering Committee (PSC), the signing of the

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Declaration of Intent (DOI) with the Ministry of Labour and Vocational Training. These activities took place between January and April 2014. The Project was officially launched with the first scheduled meeting of the PSC and the signing of the DOI between the ILO and the MOLVT on 12 June 2014. As of 30 April 2015, five meetings of the PSC had been held, with the most recent one taking place on 12 March 2015. During the first year of the project implementation, the project’s focus has been mainly at the enterprise level and national levels, due mainly to reasons of time constraints.

IV. Project Implementation Activities Below are the summary of the implementation activities and outputs at the three levels that the project had carried out and achieved during the reported period 1. Enterprise Level Activities (Immediate Objective 1: By the end of the project, participating enterprises will have seen improvements in enterprise level dialogue and IR and an increase in collective bargaining agreements). Industrial Relations Mapping in Participating Enterprises (Output 1.1: Participating enterprises are identified through participatory process)

Between April and July 2014, enterprise level activities started by mapping the IR environment in each of the 7 participating factories identified by H&M based on a questionnaire. Prior to the factory visits, the Project conducted research for available information on the factories from reliable sources such the Arbitration Council. The information was verified during the visits through the meetings with both the management and enterprise unions and cross-checked with the worker representatives randomly selected, using the questionnaire.

Industrial Relations Challenges

The project identified several major challenges ranging from operational to administrative to HR/IR to legal and political related issues.

Piece rate fixing system was commonly reported to be a main source of conflict/dispute, following by unhealthy working conditions such as poor air quality at the factory floor, dirty toilets, poor quality water, and fire hazards that need to be fixed in some of the factories.

Annual and sick leave arrangements seemed to be a common issue in most factories, followed by a limited knowledge and understanding of law and regulations on the part of unions. There was also a low level of understanding of the rights and obligations under the law by both the management and the unions, which resulted in the unions demanding the management to terminate supervisors. There was also widespread interference in the union affairs by the management in some of the factories.

Poor communication and unhealthy relationship between the management and the unions were common to all factories, partly due the reported lack of effective complaint/grievance handling

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system in place, or that the existing grievance system was not working and used effectively in most of the factories. Other issues included allegations of inappropriate behavior of union leaders, such as an act of insubordination; strong competition and intra-union fighting to gain membership support, and an ability of minority union(s) to disrupt the majority union in negotiation or settlement of disputes.

Unfair labour practices (ULPs) were commonly reported in all factories. These included alleged ULPs committed by unions such as making false allegations about poor working conditions, or asking for gift in cash or in kind in exchange of calling off strike. Alleged ULPs committed by the management included unequal treatment in remuneration and promotion against union activists, and paying off union leaders. As a result, workers were afraid to join a union because of their perception that their contract would be terminated. Close relations between the management and the union, pointing at possible interference and influence by the management in union affairs, was also reported in some factories.

There was a common acknowledgement among and between both the management and the unions that politics played a role in labour management relations at the workplace. Allegations were made of unequal treatment of unions based on their perceived political tendency toward pro-government and anti-government affiliated unions at the national level. None of the strikes conducted in the participating factories followed legal procedures. Signing of Enterprise Level MOU/ULP Agreement (Output 1.2: Enterprise Level Agreements signed by all relevant stakeholders)

The Project’s output 1.2 is to promote the signing of an enterprise replica of the industry-wide MOU and a separate agreement that will seek to prohibit unfair labour practices (ULPs), and to secure recognition of the mutual rights and responsibilities between unions and management, including the rights under Cambodian law and regulations supporting collective bargaining over terms and conditions of employment. Following the completion of the IR mapping exercise, effort had been made toward promoting the signing of an enterprise replica of the industry-wide MOU plus ULP agreement that would commit parties to adhere to the national law, in particular for the unions to their obligations to conduct any strike in accordance with the legal procedures, and for the management to follow binding awards on right disputes at the Arbitration Council. The Project drafted an enterprise level MOU and ULP Agreement, which was brought for consultation with the relevant stakeholders at two separate workshops, with the aim of raising awareness and a common understanding among the targeted participants on the content, and in order for the parties to agree to sign these documents. These two workshops were organized on 23 and 24 July 2014 for a total number of 75 participants from the employers (19 management staff), enterprise unions (31 union officers), the union federations (17 federation representatives), GMAC (3 officials), IndustriALL (1 representative) and H&M (4 representatives). Following the workshop, a series of visits were made to each of the 7 participating factories to answer questions, or to clarify any issues with regarding the enterprise level MOU and ULP Agreement.

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These visits took place between August and September 2014. As a result, 5 out of 7 participating factories had signed both the MOU and ULP agreement; one factory signed the ULP Agreement but did not sign MOU; and another one signed neither the MOU nor ULP agreement. Please see the detailed information on the factories’ names and their signing date in the table below.

