multinational enterprises and the promotion of decent employment

Multinational enterprises and the promotion of decent employment inspired by the

International Labour Organization: special attention to the access to employment,

training and working conditions

Ferran Camas Roda

Professor of Labour Law and Social Security and Director of the Chair of Immigration, Rights and Citizenship, University of Girona

SUMMER SCHOOL ON INTERNATIONAL LABOUR AND BUSINESS LAW.Doctoral Schools of University of Ferrara in Rovigo & University of Padova)

4th-15th September 2016

Summary1. Brief reference to the principle of decent work and the International Labour Organization programme.

2. TRIPARTITE DECLARATION OF PRINCIPLES CONCERNING MULTINATIONAL ENTERPRISES AND SOCIAL POLICY

3. Review of the principles of the Tripartite Declaration concerning EMPLOYMENT, TRAINING AND WORKING CONDITIONS directed at Multinational Enterprises

4. OECD Guidelines for Multinational Enterprises

5. Resolution concerning decent work in global supply chainsadopted by the General Conference of the International Labour Organization, having met at Geneva in its 105th Session, 2016

Brief reference to the principle of decent work and the International Labour Organization programme.

A reference to this issue was first made in the Report of the Director-General of the International Labour Organization submitted in its 87th Session in 1999, in which it was declared that the primary goal for the ILO was to promote opportunities for men and women to obtain decent and productive work in conditions of freedom, equity, security and dignity, and added that its goal was not just the creation of jobs, but the creation of jobs of acceptable quality; in other words, the quantity of employment cannot be divorced from its quality.

The ILO drew up a programme for decent work based on 4 strategic goals, with gender equality as a cross-cutting principle:

• 1. Employment creation,• 2. Rights at work• 3. Social Protection• 4. Social Dialogue.

During the UN General Assembly in September 2015, decent work and the four pillars of the Decent Work Agenda became integral elements of the new 2030 Agenda for Sustainable Development.

Goal 8 of the 2030 Agenda calls for the promotion of sustained, inclusive and sustainable economic growth, full and productive employment and decent work, and will be a key area of engagement for the ILO and its constituents

TRIPARTITE DECLARATION OF PRINCIPLES CONCERNING MULTINATIONAL

ENTERPRISES AND SOCIAL POLICY

(adopted by the Governing Body of the International Labour Office at its 204th Session

(Geneva, November 1977) as amended at its 279th (November 2000) and 295th Session(March 2006))

The MNEs Declaration is the most relevant document among those aiming at regulating

corporate behaviour (such as the OECD Guidelines for Multinational Enterprises, the UN Report on Business and Human Rights and the UN Global Compact) given its formal adoption

by the ILO and being the most comprensive text in the area of labour principles (The ILO MNEs Declaration: What’s

in it for workers. International Labour Office, 2011).

Basic premises of the Declaration

The aim of the Declaration is to promote the positive contribution that Multinational Enterprises (MNEs) can bring to social and economic progress, a goal that will be promoted through laws and practices

adopted by governments.

[Tension between the view that MNEs bring benefits if they are subject to the national laws of host countries and the view advocating that MNEs

should be allowed to operate without constraints]

• [The concept of a Multinational Enterprise is not defined, but guidance is provided in Paragraph 6 which states that]:

“Unless otherwise specified, the term “multinational enterprise” is used in this Declaration to designate the various entities (parent companies or local entities or both or the organization as a whole) according to the distribution of responsibilities among them, in the expectation that they will cooperate and provide assistance to one another as necessary to facilitate observance of the principles laid down in the Declaration”.

• [Voluntary application] Paragraph 7:

”This Declaration sets out principles in the fields of employment, training, conditions of work and life and industrial relations which governments, employers' and workers' organizations and multinational enterprises are recommended to observe on a voluntary basis; its provisions shall not limit or otherwise affect obligations arising out of ratification of any ILO Convention”

• [The great importance of employment, training and working conditions based on the ILO Conventions, which are promoted by the Tripartite Declaration]. Paragraph 9.

“Governments of States which have not yet ratified Conventions Nos. 29, 87, 98, 100, 105, 111, 122, 138 and 182 are urged to do so and in any event to apply, to the greatest extent possible, through their national policies, the principles embodied therein and in Recommendations Nos. 35, 90, 111, 119, 122, 146, 169, 189 and 190”.

