TMMEI/1998/10 - Note on the proceedings

The Tripartite Meeting on the Impact of Flexible Labour Market Arrangements in the Machinery, Electrical and Electronic Industries was held at the International Labour Office in Geneva from 26 to 30 October 1998.

The Office had prepared a report⁽¹⁾ to serve as a basis for the Meeting's deliberations. It addressed the following topics: overview of flexible labour market arrangements; global trends in the sector; negotiating working hours; work organization; skills, training and education; external flexibility and the structure of employment; labour compensation; the impact of flexibility on competitiveness; and export processing zones.

The Governing Body had designated Mr. M. Arbesser-Rastberg, Employer member of the Governing Body, to represent it and to chair the Meeting. The three Vice-Chairpersons elected by the Meeting were Mr. H.-M. Melas (Austria) from the Government group, Mr. R. Cristobal from the Employers' group and Ms. A. Donnellan from the Workers' group.

The Meeting was attended by Government representatives from Austria, Canada, China, Czech Republic, France, India, Indonesia, Italy, Japan, Republic of Korea, Malaysia, Philippines, Spain, Sweden, Switzerland, Thailand, Turkey, United Kingdom, United States; 24 Employer representatives and 24 Worker representatives.

An observer from the Arab Labour Organization attended the Meeting and representatives from the following international non-governmental organizations also attended as observers: International Confederation of Free Trade Unions; International Metalworkers' Federation; International Organization of Employers; and World Confederation of Labour.

The three groups elected their Officers as follows:

Government group

Chairperson:
Vice-Chairperson:
Secretary:

Ms. P. Singh (India)
Mr. S. Uemura (Japan)
Mr. K. Swinnerton (United States)

Employers' group

Chairperson:
Vice-Chairperson:
Secretary:
assisted by:

Ms. M.L. Storm
Mr. D. Diagne
Mr. J. Dejardin (International Organization of Employers) (IOE)
Ms. B. Perkins (IOE)

Workers' group

Chairperson:
Vice-Chairperson:
Secretary:

Mr. O. Herrnstadt
Mr. M. Hattori
Mr. H. Kamada (International Metalworkers' Federation)

The Secretary-General of the Meeting was Mr. B. Klerck Nilssen of the Sectoral Activities Department. The Deputy Secretary-General was Mr. J. McLin of the Department's Industrial Activities Branch. The Executive Secretary was Mr. P. Bailey. The Experts were Mr. P. Bangasser, Ms. L. Tegmo-Reddy and Mr. J.-P. Sajhau. The Clerk of the Meeting was Ms. T. Bezat-Powell.

The Chairperson welcomed the participants on behalf of the Governing Body. He pointed out the importance of the machinery, electrical and electronic industries as a pattern-setting industry in both the developed and developing world, including in his own country, Austria. Over the past two decades, shifts had occurred of both a regional and a sectoral nature, with mixed impact on employment, wages and working conditions. He emphasized the importance of sectoral meetings such as this one in the ILO's overall activities as an important source of guidance for both the Organization and its member States; they provided a valuable opportunity for the exchange of information and experience. The topic retained for this Meeting was timely since it was increasingly recognized that the workforce of the future would need to have greater flexibility, more responsibility and a high level of commitment to meet the demands for quality products in an extremely competitive industry. Changing work practices, multiskilling and teamwork demanded that the worker employed in the mechanical and electrical engineering industries of tomorrow understand the full production process, have the corresponding authority to make important decisions and be responsible for them. Logical and analytic skills were thus rapidly overtaking manual skills as job requirements.

Mr. K. Tapiola, Deputy Director-General of the ILO, welcomed the participants on behalf of the Director-General. He noted that this was the first meeting devoted to the mechanical and electrical engineering industries under the newly organized system of ILO sectoral meetings, which was introduced in 1996. The question of "flexibility" had been addressed in several other previous meetings on metal trades and a number of studies, but this was the first time that it had been selected as the main topic for a meeting for this sector. It would seem that the question of flexibility was not so much whether it should be introduced or not, but rather how to best agree on it. In this context, he underlined the importance of collective bargaining and of collectively agreed solutions. The Office report examined the following topics: length and type of contract; job description; hours worked; remuneration systems; and the organization of work. The question of flexibility, however, had to be seen in the larger picture of international labour standards. The issue of flexibility should lead to an examination of how standards were implemented, not of the standards themselves. For example, many traditional working arrangements were being challenged by work on weekends -- sometimes exclusively on weekends -- which was compensated at the regular work-week rate or at an annualized rate. Some of these practices which were once exceptional seemed to be increasingly the norm. In these situations, there was need to re-evaluate the standards on hours of work and similar employment conditions not with a view to doing away with regulations altogether but in order to identify how their basic aim of protecting the worker could be reconciled with the need for more flexibility for both the worker and the employer. Mr. Tapiola drew the attention of participants to the Declaration on Fundamental Principles and Rights at Work, which had been adopted by the International Labour Conference in June 1998. The present Meeting was one of the first opportunities to discuss the application of this Declaration to a specific industrial sector. The Declaration underlined that member States were obliged by virtue of their membership in the ILO, regardless of whether they had formally ratified the relevant Conventions, to promote the elimination of all forms of forced or compulsory labour, the effective abolition of child labour, the elimination of discrimination in respect of employment and occupation, freedom of association, and the effective recognition of the right to bargain collectively. As a mechanism for follow-up to this Declaration and its implementation, a simplified annual reporting procedure was to be introduced focusing on each of the four areas covered in the Declaration. This would also be used as a means of identifying the needs for ILO technical assistance.

1. ILO, Tripartite Meeting on the Impact of Flexible Labour Market Arrangements in the Machinery, Electrical and Electronic Industries, Geneva, 1998: Impact of flexible labour market arrangements in the machinery, electrical and electronic industries, 149 pp.

Part 1

Consideration of the agenda item

Report of the discussion⁽²⁾

Introduction

1. The Meeting met to examine the item on the agenda. In accordance with the provisions of article 7 of the Standing Orders for sectoral meetings, the officers presided in turn over the discussion.

2. The spokesperson for the Employers' group was Mr. Greff and the spokesperson for the Workers' group was Mr. Herrnstadt.

3. The Meeting held five sittings devoted to the discussion of its agenda item.

Composition of the Working Party

4. At its fifth plenary sitting, in accordance with the provisions of article 13, paragraph 2, of the Standing Orders, the Meeting set up a Working Party to draw up draft conclusions reflecting the views expressed in the course of the Meeting's discussion of the report. The Working Party, presided over by the Government Vice-Chairperson (Mr. Melas, Austria) was composed of the following members:

Government members

Austria:
France:
Japan:
Sweden:
United Kingdom:

Mr. Melas
Ms. Ory
Mr. Uemura
Mr. Ahnström
Ms. Brattan

Employer members

Mr. Diagne
Mr. Greff
Mr. Hamilton
Mr. Kopinsky
Ms. Roiland (adviser)

Worker members

Mr. Bilquez
Mr. Bylund
Mr. Herrnstadt
Mr. Monage
Ms. Spratt

Presentation of the report and general discussion

5. The report prepared for the Meeting by the International Labour Office was introduced by the Executive Secretary. He noted that employment in the machinery, electrical and electronic industries had increased between 1980 and 1992 while shifting towards lower income countries. OECD countries' share in global employment in the sector dropped from 36 per cent to 30 per cent, but their share of value added remained constant at about 90 per cent. The main issue in collective bargaining was working time and how it was organized, as exemplified by the adoption of "annualized" hours and rotating shift systems. Extended shift systems which included "unsocial hours" were compensated by shorter working weeks and overtime bans so as to generate employment. Measures to facilitate early retirement were also common. As regards work organization, internal flexibility measures had been extensively adopted by companies. Most of these required some form of team working and the breakdown of established job demarcations. This often involved collective bargaining and in every case an investment in training towards "multiskilled" capabilities. There was a need for apprentice training and on-the-job and in-enterprise training programmes. These challenges posed significant problems for smaller firms, giving rise to innovative approaches such as the Australian "group training arrangements". In developing countries, further development of an appropriate educational infrastructure of universities and technical colleges was also called for. Linking pay to skill levels through bonuses for training undertaken could be a way to promote continuous training. As regards external flexibility (outside the firm), increased use of part-time and temporary workers was an indicator of a more flexible workforce. The participation of women in the machinery industry was relatively low (12 per cent to 21 per cent in most OECD countries), while in the production of electrical machinery it was well over 30 per cent in most OECD countries, with much higher percentages in most developing countries. New systems of remuneration which relied more on bonuses or premiums related to individual or group performance had been introduced. Much of the productivity gains in the most competitive parts of the industry -- e.g. United States and Japanese companies -- had been attributed to flexible means of production, especially outsourcing and production and assembly in developing countries. Electronics manufacture/assembly was one of the two main industries to locate in export processing zones (EPZs), textiles/clothing being the other.

6. In his general introductory statement on the report, the Employers' spokesperson noted the importance of the topic in light of increasing globalization and the corresponding need for rapid change. The report prepared by the Office seemed to be focused mainly on developed countries, with relatively little information on the situation and practices in countries in, for instance, Asia and Africa. The information presented showed the link between employment and flexibility, especially in the contrast of experience between the United States and the United Kingdom, on the one hand, and that of continental Western Europe, on the other. The report did not draw conclusions on this issue and in particular the advantages of flexible arrangements for employers and workers alike were not made clear. The report tended to present the workers as victims of flexibility initiatives. Similarly, the report did not emphasize the worker's own responsibility for his or her long-term or lifetime "employability". In this regard, there could have been mention of the practice in many companies of conducting opinion surveys among employees concerning flexibility measures, in which job satisfaction was often rated highly. There could also have been more emphasis on the role of governments in basic education, and on the need for careful matching of educational systems with the skill requirements of modern industry. Finally, the Employers' group wished to draw attention to the danger of relying on regulation in lieu of negotiation between employer and employee representatives.

