FIRST ITEM ON THE AGENDA

Follow-up on and promotion of the Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy

Introduction

Response rates and patterns

Consultation with employers' and workers' organizations

Sample

No replies

Quality of replies

Observations regarding the questionnaire

Methodology

Analysis of replies

I. Principles contained in the Declaration

Background and aim
General policies
Employment
Training
Conditions of work and life
Industrial relations

II. Consultation with the representative employers' and workers' organizations concerning this report

III. Promotion of the observance of the Declaration

IV. The Tripartite Declaration and various economic and industrial sectors

V. Disputes concerning interpretation of the provisions of the Declaration 197

Conclusions and recommendations

Background, aim and general policies
Paragraphs 13-20: Employment promotion
Paragraphs 21-23: Equality of opportunity and treatment
Paragraphs 24-28: Security of employment
Paragraphs 29-32: Training
Paragraphs 33-35: Wages, benefits and conditions of work
Paragraphs 36-39: Safety and health
Paragraphs 41-47: Freedom of association and the right to organize
Paragraphs 48-55: Collective bargaining
Paragraph 56: Consultation
Paragraph 57: Examination of grievances
Paragraph 58: Settlement of industrial disputes
International labour Conventions and Recommendations referred to in the Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy
Part IV: The Tripartite Declaration and various economic and industrial sectors

1. At its 229th Session (Geneva, February-March 1985), the Governing Body, on the basis of a proposal made by the Committee on Multinational Enterprises,⁽¹⁾ set up a Working Group comprising the Officers of that Committee. The group was entrusted with the responsibility of analysing the reports submitted by governments and by employers' and workers' organizations, for the periodic surveys on the effect given to the Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy, prior to their examination by the Committee (now Subcommittee) itself.⁽²⁾

2. Since its establishment, the Working Group has met in November 1986, November 1989 and October 1992 to analyse the respective reports for the third survey which covered the years 1983, 1984 and 1985, the fourth which focused on developments in 1986, 1987 and 1988, and the fifth for the years 1989, 1990 and 1991. On each occasion the reports of the Working Group⁽³⁾ were submitted to the Committee on Multinational Enterprises, which in turn reported thereon to the Governing Body.

3. At its 248th (November 1990) Session, the Governing Body decided that the questionnaire for the fifth survey should be sent not only to governments, but also to the most representative employers' and workers' organizations.⁽⁴⁾ This was done to underline the importance of the role of employers' and workers' organizations in the survey, to help advance the preparatory work they would need to undertake in the event of a joint government-employer-worker reply, or to enable them, should they wish, to send their reports direct to the ILO. A decision to follow the same procedure for the sixth survey was taken by the Governing Body at its 258th (November 1993) Session.⁽⁵⁾ The periodicity of the survey was also changed from three to four years,⁽⁶⁾ and the sixth survey therefore focuses on the years 1992, 1993, 1994 and 1995.

4. The Working Group, comprising the Chairperson of the Subcommittee, Ms. L. Guertin (Government, Canada), the Employer Vice-Chairman, Mr. B. Noakes (Employer, Australia) and the Worker Vice-Chairman, Mr. A. Baldassini (Worker, Argentina), met in Geneva on 13, 14 and 15 January 1997, to analyse the reports submitted for the sixth survey.

5. The Working Group had before it a document summarizing all the replies received up to 30 September 1996.⁽⁷⁾ In addition, all the original reports, as well as accompanying documentation and communications used in the preparation of the summaries, were at its disposal.

6. The Working Group considered that it would be useful to provide the Subcommittee with information on the origin of the replies, and the means by which they were sent to the Office. It also agreed to follow precedent and make suggestions with regard to the next survey or other types of activities that may be undertaken by member States, employers (including multinational enterprises), workers' organizations, and the Office, with a view to enhancing the usefulness of the Declaration.

7. The replies provide extensive information and insights which should prove useful to the work of the Office in a number of major technical areas. In addition, the wealth of information thus made available will bring about transparency that would enable those interested and concerned to work together in addressing the problems identified. Replying to such a survey has meant considerable work for respondents. The Working Group would like to express its sincere appreciation to all governments and employers' and workers' organizations for their contributions to the survey.

8. Replies from 74 countries arrived in time for consideration by the Subcommittee as compared to 52 for the first survey (1980), 62 for the second survey (1983), 68 for the third (1986), 70 for the fourth (1989) and 73 for the fifth (1992). The deadline for submitting replies for the sixth survey was 29 February 1996. However, the Office has included in the summary, all replies received up to 30 September 1996. Table 1 shows the origins of the replies by region, country and respondent. It must be noted that the contribution of the social partners is understated when one considers that a number of governments consulted employers' and workers' organizations, and that their views were very likely taken into account for the preparation of the governments' reports. These organizations may not always have been named in the replies, nor did they all send copies of their contributions to the Office. For details on the organizations that were consulted by governments and those which were clearly identified as having contributed to governments' replies, see Part II of the Summary of reports (GB.268/MNE/1/1).

9. Table 2 contains the names of the employers' and workers' organizations which replied to all or part of the questionnaire for the sixth survey and the means by which they transmitted their replies to the Office. There were only five countries from which only employers' and/or workers' organizations submitted reports.⁽⁸⁾ In accordance with the decision taken by the Governing Body at its 248th (November 1990) Session, copies of replies from employers' and workers' organizations which were sent direct to the Office, were forwarded to governments for their information and comments. For communications received from the Governments of Japan and Malaysia, see Annex 2 to GB.268/MNE/1/1.

Table 1. Replies to the sixth survey by region, country and respondent ¹

Table 2. Details of the participation of employers' and workers' organizations in the sixth survey

Employers' organizations which governments identified as having contributed
to their replies ¹

Bangladesh Employers' Association
National Labour Council (Belgium -- an organization comprising representative employers' and
workers' organizations)
Confederation of Industry and Transport (Czech Republic)
Estonian Confederation of Industry and Employers
Estonian Association of Small Business
£Japan Federation of Employers' Associations (NIKKEIREN)
Singapore National Employers' Federation
Employers' Federation of Ceylon (Sri Lanka)
Swedish Employers' Confederation (SAF); and Federation of Swedish Industries 2
Chamber of Industry (Syrian Arab Republic)

Employers' replies transmitted through governments

Egyptian Federation of Industries
Confederation of German Employers' Associations (BDA)
Amman Chamber of Industry (Jordan)
Federation of Luxembourg Manufacturers (FEDIL)
New Zealand Employers' Federation Inc.
Central Union of Swiss Employers' Associations (UCAPS)
Employers' Consultative Association of Trinidad & Tobago (ECA)
Turkish Confederation of Employer Associations (TISK)
Confederation of British Industry
Venezuelan Federation of Chambers of Commerce and Manufacturers' Associations (FEDECAMARAS)

Employers' replies sent direct to ILO Geneva or through ILO's field offices

(a) Copy sent to government
Bangladesh Employers' Association
National Association of Manufacturers (ANDI), Colombia
Confederation of Finnish Industry and Employers; and the Employers' Confederation of Service
Industries (Finland). Original joint reply (in Finnish) was sent to the Government and a translation in English sent to the ILO
Japan Federation of Employers' Associations (NIKKEIREN)
Korea Employers' Federation

(b) No copy sent to government
Barbados Employers' Federation
Dominica Employers' Federation
Employers' Federation of Pakistan
Employers' Confederation of Zimbabwe

(c) No indication as to whether or not copy sent to government
Antigua Employers' Federation
General Confederation of Employers of Mauritania (CGEM)
Nigeria Employers' Consultative Association (NECA)
St. Vincent Employers' Federation
Tunisian Confederation of Industry, Trade and Handicrafts (UTICA)

Employers' replies sent through international employers' organizations

The National Council of French Employers (CNPF) sent its report through the IOE. There was no indication of whether a copy was sent to the Government.
The General Confederation of Industry (CONFINDUSTRIA), Italy, sent its report through the IOE, with a copy to the Government.
The Mexican Confederation of Chambers of Industry (CONCAMIN) sent its reply through the IOE.
There was no indication of whether a copy was sent to the Government.

Other

The following employers' organizations informed the Office that they agreed with the statements made by their governments: the Federation of Netherlands Industry and Employers (VNO-NCW); and the Confederation of Norwegian Business and Industry (NHO).

The following employers' organizations informed the Office, either directly, through their governments or the IOE, that they were unable to prepare reports for a number of reasons -- e.g., lack of time and resources, lack of information and the absence or paucity of MNEs in their respective countries: Canadian Employers' Council; Federation of Jordanian Chambers of Commerce; Latvian Employers' Confederation; Lithuanian Entrepreneur Association; Malaysian Employers' Federation; Oman Chamber of Commerce and Industry; Industrialists' and Entrepreneurs' Union of Russia; and Business South Africa.

The US Council for International Business sent a communication through the IOE stating that it did not send a separate reply because it had consulted with the Government of the United States for the preparation of the Government's report.