Along these lines, the mentioned Conventions relating directly or exclusively to employment, training or working conditions are:

• Convention (No. 100) concerning Equal Remuneration for Men and Women Workers for Work of Equal Value

• Convention (No. 111) concerning Discrimination in Respect of Employment and Occupation;

• Convention (No. 122) concerning Employment Policy;

• Convention (No. 138) concerning Minimum Age for Admission to Employment.

Nevertheless, apart from promoting the previous Conventions, the Declaration also makes a reference in the regulation of the

principles that contain other ILO laws regarding employment, training or working

conditions, for example:

Convention No. 142 concerning Vocational Guidance and Vocational Training in the Development of Human Resources, when concerning “Training”, Paragraph 29 of the Declaration refers to this Convention to establish that: “Governments, in cooperation with all the parties concerned, should develop national policies for vocational training and guidance, closely linked with employment. This is the framework within which multinational enterprises should pursue their training policies”

• On the other hand, until 2006 the Governing Body of the International Labour Office had adopted a list of Conventions relevant to the Tripartite Declaration of Principles concerning Multinational Enterprises, for example:

• Convention No. 155 concerning Occupational Safety and Health and the Working Environment, 1981, relevant to Paragraph 37 of the Declaration:

“37. Governments should ensure that both multinational and national enterprises provide adequate safety and health standards for their employees. Those governments which have not yet ratified the ILO Conventions on Guarding of Machinery (No. 119), Ionizing Radiation (No. 115), Benzene (No. 136) and Occupational Cancer (No. 139) are urged nevertheless to apply to the greatest extent possible the principles embodied in these Conventions and in their related Recommendations (Nos. 118, 114, 144 and 147). The list of occupational diseases and the codes of practice and guides in the current list of ILO publications on occupational safety and health should also be taken into account”

• Convention No. 158 concerning Termination of Employment at the Initiative of the Employer, 1982 relevant to Paragraphs 9, 26, 27 and 28 of the Declaration:

“9. Governments of States which have not yet ratified Conventions Nos. 29, 87, 98, 100, 105, 111, 122, 138 and 182 are urged to do so and in any event to apply, to the greatest extent possible, through their national policies, the principles embodied therein and in Recommendations Nos. 35, 90, 111, 119, 122, 146, 169, 189 and 190. Without prejudice to the obligation of governments to ensure compliance with Conventions they have ratified, in countries in which the Conventions and Recommendations cited in this paragraph are not complied with, all parties should refer to them for guidance in their social policy”

“26. In considering changes in operations (including those resulting from mergers, take-overs or transfers of production) which would have major employment effects, multinational enterprises should provide reasonable notice of such changes to the appropriate government authorities and representatives of the workers in their employment and their organizations so that the implications may be examined jointly in order to mitigate adverse effects to the greatest possible extent. This is particularly important in the case of the closure of an entity involving collective lay-offs or dismissals”.

“27. Arbitrary dismissal procedures should be avoided.

28. Governments, in cooperation with multinational as well as national enterprises, should provide some form of income protection for workers whose employment has been terminated”.

• Convention No. 168 concerning Employment Promotion and Protection against Unemployment, 1988, relevant to Paragraph 13 of the Declaration:

“13. With a view to stimulating economic growth and development, raising living standards, meeting manpower requirements and overcoming unemployment and underemployment, governments should declare and pursue, as a major goal, an active policy designed to promote full, productive and freely chosen employment”.

• Finally, in 2000, the Governing Body of the International Labour Office adopted an Addendum to the Tripartite Declaration of Principles concerning Multinational Enterprises in relation to the 1998 ILO Declaration of Fundamental Principles and Rights at Work. This Addendum was based on the assumption that the Declaration on Fundamental Principles and Rights at Work applied to all States, but also stated that:

“Nevertheless, the contribution of multinational enterprises to its implementation can prove an important element in the attainment of its objectives. In this context, the interpretation and application of the Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy should fully take into account the objectives of the ILO Declaration on Fundamental Principles and Rights at Work. This reference does not in any way affect the voluntary character or the meaning of the provisions of the Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy”

Review of the principles of the Tripartite Declaration concerning EMPLOYMENT directed at Multinational Enterprises.