No. Name of Participating

Factories

Detailed Records of the Signing of the Enterprise Level MOU/ULP Agreement

Remarks Enterprise Level MOU

ULP Agreement Signing Date

1 Factory 1 MOU ULP Agreement 28/08/2014





6 Factory 6 Not signed ULP Agreement 11/03/2015

7 Factory 7 Not signed Not signed

TOTAL NUMBER OF FACTORIES SIGNING ENTERPRISE LEVEL MOU: 5 FACTORIES

TOTAL NUMBER OF FACTORIES SIGNING ULP AGREEMENTS: 6 FACTORIES

Enterprise Level Training (Outputs 1.3, 2.1 & 2.21: Training on social dialogue and collective bargaining agreement including communication and negotiation skills, grievance handling, gender and MOU/ULP agreement delivered to unions and management at the enterprise level, and to union officials at confederation and federation level, and to the management staff. Following the completion of the IR mapping and the signing of the above MOU/ULP Agreements, the Project prepared a training and capacity building programme aimed at addressing the challenges and issues identified in the IR mapping reports. To this end, the project identified 3 national consultants: 1) Ms. Ann Vireak of the Integrating Human to Quality (IHQ), 2) Mr. Kong Pharith of Local Capacity Building (LOCAB), 3) Ms. Heng Seltik, a former ILO Project Coordinator working on Gender and Entrepreneurship Development Project, and 2 international consultants of IF Metall: 1) Ms. Hermine Schimann, and 2) Mr. Erik Andersson, who are qualified and have relevant expertise in their respective training fields/topics, which among others include workplace

1 The outputs 2.1: training on collective bargaining concepts, techniques and procedures and output 2.2 on IR and gender training, which are to be provided to union officials at confederation and federation level, and to the management had now been incorporated into output 1.3.

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cooperation, social dialogue, labour law and dispute resolution, effective communication and negotiation skills, gender equality and non-discrimination at workplace, and collective bargaining agreement.

The preparation of all the training materials for the Workplace Cooperation, Labour Law, Effective Communication and Negotiation Skills and Social Dialogue was completed in October, and the rest of the training materials on Collective Bargaining Agreement and Gender Equality completed in November 2014. The first training on Workplace Cooperation started on 20 October while the rest of the training programmes were conducted and delivered in the last quarter of 2014 and continued for the whole month of January 2015. Please refer to the detailed information on the exact dates, number of participants (disaggregated by sex) in each of the training modules conducted in Annex A to this report. Enterprise Level Training Outcomes Below are the summary of the outcomes of the enterprise level training programmes. Workplace Cooperation Training took place from 20 October to 1 November 2014, attended by a total of 250 management and union/worker representatives from the 7 participating factories. Out of 250 participants 149 represented the union/worker group and 101 represented the management group. By sex disaggregation, woman participation rate represented 61% and 47% for the union and management groups respectively. The Workplace Cooperation training was jointly delivered by Ms. Ann Vireak, National Consultant from IHQ and Mr. Chhieu Veyara, NPC. Labour Law and Dispute Resolution took place from 3 to 15 November 2014, attended by a total of 230 management and union/worker representatives from the 7 participating factories. Out of 230 participants 130 represented the union/worker group and 100 represented the management group. By sex disaggregation, woman participation rate represented 58% and 47% for the union and management groups respectively. The Labour Law training was jointly delivered by Ms. Ann Vireak, and Mr. Chhieu Veyara. Effective Communication and Negotiation Skills took place from 24 November to 2 December 2014 and it was attended by a total of 230 management and union/worker representatives from the 7 participating factories. Out of 230 participants 138 represented the union/worker group and 92 represented the management group. By sex disaggregation, woman participation rate represented 62% and 48% for the union and management groups respectively. The training was delivered by Mr. Kong Pharith, the national consultant from LOCAB and Mr. Chhieu Veyara. Social Dialogue and Collective Bargaining took place from 3 to 13 December 2014, attended by a total of 220 management and union/worker representatives from the 7 participating factories. Out of 220 participants 125 represented the union/worker group and 95 represented the management group. By sex disaggregation, woman participation rate represented 67% and 51% for the union and management groups respectively. The Social Dialogue training was jointly conducted by IHQ represented by Ms An Vireak, National Trainer, IF Metall represented by Mr. Erland Lindkvist, Head of International Department, and Mr. Erik Andersson, International Secretary, and the ILO represented by Mr. Chhieu Veyara. However, due to heavy work schedule and other commitment,

