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Global labour agreements:
A framework for rights
Framework agreements between multinational corporations and global unions are becoming more common. What can they achieve, and how do they relate to ILO standards? This article examines the host of new global framework agreements which have been signed between enterprises and unions in the past 12 years, and how they are changing the face of the world at work *.
GENEVA - When automobile giant Volkswagen signed a "global framework agreement" with its unions concerning minimum labour standards recently, a company spokesman made clear it would benefit both sides of the negotiating table.
Social responsibility is "not just rhetoric", the spokesman said. Rather, it is "a real support for our competitiveness".
In what is a growing trend, major global industrial enterprises are signing "framework" agreements with their employees which commit them to respecting minimum labour standards around the world? They recognize that for global corporations today, adhering to bedrock labour standards seems to be good business.
Most of the world's biggest employers are now global. And most of the world's unions are affiliated to the sector-by-sector Global Union Federations (GUFs). Companies and unions have started taking steps to sign such agreements.
And the pace is quickening. The first agreement dates back to 1988, but of the 20 such deals reached so far, no less than eight have been signed during 2002, and a number of others are on the way. These packages now apply to multinationals in a wide range of sectors from minerals and mining to telecoms, manufacturing and retailing.
Rights at work
Topics most frequently covered are trade union rights, collective bargaining rights, information and consultation, equal opportunities, safety and health, minimum wage standards, and the banning of child labour and forced labour.
Not coincidentally, the agreements concentrate on many of the issues covered by the core ILO Conventions. The texts make prominent mention of those standards, often referencing them by number and name. Most cited are the two Conventions best known to trade unionists - Nos. 87 and 98 on freedom of association and collective bargaining. Several of the agreements cite specific ILO Conventions as the most important examples of those to be applied. In these cases, a more general commitment to ILO standards is implied.
Many multinationals already have their own codes of conduct. These often include labour relations and social issues. So why is there a need for framework agreements? The answer comes down to two words: monitoring and implementation.
At the global level as at every other, there is a crucial difference between an internal company code of conduct and a union-management agreement.
An internal code has generally been written by the company itself for the company's own purposes. Its implementation is monitored, if at all, by the company or the company's paid consultants. Some of the global framework agreements, on the other hand, give the signatory GUFs the right to raisewith corporate headquarters management any alleged breaches of the provisions which have been signed. Often, the agreements specify regular meetings for that purpose, and some also establish channels for more urgent communication when needed.
For the unions, the advantage is obvious; they can keep a check on how the company is living up to its commitments on the ground, and they can quickly bring any problems to the attention of the highest corporate decision-making level. The agreements "provide the basis for future global dialogue and a framework for tackling individual problems as they crop up", says Philip Jennings, General Secretary of Union Network International (UNI). "They are the way forward in democratizing the multinationals."
But this process is also in the best interests of the companies and their stakeholders, as it gives substance and credibility to corporate ethics.
The agreement between construction multinational Ballast Nedam and the International Federation of Building and Wood Workers (IFBWW), "provides an added value for Ballast Nedam", said IFBWW General Secretary Anita Normark at the signing in March 2002. "The verification of the efforts of the company to live up to international standards can be facilitated through the use of a global union network which IFBWW can provide with 289 affiliates in 125 countries!" But, she added, "it is also important for governments to provide a legal framework for the implementation of global ILO and OECD standards".
All in all, the relationship between ILO standards and the GUFs is beginning to parallel that between national industrial legislation and national industrial unions. From the nineteenth century onwards, it was clear that even the best labour legislation needed to be backed by a strong union presence in the workplace. Conversely, the maintenance of that presence was helped by good industrial law. And many employers came to see that good law and good agreements with the workers' representatives were in their own best interests. Today, those same lessons are being learned at the global level.
The automotive industry is one of the latest sectors to join this trend. In June 2002, Volkswagen (VW) signed its Declaration of Social Rights and Industrial Relations with the International Metalworkers' Federation (IMF) and the VW Global Works Council. A few weeks later, DaimlerChrysler adopted a similar document, Social Responsibility Principles, in an agreement with its World Employee Committee, signed in conjunction once again with the IMF.