• Multinational enterprises should endeavour to increase employment opportunities and standards (16).

• Before starting operations, they should consult the competent authorities and the national employers’ and workers’ organizations (17)

• Multinational enterprises should give priority to the employment, occupational development, promotion and advancement of nationals of the host country at all levels of cooperation (18).

• When investing in developing countries, they should have regard to the importance of using technologies which generate employment (19).

• To promote employment in developing countries, multinational enterprises should give consideration to the conclusion of contracts with national enterprises for the manufacture of parts and equipment, to the use of local raw materials and to the promotion of the local processing of these materials. Such arrangements should not be used by multinational enterprises to avoid the responsibilities embodied in the principles of this Declaration (20).

• All governments should pursue policies designed to promote equality of opportunity in employment. “Multinational enterprises should accordingly make qualifications, skill and experience the basis for the recruitment, placement, training and advancement of their staff at all levels” (21-23).

• Multinational enterprises should endeavor to provide stable employment (25).

• In considering changes in operations which would have major employment effects they should give reasonable notice to the authorities and arbitrary dismissal procedures should be avoided (26 to 27).

Review of the principles of the Tripartite Declaration concerning TRAINING directed at Multinational Enterprises

• “30. In their operations, multinational enterprises should ensure that relevant training is provided for all levels of their employees in the host country, as appropriate, to meet the needs of the enterprise as well as the development policies of the country. Such training should, to the extent possible, develop generally useful skills and promote career opportunities”.

•“31. Multinational enterprises operating in developing countries should participate, along with national enterprises, in programmes, including special funds, encouraged by host governments and supported by employers' and workers' organizations”.

Review of the principles of the Tripartite Declaration concerning WORKING CONDITIONS directed at Multinational Enterprises

•“33. Wages, benefits and conditions of work offered by multinational enterprises should be not less favourable to the workers than those offered by comparable employers in the country concerned.

•34. When multinational enterprises operate in developing countries, where comparable employers may not exist, they should provide the best possible wages, benefits and conditions of work, within the framework of government policies…”.

• 36. Multinational enterprises should respect the minimum age for admission to employment.

H&M factories in Myanmar employed 14-year-old workers Fashion retail giant says it has taken action against its two factories after new book in Sweden raises fears about working conditions in the country

[The Guardian. 08/2016]

• They should maintain “the highest standards of safety and health, in conformity with national requirements, bearing in mind their relevant experience within the enterprise as a whole, including any knowledge of special hazards. They should also make available to the representatives of the workers in the enterprise, and upon request, to the competent authorities and the workers' and employers' organizations in all countries in which they operate, information on the safety and health standards relevant to their local operations, which they observe in other countries”

Concerning INDUSTRIAL RELATIONS, the Declaration states that:

• The workers’ freedom to association and the right to organize should be respected by multinational enterprises (42 and following).

• Regarding free trade zones, government incentives should not include any limitation of the workers’ freedom of association, or the right to organize and bargain collectively (46).

• Multinational enterprises should not threaten to transfer workers with a view to undermining the workers’ exercise of their right to bargain collectively (53).

Surveys on the Declaration and challenges

Based on the surveys carried out, the Declaration’s main interest lies in the area of employment promotion.

Empresas Multinacionales, Desarrollo y Trabajo Decente. Informe sobre la promoción y aplicación de la Declaración Tripartita de principios sobre las empresas multinacionales y la política social en las Américas. OIT. 2014

“the direct employment effects of MNE operations in the developing world are not large, in comparison to the

enormous workforce that needs employment. On the other hand, the tranformative impact of MNE manufacturing

investment –on the composition of production, and on the resulting structure of employment- can be impressive”.

Theodore H. Moran. A perspective from the MNE Declaration to the present: mistakes, suprises, and newly policy impliactions. ILO Geneva, Employment Working Paper No. 8, 2008.

Considerations of workers’ organizations (Latin America)

Foreign investment as a barrier to creating decent work. MNE relocation and mass dismissals.