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Mr. Lindlvist was only available for one day on 9 December, and Mr. Erik Andersson for two days on 9 & 11 December to co-deliver the training with the national trainers. Collective Bargaining Agreement took place over the period of 16 December 2014 till 29 January 2015, attended by a total of 190 management and union/worker representatives from the 7 participating factories. Out of 190 participants 114 represented the union/worker group and 76 represented the management group. By sex disaggregation, woman participation rate represented 57% and 41% for the union and management groups respectively. The training was jointly delivered by Mr. Kong Pharith and Mr. Chhieu Veyara Gender Equality and Non-Discrimination at Workplace took place from 19 to 27 January 2015, attended by a total of 201 management and union/worker representatives from the 7 participating factories. Out of 201 participants 135 represented the union/worker group and 66 represented the management group. By sex disaggregation, woman participation rate represented 73% and 52% for the union and management groups respectively. The training was delivered by Ms. Heng Seltik and Ms. Heng Molyaneth, training assistant. It was anticipated that Ms. Hermine Schimann, Gender Specialist of IF Metall would co-deliver the training with the national consultants, but for personal reasons was not able to attend. Overall, a total of 1,321 union/worker and management representatives attended the above training. Out of these participants, 791 (60%) represented the union worker group. The overall female participation rate reached 63% and 47% for the union/worker and management groups respectively. One of the 7 participating factories, had the lowest rate of woman participation at 27% for all training attended, except for the gender equality training where the woman participation rate was at 79% compared to the overall rate of 63%. Enterprise Level Training Evaluation Based on the result of evaluation made at the end of each training including the direct verbal feedbacks received from some of the participating factories, all the training programmes were well received by the participants. Overall, between 70% and 95% of participants rated the training materials/contents to be relevant or very relevant/important. They equally rated in term of clarity of the presentation, which they found it to be clear or very clear. In addition, in comparing with other training they received, the same number of the participants rated the training to be better or excellent including the general organization of the training. Enterprise Level Training: Conclusions and Recommendations Despite of positive feedback and outcomes achieved, the Project also received some constructive comments and recommendations to improve the future training. The following are comments and recommendations that were provided by the national trainers as well as some of the participants during the training.

One factory had too many participants around 50 (more than the recommended number

of 35), which caused some difficulties for the participants to interact/or less effective during the group discussions/role plays. On the opposite case, one factory had the lowest

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number of participants (14 people, about half of the recommended number), which equally made the class less effective, in particular if the participants were less active.

Chinese speaking participants sometimes were forced to join only in one discussion because there was only one Chinese interpreter, and sometimes they were asked to join with other Khmer speaking participants but with less interactions due to the language barrier. One recommendation suggested is to recruit one additional Chinese translator to assist during the group discussion in the future training.

Some participants were not able to read and write properly, thus limited their active participation in the training activities as well as in sharing new acquired knowledge and skills with their peers when they return back to their workplace.

It was recommended to make sure that there is relatively equal number of male and female participants in the future training to ensure a gender balance for all training, not only for gender training.

Supervisors should be selected based on their genuine interest in the training rather than by their appointment as they were less active in participating on the training activities.

Some participants especially from the union/worker groups found the training was too short in duration compared to the amount of training materials/content provided or delivered.

The management participants wanted all the training materials including handouts, not only the PowerPoint slides that need to be translated into Chinese.

The above comments and recommendations were presented at the 5th PSC Meeting held on 12 March 2015. Useful feedbacks and constructive comments were received from the key stakeholders – representatives from the union, management and the government as well from the donor(s) – on the training outcomes and recommendations. These include: ensuring the availability and quality of the training materials in Chinese language, securing the commitment from both the management and unions to sending the right participants to participate in the future training, incorporating relevant legal provisions for leave and some good practices from both the management and union/workers into the future training package, and the need for a new regulation or legal policy framework on the union registration and effective dispute resolution mechanism. 2. Industry Level Activities (By the end of the project, the garment industry will have experienced an increase in collective bargaining agreements and improved IR environments and improved IR environment as a result of greater adherence to the industry MOU). Promotion and Dissemination of Industry-Wide MOU (Output 2.3: Training and outreach materials on the MOU disseminated through unions and GMAC)

One of the Project’s objectives is to build the capacity of unions and employers in promoting wide-spread awareness and understanding of the MOU among the factory management at senior and middle levels, union federation officers and enterprise level affiliates, and more generally to reach out garment industry workers.

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To this end, in August 2014, the Project issued subcontracts to 8 union confederations/federations and GMAC who are the signatories to MOU, in order for them to organize dissemination and outreach workshops targeting their respective members, using and disseminating the project’s published booklets and posters. These activities aimed at raising the awareness and the importance of dispute prevention generally and the key important provisions on binding arbitration on rights disputes, no strikes and lockout until after exhausting legal dispute resolution procedures, and promotion of CBA. As the result, 25 dissemination and outreach workshops were organized from 14 August to 29 November 2011 reaching a total of 744 union leaders/active members and 95 senior and middle management staff. Table below provides the detailed information on each of 25 dissemination and outreach workshops organized by GMAC and 8 Union Confederations/Federations.

No. Name of Party

Signatories

Detailed Records of the MOU Awareness Raising Workshops

Total Participants # of

Participants# of

FactoriesDate of

Workshops Venue/

Location

1 GMAC 95 53 30-Sep Phnom Penh 95

2

NACC

First Workshop 37 7 07/09/2014 Phnom Penh

99 Second Workshop

30 1 13/09/2014 Kg Cham

Third Workshop 32 3 13/09/2014 Phnom Penh

3

CCTU


96 Second Workshop

33 4 14/09/2014 Phnom Penh

Third Workshop 33 3 21/09/2014 Kampot

4

CLC


96 Second Workshop 28 7 24/08/2014 Phnom Penh

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5

CNC


90 Second Workshop

30 6 19/10/2014 Angksnuol,

Kandal Third Workshop 30 4 26/10/2014 Bati, Takeo

6

CATU




7

CNCLP



Third Workshop 30 4 28/09/2014 Bati, Takeo

8

FTUCWK


90 Second Workshop 30 4 07/09/2014 Kg Chhnang


9

NIFTUC

First Workshop 30 4 31/08/2014 Prey Veng



TOTAL NUMBER OF UNION OFFICIALS PARTICIPATED IN THE TRAINING WORKSHOPS: 744

TOTAL NUMBER OF MANAGEMENT STAFF PARTICIPATED IN THE TRAINING WORKSHOPS: 95

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MOU Review Meeting and Renewal of Industry-Wide MOU