7. The Workers' spokesperson, in his opening remarks, noted that the question of flexibility concerned two interlinked levels, that of statutes, regulations and standard setting; and that of the workplace. At the first level, calls for flexibility had at times been attacks on hard-earned worker rights: attacks on the rights of freedom of association and collective bargaining, on rights concerning wages, overtime premiums, laws governing occupational safety and health, sometimes even attacks on the right of trade unions to exist freely and independently. At the level of the workplace, flexibility had been used to justify relocations, transfers of production, the use of contract labour, and similar practices which resulted in lower wages and fewer or no benefits. When profitability had been enhanced through flexibility measures, it had not necessarily been shared with the workers. Flexibility had also been used to undermine trade unions and collective bargaining. The discussion on flexibility, therefore, should not focus on deregulation but rather on the strengthening of standards and national laws to protect workers' rights and trade unions. For many workers, flexibility was seen as a tool for undermining these rights.

8. An observer, the General Secretary of the International Metalworkers' Federation, noted that economic globalization, resulting from national political decisions, was changing business and working conditions throughout the world. Intensive competition was transforming business practices and leading employers to look for new ways of organizing work. Flexibility was considered a magic formula for improving competitiveness. Since flexibility had become the fashion, in spite of impressive growth rates previously enjoyed by some Asian economies, world economic growth had fallen by one-third compared to the years of social welfare States when there had been more regulation. The trade union movement was suspicious when asked to tighten belts while profits and managers' salaries were increasing and material inequalities widening. The trade unions did not oppose change and could accept flexibility but not if it meant making workers pay the price of lowering production costs while increasing shareholder value. Competitiveness was not synonymous with productivity. Productivity meant producing more output with the same or less input, and workers and unions did not oppose productivity increases provided this meant no job losses and shared gains. However, improved competitiveness could originate not from higher productivity but from prolonging working hours, intensifying work, cutting wages or lowering working conditions in other ways. Pitting plants and workers against one another was in direct contradiction with the fundamental labour principle of solidarity. Trade unions had been founded to reduce competition in the labour market and certain employers were now attempting to weaken their influence. Certain employers viewed globalization as an opportunity to diminish labour's bargaining position. In the name of flexibility they attacked national or sectoral collective bargaining systems, and where these did not exist, enterprise agreements. They did not hesitate to declare that their ultimate goal was to sign contracts with individuals, considering unions as a third party. In order to avoid inequalities, an individual's right to freedom of association and collective bargaining had to be enforced. These principles were upheld in the ILO's recent Declaration on Fundamental Principles and Rights at Work. Respect for trade union rights and collective bargaining had served employers and workers well by promoting stability and economic growth. The trade unions understood that the world was changing and that collective bargaining systems could not remain unaffected. It was up to national law and collective bargaining to determine at which level issues should be negotiated. The presumption that everything should be decided at the lowest level was, however, unacceptable. To conclude, the trade union movement was willing to negotiate and encourage more effective production methods provided the gains were shared. It was also willing to review different bargaining methods, provided they were free of government and other outside influences.

Point-by-point discussion

Employment and training

9. The Workers' spokesperson noted that the questions to be discussed under the point related first to why companies initiated flexible work arrangements and second to the role of governments in creating an enabling environment. In his opening statement he had underlined that a motivating factor in introducing more flexibility was too often to weaken trade unions and trade union rights. It was important that flexibility be used not only to ensure higher profits but also to benefit workers. Workers' trade unions should also have some control over the process. As for government, its role should not be to deregulate and weaken workers' rights, but rather to strengthen them in areas such as collective bargaining. He underlined the importance of the Collective Bargaining Convention, 1981 (No. 154), and Recommendation, 1981 (No. 163). Governments needed to do more in such areas as childcare, public transportation and flexible personal leave. They should also play a key role in helping workers to improve their skills through publicly financed programmes and in guaranteeing the transferability of such training. All these measures required consultations with the trade unions.

10. The Employers' spokesperson referred to the statement made earlier by the General Secretary of the International Metalworkers' Federation and said that his group disagreed with what had been said about flexibility measures being introduced without consultation. In a changing world companies had to adjust, and in developed countries this was done through negotiations and discussions with employees, works councils and employee representatives. The reason for introducing flexibility measures could be seen from the fact that they were needed mainly in Europe, where one could observe both the strongest level of competition and the highest labour costs. There was nothing wrong with high labour costs, provided productivity was also high. To improve productivity, new methods were needed. Investments were increasingly costly and it was vital to utilize equipment fully. If enterprises were not rapid enough they would lose business. That was the economic reason for flexibility. In addition to economic reasons, there were social ones. In many cases, employees were themselves taking the initiative and companies were responding to their needs. Employees would not want companies to return to fixed working hours. Workers were being empowered through the additional skills gained and this led to enhanced job satisfaction. The role of governments was to establish an appropriate legal environment, but it should not be too rigid. They had to establish the framework in which companies and workers could negotiate agreements which would fit the needs of the enterprises. The European Union had directives which provided the opportunity for companies to negotiate agreements within a specific framework.

11. The representative of the Government of Austria emphasized that the reason for introducing more flexibility in working times was to improve efficiency and profitability. The role of the ILO was to protect workers through, e.g. regulations regarding working time, night work and weekend work, redundancy and the needs of special groups such as young people and women. Regulations should be adapted to modern conditions, and measures should be taken to encourage investment.

12. A Worker member from Austria considered that what should be asked was what would lead unions to accept flexibility. Flexibility would function if it was widely based and not only intended to ensure higher profits. Advantages had to be shared with workers. In Austria each issue was discussed at length. More regulations would be required if there was a more widely based framework.

13. The representative of the Government of France pointed out that in the discussions in her country there was recognition of the need for common rules that could be adapted to the needs of the enterprise. There had to be certain guarantees and standards to protect workers, and negotiations were an absolute must. A Worker member from France noted that if flexibility measures had been accepted, it was because of economic necessity and concerns about unemployment.

14. An Employer member from Germany informed the Meeting that discussions concerning flexibility in the German metal industries commenced with the reduction in the working week to 40 and then to 35 hours. It was thus in relation to the lowering of working hours and a better distribution of work rather than increasing profits. The trade unions were initially rather reluctant to discuss flexibility but since 1986 a more positive attitude had developed because the unions also thought that with flexibility jobs could be maintained and the needs of workers addressed. Recently there had been agreements with works councils at enterprise level to increase working hours from 35 to 38 hours in exchange for a guarantee to preserve jobs. There were also "employment life accounts" through which hours worked could be credited and saved until the worker reached pensionable age, when they could then be used to retire earlier. In this way both the employer and the worker could derive benefits.

15. A Worker member from Germany, while agreeing with most of the statement of the Employer member from his country, pointed out that in some companies workers had been placed under pressure and had reached agreements to work beyond the normal standards, which had created tensions. This was due to unemployment which threatened the very survival of workers. This unemployment had led to imbalances on the labour market. It was essential to have regulations and proper protection. There was a need to draw a distinction between deregulation measures which aimed at undermining protection for workers and flexibility introduced in a balanced manner. In periods of high unemployment advantage should not be taken of imbalances.

16. The representative of the Government of the Republic of Korea considered that governments had a key role in ensuring a smooth transition through the provision of training, especially to unskilled workers. While such training was provided in large companies, small and medium-sized enterprises could not afford to, and governments should thus take the responsibility. A trained workforce would improve society as a whole, since the country would become more competitive.

17. On the issue of trade union rights, the Employers' spokesperson said that employers recognized freedom of association and collective bargaining, but they did not accept that the unions should have a monopoly in representing employees. They could also be represented through other channels. This might, however, be more of an issue in the United States than in Europe. An Employer member from Australia considered that flexible labour markets were essential for economies to be competitive and that regulation should be light-handed. Furthermore, a monopoly role was not required for the unions. An Employer member from the United Kingdom noted that employers introduced flexibility measures for many reasons including consumer demands and workers' requests.

18. The representative of the Government of Spain considered that governments should recognize the existence of flexibility and should adapt rules to ensure that enterprises were better organized. A key issue in this regard was vocational training. Governments should ensure that workers who attended courses could find jobs quickly and were not being trained for redundant or disappearing jobs. Continuous training was vital as a result of constant technological development. Tripartism was essential and should be observed in each country. Before changing laws or developing new vocational training programmes, governments should consult workers and employers.

19. The Workers' spokesperson, responding to the Employers' spokesperson, emphasized that freedom of association and collective bargaining required genuine implementation, acceptance and effective enforcement, not just lip-service. Regarding the issue of so-called trade union monopolies, he strongly contested this, stating that this had been an empty argument, repeatedly made for many years by those who sought to weaken freedom of association and collective bargaining rights. This argument had been and continued to be rejected by national legislatures as being contrary to public policy. When employers attempted to set up their own employee organizations and make them subservient this led to economic strife and inefficiency. The fundamental rights to freedom of association and collective bargaining were essential. Cynical attempts in the United States to resurrect and dominate employee organizations under the guise of cooperation made workers and trade unions sceptical about flexibility and made it more difficult to build the mutual trust that was conducive to productivity.

20. A Worker member from India argued that when flexibility measures were introduced at the plant, regional or national levels, wages and privileges tended to be eroded. Benefits to employers had not trickled down to workers and society as a whole. Flexibility had to be the subject of tripartite dialogue and workers' rights safeguarded.

21. The representative of the Government of the United States suggested that flexibility might be viewed as the capacity to react to new opportunities in a manner which benefited all parties. The question was how best to achieve this. In that context the approach to government regulation, or the enabling environment, should be based on a recognition that regulations existed to meet a real need but that there should be a continuous search for adaptations to allow them better to meet that need.

22. Regarding training, the Workers' spokesperson argued that topics such as entrepreneurship and interpersonal skills were not central to the agenda of the labour movement or the ILO. These organizations' concerns should be centred on concrete skills. Training programmes should be directed particularly towards vulnerable groups of workers, such as those in precarious employment conditions. He noted that the Human Resources Development Convention, 1975 (No. 142), and Recommendation, 1975 (No. 150), called for substantive tripartite consultation and involvement in the development of national vocational training systems. He also noted the importance of making training available to workers at the workplace; in this regard, he mentioned the potential use of modular training systems. Finally, he emphasized that the final goal of training should be kept clearly in mind, namely the provision of good jobs.

23. The Employers' spokesperson noted that the number of training hours per employee had actually been increasing, and that the development of a skilled workforce was becoming a competitive advantage for companies. He also noted that changing work requirements called for new and additional skills on the part of workers, skills of an organizational and teamwork nature as well as of a technical nature. In this context, one should think in terms of lifetime careers. And the development of lifetime careers was incumbent on workers, employers and governments. The quality of basic education was a fundamental issue and one primarily for the government to address. But there could and should be tripartite involvement in the definition of future training needs. Speed was essential in adapting training to the changing needs of industry, and this involvement was essential in order to have training programmes based on future and not past needs.