Workers' organizations which governments identified as having contributed
to their replies ¹

National Labour Council (Belgium -- an organization comprising representative workers' and employers' organizations)
Union of Trade Unions of Chad (UST)
Estonian Association of Trade Unions
National Confederation of Hungarian Trade Unions (MSzOSz)
National Federation of Workers' Councils (Hungary)
National Federation of Autonomous Trade Unions (Hungary)
General Union of Workers (UGT) (Portugal)
National Trades Union Congress (Singapore)
Ceylon Workers' Congress (Sri Lanka)
The Lanka Jathika Estate Workers' Union (Sri Lanka)
Swedish Trade Union Confederation (LO) 3
Swedish Confederation of Professional Employees (TCO)
Swedish Transport Workers' Union
Commercial Employees' Union (Sweden)

Workers' replies transmitted through governments

Single Central Organization of Workers (CUT), Brazil
Czech and Moravian Chamber of Trade Unions (MK OS)
Central Organization of Finnish Trade Unions (SAK)
Finnish Confederation of Salaried Employees (STTK)
Confederation of Unions for Academic Professionals in Finland (AKAVA)
Confederation of Independent Trade Unions (OGB.L), Luxembourg
Federation of Swiss Salaried Employees' Associations (VSA)
Federation of Commerce, Transport and Food Industries' Workers' Unions (FCTA), Switzerland
Confederation of Turkish Trade Unions (TÜRK-I)

Workers' replies sent direct to ILO Geneva or through ILO's field offices

(a) Copy sent to government
Barbados Workers' Union
General Confederation of Democratic Workers (CGTD), Colombia
Solidarno (Poland)
General Union of Workers (UGT), Portugal
General Union of Workers (UGT), Spain

(b) No copy sent to government
Nigeria Labour Congress

(c) No indication as to whether or not copy sent to government
Gabonese Confederation of Free Trade Unions (CGSL)
Japanese Trade Union Confederation (JTUC-RENGO)
Malaysian Trades Union Congress
Free Confederation of Workers of Mauritania (CLTM)
American Federation of Labour and Congress of Industrial Organizations (AFL-CIO)

Other

The Confederation of Mexican Workers informed the Office that it agreed with the Government's statements.

The following workers' organizations informed the Office, either directly or through their governments, that they were unable to prepare reports for a number of reasons -- e.g., lack of time and resources, lack of information and the absence or paucity of MNEs in their respective countries: the General Federation of Jordanian Trade Unions; and the Latvian Free Trade Unions Association.

The Confederation of Trade Unions of Rwanda (CESTRAR) sent a letter stating its inability to reply because of the political situation in the country.

The Assembly of Free Trade Unions (Convention des Syndicats Libres) (Zaïre), sent to the ILO, a copy of its letter to the Government, urging it to submit a reply to the survey.

Replies from international trade secretariats

The International Federation of Commercial, Clerical, Professional and Technical Employees (FIET)

Explanatory notes:

Certain governments indicated the names of all employers' and workers' organizations from which they requested information and/or which they consulted for the preparation of reports. Only the names of those organizations which were clearly identified as having provided information that is in any way reflected in the governments' replies, appear in the lists. The names of all organizations mentioned in the governments' replies as having been contacted can be found in Part II of the Summary of reports (GB.268/MNE/1/1). The names of all those to which governments sent copies of their replies are also in this section.

There were governments which stated that their reports were prepared after consultation with workers' and employers' organizations, but did not name them.

In keeping with past practice, copies of replies from employers' and workers' organizations which were sent direct to the Office, were forwarded to governments for their information and comments. Communications from the Governments of Japan and Malaysia can be found in Annex 2 to GB.268/MNE/1/1.

¹ Contributions may have been fully incorporated in government replies, and in some cases copies of written contributions submitted to governments were also either annexed to the governments' replies or sent direct to the ILO by the employers' and workers' organizations concerned. 2 Both state that they have nothing new to report for inclusion in the Government's reply. 3 Written comments from the Swedish Transport Workers' Union and the Commercial Employees' Union were highlighted in the LO's contribution.

10. The 74 countries from which the Office received replies for the sixth survey constitute a good sample, as far as the origin and destination of global foreign direct investment (FDI) stocks and flows are concerned. The major countries from which multinational enterprises (MNEs) originate, and the countries in which they have their most significant levels of activity, are well represented.

11. Among the sample are 22 of the 24 States which belonged to the Organisation for Economic Co-operation and Development (OECD) prior to 1992,⁽⁹⁾ as well as the two most recent members -- the Czech Republic and Mexico.⁽¹⁰⁾ The industrialized countries account for the bulk of the world's FDI inflows and outflows. In 1992, they received 68 per cent of world FDI inflows, which totalled US$168.1 billion; and generated 89 per cent of total outflows which amounted to US$203.1 billion. In 1995, the last year covered by the sixth survey, 65 per cent of world FDI inflows which totalled approximately US$315 billion, went to the industrialized countries. Of the estimated US$318 billion world FDI outflows, 85 per cent originated from these countries. FDI stocks are concentrated in OECD member States, which are also the home countries of the world's largest 100 MNEs.⁽¹¹⁾

12. As a group, developing countries received FDI flows amounting to US$99.7 billion in 1995. The lion's share -- US$65 billion -- went to developing countries in Asia. China alone absorbed 58 per cent of the total and six other countries (Indonesia, Republic of Korea, Malaysia, Philippines, Singapore and Thailand) accounted for 32 per cent.⁽¹²⁾ All of the latter are in the sample, and they include four of the six "dynamic Asian economies" with which the OECD initiated informal talks in 1989, with a view to strengthening dialogue and cooperation between the two groups in certain "core areas" of economic relations.⁽¹³⁾

13. The sample includes four countries in Latin America which together accounted for 70 per cent of the US$27 billion inward FDI in Latin America and the Caribbean in 1995; these are Argentina, Brazil, Chile and Mexico.⁽¹⁴⁾ These countries, by virtue of a combination of factors, including the size of their markets, ongoing initiatives for bringing about macroeconomic stabilization and liberalizing trade and investment, are considered to have increasingly better prospects for pulling in more private capital flows. Referred to as "dynamic non-member economies", they were included in the group of developing countries with which the OECD pursued its informal discussions during the period covered by the sixth survey.⁽¹⁵⁾

14. Also represented in the 45 developing countries in the sample are three major recipients of FDI in Africa (e.g. Egypt, Nigeria and Tunisia),⁽¹⁶⁾ developing countries in which the impact of FDI is highly visible, either because of the relatively small size of their domestic economies (e.g. Mauritius and Swaziland) or the predominance of foreign capital in one or two industries, and certain economies that have great potential for attracting MNEs because of their industrial base and the market-oriented reforms under way (e.g. Zimbabwe).⁽¹⁷⁾ There are countries that either have drawn, or are poised to draw, increased FDI as a result of privatization programmes (e.g. India, Venezuela); developing countries that are outward investors (e.g., Brazil, Republic of Korea, Malaysia); and six of the world's 48 "least developed countries" which are, to varying degrees, implementing policies to encourage foreign investment in export-oriented and labour-intensive industries.⁽¹⁸⁾ One of these LDCs is Bangladesh -- a significant exporter of clothing, with earnings from these exports growing from US$600 million in 1990 to approximately US$2 billion in 1995. The special bonded warehouse scheme and investment in export processing zones have played a key role in the rise of this country as a major clothing exporter.⁽¹⁹⁾

15. The sample encompasses seven economies in transition. Central and Eastern Europe is a region in which inward FDI more than tripled over the period covered by the sixth survey -- from US$3.8 billion in 1992 to US$12.08 billion in 1995.⁽²⁰⁾ Respondents from this region include the Czech Republic, Hungary and Poland, which accounted for the lion's share of these capital inflows, and Estonia, Romania, Slovakia and Slovenia, which, over the period covered by the survey, gained increasing importance as recipients of FDI.⁽²¹⁾

16. Unlike in the past, the Office did not prepare tables comparing the responses received for previous surveys with those submitted for the present one. This is because a number of ILO member States have only joined the Organization since the last survey.⁽²²⁾ Consequently, they would not have been in a position to reply to previous surveys. Moreover, for the earlier surveys, countries were counted as having replied if the reports originated from governments. In addition, because of the Governing Body's decision to send the questionnaire direct to the social partners for the fifth and sixth surveys, replies may have been submitted only by employers' and/or workers' organizations in the case of certain countries. This therefore distorts the basis for making any meaningful comparison of replies to the surveys over the years.

17. The Working Group notes with appreciation that of the 36 countries from which no reports for any of the past five surveys were received (see table 3), seven submitted reports for the sixth survey.⁽²³⁾ It is worth mentioning that 18 of the countries which have never replied are among the world's 48 LDCs.⁽²⁴⁾ As a group the LDCs' share of total FDI into developing countries was 1.1 per cent between 1992-94, and they are hosts to very few, if any, MNEs.⁽²⁵⁾ This would no doubt largely explain their relatively low participation in the surveys.

Table 3. Countries from which the Office received no replies from governments,
employers' or workers' organizations for any of the six surveys

18. The Working Group notes with regret that there were countries from which governments and/or employers' or workers' organizations replied to the fifth survey, but not to the sixth (see table 4). In addition, certain significant recipients of FDI (e.g. China) were unable, for various reasons, to reply to more than one set of questions. Others (e.g. South Africa) which have tremendous potential for attracting increasing numbers of MNEs and are already emerging as key outward investors in a given subregion, were unable to reply.⁽²⁶⁾ There are other developing countries and economies in transition from which respondents were not in a position to submit reports for the sixth survey because activities by MNEs in these countries are either negligible or non-existent (for details see: GB.268/MNE/1/1, Annex 3).