At the time of writing this annual report, the original 2 year- term plus 3 month-extension of the industry-wide MOU lapsed on 2 January 2015. Six months earlier, on 30 July 2014, the ACF and the Project included in the agenda of the MOU review meeting a short session to discuss the third renewal of the MOU. During the meeting, all signatories from the union side expressed their support to renew the MOU, and both sides agreed that a better enforcement mechanism needs to be put in place as to ensure better compliance with the agreed principles and commitments.

GMAC wanted to see greater commitment of the unions to comply with the terms of CBA if one exists, whereas the unions, on the other hand, wanted the employer party to fully implement the AC’s awards on right disputes. Both parties expressed need for more time to consult with their respective members on how this new monitoring and enforcement mechanism can be implemented in practice. For this reason, the parties agreed to sign the 3-month extension agreement that would then be expired on 2 January 2015.

However, by the expiry date the parties were not able to agree to any specific proposal on the desired better enforcement mechanism for non-compliance. In the ongoing effort to renew MOU, ACF/ILO continued to meet with the concerned parties to discuss a new enforcement mechanism. Two meetings were held in February 2015 where the parties had agreed in principle to set up a Joint Committee to monitor the implementation of MOU, but the idea was dropped at separate meetings held in April. At the recent joint meeting held on April 29, 2015, the union side agreed to the latest draft texts on the proposed enforcement mechanism and the GMAC representatives, who presented at the meeting, had agreed in principle to the revised draft texts, but needed to consult with the new elected executive board members. At the time of writing this report, the future of the MOU is unclear, and may need to await the final outcome of the draft Trade Union law. 3. National Level Activities (By the end of the project, procedures for union registration/MRS certification will be clarified and records will be maintained, and conciliators at central and provincial level more capable of resolving disputes). Database Development (Output 3.1: Database on union registration, MRS certification and Collective bargaining agreements) Work on a planned development and establishment of a database of union registration, MRS certification and CBAs was put on hold due to the delay in the long awaited adoption of the new trade union law. Please refer to the below section on the latest updates on the TU law. It is expected the work on the database development will get started as soon as the TU is finalized and adopted by the end of 2015 as confirmed by the MOLVT. Training and Capacity Building of MOLVT’s Conciliators (Output 3.2: Training on IR and conciliation techniques delivered to relevant government officials)

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As foreseen in the Project’s document, the national intervention will mainly involve training, capacity building and policy reviews that are expected to lead to the improved capacity of the Ministry’s conciliators at national and local level to prevent and resolve disputes, and as a consequence, disputing parties will have increased confidence in their ability. To this end, the Project planned and organized the first the first training workshop on Conciliation Skills and Techniques targeting the labour conciliators at the central level. The preparation meeting between the Project and the Ministry took place on 18 November 2014. Subsequently, a Working Group comprised of 5 senior conciliators and headed by the Director of the Department of Labour Dispute was established in December to assist the Project in coordinating, organizing and facilitating this first training workshop as well as in 3 other future scheduled training workshops at the provincial level. The Project had identified Mr. Jan Sunoo, an international consultant with over 30 years of US and international experience, to design and develop a 3-day training programme that would meet the Project’s objectives as well as the needs of the Ministry, which among others include:1) strengthen conciliators’ skills and techniques to resolve disputes including learning how to deal with strikes, 2) strengthen and clarify their role as industrial relations professionals and labour conciliators so as to promote collective bargaining and other preventive conciliation methods to improve labour-management relations, 3) help the conciliators to understand the perspective of their customers (union and management persons) and how they view the work of conciliators. National Level Training Outcomes and Evaluation

As a result, the first training workshop, which was opened by the Minister, H.E. Ith Samheng, was carried out over 3 days from 9 to 11 February 2015 in Phnom Penh at the InterContinental Hotel for a total number of 49 participants out of which 27 were from the Strike and Demonstration Resolution Committee, 11 from the Labour Inspection Department, 8 from the Labour Dispute Department, and 3 from the Phnom Penh Municipal Department of Labour and Vocational Training. Given the dynamic and the large size of the class, the trainer decided to use the 5 senior experienced conciliators as resources for sharing best practices, as well as coach and observe the group exercises and role plays etc.

Based on the result of the evaluation, 95% of the participants said that the training had met their learning objectives and expectations, 78% agreed that it can be applied to their work, 83% indicated that it was easy to understand and 95% it was clear, accurate and logical. The customers’ feedback panel discussion proved to be very useful, leading the trainer to recommend having it at least once a year so as to provide the conciliators a chance to get information about their performance. Other recommendations include: having short regular monthly clinics with a conciliator assigned to prepare and present one of his/her cases and to be facilitated by one of the senior conciliators and used as opportunities for them to discuss other issues and problems in doing their work while building a sense of esprit de corps within the group.