24. The representative of the Government of Austria also noted the importance of involving employers' and workers' organizations in the development of appropriate training curricula. He emphasized the need for flexibility in training, in terms of timing, content, social constraints of the workers, and the stress which training could generate. He noted in particular the need for flexible and innovative methods to meet the training needs and conditions of small and medium-sized enterprises, which often differed from those of larger firms. In this regard, he mentioned the possibility of a training levy to support training programmes for groupings of small and medium-sized enterprises. The representative of the Government of China noted the problems which arose when the free times for the workers were not clearly identified regarding the adoption of flexibility in labour market arrangements, leading to inappropriate, duplicate training. The training organizations should provide flexible, basic and necessary skills training to the workers in different shifts, according to their actual needs. He also noted the importance for the enterprises to set up the appropriate training to fit into the workers' personal schedules, to encourage the workers to supplement their knowledge and skills through self-study and to assist them in solving the problems encountered during their self-studies.

25. An Employer member from France pointed out that a form of competition had evolved between training systems and methods but that there could never be a perfect match between initial training and the needs of the workplace. The answer to this problem lay in considering training as a continuous process and taking into account the worker's training history, from school and home life through technical and professional qualifications and on-the-job training. This suggested an aim, a career "target" and implied that enterprises needed to engage in job forecasting. An Employer member from Germany noted that flexible working hours offered an opportunity for training programmes and could thus be looked upon as a precondition as well as an objective for training.

26. A Worker member from Austria emphasized that employability was the responsibility of the three parties but pointed out that certain groups such as older workers, socially disadvantaged workers or handicapped workers, had special difficulties in adapting effectively to changing employment conditions. A Worker member from India considered that since employers were not genuinely interested in imparting skills which workers could take to other enterprises, governments should have the primary responsibility for training. The ILO should issue guidelines in this regard.

27. An Employer member from the Philippines stated that in his country flexibility or "industrial adjustment" was a matter of survival for enterprises. Many rules and laws had become outdated and were not conducive to competitiveness. Private training foundations organized by enterprises in the MEE industries provided an example of a forward-looking practice. These were very helpful in meeting the exigencies of the new ISO 9000 series. The foundations were supported by the enterprise members and through tax and similar incentives by the government authorities. The training programmes included entrepreneurial and livelihood skills so that, if the trainee could not find a job, he or she could at least become self-employed on the basis of acquired knowledge and skill.

28. A Worker member from Australia explained how, in her country, training programmes led to national skill recognition through tripartite arrangements. This was important for making the acquired skills portable. The training system required agreement between the social partners concerning the agreed competency requirements, qualifications and quality assurance mechanisms. A Worker member from Colombia pointed out how training in Latin America was overshadowed by the question of employment. The main issue in the minds of Latin American workers was employment security. In some situations, more highly skilled workers could be in a more precarious situation because they cost more. A Worker member from China considered that the responsibility for training lay with the employer. Trade unions, however, should also offer training programmes and the ILO could provide more technical assistance on training. In China the ILO had supported a large training project for the trade unions, which had been very successful. A Worker member from the Philippines noted that, in the face of globalization, trade unions could build socio-economic services and programmes of their own. She mentioned in this regard cooperative housing and "livelihood programmes" initiated by her organization to help its members with various issues and problems not directly linked to their workplaces. A Worker member from Brazil raised the issue of equality of opportunity. She noted that the burden of adjusting to flexibility fell more heavily on women than on men workers which would justify that training should be especially targeted on women workers. She also noted the importance of training programmes for young workers, especially those entering the labour market.

29. The representative of the Government of France noted that the relative sophistication of the machinery, electrical and electronic industries demanded swift responses to changing conditions which in turn had led to increasing use of temporary staff. Enterprises should make a special effort to train these temporary employees.

Industrial relations

30. The spokesperson for the Employers' group set forth their views on the reasons for the trend towards decentralized collective bargaining. Persons at the local level had a better grasp of realities at that level. Each business was different, and local level bargaining led to agreements tailored to the circumstances and setting of the enterprise. In industrialized countries, the trend towards decentralized collective bargaining was a response to the challenges of increasingly competitive markets. In developing and newly emerging countries, the trend reflected more the major changes in the political and economic settings, especially their movement towards free and open markets. Local level negotiations could better reflect the differences among companies as regards their markets, stage of development, and what they could afford to negotiate. Also the negotiators for both parties were likely to have a better understanding of the local situation. But local bargaining needed to be complemented at the regional, national and sectoral levels, with basic framework agreements within which this local level freedom could be exercised. In addition, there needed to be procedures for conciliation. In a world of decentralized negotiations, employers and workers' organizations should increasingly function as advisers rather than as negotiators, providing supporting material and information such as data on local and global trends, best practices, etc. The key to success was good communication between company representatives and their employees.

31. The Workers' spokesperson pointed to the serious danger that deregulation and decentralization presented to workers, their communities and society as a whole. These trends led to a weakening and destabilizing of collective bargaining, encouraging a "race to the bottom" of reduced wages and benefits which deprived communities of consumers and eventually undermined the businesses themselves. To counter this downward dynamic where everyone lost, he stressed the importance of enforceable national and international labour standards which reflected basic and minimum rights of workers, especially rights of freedom of association and collective bargaining as well as rights to information. They should be welcomed by all, especially employers, who claimed to strive mainly for a level playing field. The Workers especially deplored the practice of individual contracts mentioned in this section of the report, which clashed directly with the strengthening of trade union and workers' rights and was often a cynical way to classify workers so as to deny them various forms of statutory protection. On the question of skills at the local level, he pointed out that trade unions had been mandated by their members to bargain on their behalf. Adequate information was essential for this purpose, and employers should be obliged to make it available. It should be recalled that decentralized collective bargaining could lead to chaotic industrial relations and to an atmosphere of mistrust between workers and employers. The Workers' group understood that each company was different and could have specific needs with respect to collective bargaining. At the same time, employers had to understand that workers everywhere had the same needs and entitlement to fundamental workers' and human rights such as, for example, freedom of association and collective bargaining rights. Trade unions were not mere advisers and neither were they third parties since they were formed collectively by the workers to represent workers' interests.

32. The representative of the Government of Spain considered that collective bargaining should take place at various levels -- national, regional, local and enterprise -- but had to be done with the extensive involvement of workers' and employers' organizations in order to ensure stability and coherence. Experience in Spain suggested that collective bargaining undertaken only at the level of the enterprise and an assembly of its workers could lead to industrial unrest and foment confrontations which were subsequently difficult to settle. A practice had developed whereby certain "open clauses" in the collective agreement were not applicable to some firms. The representative of the Government of the United Kingdom stated that in her country collective bargaining was voluntary and decentralized. This had led to a great diversity of collective bargaining practices, with no single model prevailing.

33. A Worker member from the Czech Republic indicated that in his country decentralized collective bargaining had disrupted the balance between employers and workers. For employers, the expense involved in assembling the information needed to bargain effectively was absorbed into the operations of the local enterprise whereas for workers gathering information was both expensive and difficult, which made local level bargaining unbalanced. He also pointed out that at times employers concealed information from workers or their representatives and resorted to threats or intimidation. In his view, decentralized collective bargaining was not as ideal an approach as suggested by some.

34. The representative of the Government of Malaysia pointed out that 144 of the 151 industrial agreements registered over the past nine months in her country were the results of collective bargaining, which demonstrated that collective bargaining was a well-established practice. In general, these agreements were valid for three years, with built-in adjustment clauses; 98 per cent of the agreements called for wage increases, an indication that the Malaysian economy was sound despite the current financial crisis. She noted that in recent months the trade unions had realized the gravity of the current situation and exercised considerable restraint in wage claims.

35. An Employer member from Australia noted how decentralized collective bargaining in Australia had resulted in greater freedom of choice and stated that the objective was to make the national standards fulfil their true function of a national safety net.

36. A Worker member from Japan stated that employers had on occasion used the international situation as a pretext to increase the differences in pay between large and smaller firms. The ratio could be as great as 100 to 70, and so there needed to be efforts towards harmonization and standardization. A Worker member from India refuted the claim that local collective bargaining led to lower costs. In his view, workers at the local level had neither the knowledge nor the skills to bargain effectively and the trend towards decentralized collective bargaining led to more strikes and labour instability. A Worker member from Malaysia questioned the employers' genuine desire to decentralize collective bargaining, since local unions did not have the necessary information, a fact which the employers used to their advantage. A Worker member from the United Kingdom stated that decentralized collective bargaining and deregulation/privatization were interrelated issues each of which necessitated an enabling environment of conventions and regulations in order to be successful. He also pointed out that it had taken the United Kingdom many years to develop its current practices of decentralized collective bargaining.

37. The representative of the Government of India pointed out that genuinely decentralized collective bargaining was relevant only to small and medium-sized enterprises which operated at a single site, and that effective information sharing was a precondition for success.

38. The Workers' spokesperson drew attention to several international labour standards relating to communication and information sharing within the enterprise, particularly the Co-operation at the Level of the Undertaking Recommendation, 1952 (No. 94), and the Communications within the Undertaking Recommendation, 1967 (No. 129).

39. An Employer member pointed out the wide range of situations and circumstances in his country, the Philippines, which had led the social partners to recognize the need for bipartite discussion, with a main focus on industrial adjustment and the preservation and creation of jobs. The mechanism of labour-management councils was used for unionized as well as non-unionized enterprises; the latter accounted for nearly three-fourths of the labour force. The emphasis was placed on building a sense of mutual trust and confidence. To illustrate this, he gave the example of two multinational firms operating in the Philippines: the employers' first initiative had been to educate managers on the dynamics of unionism, as well as the workers' leaders on business operations, resorting extensively to the Japanese practices of consultation and inviting workers' representatives to participate in corporate strategy planning. An excessively legalistic style had been avoided, the lawyers of the respective bargaining parties participating only as advisers. This process had been conducted with firm top management support.