Empresas Multinacionales, Desarrollo y Trabajo Decente. Informe sobre la promoción y aplicación de la Declaración Tripartita de principios sobre las empresas multinacionales y la política social en las Américas. OIT. 2014

“Precise data on wages, benefits and other workplace conditions provided by MNE investors in their developing country plants

are not available”But “wherever MNE investment is located, foreign-owned firms

and plants pay higher wages” and “there is a complementary relationship between outward investment and the creation of

higher-than-average decent work jobs at home”Theodore H. Moran. A perspective from the MNE Declaration to the present: mistakes, suprises, and newly policy impliactions. ILO Geneva, Employment

Working Paper No. 8, 2008

• Failure by MNEs to implement equal opportunity policies.

• Employment of qualified staff and failure to participate in local training programmes.

• As a result of outsourcing practices, responsibilities are transferred by MNEs to their suppliers.

Considerations of Governments and employers (Latin America)

• Informality in small enterprises and the difficulties in integrating Global Value Chains driven by MNEs.

• Lack of resources to carry out inspections in keeping with national labour laws.

Empresas Multinacionales, Desarrollo y Trabajo Decente. Informe sobre la promoción y aplicación de la Declaración Tripartita de principios sobre las empresas multinacionales y la política social en las Américas. OIT. 2014

OECD DECLARATION ON INTERNATIONAL INVESTMENT AND

MULTINATIONAL ENTERPRISES

25 May 2011

• Adhering Governments Declare that they jointly recommend to multinational enterprises operating in or from their territories the observance of the Guidelines.

• Adhering governments should accord to enterprises operating in their territories and owned or controlled directly or indirectly by nationals of another adhering government treatment under their laws, regulations and administrative practices, consistent with international law and no less favourable than that accorded in like situations to domestic enterprises (hereinafter referred to as "National Treatment").

OECD Guidelines for Multinational Enterprises

Recommendations for responsible business conduct in a global context

25 May 2011 at the OECD’s 50th Anniversary Ministerial Meeting.

Previous data: Some differences in relation to the ILO Declaration.

• The Guidelines are recommedations addressed by governments to multinational enterprises.

• No reference to ILO Conventions and Recommendations.

“A precise definition of multinational enterprises is not required for the purposes of the Guidelines. These enterprises operate in all sectors of the economy. They usually comprise companies or other entities established in more than one country and so linked that they may coordinate their operations in various ways. While one or more of these entities may be able to exercise a significant influence over the activities of others, their degree of autonomy within the enterprise may vary widely from one multinational enterprise to another. Ownership may be private, State or mixed. The Guidelines are addressed to all the entities within the multinational enterprise (parent companies and/or local entities)” (Chapter I: Concepts and Principles).

•Governments adhering to the Guidelines should not use them for protectionist purposes nor use them in a way that calls into cuestion the comparative advantage of any country where multinational enterprises invest (Chapter I: Concepts and Principles).

•Enterprises should respect the internationally recognised human rights of those affected by their activities (Chapter II: General Policies)

The OECD-MNE Guidelines regulate issues that do not establish in ILO Tripartite Declaration:

• Disclosure• Combating Bribery, Brive Solicitation and

Extortion• Consumer Interest• Competition• Taxation

•Encourage human capital formation, in particular by creating employment opportunities and facilitating training opportunities for employees.

•Refrain from seeking or accepting exemptions not contemplated in the statutory or regulatory framework related to human rights, environmental, health, safety, labour, taxation, financial incentives, or other issues.

Guidelines of interest concerning General Policies

•[To implement “Due diligence”] in Seek to prevent or mitigate an adverse impact where they have not contributed to that impact, when the impact is nevertheless directly linked to their operations, products or services by a business relationship. This is not intended to shift responsibility from the entity causing an adverse impact to the enterprise with which it has a business relationship.

•Enterprises are encouraged to engage in or support, where appropriate, private or multi-stakeholder initiatives and social dialogue on responsible supply chain management while ensuring that these initiatives take due account of their social and economic effects on developing countries and of existing internationally recognised standards.

Attention. It should be taken into account: Resolution concerning decent work in global supply chains

adopted by the General Conference of the International Labour Organization, having met at Geneva in its 105th Session, 2016.