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Trade Union Law (Output 3.3: Tripartite Discussions on Industrial Relations Policy Development) As indicated in the Project document, one of the objectives is to strengthen the regulatory and policy framework governing industrial relations and collective bargaining. A strong trade union law, in compliance with ratified ILO Conventions, would contribute to achieving an orderly IR policy framework. To recall, the process of development of the TU law was initially launched in 2008, with a series of tripartite consultations took place between 2009 and 2011, but the draft law was ultimately not adopted by the government at that time. In early 2014, the Government decided to bring the draft forward again. The Ministry of Labour and Vocational Training (MoLVT) organized one tripartite workshop on 27-28 May 2014 with the project’s financial support in order for the constituents to understand the content of the legislation, and to take on board comments from workers and employers. The MoLVT has committed to ensuring that the legislation is in line with ratified Conventions, including ILO Conventions No 87 and No 98. Following the above workshop, MOLVT invited the employers and the union groups to submit their written comments, which MOLVT would consider for inclusion into a new revised draft. On 27 August 2014, the MOLVT’s drafting committee met with the ILO Specialist on International Labour Standards based in Bangkok to discuss the comments received from the stakeholders.

At this meeting, the ILO specialist reviewed the ILO’s technical comments officially submitted to the Ministry on the key concerns and recommendations concerning issues such as most representative union status, minimum membership requirements for union formation and the scope of the TU law. The Drafting Committee further revised the draft and then officially submitted to the ILO in November. In December, the ILO provided a Technical Memorandum analyzing the draft law in light of ILO Conventions ratified by Cambodia. On 9 & 17 February 2015, the Drafting Committee met with the ILO specialists to discuss the ILO comments. At the conclusion of these meetings, the Chairman of the Drafting Committee informed the ILO that the Ministry did not have a plan to have further consultation with the stakeholders. The ILO highlighted the importance of further tripartite consultations on the draft. The Ministry then convened a series of Inter-Ministerial Committee meetings to discuss the draft, process completed by the end of April. According to the Ministry, the law will be adopted by the National Assembly by the end of 2015. The ILO will continue to engage with constituents on this important piece of legislation. IR Policy Development and Review of Existing Regulations and Procedures In January 2015, the Project received the official request from the MOLVT for the technical assistance in drafting two Prakas: 1) Essential services to be maintained in the enterprise/establishments before a strike is conducted, and 2) the first round of shop steward election to determine representativeness for the purpose of signing a CBA. In response, the ILO sent the specialists on ILS and Industrial Relations to meet with the Ministry on 10 February 2015 to discuss and to get a better understanding of the Ministry’s intent to have such Prakas.

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As a result, the ILO provided the MOLVT with the list of services that are typically considered to be essential and that technical substance will then be provided in drafting the zero draft. The second proposed Prakas on shop stewards was dropped in light of the eventual adoption of the TU law.

V. Monitoring and Evaluation - Performance Plan In order to monitor and evaluate the progresses and results against the planned targets at the end of interventions, the Project developed a set of baselines/indicators. Below are the Key Performance Indicators (KPIs) with the established baselines, the planned targets, and the actual achievements up to the end of the reporting period. Key Performance Indicators (KPIs)

Following the IR mapping exercise, and subsequent discussions with the project’s partners, 10 Key Performance Indicators (KPIs) were identified taking into account the availability and reliability of the existing data sources including information on gender and other change aspects such as increase income. It is believed that these established indicators will facilitate the measurement and verification of the actual achievements/or of any change in the established baselines against, the expected outcomes/results. The 10 KPIs are divided into 2 categories: 3-Month and 6-Month Reported KPIs. Below is a summary table of both categories of the established indicators along with the narrative as of March 2015. 3-Month Reported KPIs

3-MONTH-KPIs (Indicators, Baseline, Target)

Accumulative Result as of December 14

Actual Achievement as of March

15

Expected Result Accumulative at the End of the

Project

Remarks

By the end of the Project, participating enterprises will have seen improvements in enterprise level dialogue and IR and an increase in collective bargaining agreements

Indicator 3: (%) of strikes that will follow legal procedures

Baseline: 8 (0%)

1 (100%) 1 (100%) >90% Target: >90%

Indicator 5: Participating factories experience a reduction in worker turnover and unauthorised absenteeism Due to

difficulties in data collection, the data was not available by the due reported data

Baseline: Average Average Expected Result

Average Worker Turnover per month: 3.15% N/A Reduced by 50%

Unauthorised Absenteeism per day: 2.76% N/A

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Target: > 50% reduction - -

Indicator 7: Increased number of factories with well-functioning/improved grievance procedures

Baseline: 0 factories

0 Factories 5 Factories 7 Factories

One factory was dropped

out of the programme

Target: 7 factories

Indicator 9: Increased number of union members trained in IR related matters (disaggregated by sex) Baseline: 59 (F:28, M:31)

542 (F:337, M:205)

791 (F:500, M:291)

Increased number of union members taking part in training delivered by ILO local consultants/IF Metall/ACF

Target: Increased number of union members taking part in training delivered by ILO local consultants/IF Metall/ACF