40. The Workers' spokesperson emphasized that workers were entitled to independent trade unions and that these should engage in collective bargaining; this involved communications between workers and management. The Workers considered this as a fundamental right. Collective bargaining should encompass all issues of interest to workers. A number of ILO instruments were of particular relevance such as the Convention, No. 154, Recommendations Nos. 94, 129 and 163, the Freedom of Association and Protection of the Right to Organise Convention, 1948 (No. 87), and the Right to Organise and Collective Bargaining Convention, 1949 (No. 98). As far as restructuring was concerned, governments had an obligation to establish regulations to ensure workers' protection. In this regard, collective bargaining, freedom of association, and national and international labour standards were key. Too often restructuring had led to redundancies and wage and benefit losses which created serious problems for workers and their communities.

41. The Employers' spokesperson considered that the question of roles and rights should be addressed, but not only those of trade unions. Other players had roles and rights, including other employee representatives, as not all workers were represented by trade unions, and the employees themselves. Employees had a right to direct communication on developments in their companies, specifically as regards restructuring. The keys to success were information-sharing and consultations among different partners; a realistic approach; and mutual trust and confidence. If trade unions persisted in their belief that restructuring was based only on profit, it would be difficult to have fruitful discussions. Companies needed to restructure to survive and trade unions wished to maintain jobs; this situation could lead to some conflicts. In countries with less confrontational relations between employers' and workers' representatives, restructuring had been managed with greater success. What was required was a change in relationships between companies, trade unions and employees or employees' representatives. Enterprises had to be more open and have good communications, and workers and trade unions needed to have a better understanding of economic realities for joint solutions to be found.

42. A Worker member from Austria noted that in his country, in addition to the legislative level, there were national and enterprise level collective agreements, but clear regulations existed regarding the appropriate levels for negotiating different issues. The union participated at all levels in the negotiations and therefore wondered what the employers meant by their reference to other workers' representatives. A Worker member from China noted that there had been much foreign investment in his country during the last 20 years as reforms had been introduced. Chinese industries were undergoing restructuring. Trade unions had already made great progress in their practise of labour relations, in concluding collective agreements and in increasing their membership.

43. The Workers' spokesperson stressed that independent trade unions provided the platform on which to build mutual trust mentioned by previous speakers. Full exchange of information on the enterprise was needed. In some countries there was no legal obligation to provide full and comprehensive information to trade unions in a timely fashion, although this was essential. The notion of giving legitimacy to alternative groups of workers that were not independent and free trade unions was contrary to collective bargaining and freedom of association and the democratic principles reflected in ILO Conventions. The suggestion that a group of workers could be legitimate when workers could not freely select their own representatives, set their own agenda, goals and objectives, and was subservient in any way to employers, was contrary to the fundamental principles of freedom of association and collective bargaining.

44. A representative of the Government of Japan considered it important to establish good relations between employers and trade unions in order for them to deal with changes in labour market flexibility. It was desirable to have flexible industrial relations through voluntary negotiations between the groups. In Japan, good industrial relations had been established in the electronic and electrical industries on the basis of mutual trust. This had resulted in enhanced productivity and working conditions. The role of the government was to support such initiatives by providing an enabling environment. His Government was contributing to this process by establishing high-level tripartite round-table conferences. Another representative of the Government of Japan added that national labour standards should be improved. Central bargaining was very important and for this reason central tripartite discussions were held in Japan on an annual basis.

Conditions of work

45. The Employers' spokesperson stated that only a few countries had relevant legislation on the annualization of working time and the impact on overtime was therefore limited. Most countries still based overtime on hours worked in the course of a week, but this situation would change. In countries such as Germany where there had been modifications, there was some convergence between the companies' wishes to reduce costs and the works councils' desire that overtime be reduced so as to create jobs. One way to address the issue was to move from the present system to a system whereby employees could have a share of the company's financial results. Employers and workers had to reflect together on how to improve human resource management, e.g. by developing multiskilling of the workforce, giving more responsibility to workers, increasing workers' involvement in cost reductions, upgrading company products, and improving wages and benefits. It should be recalled that employment was created following a move to four or five shifts per week and weekend work.

46. The Workers' spokesperson considered that it was incumbent upon governments to adopt national labour standards on wages, hours and overtime, and to ensure that they were effective and properly enforced, and accompanied with sanctions for enterprises which did not comply including through the misclassification of workers on subcontracts, or the employment on a part-time or casual basis. Governments should move these categories of workers to regular, permanent positions as they were often excluded from legal protection and benefits. Compensatory time off should be calculated at the equivalent penalty rate, regulated and taken on a strictly voluntary basis. Workers should be provided the option to receive premium pay, without coercion. They should be able to receive money with interest whenever they desired, not have to work excess hours and take time off at their discretion, not that of the employer. Further, this should not be used to force people to work longer hours in a day; workers should collect premium pay for all overtime on a daily basis and safeguards should be provided for workers when enterprises closed or were sold. In some countries, enforcement of laws on wages and hours of work was ineffective. A new system such as that proposed would be difficult to enforce and expensive; employers would not be deterred from violating the law and workers would be subject to coercion.

47. The representative of the Government of Austria felt that as a rule flexible working time measures allowed for savings on overtime payments and reduced take home pay. There should be enterprise agreements to ensure that unused time worked would be compensated or covered in a new agreement. This was necessary especially for part-time or other non-regular workers.

48. The representative of the Government of France noted that the information contained in the Office report on hours of work in France needed updating as a new law had been promulgated in June 1998 on a 35-hour work-week. Its objective was to reduce working hours but collective bargaining should take place at the sectoral or enterprise level to define how the law should be applied. Another law to reduce the legal duration to 35 hours would take effect on 1 January 2002 or by 2000 for enterprises with more than 20 workers. Assistance would be provided with regard to social security payments for enterprises which applied a 35-hour working week or less if they had difficulties in maintaining staff.

49. A Worker member from Canada stressed that overtime standards were vital and premiums should be increased so as to reduce overtime. In Canada a tripartite position paper clearly stated that there should be a move from a 48- to a 40-hour work-week. The paper also said there should be a review of shift work and rotations so that workers could have normal social lives. A Worker member from Austria considered that flexible working time and overtime issues should be kept separate. In his country flexible time meant working different hours but averaging 38.5 per week. It there was a surplus, time could be taken off. As concerns overtime, they tried to make sure that it was limited and entailed additional payment in order to ensure a certain effect on employment.

50. The representative of the Government of Spain noted that in his country there was a 40-hour work-week with a restriction of a maximum of nine hours per working day. There were adequate sanctions in cases of infractions. Many sectors had now reduced daily hours and transformed them into annual time. Regarding overtime an agreement between trade unions and employers' associations stipulated that it should be eliminated or reduced in order to create employment.

51. A Worker member from India emphasized that downsizing had become the rule of the day with employers resorting to compulsory retirement or imposing forced leave on workers. In India, they were attempting to increase daily working hours from eight to 12 hours in the electrical industries. The Government was trying to amend the labour laws to facilitate the retrenchment of workers to help enterprises downsize; this situation was very serious since workers had no social security entitlements.

52. The representative of the Government of the United States considered it important that workers' and employers' concerns were heard by governments, and he was grateful to the workers for pointing out a number of practical issues that would confront governments in seeking to add compensatory time as an option to overtime pay. Systems for accounting for time were more complex than paying for overtime when that obligation was incurred.

53. A Worker member from Germany noted that in his country there were regulations regarding compensatory time off but there was a growing problem of increased workloads. Many jobs had been eliminated during the mid-1990s and despite the improved economic situation, the jobs had not been reintroduced. Recourse to overtime replaced job creation, and this situation was scandalous in view of the high unemployment rates. Workers had accepted overtime because their wages had not been adjusted to share equitably in increased prosperity. Rules to restrict overtime were needed and they should be based on negotiations.

54. An Employer member from Germany responded that employment had in fact increased in the last year in the German metal and electrical industry and overtime had declined. Employers preferred not to pay overtime which was costly.

55. An Employer member from the Philippines stated that in his country flexible working time enabled workers to deal with such problems as traffic and typhoons. The critical issue in the Philippines regarding flexibility was subcontracting or casualization of labour. The Government, after consultation with the social partners, issued guidelines on the protection of workers in cases of subcontracting or labour contracting. An exhaustive list had been made of what was permissible and which services could be contracted out. One of the provisions extended coverage to contract workers of all labour standards and occupational health and safety standards, and granted them the right to organize, job security and social and welfare benefits. A manpower pool was created as was a monitoring system. The Government provided safety nets for workers who would be displaced as a result of globalization, for example in the textiles and stuffed toy industries, and the social security system enabled workers to take out loans to buy equities in their companies.

56. The Workers' spokesperson stated that any reduction in working time should be without a reduction in pay, and that overtime should in no way be used as a substitute for an adequate minimum wage. It should also be clear that this issue, which also related to higher wage categories, would be subject to collective bargaining.

57. The Employers' spokesperson noted that a limited number of countries were moving towards a 35-hour work-week. Germany was perhaps the most notable example, with Italy and France also following suit. The Employers were of the view that reducing working time did not create jobs but increased labour costs. Negotiated flexibility enabled companies to adjust to these cost increases. In cases where companies did not have this flexibility, some had gone out of existence, while others had adjusted through changing the structure of jobs. In the case of Germany, overtime was paid to skilled workers who were in short supply. This pointed to the importance of governments' role in providing basic education and career guidance to build a skilled workforce.

58. The representative of the Government of Austria said that this was very much an issue involving all three parties. On the part of governments, in addition to wage policies focused on productivity and on solidarity, thought should also be given to a form of special tax relief for low wage-earners.

59. A Worker member from Germany believed that other European countries, such as Belgium and the Netherlands, were also moving toward shorter working time. As regards the link between the reduction of working time and the creation of employment, he referred to a study on the West German machinery industry which suggested that 300,000 jobs had been created between 1980 and 1993. An employer member from Germany pointed out that there were only extrapolations but no empirical evidence on the numbers of jobs created through working time reductions in Germany. He also pointed out that, for example, the reduction of working time from 36 to 35 hours per week in October 1995 had been completely balanced by a productivity increase in the following year; no increase in employment had therefore occurred. He further noted that there was a clear lack of skilled workers in electronics and in part of the machinery industry and he emphasized the importance of apprenticeship programmes for developing a skilled labour force.

60. The representative of the Government of the United States drew attention to a recent OECD publication which devoted a chapter to this specific subject. The study concluded that working time measures tended to be more effective at saving existing jobs than at creating new ones. It further concluded that there was a tendency towards more overtime when labour costs were linked to the number of persons employed, whereas the tendency was more towards employment creation when the labour costs were mainly based on hours worked.