Table 4. Countries from which governments, or employers' and workers'
organizations replied to the fifth survey but not the sixth

19. For the most part, the level of detail and relevance of the information provided were satisfactory. However, because of the heterogeneity of the respondents, there were inevitably differences in the quality of the reports. The degree of specificity and the comprehensiveness of the information varied, as did assessments of the impact and implications of developments during the period under review. There were differences in the emphasis given to certain questions as opposed to others, and some respondents chose to reply to only selected questions rather than to the entire questionnaire. Further comments on the scope and content of the reports are provided in the analyses of replies to specific sections.

20. Certain governments and employers' and workers' organizations were of the view that the questionnaire was too lengthy, complex and detailed, and that it was not possible to devote the time and personnel required to prepare a meaningful report.⁽²⁷⁾

21. To the fullest extent possible, all relevant information in reports and accompanying official documents is reflected in the summaries. Other sources of information were also used in the preparation of the report of the Working Group. In the interest of conveying accurately the emphasis that some respondents placed on certain issues, excerpts of their original comments are quoted. Where tables were provided, certain data were extracted and calculations based on those data are included in the summaries, as required. Where respondents said that they shared the governments' views, this is indicated. If this was not stated, but the information provided was similar to that in the governments' reports, the Office may have repeated some of the observations made.

22. Some respondents stated that reference should be made to a country's reports to the ILO's Committee of Experts on the Application of Conventions and Recommendations, to their responses to complaints submitted to the Committee on Freedom of Association or to previous surveys. In such cases, these sources were consulted for the preparation of the report. The Working Group wishes to note that in the case of a number of replies in which it was indicated that information provided for past surveys was still applicable, this referred to observations dating back to the fourth survey which covered 1986, 1987 and 1988. Certain respondents mentioned laws that were passed, as well as policies and programmes initiated in 1996. Where this was the case, the summary of the reports states that during the period covered by the survey, work on these laws, policies and programmes was undertaken. In this way, they were not disregarded, but neither were they highlighted in a survey to which they are not relevant. A number of responses to questions pertaining to paragraphs 1-7 and 8-12, contain information which has a bearing on subjects discussed in other sections of the report. Consequently information was often drawn from these responses when preparing the analysis for other sections. In other cases of similar overlapping this procedure was also used.

I. Principles contained in the Declaration

Background and aim

Paragraphs 1-7

(1) Have any of the activities of MNEs given rise to conflicts with national policy objectives and with the interest of the workers? If so, please explain.

(2) In an endeavour to further the aims of the Declaration, have any new laws been promulgated, policy changes made or action taken since the last survey to which you replied?

(3) Have any difficulties arisen for any of the addressees of the Tripartite Declaration in their attempts to respect its principles? If so explain.

No. of respondents: 62 governments, 37 employers' organizations and 25 workers' organizations. Total: 124.

23. Most respondents were of the view that the activities of MNEs had not conflicted with national policy objectives nor with the interests of workers. None the less, in the replies to the question concerning the application of the Declaration, some of those respondents, and others, reported cases in which the addressees of the Tripartite Declaration sometimes had difficulties in respecting the principles of this instrument, particularly with regard to workers' interests.

24. The reports generally emphasized the positive impact of MNEs on host economies and the policy reforms that were being made by different governments to give a fillip to inward FDI. There did not appear to be many major differences between the policies and practices of MNEs and national policy objectives. Governments generally perceived economic globalization as opening up possibilities for attracting MNEs, since different parts of the production process could be divided up and located in countries offering the best possibilities for cost and efficiency gains. Private foreign participation in state-owned enterprises (including utilities), and in massive infrastructural development projects, constituted another major national policy objective, for the attainment of which MNEs were expected to play a key role. Most respondents emphasized the actual and potential benefits of foreign direct investment (FDI). In particular, those from the developing regions and Central and Eastern European countries (CEECs) accorded great importance to attracting MNEs in order to diversify their economies, stimulate export-oriented industrialization and increase their share of world FDI flows. Job creation in both labour-intensive and higher value added activities, and the strengthening of technological capabilities in different fields, were other areas in which enterprises with foreign capital were expected to make a significant contribution.

25. Some respondents expressed concerns about the extent to which the activities of MNEs were consistent with national policy objectives. In one case it was reported that in the event of labour disputes, certain MNEs (i.e., those producing mainly for export) paid little heed to national policy objectives. In addition, since decisions affecting those companies were usually made overseas, it was difficult for local management to harmonize their policies with those of the host country.⁽²⁸⁾ The degree to which MNEs shared the social concerns of the host country was called into question by one respondent,⁽²⁹⁾ while another was of the view that their activities were always incompatible with national policy objectives and workers' interests.⁽³⁰⁾ In another context, the policies of MNEs with respect to the pricing of certain products sold in the host country and their persistent demands for price increases, were said to have conflicted with the government's policy on prices and controlling inflation. However, the government of the country concerned stated that MNEs' policies did not conflict with national policy objectives.⁽³¹⁾

26. When it came to the question of the effects of MNEs' activities on workers' interests, there were three areas in which they were said either to have caused difficulties, or to be potential sources of problems. They essentially concerned the right to organize and collective bargaining, labour-management consultations and security of employment.

27. In certain countries the incidence of labour-related problems in MNEs was found to be similar to those in comparable large companies or in locally owned enterprises.⁽³²⁾ However, MNEs had particular characteristics that drew more attention to the effects of their practices as opposed to those of other enterprises. One of those was the global scope of their operations which would explain the apprehensions in certain quarters about their possible relocation to countries offering better advantages in the event that conditions in the host country changed. Another feature was their decision-making structure and procedures which sometimes limited the issues on which local management could hold consultations and make decisions. The fact that host country governments and workers generally had high expectations about the positive effects of MNEs, should not be discounted since it inevitably influenced their assessment of the actions of MNEs. Many believed that MNEs should observe not only the same labour standards as comparable local enterprises, but that, ideally, they should introduce higher norms in line with those applied in the home country. As a result, it was not unusual for a respondent to point out that some MNEs applied lower standards than those in the home country with respect to wages and labour relations.⁽³³⁾ The fact that the standards either were or might have been in line with national requirements, seemed to be of less importance than the fact that they were not comparable to, or the same as, those applied in the country of origin. Another factor that shaped perceptions of the impact of MNEs on host countries was the commitment of most governments to increasing private foreign capital inflows. It was argued that such interest influenced their approaches to dealing with labour problems involving MNEs.⁽³⁴⁾

28. The exercise of freedom of association and collective bargaining were said to be under threat in certain countries. There had been cases of new management boards of companies with foreign participation attempting to have the statutes and structures of trade unions changed,⁽³⁵⁾ enterprises with unionized staff being closed after their acquisition by new owners,⁽³⁶⁾ and enterprise unions being promoted, posing a challenge to traditional trade union structures.⁽³⁷⁾ One respondent reported that pressure had been exerted on the host country government for it to guarantee an "anti-union" environment. However, according to the government's report, the formation of national unions, except in the textile and electronics industries, was encouraged. There were state-based unions in the textile industry and enterprise unions in the electronics industry. These unions could affiliate to national labour centres.⁽³⁸⁾ The dismissal of unionized workers, threats to relocate if workers joined or set up unions, as well as other practices limiting the exercise of freedom of association and collective bargaining, had reportedly taken place in different countries.⁽³⁹⁾ One respondent was of the view that the social policies of MNEs were increasingly infringing on workers' rights.⁽⁴⁰⁾

29. The situation with respect to collective bargaining was another cause for concern in certain countries. One complaint was that unions found themselves in a very weak bargaining position vis-à-vis foreign enterprises. Negotiations sometimes began with management proposing a complete closure of operations, or calling for a reorganization of local companies that they wished to acquire.⁽⁴¹⁾ Others were unwilling to negotiate with unions.⁽⁴²⁾

30. When it came to consultations, there were contexts in which dialogue between labour and management was uncommon and others in which they were non-existent.⁽⁴³⁾ Even where there were well-established consultation procedures, certain MNEs found it hard to adapt to the local practice,⁽⁴⁴⁾ and discussions were sometimes rendered difficult because local management had to report to the parent company and get approval before being able to decide on important matters raised by local employees.⁽⁴⁵⁾

31. Concerns about job security had intensified during the period under review, because of the increasing privatization of local enterprises, including SOEs, the globalization of manufacturing and services, and intense competition among countries to attract MNEs. Rising labour costs and the introduction of labour-saving technologies were seen as making workers more vulnerable to possible redundancies,⁽⁴⁶⁾ and in certain cases, the very fact that MNEs could relocate to take advantage of differences in productivity, skills and labour costs, was enough to provoke apprehensions about relocation and a resultant loss of jobs, even before they had taken place.⁽⁴⁷⁾ Certain respondents reported a sharp rise in dismissals and the number of workers having to take early retirement during the period under review.⁽⁴⁸⁾ Atypical forms of employment in both local and foreign companies had grown to the point where 35 per cent of the working population in one country was said to have been in "precarious employment".⁽⁴⁹⁾ In certain cases enterprises did not act in keeping with the principles of the Tripartite Declaration. Two respondents indicated that certain enterprises had closed their operations without giving advance notice to workers and without honouring their debts to the government or workers.⁽⁵⁰⁾ In another case it was reported that while on the whole MNEs respected the national labour legislation, problems had arisen with regard to informing workers about economic, social and financial issues in cases of the closure or restructuring of enterprises, and certain MNEs also had difficulties in adapting to local practices as regards social dialogue and consultations. However, those problems were by no means peculiar to multinationals.⁽⁵¹⁾ Moreover, as a result of subcontracting, workers in certain countries were unable to identify their employers in the event of grievances,⁽⁵²⁾ which might involve the question of responsibility for the payment of benefits in the event of termination of employment at the initiative of the employer.