Indicator 10: Increased number of management staff trained in IR related matters (disaggregated by sex) Baseline: 131(F:58, M:73)

388 (F:186, M:202)

530 (F:249, M:281)

Increased number of management staff taking part in training delivered by ILO local consultants/IF Metall/ACF

Target: Increased number of management staff taking part in training delivered by ILO local consultants/IF Metall/ACF

Indicator 3: # of Strikes that will follow legal procedures. As per the established baseline/indicators, none of the 8 strikes that occurred in the 7 participating factories did follow the legal procedures. During the reported period, there was one strike that was conducted in compliance with the prescribed legal procedures. By the end of the Project, it is expected that any strike(s) over interests will take place in the context of collective negotiations. Indicator 5: Participating factories experience a reduction in worker turnover and a decreased level of absenteeism (increased job satisfaction). Due to the fact that some factories had experienced difficulties in providing accurate data on this indicator, it was decided during the project partners’ meeting that this indicator would n longer be required to be reported. However, at the 5th Meeting of PSC, it was suggested that the Project keeps reporting on this indicator and that H&M will continue to collect required data from all the participating factories and send it to the Project in order to monitor the progress. Indicator 7: Increased # of factories with well-functioning/improved grievance procedure. As per the result of IR mapping exercises, it was found that the existing handling complaint/grievance system in all the 7 participating factories seemed to be not functioning and used effectively. Only few factories claimed to have grievance procedures in place, mostly in the form of verbal briefing, and if any written form of the grievance existed, it was not commonly known or made accessible to workers. Following the completion of the training and capacity building programme, 5 out of the 7 factories had adopted or improved their own grievance procedures. By the end of the Project, it is expected that an increased number of factories will have

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a clear written and well-functioning defined step-by-step and time-bound grievance handling procedures adopted and used effectively. Indicator 9: Increased # of union members trained in IR related matters (disaggregated by sex) As per the established baseline indicator, 59 (Male: 31, Female: 28) local union members had attended some basic IR training related matters. By the end of the training and capacity building programme, there was a total of 791 union of officials and worker representatives trained in IR related matters. Out of 791 union participants, 500 were women, whose participation rate represented about 63%. Indicator 10: Increased # of management staff trained in IR related matters (disaggregated by sex). As per the established baseline indicator, 131 (Male: 73, Female: 58) management staff had attended some basic IR training related matters. By the end of the training and capacity building programme, there was a total of 530 management staff trained in IR related matters. Out of 791 management participants, 249 were women, whose participation rate represented about 47%.

6-Month Reported KPIs

6-MONTH-KPIs (Indicators, Baseline, Target)

Accumulative Result as of

September 14

Actual Achievement

as of March 15

Expected Result Accumulative at the End of the

Project

Remarks

By the end of the Project, participating factories will have seen improvements in enterprise level dialogue and IRand an increase in collective bargaining agreements.

Indicator 1: # (%) of factories with registered MRS union/or coalition of quasi-MRS unions

Baseline: 3 (43%) of factories with registered MRS union

3 MRS (43%) 3 MRS (43%) 7 MRS/Coalition of

MRS (100%)

Target: 7 (100%) of factories with registered MRS/coalition of MRS unions

Indicator 2: # of CBA covering terms and conditions of employment negotiated between unions and management (any increase income will be measured)

Baseline: 1 CBA

1 CBA 1 CBA 7 CBAs

Target: 7 CBAs

Indicator 4: # of AC awards, and (%) of its compliance with AC awards on right disputes that are implemented by both unions and management

Baseline: 14 (57%)

1 (100%) 1 (100%) 100% Target: 100%

Indicator 6: Increased # (%) of women elected to union positions in the enterprise level unions

Baseline: 42 (53%) 42 (53%) 42 (53%) >65%

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Target: > 65%

Indicator 8: Increased % of grievances resolved through well-functioning/improved grievance procedures

Baseline: 0% (No record available) 0% N/A >75%

Target: > 75% -

Indicator 1: # (%) of factories with registered MRS unions/or coalition of MRS unions. Currently there are only 3 out of the 7 participating factories with MRS unions. By the end of the Project, we expect that all factories will have MRS or coalition of MRS unions certified/recognized as an exclusive bargaining partner in all the participating factories. (This indicator will depend on the final adopted version of the Trade Union Law.) Indicator 2: # of CBAs covering terms and conditions of employment negotiated between the management and union(s). Currently there is only one CBA that was signed in May 2013 and it is to be expired in May 2015. By the end of the training and capacity building programme, at least 4 out of 7 factories indicated their interest in engaging/or re-engaging in collective bargaining negotiation. By the end of the Project, it is expected that all participating factories will have tried to negotiate a CBA and the existing one has been renewed. Indicator 4: # of AC Awards, and (%) of its compliance with AC awards on rights disputes that are implemented by both the management and unions. As per the established baseline/indicators, 8 out of 14 AC’s awards on rights disputes was implemented by both parties. This represents 57% compliance rate with the AC’s awards by all participating factories. By the end of the Project, it is expected that any rights disputes that may be arise will be settled through final and binding arbitration. Indicator 6: Increased # (%) of women elected to union positions in enterprise level unions. As per the established baseline/indicators, there are 42 women currently elected to the union leadership positions in the 7 participating factories. This represents about 46% of women holding the union positions. Given the fact that the presently elected union positions would only be re-elected when the current term comes to the end, the targeted result to increase the women position up to 65% will only be achieved once the re-election takes place. However, the Project, through training and capacity building programme, had encouraged the unions to nominate more women candidates to any future available seat(s) for union leadership ranks and positions. By the end of the reported period, there was no change in the existing union leadership positions. Indicator 8: Increased % of grievance resolved through well-functioning/improved grievance procedure. Because of the absence of the clearly written procedures and the record keeping thereof, no existing baseline indicator was established. However, with a clear written grievance handling procedures that had just been adopted/introduced following the completion of the training and capacity building programme, it is expected that a proper record keeping will be maintained to keep track of, thus a percentage of its successfully resolved grievances/complaints can be established in the future reported period.