61. The representative of the Government of the Republic of Korea noted that flexible labour markets were important for improving productivity, and governments should therefore give support with appropriate training programmes.

62. The representative of the Government of France informed the Meeting that several articles of the recent legislation concerning working time in France provided for special measures and assistance to enterprises which experienced particular difficulties in fully applying its provisions. She also affirmed that employment generation definitely weighed on the minds of the legislators when this legislation was debated and passed.

63. A Worker member from Austria deemed the reduction of working time to be a desirable goal for all three partners as a matter of principle. The data provided referred to a period (1990-95) during which working time measures were not changed. Increases in productivity and job losses had occurred concomitantly. Reductions in working time would therefore be a means of making jobs more secure.

64. The Employers' spokesperson noted that changing working times did not have only a negative impact on workers. There were often advantages as concerns the organization of family life, and the Employers recommended that changes be discussed within the undertaking by workers and management. Employees' views and wishes should be solicited and when this was not practicable sufficient advance planning should be followed to inform employees of working time changes and to allow them to make suitable family arrangements. Use could also be made of teleworking and homeworking arrangements, all with a view to finding mutually agreed solutions. Governments could also help, for example by providing crčches. However, it should be remembered that no single solution was suitable for all situations and this issue should therefore be discussed fully with the employees at the local level.

65. The spokesperson for the Workers' group noted that this issue affected all workers, not only those with family responsibilities. The best way to ensure the protection of workers' rights was through effective trade unions, collective bargaining and strong national and international labour standards.

66. The representative of the Government of Spain noted that home work created special complications: it was virtually impossible to control violations of laws and regulations relating to working conditions, child labour, hours of work, etc. since labour inspectors could not enter private homes. He also noted that the issue of weekend work touched on the problem of religious customs and traditional days of rest. The representative of the Government of the Republic of Korea noted that unsocial hours could negatively affect social lives as well as family lives, and thus employers should endeavour to distribute among many workers the burdens which this might impose and ensure that too great a burden did not fall on a few. The representative of the Government of Sweden added that the question of adequate rest time also touched on questions of safety and health and the frequency and likelihood of accidents.

67. A Worker member from India considered that on call work was in contradiction with having an adequate social life. He mentioned several cases which he believed illustrated that the Government was undermining workers' rights and interests and encouraging the informalization, contractualization and casualization of work, under the guise of flexibility. He further emphasized that an adequate wage was the basic condition for an adequate social life and proper rest.

68. The Employers' spokesperson expressed surprise about the negative examples cited since his overwhelming impression with respect to the machinery, electrical and electronic industries was one of sustained progress in regard to working time.

69. A Worker member from Malaysia stressed that the best defence of workers' rights on this issue, as on others, was the existence of free trade unions; he regretted that his country had not ratified Convention No. 87 and that many Malaysians could only look to in-house unions. A Worker member from the Philippines also stressed the importance of free and strong trade unions but argued that without firm government support they would not be effective.

70. The representative of the Government of Italy noted that, in his view, this issue could call for quite different solutions depending upon whether the undertakings were large firms or small to medium-sized enterprises. The Employers' spokesperson concurred.

71. The Workers' spokesperson stated that for workers whose employment status changed frequently, governments needed to ensure that appropriate social security was provided. This was a matter of entitlements. Public social security systems needed to be strengthened. The jobs of the workers concerned should be converted to full-time jobs with full benefits. The issue of portability of benefits and entitlements from one company to another was important; workers had to be protected when enterprises failed or their ownership changed. Health care was important and comprehensive national health care schemes should exist as should adequate workers' compensation benefits. Enforcement should be effective. These questions should also be addressed through the collective bargaining framework.

72. The Employers' spokesperson considered that the first obligation was to ensure that jobs were offered and efforts should be directed at increasing employment. Solutions had to be negotiated with governments and employers' and workers' organizations. However, they entailed costs which would have to be financed.

73. The representative of the Government of Spain stated that, in Spain, the workers whose employment conditions status were not defined by a fixed-term full-time contract had the same coverage as those who did since subjecting them to different conditions could be discriminatory.

74. A Worker adviser from Japan recalled that the major financial crisis in Asia had led to a dramatic increase in unemployment. Most of the Asian countries did not provide unemployment benefits and thus provided no safety net. The ILO should urge these countries to consider methods of providing such protection.

75. The representative of the Government of Japan indicated that in his country there were two types of health care coverage with public funding, one for workers and one for all other persons. There were different contribution rates and complicated adjustments for part-time or temporary workers, but they were covered. There was also a two-tier system for pensions including a basic pension to which all persons were entitled and a scheme for workers with benefits calculated on the basis of their wages.

76. Concerning a possible link between flexibility in manufacturing and additional stress and accidents, the Employers' spokesperson stated that no study had shown a correlation between increased accidents and flexible systems. Statistics showed in fact that accident rates had been declining worldwide. In Japan where flexible manufacturing methods were widely practised, the accident rate was among the lowest in the world. The origins of stress and accidents should be looked into. These incidents could be related to lack of training, skills, knowledge or self-confidence and could be dealt with through improved training. Accidents could also be related to the routine nature of work or to poor working conditions, but these had little to do with flexibility measures.

77. Notwithstanding the previous remarks, the Workers' spokesperson argued that accident rates were still too high. Origins of stress could relate partially to a lack of training but other causes included pressures relating to jobs, multiple tasks, production increases without pay increases and under the threat of losing one's job. When reviewing multiskilling, accreditation and higher wages should also be considered. Multiskilling could be used to downsize and to undermine trade unions, and it could also affect seniority issues. The ILO should carry out a study on the effects of multiskilling. A Worker member from Singapore further requested the ILO to conduct a study on new forms of work arrangements such as multiskilling and multitasking and on any adverse effects they had on workers such as an increase in accident rates and stress.

78. A representative of the Government of Japan recalled that in Japan workers were expected to perform many tasks and yet the number of accidents was falling. Workers and employers worked together to prevent industrial accidents. A law required employers to establish a special commission for the prevention of accidents, with a representation of workers and employers.

79. A Worker member from Canada noted that trade unions generally had no problem with negotiating change but studies should be implemented jointly in the workplace and training had to take place during work time. Multiskilling was stressful for older workers and their seniority rights should not be eroded. A move towards the Japanese model could generate stress at the workplace as could any action that could lead to unemployment. A Worker member from India emphasized that multiskilling was very different from multitasking: multitasking could break monotony while multiskilling could lead to stress which could be transferred to the domestic sphere. Employers wished to cut production costs but workers reaped no gains from multiskilling A Worker member from Malaysia affirmed that employers were attempting, within the framework of collective bargaining, to link multiskilling with wages; they wished to grade workers on the basis of multiskilling. A Worker member from South Africa argued that flexible manufacturing systems and changes in work organization should be subject to collective agreements. Job classification systems could lead workers to be downgraded as a result of change. No one whose job was downgraded should face a reduction in pay. Governments should develop and enforce legislation to improve monitoring of abuses by employers.

80. An Employer member from Belgium, speaking on behalf of the Employers' group, confirmed their full support for the recently adopted ILO Declaration on Fundamental Principles and Rights at Work, which promoted freedom of association and the right to bargain collectively. While they recognized and welcomed the need for strong workers' and employers' organizations, the conclusions of the Meeting should acknowledge that workers were represented in many ways and at different levels, and that no single form of representation had a monopoly. In the area of labour market flexibility, the most appropriate level of negotiation was often the local level. They regretted that the spokesperson for the Workers' group repeatedly digressed from the agenda; the fact that the Employers had not responded to each of his references to trade union rights did not indicate their consensus on the point.

81. The spokesperson for the Workers' group replied that his earlier comments on trade union rights, international labour standards, freedom of association and collective bargaining were critical in discussions on flexibility and should be reflected in the draft conclusions.

82. The Employers' spokesperson, referring to the suggestion about limiting hours of work in smaller supplier firms, stated his group's astonishment at the idea of selectively limiting hours for specific industries. Small companies had customers whose needs had to be satisfied; a good delivery record was essential for remaining in business. For those companies, working time was defined in legislation and changes could penalize the companies. Flexible work arrangements, including multiskilling and annualization of hours, were available tools for them to respond to customers. Management and workers should conclude agreements under the terms of existing legislation.

83. The spokesperson for the Workers' group considered that such agreements should be determined through national and international labour standards. Many countries did not have appropriate standards. This question should also be addressed through collective bargaining and trade unions. Some of the issues relating to supplier firms had been used to undermine trade unions and workers' rights, with companies turning to suppliers whose employees had lower salaries and worse conditions.

84. A Worker member from India felt that there should be no difference between larger and smaller enterprises as regards workers' entitlements and trade union rights. Delivery schedules were equally important for all companies regardless of size. In smaller units trade union rights were often flouted, prescribed minimum wages disregarded and safety and health measures non-existent. The ILO should conduct a study on the application of labour legislation in the smaller units.

85. A Worker member from Germany noted that globalization had intensified competition between enterprises, and the relative strength of larger multinational enterprises had vastly increased. Suppliers were under extreme pressures. Governments should ensure that standards were developed for workers in these companies.

86. A Worker member from Japan referred to the Japanese just-in-time model and noted that subcontractors were often placed in a difficult situation as they frequently had to deliver new supplies at short notice. The manufacturers acted in a totally arbitrary manner without taking the situation of the suppliers into proper consideration. This was difficult not only for the workers, who were likely to work weekends and nights, but also for the suppliers, who had to bear the costs of overtime. If a small supplier did not meet the manufacturers' demands, it would not receive another contract. Collective bargaining and legislation were important, and workers and employers should review rules of fair competition.

87. A Worker member from Malaysia expressed concern about the fact that larger manufacturers outsourced business without reviewing the labour practices of the companies selected. Governments should ensure that if subcontractors did not abide by national labour standards, larger companies that outsourced to them would be penalized. A Worker member from the Philippines noted that in her country there were limits to subcontracting and it could not be used to replace ongoing work habitually performed by the workers of an enterprise.

88. The representative of the Government of Spain stated that in his country the subcontractor and the main enterprise would be held responsible if certain standards were not applied, such as -- in certain cases -- those on occupational safety and health.

89. The representative of the Government of Austria felt that working hours of workers employed by smaller supply firms depended very much on supply schedules and demands, and obligations had to be met. Workers should, nevertheless, be protected from excessive work hours through collective bargaining and other means. An enterprise could recruit additional workers, reduce the hours for each shift or make use of firms that supplied workers to meet variations in orders.