32. During the period under review, a considerable number of countries adopted laws and policies dealing with investment liberalization, social policy and labour issues. However, it would be difficult to argue convincingly that they were adopted with the aim of furthering the objectives of this voluntary instrument, since decisions to pass legislation and elaborate policies in any given field are generally made in response to social, economic and political developments in both domestic and external environments. Laws and policies have also been adopted in countries where the Tripartite Declaration was said to be not well known. Laws have also been passed in response to developments within regional groupings to which countries belong (e.g., the European Union, the North American Free Trade Agreement or the Caribbean Community and Common Market). What can be said is that the laws and policies were generally of relevance to the Tripartite Declaration. Consequently, to the extent that they were respected, the changes in practices that they would have engendered, would have had the effect of furthering the aims of the Declaration.

33. There were reports which contained information that illustrated the important role of MNEs in certain countries,⁽⁵³⁾ and gave an overview of the regulatory and policy reforms that had been either initiated or strengthened, with a view to boosting FDI during the period under review. The widespread interest in creating favourable conditions for inward FDI was reflected in the passing of legislation to facilitate foreign private participation in various sectors of the economy, including those that had been traditionally reserved for the State or local private investors. The laws provided for the following: the lifting of restrictions on the repatriation of capital and on foreign exchange transactions in general; foreign ownership of assets including in the financial sector and real estate; privatization of public utilities and other industries once considered to be of great strategic importance (e.g., railways, petroleum industry, telecommunications, and air transport); the protection of intellectual property rights; and the establishment and expansion of export processing zones and similar export-oriented facilities.⁽⁵⁴⁾ Most countries set up institutional arrangements to ensure that investment-related administrative procedures would be streamlined to facilitate the implementation of legislative and policy reforms.

34. In the field of labour, many countries either amended existing laws, enacted new ones, or began considering draft legislation during the years covered by the survey. The introduction of flexibility was said to be the aim of these initiatives in the case of one country.⁽⁵⁵⁾ In others, the intention was to update and amend certain laws to make them more responsive to recent social and economic developments and to concerns expressed by the social partners. However, there was one observation that the general policy of encouraging inward FDI did not address the social dimensions of those developments.⁽⁵⁶⁾ During the period under review there were reports of labour codes having been amended and new codes being enacted.⁽⁵⁷⁾ Specific laws dealing with the following were also passed: occupational safety and health;⁽⁵⁸⁾ paid sick leave, pensions, and other social security benefits;⁽⁵⁹⁾ equality of opportunity and treatment;⁽⁶⁰⁾ employment, including part-time and temporary workers;⁽⁶¹⁾ and different aspects of labour relations (e.g. trade union rights, collective bargaining and workers' participation).⁽⁶²⁾ It was encouraging to note that in certain countries amendments to the legislation or the passing of new laws were considered to have brought about an improvement in the different areas covered, and that policies and programmes had been instituted to strengthen labour administration procedures and supervisory mechanisms.⁽⁶³⁾ In others, plans to amend policies to provide more social protection for contract labour were being considered.⁽⁶⁴⁾

35. The laws that were introduced or amended covered all areas dealt with in the Tripartite Declaration and the relevant international labour standards referred to in the annex and addenda thereto. In the case of EU countries, the passing of new laws was partly in response to the adoption of Council Directives (e.g., concerning the establishment of works councils in the social and labour fields). NAFTA countries (the United States, Canada and Mexico) undertook commitments to ameliorate working conditions and living standards, and to protect and improve workers' rights in keeping with the "Agreement on Labor Cooperation", while within the Caribbean Community and Common Market, initiatives to harmonize industrial relations standards were said to be under way.⁽⁶⁵⁾ On the whole, the objectives of those initiatives were consistent with the principles of the Tripartite Declaration.

36. Except for those EPZ host countries with legislation allowing export-oriented enterprises to observe different labour standards from those that applied to the rest of the country, locally owned and foreign enterprises had to respect the national labour laws in all other contexts. However, in recognition of particular characteristics that distinguished MNEs from local companies, several respondents took special initiatives to address issues that could not be dissociated from the structure and global scope of MNEs' operations. In the normative field, there were examples of governments lifting regulations that restricted workers in EPZs from forming and joining workers' organizations of their choice,⁽⁶⁶⁾ and issuing legal provisions dealing specifically with labour standards in foreign enterprises.⁽⁶⁷⁾ There was an example of changes having been made with respect to notification requirements in the event of dismissals and the payment of special severance pay to those concerned, where labour was being displaced because of the introduction of, or changes in, production technologies. While MNEs would certainly not have been singled out for the application of those new provisions, they were likely to be the most affected, since they tended to be the initiators of such changes. Moreover, the respondent did mention that rising labour costs and the use of labour-saving technologies in MNEs had led to job displacement.⁽⁶⁸⁾ In EU countries, laws were passed to incorporate the provisions of the Council Directive (of the EU) concerning the establishment of workers' councils and information and consultation procedures, which were of specific relevance to MNEs. Certain non-EU countries within Europe also passed legislation based on the Council Directive, with the aim of improving information and consultation practices in all enterprises, including MNEs.⁽⁶⁹⁾ Concerns about the protection of workers' rights in situations of changes in the ownership of enterprises due to mergers and acquisitions, led to the creation of a special committee in one OECD country, to study the labour-related issues arising from such changes, and to make recommendations in this regard.⁽⁷⁰⁾ Another noted that efforts had been made to improve the framework governing MNEs' activities and their effects on workers.⁽⁷¹⁾

37. The setting of standards was not the only approach taken to address labour-related issues that had either arisen or were likely to surface in foreign enterprises. The setting up and strengthening of institutional arrangements, the provision of advisory services and the dissemination of information were other approaches. In one case a special unit was set up within the Ministry of Labour to monitor labour-management relations in MNEs.⁽⁷²⁾ In another, a commission set up to monitor investors' compliance with all the applicable laws and regulations (including those pertaining to labour) was expected to enable the competent authorities to see the extent to which MNEs' activities were in keeping with the principles of the Tripartite Declaration.⁽⁷³⁾ Certain major home country governments either drew up, or amended guidelines to encourage MNEs to adopt good social policies and practices in their overseas operations.⁽⁷⁴⁾ Codes of conduct and guidelines for the same purpose, were issued by individual MNEs,⁽⁷⁵⁾ and certain employers' organizations.⁽⁷⁶⁾ Manuals on appropriate ways of dealing with labour matters in different host countries were distributed, and so too were the results of research on industrial relations commissioned from employers' and workers' organizations in those countries.⁽⁷⁷⁾ There were also examples of governments making available copies of codes of practice and concise publications highlighting national laws and practices, to all enterprises, including MNEs.⁽⁷⁸⁾ Access to such information would have also been facilitated through membership in local employers' organizations. All of those initiatives served to encourage enterprises to act in accordance with national labour standards which were generally in line with the principles of the Tripartite Declaration.

38. The objectives and coverage of initiatives for encouraging good social practices on the part of local and foreign enterprises demonstrated both the timelessness and universality of the principles of the Tripartite Declaration. Almost two decades after it was adopted, this instrument continues to be of relevance to the interests of home and host country governments, employers, workers and their representative organizations, and MNEs. For the most part, the areas covered by the Tripartite Declaration were reflected in codes or guidelines adopted by governments, employers' organizations or individual enterprises.⁽⁷⁹⁾ In certain cases, the issues of child labour and forced labour have also been addressed, in response to mounting concerns articulated in different international governmental and non-governmental fora, about the situation in some offshore export-oriented enterprises and in some local firms with which MNEs have subcontracting arrangements.⁽⁸⁰⁾

39. Despite the political, technological and economic changes that have marked the world since 1977, the principles of the Tripartite Declaration and the areas to which they apply, are still regarded as being fundamental for optimizing the mutual gains that could be derived from economic globalization. On the whole, the effectiveness of this non-binding instrument was not called into question. Its voluntary nature was mentioned by only four respondents, three of which were of the view that it should remain as it was.⁽⁸¹⁾ There was only one workers' organization which noted that the effectiveness of the Tripartite Declaration could be enhanced if it were made into a binding and enforceable instrument.⁽⁸²⁾ Another workers' organization called for the elaboration of what it referred to as a "new document" to improve collaboration between governments and the social partners of home countries, with the aim of stopping "flagrant violations" of laws, especially in developing regions. However, no details on the nature of the proposed document were provided.⁽⁸³⁾

General policies

Paragraphs 8-12

(1) Are the principles of Conventions Nos. 87, 98, 111 and 122 and Recommendations Nos. 111, 119 and 122 applied by the government?