The pioneers of framework agreements were the food and allied workers' international, IUF, and the French-based multinational, Danone. Negotiations for their first agreement began in 1985. Since then, they have signed additional agreements on trade union rights, on skills training, and on the measures to be taken, "in the event that new techniques [or] organizational processes are implemented, or in the case of substantial changes in production volume, transfer of a substantial part of production, partial or full closings of facilities and, in general, in all situations whereby working conditions or the nature of employment contracts are significantly affected".
Other landmark examples include the 1998 framework agreement between IKEA and the building and woodworkers' IFBWW, and UNI's agreements with Carrefour and Telefónica. Mining and energy workers are also well represented in agreements between their International Federation of Chemical, Energy, Mine and General Workers' Unions (ICEM) and Statoil, Endesa and AngloGold.
The VW and DaimlerChrysler agreements each cover more than 300,000 employees, and with their adoption almost two million employees worldwide now work for companies which have signed framework agreements. Generally, companies headquartered in Western Europe have taken the lead, but there are also examples from New Zealand (Fonterra) and South Africa (AngloGold).
VW'sagreement, for instance, commits the company to seven major principles:
The agreement also states that "the future security of the Volkswagen Group and its employees ensues from the spirit of cooperative conflict management and social commitment, on the basis and with the goal of ensuring economic and technological competitiveness".
For the company, this is a big advantage of the agreement. "We have enshrined our corporate attitude to conflict resolution," a VW spokesman told World of Work. "That approach has been very successful in Germany, and this agreement is now helping us to transfer it to other parts of the world." The company also sees the agreement as part of its follow-up to UN Secretary-General Kofi Annan's Global Compact initiative, which incorporates the basic rights guaranteed by the core ILO Conventions.
The IMF's Robert Steiert is just as happy with the outcome. As the Coordinator for the VW Global and European Works Councils, he thinks the agreement will set an important precedent: "With the big firms, there is always a locomotive effect. It is in the interests of companies to project a good public image, and others will not want to get left behind. In taking this step, VW is once again emphasizing its stance of corporate social responsibility and putting itself out front. We hope that others will follow suit."
Certainly, when one or more companies in a sector sign up, there will be some pressure for agreements with the others. That pressure may also be felt by the unions. A company which has signed a framework agreement may feel exposed if its competitors fail to do likewise after a certain time - exposed, that is, to criticism both from the competitors and from the company's own shareholders. So the GUFs will feel a particular need to keep up the momentum. Here, another factor comes into play. In the nature of things, the first companies to sign the agreements have tended to be those which already have a good working relationship with the unions. Other negotiations may prove more difficult.
One way around this dilemma may be to reach sectoral-level global agreements on specific issues. This approach also has its pitfalls, however - not the least of them being a certain asymmetry in the mandates of the negotiating partners. While most industrial manufacturers are in sector-wide bodies at the global level, the relationship between these councils and their member companies is not the same as between the GUFs and their affiliated unions.
The potential difficulties are well illustrated by a chemical industry initiative which had its origins in an ILO sectoral conference. In February 1999, governments and chemical industry employers and unions met under ILO auspices. They agreed that negotiations should begin for greater participation of workers' representatives in the chemical industry's existing Responsible Care programme, which aims to ensure universally high health, safety and environmental standards wherever the industry operates.
Detailed negotiations were indeed launched between the ICEM and the companies' International Council of Chemical Associations (ICCA), and by the beginning of 2001, everything seemed set for a worldwide sectoral agreement. However, the deal fell through at the last minute, but there is still hope to reach agreement, possibly at the regional level.
More generally, the ILO may well help to promote framework agreements. After all, the precondition for any such deal is to get the unions and the companies together at the international level, and where better to do that than at the tripartite ILO?
The basis for this role has been laid out by the ILO's Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy. As Director-General Juan Somavia points out, this Declaration is a universal basic reference point for social responsibility in the world of work. Its principles, he says, "foster mutual understanding, participation, transparency and social responsibility - all prerequisites to sustainable partnerships among global and local actors and markets".
In a global workplace with global employers, that is a vital task.
* Written jointly by Ian Graham, a freelance journalist who has written widely on labour issues and Andrew Bibby, writer and journalist.