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VI. Sustainability, Risks and Mitigation Measures Sustainability As indicated in the Project’s document, sustainability assumptions depends on a number of factors: Project period must be sufficiently long enough for impacts to take effect and to be replicated, stakeholders namely union federation/confederation and GMAC, and their enterprise affiliates would continue to support and rely on MOU/ULPs agreements at the end of the project period. At the enterprise level, the sustainability of the project’s outcomes/results would vary depending on the number of participating factories reached, and how the enterprise unions and factory management would respond and conduct themselves at the end of the training and capacity building programme. During the first year of the Project’s implementation, and following the completion of the training and capacity building programme at the enterprise level, most of the planned interventions have been carried out smoothly with the commitment and support from the relevant project stakeholders. The results achieved had been encouraging in terms of the targeted number of participating factories reached, the stronger commitment and improved capacity of the stakeholders to take action to improve industrial relations at their workplace through the signing of the enterprise level of MOU/ULPs. However, the long-term impact from the project’s intervention at this point in time still needs to be assessed at the end of the project period. Risks and Mitigation Measures Despite the generally positive results of the industry-wide MOU, the fact that it has lapsed since January 2, 2015 could have a negative effect on the work of the project, especially if it were not renewed on time for the next batch of the participating factories. It may be more complicated to persuade the enterprise unions and management to sign the enterprise MOU’s if the industry-wide MOU is not in effect. As a mitigation measure, the Project together with the Arbitration Council Foundation (ACF), have continued to facilitate the parties in their effort to renew and sign the next MOU before the next scheduled campaign at the enterprise level. In the worst case scenario, the Project will work with individual union federations and confederations, who have their enterprise affiliates to sign the enterprise level MOU/ULP Agreement without linking its signature to the industry-wide MOU. Another risk that can be foreseen at the moment concerns the draft Law on Trade Unions, which may contain provisions contrary to obligations under ratified Conventions. If the law goes into effect with these clauses, it could have a negative impact on the project’s future implementation activities. The draft TU law was not included in the original risk matrix, because at the time that the project document was developed, the law was not under consideration. As a mitigation measure, the ILO continue to intensively engage with the MOLVT and other relevant key stakeholders on ensuring that the draft law is fully compatible with core ILO conventions. Further the ILO also strongly recommend the Ministry to organize the last round of tripartite consultations once the revised draft law has been gone through its final preparation and revision process.

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VII. Project’s Budget, Expenditure and Procurement Budget The ILO Project on Improving Industrial Relations in Cambodia’s Garment Industry is funded jointly by SIDA and PULS Trading Far East Ltd, a subsidiary company wholly owned by H&M Hennes & Mauritz AB, with a total budget of USD $839,827. Below is the detailed breakdown of the financial contribution by SIDA and H&M along with disbursement schedules and the actual amount of the contribution received.

No. Disbursement Schedules

SIDA Contribution H&M Contribution As per

Agreement Actual

DisbursementAs per

Agreement Actual

Disbursement1 Upon Signature $140,296

(Feb. 2014)$139,419.00(Feb. 2014)

$85,000 (Nov. 2013)

$85,121.53(Nov. 2013)

2 March 2014 $171,479 145,243.99(Jan. 2015)

$129,000 (March 2014)

$129,000.00(June 2014)

3 March 2015 $179,037(Not yet

disbursed)

$134,790 (Not yet

disbursed)

Sub-total $491,037 $284,662.99 $348,790 $214,121.33 Grand Total as

per the Agreement

$839,827

Grand Total Received up-to-

date

$498,784.32

Certified Financial Statement As indicated in the attached Certified Financial Statement of Income and Expenditure as at 31 December 2014 in Annex B, the Project had received the first two instalments from both SIDA and H&M for the total contributed amount of $498,784.32 ($284,662.99 from SIDA, and $214,121.33 from H&M) with $26,990 short of $525,775 anticipated amount in the funding agreement for the total SIDA’s and H&M’s first two instalments. This may explain by a fluctuation in the market rate of exchange that reflected the depreciation of SEK against the US dollars on the date of transaction. Out of the total $498,784 received, only $173,421 had actually been spent by the end of 2014, and $325, 363 had been committed and allocated under different budget lines in 2015. As of March 2015, the actual expenditure was up to $226,758, out of which, $125,472 had been used mainly to support the cost of the project management, administration and financial services, operations including purchase of office equipment and supplies, office and car rental, and other