• Global supply chains have increased, facilitated by technological development

• The positive impact of global supply chains on job creation is important.

• At the same time, failures at all levels within global supply chains have contributed to decent work deficits for working conditions

• Decent work deficits are pronounced in a significant number of EPZs linked to global supply chains

Role for governments, business and social partners:

• “Business has a responsibility to respect human and labour rights in their supply chains, consistent with the UN Guiding Principles, and to comply with national law wherever they do business”

• Governments should strengthen labour administration and labour inspection systems; actively promote social dialogue; use public procurement to promote fundamental principles and rights at work; consider to include fundamental principles and rights at work in trade agreements…

“The review process of the MNE Declaration text and interpretation procedure decided by the Governing Body should take into account the outcomes of this discussion of the International Labour Conference”.

Issues to discuss concerning the Resolution?

• Openness to the possibility of adopting regulation concerning supply chains. Should this regulation be addressed at a national level or through international agreements?

• Should we move from using unilateral mechanisms (of corporative social responsibility) to implementing global master agreements with trade unions? Agreements among multinational enterprises, which are at the top of the chain, with the unions?

Enterprises should:

1. Respect human rights, which means they should avoid infringing on the human rights of others and should address adverse human rights impacts with which they are involved.

3. Seek ways to prevent or mitigate adverse human rights impacts that are directly linked to their business operations, products or services by a business relationship, even if they

do not contribute to those impacts.

4. Have a policy commitment to respect human rights.

Concerning Human Rights:

Employment and Industrial Relations

• Respect the right of workers employed by the multinational enterprise to establish or join trade unions; contribute to the effective abolition of child labour; contribute to the elimination of all forms of forced or compulsory labour; be guided throughout their operations by the principle of equality of opportunity and treatment in employment and not discriminate against their workers…

“unless selectivity concerning worker characteristics furthers established governmental policies which specifically promote greater equality of employment opportunity or relates to the inherent requirements of a job”

“Refrain from discriminatory or disciplinary action against workers who make bona fide reports to management or, as appropriate, to the competent public authorities, on practices that contravene the law, the Guidelines or the enterprise’s policies”

• Observe standards of employment and industrial relations not less favourable than those observed by comparable employers in the host country.

• When multinational enterprises operate in developing countries, where comparable employers may not exist, provide the best possible wages, benefits and conditions of work, within the framework of government policies. These should be related to the economic position of the enterprise, but should be at least adequate to satisfy the basic needs of the workers and their families.

• Take adequate steps to ensure occupational health and safety in their operations [No reference to ILO Standards].

•In their operations, to the greatest extent practicable, employ local workers and provide training with a view to improving skill levels, in co-operation with worker representatives and, where appropriate, relevant governmental authorities.

• Enterprises should endeavour to ensure that their activities are compatible with the science and technology policies and plans of the countries in which they operate and as appropriate contribute to the development of local and national innovative capacity [As can be seen, the Guidelines are not directed specifically at developing countries, as the ILO Declaration is, nor do they refer to job creation]

“Establish and maintain a system of environmental management appropriate to the enterprise, including: a) collection and evaluation of adequate and timely information regarding the environmental, health, and safety impacts of their activities…;

“Consistent with the scientific and technical understanding of the risks, where there are threats of serious damage to the environment, taking also into account human health and safety, not use the lack of full scientific certainty as a reason for postponing cost-effective measures to prevent or minimise such damage”

As regards the environment, the Guidelines contain aspects that are not included in the ILO Declaration:

Implementing the OECD Guidelines for Multinational Enterprises: The National Contact Points from 2000 to 2015

21 June 2016

Specific instances treated to date have covered all chapters of the Guidelines with the majority focusing on the chapters on

employment and industrial relations (55%), human rights (24%) and environment (21%).

Issues to discuss:• ¿The protection of the human rights in employment

needs international regulations rather than national laws? ¿It would be needed to adopt international monitoring agencies abel to control non-compliance by states?

• ¿Has employment lost its basic function of guaranteeing a decent existence? ¿It would be needed to incorporate human dignity in employment relations as a transversal assumption integrated in legal standarts?

Thank you very much!

http://www.ferrancamas.com

fernando.camas@udg.edu

@FerranCamasRoda