90. The Workers' spokesperson was of the view that productivity gains could best be achieved if issues were properly negotiated with trade unions. In order to accomplish this, the information provided to the unions had to be broadened. He recalled ILO Recommendations Nos. 94 and 129. He also noted that many keys to productivity should be addressed such as the exorbitant pay in some countries for top executives of enterprises, their severance packages and investments. The concept of competitiveness was more troublesome, as it could be misused to move production to workplaces where workers were the least protected, could not join trade unions and were deprived of occupational safety and health protection. It also represented a "race to the bottom" where deregulation meant lower standards, wages and benefits and more dangerous working conditions for everyone.

91. The Employers' spokesperson considered that flexible working arrangements were a way to offset labour costs that increased owing to reduced working time. The effects of flexible measures on productivity had been positive but perhaps sufficient statistics were not yet available as the changes were fairly recent. Productivity had many aspects such as the individual's productivity, productivity related to increased utilization of equipment, and improvements due to the introduction of new technologies which was vital in high labour-cost countries. Productivity improvements would follow if the structure of jobs were changed so that workers were able to work in different units of an enterprise and suggestion schemes or the Kaizen approach were introduced. Productivity was a main factor in competitiveness but there were other factors such as taxes and energy costs. By increasing productivity, companies were better placed to compete in the global free market. A balance of interests had to be found between companies, workers and communities. Workers attached great importance to their wages, benefits and quality of life, while communities depended on purchasing power; companies had to make profits to survive and dissatisfied workers would not be productive. Flexible work arrangements allowed firms to adjust to market changes which guaranteed employment and growth.

92. A Worker member from Germany noted that in the past discussions had focused on economics, the effects of technology and organizational innovations. New technologies first led to increased production, advantages in competitiveness and additional profits. However, if all enterprises operated identically they would fail and in the long run competition would lead to a draw for the companies concerned.

93. An Employer member from Australia considered that the term "labour market flexibility" related to a very complex issue. The report prepared for the Meeting had a box on page 5 of the English version which referred to various forms of flexibility. In each company different aspects had more weight than others and each form of flexibility had its own specific benefits. For example, functional flexibility, which could be agreed within the framework of collective bargaining, could lead to a greater variety of tasks, enhanced skills and less demarcation. Wage flexibility was another aspect with increased use of systems based on performance and sharing results. In Australia, the overall evidence of employment surveys and studies on individual companies showed that there had been some positive change introduced through some consensus. Many enterprises introduced changes through collective bargaining or individual agreements which conformed to national legislation.

94. A Worker member from Australia acknowledged that there had been negotiations in Australia with the objective of improving productivity. However, workers continued to experience increasing pressures regarding job security. Linking termination law and productivity was not acceptable.

95. An Employer member from Switzerland informed the Meeting that in her country a collective agreement had been concluded in 1998 which gave the possibility of annualizing hours. Statistics were not yet available on its application or impact on the labour force, but it was generally considered a positive measure. Labour costs were high in Switzerland and as a result ways had to be found to best utilize labour at the enterprise level. Companies should be democratic in their functioning, with workers represented at the enterprise level and trade unions able to provide advice. Enterprises could take into account the needs of each worker and emphasis should be put on lifelong training. An Employer member from Sweden emphasized that labour market flexibility was essential for industrialized countries; trade unions and employers should work closely together but the former should realize that unreasonable demands would put a halt to investments in the enterprises.

96. A Worker member from Japan considered that unbridled and unfair competition was dangerous. Chapter 8 of the report prepared for the Meeting contained an interesting section on competitiveness and concentration. In the United States and Japan concentration was high and higher profits should follow but the reverse was in fact true. It was recognized that the sector's value added provided benefits to other sectors but they should first be shared among its own workers. A Worker member from India felt that while productivity could be negotiated, competitivity should not. In most developing countries workers had no access to information and inputs.

97. An Employer member from Belgium informed the Meeting that the European Commission supported flexible arrangements, and on 14 October 1998 recommended to governments that they modernize work organization and forms of work in order to make enterprises competitive. The issues of reconciling work and family life, affordable child and dependant care, good working conditions and lifelong learning were highlighted. An Employer member from the Philippines noted that in his country flexibility was not an issue of casual labour but related to increasing competition from countries such as India and China which had lower costs. The Philippines had to concentrate on quality and higher productivity. The country had to ensure that its workers were upgraded, multiskilled, versatile and motivated. This would lead to increased costs in human resource development and new technologies as well as transitory job losses, but also to higher value-added jobs and better labour relations. An Employer member from Bulgaria felt that his country provided an example of a country with low labour costs which alone was insufficient to increase productivity and ensure competitiveness on international markets. The Government, employers and trade unions considered that flexibility had been poorly implemented in the transition period. Industries had suffered considerably but lessons had been learned by the three parties. Binding agreements facilitated the restructuring process.

98. The spokesperson for the Employers' group was of the opinion that competition was positive, had been an engine of wealth creation worldwide and had to be based on rules and standards, including international labour standards, rather than be eliminated.

Export processing zones (EPZs)

99. The Employers' spokesperson noted that the reasons for which governments established EPZs were essentially to attract investment and technology transfer and encourage employment generation, while a company might choose to locate in an EPZ because it gained a toehold in the local or regional market and could take advantage of government incentives and favourable labour costs. Generally, EPZs had a positive impact on the GDP of the host country. Workers' wages and benefits were often comparable to local salaries or even higher in the EPZs. The key to success for a foreign enterprise lay in the development of sound labour relations.

100. The Workers' spokesperson pointed out that EPZs could take different forms. They often embodied the negative and undesirable aspects of flexibility, in particular by undermining fundamental workers' rights and exonerating the employer from normal civic responsibilities such as paying taxes. The economic incentives incorporated into EPZs were nearly always intended to benefit the employers. Governments should be careful not to slip into a downward competitive spiral. In this respect, there should be a firm link established in international forums such as WTO and ILO between workers rights', international trade and trade agreements, investment, import-export, market access, etc.; this link should be reinforced with sanctions on countries and companies which failed to observe these international norms. He pointed out the terrible conditions of the "maquiladora" zones in Mexico. Follow-up to the Declaration of Fundamental Principles and Rights at Work should pay special attention to EPZs with regard to Conventions Nos. 87 and 98. Finally, he contested that wages in EPZs were above the local labour market.

101. The representative of the Government of China provided information on the role of EPZs in the ongoing economic transformation in China over the past two decades. Special labour laws and labour relations methods were applicable to these "special economic zones". In addition to their direct economic role, the zones played a pilot role for the rest of China in its gradual economic transformation towards a more market-driven economy. Since 1995, labour legislation had been enacted which provided for collective bargaining and dispute settlement mechanisms. These provisions applied to EPZs as well as to other areas, and they were proving helpful not only to the workers but also to foreign companies which operated in China.

102. The representative of the Government of Spain noted that EPZs had offered a number of advantages to companies but these should not lead to substandard employment and working conditions in the host country.

103. A Worker member from Canada denounced the establishment of the "maquiladora" zones in Mexico under the North American Free Trade Agreement (NAFTA), which illustrated the "race to the bottom" tendency which was of such concern to the Workers' group. A number of Canadian firms had moved to Mexico for tax and fiscal advantages after having already benefited from similar tax incentives from Canadian authorities. These firms employed 12 and 13-year-old girls in substandard and exploitive conditions. This kind of flexibility had nothing to do with improving lives but with generating "obscene" profits. Penalties should be imposed for such conduct, perhaps through the WTO or the ILO. These "maquiladora" zones also brought into sharp relief how individual contracts and the "individualization" of employment were sometimes used by employers to avoid and undermine trade unions.

104. A Worker member from Malaysia noted how his Government had established as incentives for location in EPZs the abolition of the prevailing minimum wage requirements and of the rights of workers to organize. The Government should look into the effects these incentives actually had on Malaysian workers and society. A Worker member from India pointed out that countries which had promoted EPZs faced as many difficulties with the current economic crisis as any others. While he saw no objection to governments granting tax concessions to companies to locate in an EPZ, governments should not permit infringements of basic workers' rights. Finally, a number of Worker members made the point that, when all was taken into account, the costs to society of EPZs -- counting direct costs and indirect costs such as lost taxes -- were usually greater than the actual benefits such as employment and technology transfer. EPZs had turned out not to be the "engines of growth" that they were expected to be. The Worker member from India proposed that the ILO carry out a study on this issue.

Role of the ILO

105. The Workers' spokesperson urged that the ILO continue to provide information on flexible labour markets, including information on pay, working conditions, respect for workers' rights, etc. It should also carry out studies on the impact of flexibility, especially on the negative aspects. Finally, he recommended that the ILO devote appropriate resources to assist its member States in adjusting to flexible labour markets. The ILO should provide information on innovative developments that enhanced standards.

106. The Employers' spokesperson endorsed the proposal for the ILO to undertake studies and produce objective reports on this topic. The ILO could influence member States to improve observance of fundamental standards; care should be given, however, not to single out individual companies. The ILO could be effective in explaining the importance and impact of flexible labour markets and in establishing guidelines on good practices and on the roles of the social partners in this field. The ILO could also examine the impact of flexible labour markets in the different regions. He believed that the ILO should not adopt international labour Conventions that were not compatible with labour market flexibility.

107. The representative of the Government of Spain considered that the ILO should promote collective bargaining among the parties affected by flexible labour markets.

108. Finally, a Worker member from the United Kingdom reminded the Meeting that trade unions were not opposed to changes per se. But four key factors needed to be respected, namely: the recognition of the worker's need for employment security along with the employer's need for flexibility; a fair sharing of the benefits which accrued from flexible labour markets; information and consultation of staff at workplace and company level; and representation of the workers by trade unions that were free of government and other influences.

Consideration and adoption of the draft report
and the draft conclusions by the Meeting

109. The Working Party on Conclusions submitted its draft conclusions to the Meeting at the latter's sixth sitting.

110. At the same sitting, the Meeting unanimously adopted the present report and the draft conclusions.

Geneva, 30 October 1998.

(Signed) Mr. M. Arbesser-Rastburg,
Chairperson.