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programme support costs, and $83,013 had been spent primarily to achieve the outcome 1 & 2 toward the costs of training and capacity building programme at the enterprise and industry level activities, including hiring of national consultants, translating training materials and on-site interpretation and renting of the training venues, facilities and foods. The remaining expenditure of $18,272 had been used to achieve the outcome 3 toward the training costs of the Ministry’s conciliators and the tripartite discussions and consultation on industrial relations policy, law and regulations at the national level. Please refer to the detailed reported expenditures in the attached Financial Status Report by the Project Output and Expenditure2 in Annex C. Due to the delay in the third disbursement, the current budget has no sufficient funds for the planned enterprise level activities as reflected in the outputs 1 & 2. Thus, the Project needs to receive the last disbursement of $134,790 from H&M in June/or July 2015 ahead of the planned enterprise training activities, which are scheduled to be implemented as from August 2015, and $179,037 from SIDA, preferably toward the end of the year, or early next year 2016 – the ending year of the Project. Local Procurement of Equipment or Services In terms of the procurement of equipment, the Project had spent $4,125 for the purchase of 2 Notebook Laptop Computers, 1 Laser Printer and 1 Scanner. It is worth to note that the Project had received the custody of other office equipment and furniture from the ILO’s previous project and therefore there was no further need to acquire them under the Project. Please refer to the detailed list of the Office Equipment in Annex D. Although a formal bidding process is not required for the local procurement of equipment or service where a single purchase does not exceed $20,000, the Project had strictly followed the ILO’s mandatory procurement rules applicable to such the specified purchase by obtaining and retaining on file written quotations together with the comparative evaluation undertaken prior to the purchase, plus a prior approval on the required specifications from the ILO’s relevant technical department/unit. In terms of the procurement of services, the Project mainly had entered into the service contracts with various local service providers toward the costs associated with the provisions of the training materials, stationeries, translation/interpretation, and other facilities including venue, meals and allowance. Similarly to the procurement of equipment, efforts had been made in obtaining comparative prices on the services offered from the relevant service providers. As reflected in the financial status report, out of $83,013 reported expenditures $8,467 had been used to cover the cost of service contracts to promote industry-wide MOU. (Please refer to the detailed list of service providers in Annex E), and the $53,326 had been used to cover the costs of the training venues, training materials, stationeries, translation/interpretation, meals and allowance in support of the conduct and delivery of training workshops at the enterprise and industry levels. External Collaboration Contracts

2 This Financial Status Report by the Project Outcome, Output and Activity as of March 2015, is not the officially certified financial statement. It is provided for the purpose of providing a reader with the most up-to-date financial statement at the time this report is written.

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In addition to the procurement of equipment and services, the Project had used the external collaboration contracts with both national and international collaborators/or consultants, who are well known and highly qualified in a specified field of expertise that is needed by the Project. The selection of an External Collaborator is not governed by the standard procurement rules but by the special rules governing external collaboration contracts based on a transparent, reasoned and documented process. In doing so, the Project had strictly followed through the process of identifying potential candidates, which entails the need to provide justification and reasons for the recommended selection of particular collaborators/or consultants, such as previous working experiences to the satisfaction of the ILO or other UN agencies etc. A daily rate/or fee, which is based on the best local rates for equivalent work, and was subject to preliminary negotiation of the terms of the contract with the consultants, and prior approval of the ILO’s responsible officials. As reflected in the list of external collaboration contracts, $21,220 had been used to cover the fee of national consultant(s) for the conduct and delivery of the enterprise level training activities. By the time of the report, another $3,596 had been used to cover the fee of the international consultant for the conduct and delivery of training for the Ministry’s conciliators at the national level. Please refer to the detailed list of the Service Providers in Annex F. Anti-Fraud Policy The ILO has in place the Anti-Fraud Policy (the Office Directive, IGDS Number 69, Version 1 of 17 June 2009) that iterates a clear policy of zero tolerance to fraud and dishonesty, sets down measures to promote an anti-fraud culture, clarifies procedures for reporting fraud, defines responsibilities of the Treasurer/Financial Comptroller, Committee on Accountability, Office of Internal Audit and Oversight and ILO staff. All ILO officials to whom authority has been delegated for the use of ILO resources are responsible for ensuring compliance with the established procedures and acting prudently and ethically to provide reasonable assurance for the prevention and detection of fraud, and other irregularities The project is directly implemented by the ILO, and not implemented through local partners. Thus, the internal anti-fraud and corruption rules, as well as auditing provisions are considered sufficient to address these matters.

VIII. Workplan Attached to this report is the updated workplan for the year 2015 – Annex G. This was prepared based on the work activities implemented in 2014 as most of the planned activities such as training at the enterprise level will be conducted and delivered in the same manner using the same but to-be improved training materials within the same training period. The Project will review certain activities planned for the national level in light of the adoption of the new TU law.

2014 project annual report · 2014 project annual report - i - project on improving industrial...

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