(2) Have consultations been held between multinational enterprises and government and/or national employers' and workers' organizations concerned, in order to harmonize MNE activities with the development priorities and social aims of the host country? If not, why not?

No. of respondents: 60 governments, 29 employers' organizations and 23 workers' organizations. Total: 112.

40. The principles of Conventions Nos. 87, 98, 111 and 122 and those of their corresponding Recommendations were respected in many countries, including those which had not ratified the Conventions. Moreover, certain respondents indicated that where the instruments had not been ratified, the possibility of doing so in the future was being considered.⁽⁸⁴⁾ Freedom of association, the right to organize, and equality of opportunity and treatment in all aspects of life and work, were guaranteed under the national constitutions and labour codes of a number of countries.⁽⁸⁵⁾ In one case there was a national interprofessional agreement on trade union rights which complemented the provisions of the Labour Code. In addition, collective or enterprise agreements often contained clauses dealing with those subjects.⁽⁸⁶⁾ Where they did not already exist, specific laws relating to the exercise of trade union rights,⁽⁸⁷⁾ and protection against non-discrimination in employment, had been either enacted, amended, or were under consideration.⁽⁸⁸⁾ Progress with respect to the protection of workers' rights had been made in countries where the revision of the labour code had effectively removed former obstacles to the exercise of workers' rights,⁽⁸⁹⁾ while in others, improvements were on the horizon with the consideration of draft laws for strengthening procedures for the registration and functioning of trade unions, as well as for collective bargaining.⁽⁹⁰⁾ All enterprises, regardless of their origin and ownership were subject to national law and practice. While on the whole they were said to comply with the legal requirements, there were none the less concerns, particularly on the part of some workers' organizations, with respect to the non-application of standards concerning freedom of association, the right to organize, collective bargaining, and non-discrimination in employment.

41. There were examples of certain national laws being inconsistent with the principles of Conventions Nos. 87 and 98,⁽⁹¹⁾ and in the case of certain EPZ host countries, legislation for promoting investment in the zones contained provisions restricting workers from forming and joining organizations of their choice for the purpose of defending their interests.⁽⁹²⁾ There were reports of anti-union discrimination and the hindering of collective bargaining,⁽⁹³⁾ sometimes in both local and foreign enterprises. The views of trade unions were said to be disregarded,⁽⁹⁴⁾ company unions were promoted to the exclusion of other forms of workers' organizations, and applications to form national unions or trade union federations representing workers in particular industries were reportedly rejected in certain cases.⁽⁹⁵⁾

42. Even in countries where the exercise of workers' rights was guaranteed by law, undesirable practices were said to have been on the rise.⁽⁹⁶⁾ Weak unions, ineffective supervisory and enforcement mechanisms and the anti-union stance of certain governments, allegedly interacted to create those drawbacks which workers sometimes faced in their efforts to exercise their rights.⁽⁹⁷⁾ In certain cases complaints had been submitted to the ILO.⁽⁹⁸⁾

43. Details of the experiences of governments and the social partners with respect to the application of Conventions Nos. 87 and 98 were given not in the replies to this section but in those concerning industrial relations (paragraphs 41-47, 48-55) and Part IV (with reference to export processing zones).

44. The principle of non-discrimination in employment, which is contained in Convention No. 111, was generally promoted in national legislation, and considerable efforts to encourage its application had been made in a number of countries during the period under review. In this section of the report (paragraphs 8-12), only one respondent mentioned that discrimination on the basis of gender persisted, and suggested that workplace inspections needed to be reinforced, and information disseminated, in order to raise awareness of the problem of gender-based discrimination.⁽⁹⁹⁾ With respect to Recommendation No. 119 concerning termination of employment at the initiative of the employer, several respondents indicated that its provisions were taken into account in national legislation. Only in two cases were there expressions of dissatisfaction in this regard. One workers' organization noted that the principles of this Recommendation were not applied.⁽¹⁰⁰⁾ Another mentioned discrepancies between certain provisions of the Workers' Statute and the principles of the Recommendation, in that workers who had been absent because of illness or injury and who had used up 20 per cent of the legally prescribed sick leave within two consecutive months, might be dismissed with the union having no say in the matter.⁽¹⁰¹⁾ The replies to paragraphs 21-23 offered better insights into the degree of observance of the principle of equality of opportunity and treatment in local and foreign enterprises.

45. The principles of Convention No. 122 (employment policy) were taken into account by a number of countries. Where that instrument had been ratified, national laws and policies would have been brought into line with its principles. Certain States that had not ratified the Convention were none the less reported to be implementing policies that were consistent with its provisions. Where difficulties were mentioned, they were said to be caused by delays in implementing policies for promoting industrial development, training and labour market reforms, and by the ease with which enterprises could restructure their operations and reduce the workforce.⁽¹⁰²⁾ The severe incapacity of the employment office to meet the demands for employment in one country was also highlighted.⁽¹⁰³⁾ It was argued that a more active employment policy was required in order to curb high unemployment,⁽¹⁰⁴⁾ and that the government needed to promote such policies where they were "virtually non-existent".⁽¹⁰⁵⁾

46. Special measures had been adopted or were being contemplated in an endeavour to respond to the challenges of rising unemployment. In certain contexts, initiatives had been taken to share available work among more people by reducing hours of work and increasing part-time and temporary employment.⁽¹⁰⁶⁾ Employment policies had been decentralized, and steps taken to promote industrialization, the creation of small and medium-sized enterprises, training, the harmonization of manpower development programmes and the expansion of state-run employment services.⁽¹⁰⁷⁾ In order to create job opportunities for disadvantaged groups, vocational training and skills development programmes had been strengthened in certain countries.⁽¹⁰⁸⁾

47. As regards consultations involving representatives of MNEs, host country governments and national organizations representing the social partners, they are considered to be one of the ways in which efforts could be undertaken to make the activities of foreign investors consistent with the development priorities and social objectives of the countries in which they operate. Discussions of this kind, both at the initial stages of investment and after having set up operations, are expected to encourage transparency and the search for mutually acceptable ways of accommodating different interests where they exist.

48. Several respondents indicated that consultations with a view to harmonizing MNEs' activities with the development priorities and social aims of host countries had taken place. While not all of them specified at which stage the discussions were held, the reports suggested that in some cases they were held after the enterprises had gone into operation. Certain respondents did not have information as to whether or not such meetings took place.⁽¹⁰⁹⁾

49. In certain countries there were laws and regulations providing for such dialogue,⁽¹¹⁰⁾ or obliging foreign companies to make documents with information about the enterprises publicly available, before starting their activities.⁽¹¹¹⁾ In others, institutions that processed and approved applications from investors and dealt with other investment-related matters, had a mandate that included informing foreign entrepreneurs of the host country's social and economic development goals.⁽¹¹²⁾

50. Some countries had arrangements to facilitate consultations on social and economic questions at the industry, sectoral and national levels, in which MNEs, through their membership in employers' or industry-specific organizations, participated.⁽¹¹³⁾

51. Consultations usually involved government officials of different ministries and departments dealing with trade and investment matters. For example, in one country there were different tripartite committees and councils through which representatives of MNEs were able to participate in consultations on a wide range of labour-related issues.⁽¹¹⁴⁾ In most cases meetings between MNEs, government officials and/or representatives of employers' and workers' organizations took place after enterprises had begun operating. However, the regularity with which they were held varied from one country to another. There were cases in which the parties met only in times of crisis and others where consultations were held either occasionally or fairly often.⁽¹¹⁵⁾ Details of the experiences of respondents with respect to consultations after the establishment of companies were provided in the replies to questions concerning paragraph 56.

52. In the absence of established mechanisms for consultations either before or after the operations of MNEs came on stream, representatives of certain multinationals were reported to have taken the initiative of holding occasional discussions with local businesses. The aim was to ensure that their activities were in keeping with national labour laws and the social policies of the countries concerned.⁽¹¹⁶⁾ Trade unions were also known to have initiated consultations with representatives of MNEs in cases where the local business partner had failed to do so. In the country in question, most MNEs were said to be willing to engage in such dialogue, even if the parent companies were known to be reluctant to deal with unions.⁽¹¹⁷⁾ There were examples of individual senior government officials meeting with prospective investors to discuss matters which included social and labour questions.⁽¹¹⁸⁾ While there were no formal requirements for consultations in certain countries, it was noted that nothing prevented the parties from engaging in such discussions if they considered it necessary.⁽¹¹⁹⁾

53. Differences in the approaches to consultations gave rise to complaints in some quarters. There were reports that consultations of the kind referred to in paragraph 10 of the Tripartite Declaration did not take place.⁽¹²⁰⁾ Where a respondent's statement contradicted another originating from the same country, one can surmise that not all the social partners might have participated in talks with foreign investors.