2. Adopted unanimously.

Conclusions on the impact of flexible
labour market arrangements in
the machinery, electrical and
electronic (MEE) industries⁽³⁾

The Tripartite Meeting on the Impact of Flexible Labour Market Arrangements in the Machinery, Electrical and Electronic Industries,

Having met in Geneva from 26 to 30 October 1998;

Adopts this thirtieth day of October 1998 the following conclusions:

1. The MEE industries as a whole and especially the electrical machinery and electronics segment are highly exposed to the increasingly competitive pressures of world markets. Against this background, innovative ways of organizing the workplace are required to face the future.

2. Flexible labour market arrangements are being introduced for several reasons, including profits, financial performance, the need to control costs, respond to customer demands, and in some circumstances workers' requirements or preferences. These arrangements should be used as a means to adapt quickly in today's world so that enterprises can remain viable and can preserve and create additional jobs with good working conditions that include benefits and well-paid wages. The objective should be to do this while continuing to respect and while maintaining the level of social protection available in the past; social protection schemes should be enforced and, where feasible, enhanced, having regard to all relevant matters. Flexibility can be viewed as the capacity to react to new opportunities in a manner which benefits all parties, including the enterprises, those who work in them, and the broader community. To realize those mutual benefits, a degree of trust and confidence between employers, workers and workers' organizations,⁽⁴⁾ and appropriate support from governments, are required. Establishing and maintaining such trust and confidence requires that the benefits and burdens of adjustment should be shared between employers and workers.

3. For the successful introduction of more flexible arrangements, timely discussions/bargaining and exchange of information at the appropriate level between all the parties concerned are essential.

4. The role of government in providing the appropriate regulatory framework for the parties is essential, ensuring protection and national standards.

5. Suitable education and training policies and programmes are necessary to make the flexible arrangements work to the satisfaction of all parties. Governments should provide sound basic education and regularly adapt curricula and teaching methods so that they remain relevant to the rapidly changing needs of the workplace. Training should impart portable skills and should be carried out in the context of lifetime learning for long-term careers. There should be tripartite involvement in the definition of training needs, and, where appropriate, tripartite involvement in the administration of training programmes. Governments have special responsibilities as regards training for disadvantaged groups of workers and for small and medium-sized enterprises. There is a role for private training foundations supported by enterprises and workers' organizations which can also provide certain kinds of training and related programmes for their members. These foundations can provide a particularly valuable service to small and medium-sized enterprises.

6. As recognized in the ILO Declaration on Fundamental Principles and Rights at Work, the ILO member States have an obligation to respect, promote and realize in good faith the principles of fundamental Conventions including those on freedom of association and the effective recognition of the right to collective bargaining. These principles and rights need to be implemented, accepted and enforced. The principles and rights contained in other international labour standards also offer a good basis for sound industrial relations. These include the Collective Bargaining Convention (No. 154) and Recommendation (No. 163), 1981; the Communications within the Undertaking Recommendation, 1967 (No. 129); and the Co-operation at the Level of the Undertaking Recommendation, 1952 (No. 94). A wide variety and diversity in types of collective bargaining exist ranging from national, to regional, sectoral and plant level agreements. All of these developed in the historical context of the countries concerned and usually have a legal underpinning.

7. A degree of decentralization of negotiations about the implementation of flexible arrangements, to the level where the bargaining parties who know local conditions best can enter negotiations with each other is desirable, consistent with any bargaining framework that has been negotiated, as long as it does not mean an erosion of the rights of workers, employers and their respective organizations.

8. The introduction of flexible working-time arrangements has advantages and disadvantages. To ensure that all workers can benefit as much as possible, such measures should be negotiated in advance between the bargaining parties. Advance planning and the establishment of childcare facilities can also help.

9. A comprehensive social security system which extends protection to all categories of workers (whether full-time, part-time, temporary, casual or contract workers) on a non-discriminatory basis would alleviate many problems and ease the transition through various forms of employment. Portability and transferability of pension schemes and other acquired rights should be given special attention in national legislation.

10. Sufficient empirical studies do not exist on the impact of flexible manufacturing systems on accident rates and occupational safety and health. The ILO should undertake additional studies of this matter.

11. Smaller suppliers in the supply chain face special difficulties in adapting flexibly to changes in demand. Laws and collective agreements should afford the workers in such enterprises adequate protection.

12. How productivity gains arising from the introduction of flexible work arrangements are to be distributed should be the subject of full negotiations. Government should provide incentives to invest in training.

13. The establishment of a sound industrial relations system based on effective enforcement of freedom of association and collective bargaining is a key to successful operations in EPZs. All parties in the MEE industries should make a special effort to see that the Declaration on Fundamental Principles and Rights at Work is observed. Governments should see to it that the provisions of national labour legislation, and all ILO core Conventions, are applicable to all zone enterprises, and exemptions should not be granted.

14. The ILO should continue to undertake objective studies on investment and employment, job creation, pay, hours and conditions of work, the observance of labour standards, and documenting examples of good practice and innovative developments. Studies should also be carried out on the role of the social partners in the restructuring process and on specific regions, e.g. developing and transitional countries. The ILO could be instrumental in assisting in the development of better labour-management relations in these regions and countries.

3. Adopted unanimously

4. When the term "workers' organization" is used, it refers primarily to trade unions as well as other workers' organizations.

Part 2

Resolutions

Consideration and adoption by the
Meeting of the draft resolutions

At its third plenary sitting, the Meeting set up a Working Party on Resolutions, in accordance with article 13, paragraph 1, of the Standing Orders.

The Working Party, presided over by the Chairperson of the Meeting, consisted of the Officers of the Meeting and three representatives from each of the groups. The members of the Working Party were:

Officers of the Meeting

Mr. M. Arbesser-Rastburg (Chairperson)
Mr. H.-M. Melas (Government Vice-Chairperson)
Mr. R. Cristobal (Employer Vice-Chairperson)
Ms. A. Donnellan (Worker Vice-Chairperson)

Government members

Italy:
Philippines:
Spain:

Mr. A. Lapalorcia
Ms. R.I. Sarmiento
Mr. R. García-Conde

Employer members

Mr. R.H. Güell
Mr. C. Soumbounou
Ms. M.-L. Storm

Worker members

Mr. B. Fenelon
Mr. H. Schauer
Mr. G. Zöhrer

At the Meeting's sixth plenary sitting, the Chairperson, in his capacity as Chairperson of the Working Party on Resolutions and in accordance with article 14, paragraph 8, of the Standing Orders, submitted the recommendations of the Working Party on Resolutions regarding the draft resolution before the Meeting. As required by the same provisions of the Standing Orders, the three Vice-Chairpersons of the Meeting had been consulted on the contents of his oral report.

The Working Party had before it three draft resolutions submitted by the Workers' group, all of which were declared receivable. The Working Party amended the text of the resolution concerning job creation within the time limit set by the Officers of the Meeting. The Working Party was unable, however, to finalize the resolution concerning the follow-up to the ILO's Declaration on Fundamental Principles and Rights at Work; the Working Party members had proposed a number of drafting and substantive changes to the draft which were not unanimously endorsed. After lengthy discussions the Worker members decided to withdraw their draft resolution which was then moved by the Government members. The Employer members asked for clarification on the possibility of resubmitting a withdrawn text and were informed by the Office that a resolution which was already tabled could be moved by another member even if its author(s) had decided to withdraw it. The Working Party was nevertheless unable to reach agreement on this text. Furthermore, due to the time constraints, the draft resolution concerning future ILO activities which had also been declared receivable could not be considered by the Working Party.

Resolution concerning job creation in the machinery,
electrical and electronic (MEE) industries
in the face of the global economic crisis

The Meeting unanimously adopted the resolution.

Text of the resolution adopted
by the Meeting

Resolution concerning job creation in the machinery,
electrical and electronic (MEE) industries in the face
of the global economic crisis⁽⁵⁾

The Tripartite Meeting on the Impact of Flexible Labour Market Arrangements in the Machinery, Electrical and Electronic Industries,

Having met in Geneva from 26 to 30 October 1998,

Considering that globalization contributes to structural changes in the MEE industries and is causing shifts in employment between world regions and countries,

Considering that flexible labour market arrangements are an element of such structural changes,

Considering that economic crises are causing widespread unemployment and poverty in many countries including in the workforce of the MEE industries and that the effects of these crises may affect other countries as well,

Pointing out that a severe deterioration of general economic conditions in any country may have negative consequences for economic activity and employment in other countries as well,

Noting that in order to avert any danger of depression, increased economic activity and creating productive employment are of common interest to employers, workers and workers' organizations and governments,

Paying tribute to the work that the ILO has undertaken in this area in the past,

Regretting that the study on the impact of intra-firm trade within the metal trades, which includes the MEE sector, and its impact on employment, requested in resolution No. 103 of the Metal Trades Committee, has not been undertaken;

Adopts this thirtieth day of October 1998 the following resolution:

The Tripartite Meeting on the Impact of Flexible Labour Market Arrangements in the Machinery, Electrical and Electronic Industries invites the Governing Body of the International Labour Office:

(1) to appeal to governments to continue efforts to:

use appropriate measures, including fiscal and other economic instruments, to encourage sustainable development and growth to prevent a further deepening of economic crises;
explore all the possibilities of international coordination and cooperation, including coordinated fiscal stimulus and interest rate reductions, where appropriate, to make job creation a global priority;
implement financial measures designed to help the countries most seriously affected by economic crises to begin recovery;
explore measures to ensure transparency in national and international financial markets and to prevent the occurrence of financial crises;

(2) to request the Director-General of the ILO to:

undertake a survey of successful general economic and enterprise level measures taken by governments of member States in the field of job creation and the removal of barriers to job creation and job preservation and their impacts, in particular on the MEE sector, to enable governments, employers and workers and workers' organizations to benefit from experiences around the world and adapt them to their local needs;
provide where possible the necessary expertise and technical assistance within its mandate to promote and assist multipartite projects undertaken or planned in member States, that have the goal of aiding economic recovery and job creation;
continue to follow up requests for action expressed in resolution No. 103 adopted by the Metal Trades Committee and in particular to proceed with the study on the impact of intra-firm trade and its impact on employment at least within the MEE industries.

