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Business and Society Programme
The business environment changed radically in the 1990s. State withdrawal from the market and deregulation have meant an expanded role for business in national and global governance. Foreign direct investment is now the preferred vehicle for capital transfer and for the diffusion of technology and skills. Business is seen as the locomotive for growth everywhere. However, this has led to an escalation of popular expectations and to public demands for greater corporate involvement in fields as varied as employment security; community benefits; child labour; environmental standards; and transparency in business transactions. What is new is that public demands are now being more directly translated into market signals - through consumer demand; through changing employee attitudes and views; through trade and business regulations; and through media exposures affecting corporate reputations and share prices.
Corporate strategy and business policy face added dilemmas in reconciling global competitive pressures with social transformation. They call for new strategies; the promotion of mediating institutions which can link business with society; and the creation of a more favourable policy environment to optimize and diffuse the benefits of investment and growth.
The Institute's programme on "Business and Society" addressed these issues. It is based on the following premises:
(i) There are limits to the extent to which social demands can be met through market mechanisms. Social needs cannot - and should not - be met by business alone. They are basically issues for public consensus and action by civil society and the State.
(ii) Voluntary partnership and innovative forms of cooperation between enterprises and civil society are an essential complement, both to regulatory and normative structures and to individual corporate social initiatives. The programme aimed to promote such complementarities.
In 1998-1999, the activities under this programme comprised two main projects. The first, on Social Transformation and Enterprise Performance, looked at the responses of large international corporations to global competition and to the growing pressures for socially responsive practice placed upon them by consumers, trade unions and other groups of civil society. The second project, on The Changing Environment and Employers' Organizations, focussed on the transformation in the role of employers' organizations and other business associations. These organizations are faced with new and insistent demands by their national constituents, which call for a reappraisal and strengthening of ILO support. At the same time, they are emerging as potentially significant social actors mediating between business and society and serving as conduits for best practice and innovative strategies within the economy as a whole.
Social Transformation and Enterprise Performance
An international workshop on Global Production and Local Jobs organized in Geneva in March 1998 helped identify lines of inquiry for the programme. The meeting focused on the relationships between large "lead firms" - driving geographically dispersed production networks in global industries - and their local suppliers and subcontractors. The main topics discussed concerned local development and social cohesion; the quantity and quality of jobs at each node of global production networks; and the growing adoption of corporate codes of conduct and guidelines for ethical sourcing.
By linking successful integration in global networks to social dynamics, the workshop pointed to the importance of local policy networks and to the need to widen participation in these structures. Local industrial transformation was more effective - and social cohesion less affected - when it was assisted by policy networks connecting a vast array of private, semi-private and public intermediary organizations. By stimulating and coordinating cooperation between firms and public agencies, these networks helped to build up new industrial competence, and contributed to wider employment opportunities. Several examples were discussed where either business associations, trade unions or individual firms played a driving role in establishing intermediary organizations to support industrial upgrading at the lowest possible social cost.
The issue of local policy networks was also at the centre of the international workshop on Industrial Upgrading and Development (Geneva, 2-3 November 1998), which the Institute organized in collaboration with the SSRC (Social Sciences Research Council - a US private academic foundation). The workshop brought together academic experts from varied disciplines and nationalities to review the latest research on industrial upgrading, its implications for development and the generation of employment opportunities, including the role of business associations.
The problems associated with conditions of work in the remote corners of global supply chains were further explored at the Executive Round Table on Social Codes of Practice in Multinational Businesses (Ascot, UK, 15-16 April 1999). The meeting - which was self-financed - was a preparatory event for the 2nd ILO Enterprise Forum that took take place in November 1999. The Round Table brought together senior executives from major multinationals and ILO experts for an open and frank exchange of views on corporate codes of conduct and conditions of work in global supply chains. Possible roles were suggested for the ILO, e.g. in making information on national and international labour law available to companies operating in developing countries; in conducting research on the impact of corporate codes of conduct on local suppliers and subcontractors; and in reviewing management systems as well as the principles of social responsibility.
If corporate codes of conduct represent a highly visible response to the social concerns of consumers and public opinion, another response - equally widespread - is the proliferation of corporate social initiatives. These include a broad range of voluntary community involvement programmes such as: initiatives to train and educate local workers and their families; to facilitate the access of disadvantaged groups to the labour market; to promote social cohesion; and to favour employee volunteering and secondment to community organizations.
The IILS international workshop on Voluntary Business Initiatives for Decent Work: Lessons Learnt from Corporate Community Involvement Programmes (Geneva, 2-3 September 1999) brought together academic experts, ILO officials and business practitioners for a comprehensive review of those initiatives. The discussion focused on the motivations behind those programmes and the modalities of implementation. It highlighted the links between the programmes and mainstream enterprise concerns but also stressed the potential mutual gains for the enterprise and the community, particularly in the areas of greatest interest to the ILO. Participants explored issues related to the international diffusion of good practice. This event was also organized as part of the preparations for the 2nd ILO Enterprise Forum.