54. One argument for not holding consultations was that all enterprises including MNEs were subject to the same national law and practice, which made special arrangements unnecessary.⁽¹²¹⁾ It was further noted by certain respondents that the economic information required for making investment decisions was available to the public from government sources. Implicit in those observations, together with the statement that firms operating in a free market system responded to market forces when making investment decisions, was the idea that there was no need for consultations of the kind recommended in the Declaration.⁽¹²²⁾

55. Another observation was that consultations, where they were held, did not necessarily involve workers' representatives,⁽¹²³⁾ and that in certain countries where workers used to participate in them, the situation had changed. For example, the workers' organization of a CEEC noted that whereas in the early phase of the country's privatization programme workers had the right to be informed about plans to sell off enterprises, there had been recent amendments to the legislation, eliminating that right.⁽¹²⁴⁾ During the period under review, there was a breakdown in the consensus with regard to the social reforms that should be undertaken in that country. That led to the suspension of social dialogue within the framework of the tripartite council, which in turn brought into question the government's commitment to taking part in broad social consultations.⁽¹²⁵⁾

56. The focus of consultations was another area in which differences of interest had become apparent. According to one respondent there was a tendency for the consultations to focus on the interests of companies rather than on the host country's economic and social development objectives.⁽¹²⁶⁾ It therefore meant that the discussions did not provide an opportunity for bringing divergent interests to the fore, nor did they lay a basis for seeking appropriate ways of reconciling such divergences where they might have existed.

57. For many host countries, the consultations recommended in the Tripartite Declaration might be very useful since they could constitute an important means of obtaining information on the MNEs concerned which would help in ascertaining whether their planned activities would be compatible with the country's development priorities and social aims.

Employment

Paragraphs 13-20 (Employment promotion)

(1) Please describe action taken by MNEs to increase employment opportunities and standards and to cooperate with government and workers' organizations in combating unemployment.

(2) In order to keep their manpower plans in harmony with national social development policies, do MNEs undertake appropriate consultations before starting operations?

(3) What steps have been taken by multinational enterprises to give priority to the employment, occupational development, promotion and advancement of nationals employed by them?

(4) Have multinational enterprises contributed to the local development/use of appropriate technology and to technology capable of generating both direct and indirect employment? If so, please cite any examples.

(5) What has been the policy and practice of MNEs with regard to the use of local raw material, local manufacture of parts or local processing of raw materials?

No. of respondents: 58 governments, 27 employers' organizations and 20 workers' organizations. Total: 105.

58. Notwithstanding the current levels of unemployment in a number of countries and the concerns expressed about the need to promote policies to stimulate job creation, not many respondents provided specific information on the policies that might have been implemented to promote employment by MNEs.

59. There was widespread acknowledgement that MNEs had made a significant contribution to increasing employment opportunities and standards and promoting economic growth and development during the period under review. Direct employment was created through greenfield investment, the acquisition of state-owned enterprises (SOEs) and the expansion of activities in different industries. Indirect employment opportunities were generated through linkages with SMEs and other enterprises, subcontracting arrangements and the use of raw material, components, goods and services from local sources. MNEs also played a critical role in training, upgrading the skills of local workers, and introducing new management practices and advanced technologies -- all of which have had some impact on employment.⁽¹²⁷⁾

60. Notwithstanding the positive assessment of MNEs' contribution to the host economies, it was argued by some respondents that actions taken by MNEs had resulted in widespread layoffs, which aggravated the general unemployment situation.⁽¹²⁸⁾ The acquisition of SOEs by foreign investors had led to job losses as a result of the restructuring of those newly privatized enterprises.⁽¹²⁹⁾ Layoffs also occurred as a result of mergers and acquisitions of privately owned enterprises, and the reorganization and rationalization of production and marketing arrangements in response to concerns about increasing productivity, efficiency and competitiveness. However, in the case of newly privatized companies, it may be argued that in the absence of foreign investment, some of those enterprises might have been closed, thereby aggravating the unemployment situation even further.

61. MNEs were generally subject to the same legal provisions concerning employment that applied to domestic enterprises and in a number of countries they were said to have cooperated with governments in implementing their labour market policies. Employment opportunities and standards did not seem to differ between the two groups.⁽¹³⁰⁾ The role of MNEs in the labour market seemed to be largely positive, but in the absence of any quantitative or qualitative information in this regard, it was difficult for certain respondents to determine precisely the employment impact of MNEs and whether or not they had taken any particular measures to increase employment opportunities and standards.⁽¹³¹⁾

62. In 1994, MNEs directly employed 73 million persons worldwide, representing about 3 per cent of the world's labour force. According to conservative estimates, MNEs accounted for 150 million direct and indirect jobs.⁽¹³²⁾ According to the information provided, MNEs took note of governments' employment policies and played an important role in creating jobs in a number of countries. The following examples are illustrative. In one case they had created, up to the last year covered by the survey, direct employment for 100,000 persons and the same number of indirect jobs.⁽¹³³⁾ In another, they employed 35.9 per cent of the workforce in 1992, and their involvement in infrastructural development projects was expected to contribute to job creation and the upgrading of skills and know-how in new fields.⁽¹³⁴⁾ In that same year, minority foreign-owned (less than 49 per cent) MNEs accounted for 7,926 part-time workers and 30,926 full-time workers in another country, while enterprises with 50 per cent or more foreign capital created jobs for 28,773 part-time and 132,707 full-time employees.⁽¹³⁵⁾ A number of respondents provided details of the size of the workforce in MNEs in both home and host countries. According to the data, those with relatively medium-sized and small operations were significant job creators.⁽¹³⁶⁾

63. In several countries MNEs were said to have undertaken appropriate consultations with the competent authorities in accordance with national law and practice.⁽¹³⁷⁾ In some cases, even though there were no legal obligations for them to hold such consultations prior to commencing operations, many MNEs held discussions with the parties concerned to obtain information about local practices, industrial trends, the skills available and the manpower plans of the host country.⁽¹³⁸⁾ There were none the less certain respondents which indicated that MNEs either never, or rarely, engaged in appropriate tripartite consultations prior to setting up their operations.⁽¹³⁹⁾

64. While certain host countries had specific regulations pertaining to the employment, occupational development, promotion and advancement of nationals in MNEs,⁽¹⁴⁰⁾ in others, the employment of non-nationals in all enterprises, including MNEs, was said to be guided by existing immigration laws.⁽¹⁴¹⁾ The experiences with respect to the employment and promotion of nationals appeared to have been positive in many countries. Some MNEs provided technical, professional and, where necessary, language training for local employees, thereby preparing them to assume greater responsibilities in those enterprises.⁽¹⁴²⁾ However, it was argued that MNEs offered enterprise-specific training which was not always transferable to jobs elsewhere.⁽¹⁴³⁾ There were also instances in which they demonstrated a preference for foreign workers by stipulating requirements which could not be met by nationals.⁽¹⁴⁴⁾ Foreign citizens were said to be employed in critical positions, with the understanding that they would be gradually replaced by nationals.⁽¹⁴⁵⁾ However, one respondent indicated that when the time came to transfer the responsibilities to local employees, there was, in certain cases, a reluctance to do so. That was attributed to "mistrust" and there was the perception that regardless of the technical competence acquired by local employees, there were limits to the levels of responsibility which they would be given.⁽¹⁴⁶⁾ The comments suggested that the difficulties that had arisen, concerned primarily senior technical and managerial positions.

65. Certain reservations were expressed with respect to having policies under which priority was given to the employment and promotion of nationals of host countries. In one case it was argued that such policies and practices might be discriminatory and therefore inconsistent with the provisions of paragraph 21 of the Tripartite Declaration.⁽¹⁴⁷⁾

66. The record as regards MNEs' contribution to the creation of backward and forward linkages varied considerably. In certain countries, MNEs subcontracted some of their activities to local enterprises, including those with small-scale operations.⁽¹⁴⁸⁾ In others, they had contributed to the development of supplier industries, by establishing arrangements with SMEs for the supply of goods and services. Moreover, certain local enterprises had developed a capacity to provide high-quality inputs required by foreign enterprises.⁽¹⁴⁹⁾ The activities of MNEs and the establishment of linkages with local SMEs were expected to contribute to indirect employment in the latter, which had a high profile in the domestic economy of certain countries -- e.g., 98 per cent of all firms in manufacturing, in one case.⁽¹⁵⁰⁾ In an endeavour to create a favourable environment for strengthening business relations between foreign and local enterprises, there were governments which introduced initiatives to encourage local sourcing.⁽¹⁵¹⁾ Not surprisingly, MNEs in natural resource-based industries and those involved in agro-based industries (e.g. aluminium, fertilizers, steel, petroleum and food and drink) were more likely to use local raw materials than other enterprises.⁽¹⁵²⁾

67. Notwithstanding the encouraging reports about linkages that had been established between foreign and local enterprises in certain countries, there were cases in which the experiences were said to be disappointing. Certain respondents reported that MNEs had no policies on, or had adopted only limited measures regarding local sourcing, the manufacture of parts and the processing of raw materials, nor did they contribute to the development and use of appropriate technology.⁽¹⁵³⁾ Several factors may have accounted for that: the types of activities in which the MNEs were involved; the capacity of local enterprises to fulfil demands for goods and services, taking into account considerations of quality, cost and timely delivery; and the existence and effectiveness of information channels for making known the requirements of potential buyers and that which is available from local suppliers. In the case of one EU country, it was reported that as much as 90 per cent of inputs used by MNEs might originate from enterprises within the group. However, some of them were based in the country in question.⁽¹⁵⁴⁾ Not all respondents were convinced about the appropriateness of governments taking initiatives to promote linkages between MNEs and local enterprises. One government was of the view that actions of that kind could be perceived as encouraging the imposition of local content requirements, which would be contrary to the multilateral agreement on Trade Related Investment Measures (TRIMS).⁽¹⁵⁵⁾

Paragraphs 21-23 (Equality of opportunity and treatment)

(1) Does government policy promote equality of opportunity and treatment in employment and does the practice by multinational enterprises comply fully with the letter and spirit of such policy?