5. Adopted unanimously.

Part 3

Other proceedings

Panel discussions

ILO activities of interest to the mechanical
and electrical engineering industries

Ms. P. Singh (Chairperson of the Government group)

Panellists:

Mr. L. Swepston, Equality and Human Rights Coordination Branch, ILO, Geneva
Mr. W. Blenk, International Programme on the Elimination of Child Labour, ILO, Geneva
Ms. P. Kelly, Labour Law and Labour Relations Branch, ILO, Geneva

ILO Declaration on Fundamental Principles
and Rights at Work and its Follow-up

Mr. Swepston noted that the Declaration on Fundamental Principles and Rights at Work and its Follow-up (hereafter the Declaration) was adopted by the International Labour Conference in June 1998 after a difficult but interesting discussion. It had become increasingly obvious that in the global economy there was a need to ensure that certain basic principles existed for all workers. The idea of a "social clause" had been proposed by the international trade secretariats and some governments, but it became evident that there was no general consensus in the ILO to adopt this principle. One of the reasons for which it was not retained was the fear of many countries -- especially developing countries -- that it would be used for protectionist purposes. Nevertheless, the possibility of seeing a large number of workers excluded from the economic development process and deprived of access to certain fundamental rights remained a concern. Two important international meetings prompted the ILO to take action. The ministerial conference of the World Trade Organization (WTO) held in Singapore (December 1996) had concluded that the WTO was not the competent organization for dealing with labour issues, this being the domain of the ILO. The World Summit for Social Development in Copenhagen (1995) also reached consensus on certain fundamental rights and called on all States to ratify the relevant standards and apply them. The consensus crystallized around seven ILO Conventions, covering four areas: freedom of association and collective bargaining; forced labour; child labour; and discrimination at work. In the Director-General's Report to the International Labour Conference in 1994, it had already been emphasized that if these basic rights could be implemented in all countries, a major step would be made towards ensuring that workers worldwide would benefit from and participate in economic development. Discussions had led to the consensus that a Declaration was the best way to address such concerns. No other instrument such as this existed in international law, including the Declaration of Philadelphia and the Universal Declaration of Human Rights. The preamble asserted that "... the link between social and economic growth, the guarantee of fundamental principles and rights at work is of particular significance in that it enables the persons concerned to claim freely and on the basis of equality of opportunity their fair share of the wealth which they have helped to generate ...". It recognized that the ILO, by virtue of its Constitution, was the organization mandated to set and deal with international labour standards. It stated that "... all Members [of the ILO], even if they have not ratified the Conventions in question, have an obligation, arising from the very fact of membership of the Organization, to respect, to promote and to realize, in good faith and in accordance with the Constitution, the principles concerning the fundamental rights of those Conventions ...". Governments, while not obligated to implement Conventions they had not ratified, were responsible for making efforts to apply the constitutional principles they embodied. The Declaration made the ILO responsible for assisting its member States to achieve progress in this domain. The Declaration contained a clause stating that "... labour standards should not be used for protectionist trade purposes ...".

The follow-up would be discussed and refined at future sessions of the Governing Body. All member States were obliged to report to the Governing Body. There would be regular examinations during its March sessions on the basis of an annual report; workers' and employers' organizations could also submit their own reports. A global report covering one of the key areas would be submitted each year for discussion by the International Labour Conference. The first such discussion would probably take place in the year 2000. The ILO would refocus its analytical work and technical assistance to constituents on the basis of these examinations, with a view to promoting the Declaration and creating enhanced interaction with and between the partners. This balance of responsibility between the Members responsible for pursuing the implementation of the principles and the Organization responsible for helping them to do so, was the unique feature of the Declaration and its follow-up.

The role of collective bargaining
in labour market flexibility

Ms. Kelly presented the findings of a recent ILO research project on collective bargaining and flexibility which covered 22 developing and industrialized countries. She noted that the findings were similar to those in the report prepared for the current Meeting. Many of the trends seen in MEE industries were also taking place in other sectors of the economy. The research project on the role of collective bargaining comprised four main areas: a general overview of trends towards flexibility in the labour market; the role of the State and bargaining structures; the position of the social partners; and trade-offs. The country studies covered representative and innovative examples.

The types of flexibility could be broken down into four main groups: flexibility in employment contracts, flexibility in pay, flexibility in working time and flexibility in work organization. Flexibility in employment contracts included temporary, part-time, seasonal and contract work, and essentially enabled employers to increase or decrease the number of workers in accordance with fluctuating needs. The flexibility in pay systems included decentralized wage bargaining, pay for performance and gain-sharing. Flexibility in working time, which was used to expand employment or avoid retrenchments, covered annualized hours, shift work and weekend work. New forms of work organization related to teamwork, multiskilling, on-the-job training and increased responsibilities for workers.

In reviewing the role of the State in bargaining structures, four distinct groups emerged: in industrialized countries such as the United States and the United Kingdom, flexibility was introduced mainly through collective bargaining at the enterprise level; in European countries with a tradition of tripartism, the State played a much larger role and it was more likely that bargaining would take place at higher levels such as the sectoral or national levels; in Latin America the role of the State related to legislation, with collective bargaining playing a more limited role; and in Asian countries the State tended to play a more limited role than the social partners, with enterprise bargaining being the more prevalent level for collective bargaining.

Employers had been the driving force behind the moves towards increased flexibility with a view to improving productivity, enhancing competitiveness and reducing costs. They, nevertheless, recognized the importance of having a core of stable, committed workers, and generally felt that limited use should be made of temporary workers. The trade unions tended to be resistant to flexibility measures, which frequently involved a loss of security (regular hours, overtime, stable salaries, pay not linked to peaks and lows of an enterprise, etc.). While they were concerned about the trend, they also realized that unionized firms could often lose competitiveness if they did not introduce flexible arrangements. Flexibility frequently required sacrifices of workers with regard to pay and security.

Most trade-offs occurred at the enterprise level where the specific needs of a particular company could more adequately be taken account of. Four types of trade-offs related to job security, redundancy alternatives, working time and workers' lifestyles. In some cases a wage reduction was agreed to in exchange for job security. With regard to redundancy, when faced with the possibility of layoffs or plant closure, workers had accepted shorter hours, pay or compensation cuts or wage freezes, and employee ownership was sometimes promoted. For working time changes there were cases where workers and employers were both able to derive benefits. As far as workers' lifestyles were concerned, there were cases where the workers themselves were pressing for change, especially as a result of the increasing number of women joining the workforce.

Ms. Kelly provided a number of examples of collective bargaining over flexibility which concerned the machinery, electrical and electronic industries in various countries. To conclude, she noted that flexibility was a means of enhancing competitiveness in view of globalization, but led to many new situations for workers. To be successful in introducing flexibility, the views of workers and their organizations had to be heard, and mutual trust and loyalty between workers and employers were vital. Due to the participatory nature of collective bargaining, it resulted in a better acceptance of changes.

International Programme on the
Elimination of Child Labour (IPEC)

Mr. Blenk recalled the obligation under the newly adopted Declaration for the ILO to provide assistance to member States, a task which IPEC was already undertaking actively. International labour standards and in particular the Minimum Age Convention (No. 138) and Recommendation (No. 146), 1973, provided the policy framework for carrying out IPEC's technical cooperation activities. The Declaration was extremely important as it required member States to try to reach the objectives enshrined in seven fundamental Conventions on areas including child labour. In that sense, he stressed that "the effective abolition of child labour" was identified as one of the four areas of fundamental principles and rights specified in the Declaration. IPEC was a relatively large technical cooperation programme which, since its inception in 1992, had implemented or was implementing a total of over 1,000 projects in 50 countries worldwide. Memoranda of Understanding had been signed with 33 countries. There were 21 donors and the financial commitments amounted to some US$106 million. IPEC assisted countries at their initiative and on a voluntary basis in their efforts to eliminate child labour. The political will and commitment of individual governments to combat child labour was thus the starting point for all IPEC action.

Poverty was one of the main causes of child labour. On the supply side, where families were very poor, children had to work. On the demand side, employers were themselves often in the informal sector and poor. Child labour, however, also contributed to poverty as children who worked would be unable to grow into productive adults. Another major reason for child labour related to insufficiencies in educational systems. In many countries educational and vocational training systems simply could not respond to the signals of the labour market and could not provide adequate basic education if any.

Given that child labour was a complex, multifaceted problem with labour market, education and community mobilization components, IPEC had to take a multidisciplinary approach when conceiving and implementing projects. It had to bring together a broad alliance of national and international decision-makers. It worked on a priority basis with ILO constituents. The contribution of workers was essential, and trade unions as organizations had an interest to fight child labour and to implement projects. Working children were not members of trade unions and their presence in the labour market tended to have a negative impact on wages. Employers played an equally crucial role in fighting child labour and it was necessary to be able to count on their support. Some of IPEC's most innovative programmes were being carried out with the support of the industry concerned. However, child labour was widespread in areas where trade unions and organized employers were scarce, namely, the informal sector; IPEC thus worked with the non-governmental organizations which were often present in these areas.

IPEC was fundamentally action-oriented and research and other activities were carried out only if they were specifically required for the action programmes. A typical project had three components. First, the removal of children from the workplace, with particular care given to hazardous occupations, which was the programme's main focus. The second component was the provision of formal or informal education and skills training. While the ideal was to mainstream children into national primary education systems, these might not exist or could be inadequate. Children acquired literacy, numeracy and other skills and as they grew older and reached the appropriate age, skills training was conducted. The third component consisted of monitoring undertaken by teams employed by the projects concerned, who visited workplaces unannounced to check on the use of child labour. If found, the children were transferred from work to education. This was an effective preventive measure as employers were aware that workplaces were being monitored.

Donor commitment was very strong and growing. IPEC acted locally, respecting the principle of national implementation, but on the basis of a global strategy. There was a need to promote a worldwide movement that could support, coordinate and, where necessary, stimulate government policy and action. IPEC therefore supported worldwide activities on child labour of which a prime example was the Global March which culminated in Geneva in June 1998 during the International Labour Conference.

Discussion

In relation to a question regarding how the Declaration and the ILO in general could have an impact on the situation of informal sector workers, Mr. Swepston noted that it was sometimes felt that the ILO could not work with the informal sector as the Organization's main interlocutors were from the formal sector. The IPEC programme was an excellent example of how the informal sector could be successfully targeted. ILO standards were aimed at all parts of the economy and the reports submitted in relation to the Declaration should help to identify gaps and lead to strategies to deal with them. The examination of the reports could well lead to the conclusion that laws did not apply to the informal sector and demonstrate the importance of working with the three parties to reduce the siz

INTERNATIONAL LABOUR ORGANIZATION

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