The Changing Environment and Employers' Organizations
The activities under this second item were designed to fill gaps in theoretical and empirical research on employers' organizations and business associations. Three themes dominated the work.
The first theme was the need to know more about the impact of economics and social change on the activities and prospects of employers' organizations. The Institute supported the ILO's Bureau for Employers' Activities in carrying out a comprehensive survey of employers' organizations in industrialized, developing and transition economies. The findings indicated that employers' organizations have started to respond to new challenges. In shaping their agenda, they are moving into areas such as training, productivity and labour market regulation. They are placing greater emphasis on broad national concerns such as social security, education, trade and fiscal policies and also becoming more active at the local, regional and international levels.
The second theme concerned the contribution that business joint action could make to promoting higher planes of competition, sustainable development and decent jobs. This topic is of obvious concern to the ILO and its constituents, but it also reflects recent orientations in development thinking. If the development policies of the 1980s and early 1990s were characterized by a marked shift from the state to the market as the engine of growth, now more attention is paid to the institutional infrastructure necessary to make markets work and to make growth socially sustainable. This theme was addressed at the international workshop on Employers' Organizations, Development and Jobs that the Institute organized in Geneva (April 1999). The workshop gathered ILO and academic experts and leaders from employers' organizations from Africa, Asia, the Americas and Europe to review case studies of associations that successfully supported enterprise growth, in particular small and medium-sized businesses, while at the same time delivering wider benefits to society.
The associational responses of business to globalization were also discussed at the international conference on Responding to the Challenges of Globalization: Local and Regional Initiatives to Promote Quality Employment through Social Cohesion (May 1999). This conference was organized by the ILO Employment and Training Department, with the collaboration of the Institute and the support of the Regional Government of Emilia-Romagna (Italy). It showed that the trend towards decentralizing employment and industrial policies was becoming widespread. A number of case studies demonstrated that successful enterprise development strategies were characterized by their emphasis on close and flexible relationships between the State, business, its associations, and a wide range of other intermediary organizations.
A Carribean regional workshop on Decent Work and Global Competition: New Roles for Enterprises and their Organizations, was held in Port-of-Spain in October 1999. The workshop was organized by the Institute in collaboration with the ILO Office for the Caribbean. Its purpose was two-fold: first, to break new ground in identifying the key elements of high-road employment and industrial strategies to achieve decent work in the region; and, second, to enhance knowledge of the specific contribution that the business community could make to formulating and implementing those strategies.
The discussion focused on business strategies, productive upgrading and supportive meso-level policies, institutions, and organizations. Several policy concerns were raised:
- The small and undiversified economies of the Caribbean had to pursue a new pattern of productive specialization in order to generate decent and sustainable jobs, a pattern less centred on traditional industries and more on innovative service activities and export niches in international value chains;
- Targeted efforts to promote quality foreign direct investment and incentive systems that did not discriminate between local and foreign investors were preferred over the EPZ model;
- Small business development was a cornerstone of strategies to achieve decent work in the region: export niches, for instance, could be developed out of SME and even informal sector activities.
- Caribbean firms should abandon reliance on cheap labour for sustainable competitiveness and move to high-road solutions based on innovation and the involvement of skilled and motivated workers; to succeed, however, they had to be supported by meso-level policies and institutions, primarily in the area of HRD;
- Closer public-private interactions and attention to industry specificities were key elements of successful meso-level initiatives to promote new management practices at enterprise level and the generation of adequate skills for the economy as a whole;
- Employers' organizations and other business associations could encourage productive upgrading and decent work by providing their members with new information services and by promoting awareness campaigns and social partnership; these efforts, however, required improvements in their strategic planning and technical skills.
Finally, the third theme concerned the developmental function of informal-sector associations of micro-enterprises and enterprises. Work was done, for instance, on the reasons for the success of the National Federation of Artisans of Mali. Investigating the scope for business associations to address the problems of informal sector producers in developing countries is of interest to employers' organizations wishing to be more active in this area. For the ILO, the interest lies in the possibility of these associations serving as important channels for improving conditions in the informal sector, i.e. for achieving decent work. Activities also focused on exploring the contribution that employers' organizations could make to strengthening the linkages between micro-enterprises and larger firms. This was the basis for the IILS contribution to the regional workshop on "Cooperacion para la competitividad empresarial" (Cooperation for Enterprise Competitiveness) organized in Guatemala City, 18-19 August 1999.
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