No. of respondents: 59 governments, 28 employers' organizations and 19 workers' organizations. Total: 106.

68. In general, respondents agreed that efforts were made to respect the principles of equality of opportunity and treatment in employment, and that MNEs usually applied the national standards in this regard. Many provided substantial information on national policies and programmes in this field.

69. On the whole, governments pursued policies designed to promote equality of opportunity and treatment in employment, in keeping with the principles of the Conventions and Recommendations mentioned. In some countries laws were enacted or amended during the period under review. They were designed to counter discrimination on any grounds, including on the basis of race or against minority groups and women, sexual harassment and gender-based wage disparities. Maternity-related issues and the protection of part-time workers were also covered by the legislation.⁽¹⁵⁶⁾

70. Policies were adopted and programmes implemented, to put into effect anti-discrimination legislation and provide support to disadvantaged groups. Various incentives were offered and programmes put in place to encourage the hiring of women in professional and other positions where they were under-represented, to improve their representation in senior positions (on the basis of merit), and to enable their re-entry into the labour market after a period of prolonged absence. Some of those initiatives included the identification and removal of barriers that women faced at work and in public life, the provision of child care for children of school age, and the encouragement of flexible working arrangements. Legislation was also introduced to provide for longer maternity leave, automatic protection against maternity-related dismissal, as well as the protection of the identity of employees involved in sexual harassment cases.⁽¹⁵⁷⁾ Part-time employment was another area in which new regulations were adopted with a view to guaranteeing part-time employees the same protection as that given to full-time workers.⁽¹⁵⁸⁾

71. Legislation to promote equality of opportunity and treatment was not always perceived to be the solution to gender inequalities. The appropriateness of such legislation was called into question by an employers' organization, which noted that while the principle of promoting women at work was respected and the responsibility of enterprises was recognized, discrimination against women had social origins that could not be dealt with by imposing legal obligations on enterprises.⁽¹⁵⁹⁾

72. The regulatory framework generally applied to all enterprises, regardless of their origins, and there seemed to be a widespread view that the prescribed standards were respected by MNEs. Notwithstanding efforts to eliminate discriminatory practices, there were problems in certain countries,⁽¹⁶⁰⁾ and governments' efforts to stamp out discrimination were sometimes said to have been undermined by the practices of MNEs.⁽¹⁶¹⁾ Various examples were given. In one case women doing the same work as men were said to earn about one-third less than their male counterparts, and when new technologies were introduced, low-skilled workers were dismissed, and no efforts were made to train them.⁽¹⁶²⁾ In another, it was reported that opportunities for women to obtain jobs which were covered by collective agreements were limited, because only 29 per cent of collective agreements in MNEs either fully or partially covered part-time workers, as opposed to 49 per cent of agreements in other enterprises, and only 1 per cent of all companies (regardless of their ownership) provided child-care services.⁽¹⁶³⁾ One respondent was of the view that performance appraisal systems opened up possibilities for hidden forms of discrimination against women,⁽¹⁶⁴⁾ and another stated that economic difficulties had given rise to growing wage disparities between men and women.⁽¹⁶⁵⁾ Other problems mentioned were: the preference for young and middle-aged workers as opposed to those who were older;⁽¹⁶⁶⁾ discrimination against nationals in favour of foreign staff, as evidenced by the demand for special technical skills and professional qualifications from foreign institutions; and wage differentials between nationals and expatriates.⁽¹⁶⁷⁾ The absence of information on available skills in the local labour market, and subjective factors such as a lack of confidence in the capabilities of local workers on the part of certain foreign employers might explain some of the problems reported. The lack of union representation in the enterprises concerned and the weak enforcement of relevant legislation, might also have contributed to those difficulties. The political will of a certain government to implement the relevant policies and enforce the legislation in this regard was called into question by a trade union which stated that equality of opportunity and treatment was not promoted and that the government's employment policy was characterized by "discrimination based on a system of oppression and exclusion". ILO Convention No. 111 has been ratified in the country in question.⁽¹⁶⁸⁾

73. In conclusion, most governments seemed to be fully committed to the principle of equality of opportunity and treatment and to ensuring that all enterprises, including MNEs, fully respected it, in accordance with national law and practice.

Paragraphs 24-28 (Security of employment)

(1) What role do multinational enterprises play in promoting and providing stable and secure employment?

(2) In considering changes in operations that may have major employment effects, do multinational enterprises provide reasonable notice to: (a) those employees affected; (b) their organizations; and (c) to the appropriate organs?

(3) What has been the respective role of government, multinational enterprises and national enterprises in providing income protection for workers whose employment has been terminated?

No. of respondents: 56 governments, 28 employers' organizations and 22 workers' organizations. Total: 106.

74. The responses suggested that it was difficult to evaluate the overall contribution of MNEs in promoting and providing stable and secure employment. However, a large number of respondents believed that MNEs played a significant role in that regard.⁽¹⁶⁹⁾

75. In the reports that provided details of the employment practices of MNEs, the following were identified as having created job security: career-long employment; comprehensive remuneration policies and employee welfare programmes; avoidance of arbitrary dismissals; permanent jobs; the provision of social security benefits; and, where possible, the provision of alternative employment for workers whose jobs had been declared redundant.⁽¹⁷⁰⁾

76. Job security for some workers was threatened by the rationalization and restructuring of large enterprises, economic concentration at the international level, relocation, outsourcing and subcontracting. Mergers and acquisitions, privatization, technological innovation and the application of new management methods were also seen as having contributed to the displacement of jobs and the rise in precarious forms of employment. In some cases, those who lost their jobs due to the relocation of enterprises had not been able to move into new ones.⁽¹⁷¹⁾

77. Not all respondents agreed that MNEs played a special role in providing stable and secure employment.⁽¹⁷²⁾ In one case the threat of relocation was considered to be "always present" in MNEs.

78. While large MNEs (more than 500 employees) still accounted for a significant share of direct employment in many countries, their new strategies, such as outsourcing and subcontracting, had generated indirect employment in SMEs, which were perceived as the "engine of expansion".⁽¹⁷³⁾ Those SMEs, many of which supplied goods and producer services to MNEs, were reported to account for 70 per cent of the growth in jobs; 98 per cent of the enterprises in the manufacturing sector, and 75 per cent of the foreign-owned enterprises (1993) in certain OECD countries during the period under review.⁽¹⁷⁴⁾ It is worth noting that there were differing views on the ability of SMEs to provide the type of jobs that offered job security.

79. With a few exceptions, the replies indicated that MNEs tended to comply with the requirements in the labour regulations and collective agreements relating to advance notification in the event of dismissals. A number of countries had enacted legislation requiring all employers to provide information about proposed changes to workers and their representatives, to notify affected workers about planned changes in a timely manner, and in some cases to discuss those changes with a view to finding ways of mitigating their negative effects.⁽¹⁷⁵⁾ In certain cases, the law required that certified agreements (between the employer and the relevant unions) and enterprise flexibility agreements (between the employer and employees directly concerned) must be signed, to provide for consultations on matters relating to changes in the enterprises.⁽¹⁷⁶⁾ The issue of collective dismissals and redundancies seemed to be of enough concern to warrant the amending of industrial relations legislation in some countries in order to ensure that workers and their representatives, as well as the competent authorities, would be notified in good time.⁽¹⁷⁷⁾ The concept of "reasonable notice" was defined in some collective agreements, and MNEs in which workers were unionized were guided by the relevant provisions.⁽¹⁷⁸⁾ There were countries in which employers who had not complied with the advanced notice requirements were required to pay compensation in lieu of such notice.⁽¹⁷⁹⁾ Certain countries had provided incentives to encourage employers to comply with notification provisions. For example, under the social security insurance fund in one OECD country, employers were rewarded in the form of a rebate on their lump-sum payment to the fund, if the minimum period of dismissal notice had been duly respected.⁽¹⁸⁰⁾

80. There were reports of MNEs failing to comply with the provisions concerning advance notice and compensation in the event of collective redundancies and dismissals. Attention was drawn to a particular problem of non-compliance by MNEs with the national law in cases of the transfer of an enterprise. The non-observance related to collective dismissals, plant closures as well as information and consultation with workers regarding employment or maintenance of rights.⁽¹⁸¹⁾ The multinational character of the enterprise in question made it difficult to negotiate a social plan or, failing that, to impose sanctions. Certain trade unions also pointed to the practice of some MNEs not giving prior notice in cases of such dismissals and the absence of possibilities for holding discussions with a view to dissuading the enterprises from taking such action.⁽¹⁸²⁾ In certain circumstances workers had resorted to strike action.⁽¹⁸³⁾ A number of countries had enacted legislation in line with ILO Recommendation No. 119, providing for income protection for workers whose employment had been terminated, regardless of the ownership of the enterprises in which they worked. Different forms of cooperation and agreements regarding compensation procedures between MNEs and workers' representatives were reported to be in place. Termination benefits that exceeded the statutory requirements were provided by certain MNEs, which had also contributed to the retraining of workers, granted early retirement instead of laying off workers, and helped some people to start their own businesses.⁽¹⁸⁴⁾

81. There had been tripartite efforts to protect workers affected by the large-scale layoffs caused by the privatization of SOEs. The examples of two CEECs are of interest. In the first case, legislation concerning the obligation of foreign owners upon the acquisition of SOEs had been enacted, and in the second, MNEs had concluded agreements with workers' organizations guaranteeing that existing employment levels would be maintained for between one-and-a-half and two years after a change of ownership.⁽¹⁸⁵⁾ Even in cases where there was a legal void, those workers' rights could be protected. The Court of Appeal of an OECD country held that an employer may be required to pay compensation even where there were no contractual obligations to do so. In such cases, the courts would consider factors such as reasons for the redundancy, length of service, period of notice provided and the ability of the employer to pay.⁽¹⁸⁶⁾

82. Contributory and non-contributory social security and unemployment insurance schemes were identified as the main sources of funding for compensation packages. Certain governments had implemented special programmes to supplement those, and there were provisions for assisting those dismissed for economic, structural or technological reasons.⁽¹⁸⁷⁾ Some of those packages included vocational and preparatory training, wage subsidies for new employers hiring redundant workers, and assistance to help workers relocate to regions with better job opportunities. In one country, workers in the textile, clothing and footwear industries, passenger motor vehicles, as well as railways, were the main beneficiaries of such adjustment packages during the period under review, and another, covering workers in forestry and related industries, was launched in the last year covered by the sixth survey.⁽¹⁸⁸⁾

83. Not in all cases did governments, MNEs or national enterprises provide income protection for workers whose employment had been terminated.⁽¹⁸⁹⁾ One respondent was of the opinion that MNEs had the same approach to dealing with workers' incomes as national enterprises -- i.e., when there were changes in operations, they tried by all means to pay the least possible, without considering the situation of those concerned.⁽¹⁹⁰⁾ In the case of one country where the minimum severance pay was 30 days' wages for each year's service, and where the system, based on seniority, provided for the payment of compensation in lieu of notice, it was argued that such requirements could have a negative effect on the overall capacity of MNEs to provide stable and secure employment.⁽¹⁹¹⁾

Training

Paragraphs 29-32

(1) Does training provided by MNEs also meet the needs of the development policies of host countries?

(2) Are there national programmes (including funds) aimed at enhancing/encouraging human resource development?

(3) If so, do national and multinational enterprises support and actively participate in such programmes? What role do they have in the process of implementation?

No. of respondents: 55 governments, 32 employers' organizations and 22 workers' organizations. Total: 109.

84. Some respondents provided information relating only to the questions, while others described in detail their overall human resources development programmes, which included vocational guidance and training, and the different means by which they were implemented. Most of the replies came from governments, which can be explained by the fact that as policy-makers, they were best placed to give an overall assessment of the degree to which MNEs' activities were in line with national development objectives and to give an overview of national training programmes. Where there were reports from employers' organizations, they usually shared the governments' views, while the observations of those workers' organizations which responded, tended to be mixed.

85. On the whole MNEs were said to comply with the national development policies of host countries, even though the training that they provided was primarily intended to meet their own requirements. There were examples of countries in which MNEs were said to have played a critical role in fulfilling local manpower needs, and certain respondents attributed the attainment of national economic development policies to the training initiatives of those enterprises.⁽¹⁹²⁾ Skill formation and development, particularly among technical, professional and supervisory personnel, and improved career prospects, were direct advantages for the individuals concerned; while enterprises derived, inter alia, higher productivity levels and better quality products and services.⁽¹⁹³⁾ In spite of those positive experiences, some respondents said that the training activities of MNEs were not always consistent with host countries' development needs. However, those observations were rare, and the reasons for them were not advanced.⁽¹⁹⁴⁾ It was also said by one respondent that MNEs did not offer adequate training to local workers to enable them to master the use of appropriate technology.⁽¹⁹⁵⁾

86. Since all enterprises, regardless of their ownership or origin, operated within the same regulatory and policy frameworks governing training, it was difficult for respondents to make a meaningful comparative assessment of the role of MNEs as opposed to that of local enterprises in this field. Where comments specific to MNEs were made, they often acknowledged that the internal training programmes and facilities were of a high standard, and in certain cases they served as role models for local companies.⁽¹⁹⁶⁾ The contribution of MNEs to the development and upgrading of skills in various technical fields, to the strengthening of research and development capabilities, and the introduction of new management techniques, was recognized by a number of respondents.⁽¹⁹⁷⁾

87. In the case of economies in transition, the role of MNEs was considered to be particularly critical to the process of modernizing manufacturing and service industries and to enhancing the capabilities of the workforce to meet the technical, linguistic and other skill requirements of foreign enterprises.⁽¹⁹⁸⁾ Foreign MNEs were known to spend considerable sums for the training of their workforce -- in one case, a multinational was reported to have devoted almost 5 per cent of its budget for personnel management on training.⁽¹⁹⁹⁾ Where training centres already existed, certain MNEs were said to have retained those facilities after acquiring the local enterprise.⁽²⁰⁰⁾

88. The positive contribution of MNEs to the training of workers in the host country was by no means unique to the CEECs, which have had to adapt to the requirements of the free market economy. There were OECD and developing countries which noted that the training provided by MNEs was beneficial to workers. It had positive spillover effects on the domestic economy, as some workers formerly employed by MNEs either set up their own businesses or moved to local enterprises, bringing with them their skills and know-how.⁽²⁰¹⁾ Certain observations are worth mentioning since they provided concrete examples of the ways in which the actions of MNEs stood out vis-à-vis those of local companies. In one OECD country, a 1992 survey found that 60 per cent of foreign enterprises, as opposed to 43 per cent of locally owned establishments, enabled staff to improve their skills. Forty-one per cent of MNEs gave leave for further training and 19 per cent financed it. The comparable figures for local firms were 32 and 17 per cent respectively.⁽²⁰²⁾ The importance of training and retraining was emphasized in discussions on MNEs' manpower plans with governments.⁽²⁰³⁾ There were countries in which MNEs were said to provide locals with the necessary expertise to replace expatriate staff in middle-level and senior professional positions, and to train staff to master the use of new technologies.⁽²⁰⁴⁾ There were others in which MNEs stood out as having a greater interest than local companies, in management development and training as a whole.⁽²⁰⁵⁾

89. A large majority of governments had developed national human resource development (HRD) programmes. Training programmes were considered to be an essential component of policies for reducing unemployment, promoting economic development and increasing the competitiveness of enterprises.⁽²⁰⁶⁾ Training was undertaken at all levels. In a number of countries special training and retraining programmes designed to meet the needs of specific groups had been put in place. They were targeted to the following: the long-term unemployed; workers in industries undergoing conversion; first-time jobseekers, including youths; women; and disadvantaged and vulnerable groups.⁽²⁰⁷⁾ By virtue of the growing trend towards the privatization of state-owned enterprises, special attention was being given to the retraining of public sector workers in the enterprises concerned, in certain countries, while the need to pay attention to that question was recognized by policy-makers in another context.⁽²⁰⁸⁾ Courses for enabling workers to master the use of new technologies had been implemented by enterprises in some countries.⁽²⁰⁹⁾ High unemployment among youths stood out as a particular concern in many contexts, and in response, apprenticeship systems aimed at facilitating labour market entry for young jobseekers were fairly widespread. There were also examples of schemes under which formal training in institutions was alternated with on-the-job experience through internships.⁽²¹⁰⁾ One noteworthy example was that of a developing country in which almost 9,000 contracts for on-the-job training for young persons were concluded over the period covered by the sixth survey, and more than 9,000 youths were said to have obtained jobs in which they were able to make practical use of the training they had received.⁽²¹¹⁾

90. When it came to the funding of training programmes, there were different schemes to which governments and employers generally contributed. A number of governments had a policy of imposing on companies a levy (usually around 1 per cent of their wage bill) to help finance government-run training programmes. Others collected the equivalent of 1 per cent of the profits made by companies, and in certain cases employers and workers each contributed 0.5 per cent of the workers' insurable earnings to a government training fund.⁽²¹²⁾ However, one employers' organization considered the training levy to be burdensome.⁽²¹³⁾ A number of government funds were established to subsidize different training activities to facilitate initial employment and the return to work, or to build up a highly trained workforce in a context of economic restructuring.⁽²¹⁴⁾ For example, in one country, the law required all employers to channel 1 per cent of the salaries of employees earning less than S$1,000 per month to a skills development fund, which covered the training costs incurred by enterprises.⁽²¹⁵⁾ Financing from external bilateral and multilateral sources was also reported.⁽²¹⁶⁾

91. The granting of incentives was one way in which governments sought to encourage enterprises to expand their training activities. They took the following forms: special tax rebates for enterprises that devoted a stipulated percentage of their gross expenditure to training and other activities that would facilitate the transfer of technology;⁽²¹⁷⁾ reductions in contributions to government funds for enterprises which offered places to apprentices or provided professional training to youth;⁽²¹⁸⁾ training subsidies and other cost-sharing arrangements, including for small and medium-sized enterprises.⁽²¹⁹⁾

92. MNEs supported and took an active part in the development, management and implementation of training programmes in a number of countries. There was evidence of a growing trend in certain States of a shift towards giving increasing responsibility to the social partners to ensure that training kept abreast of the changing demands of the labour market.⁽²²⁰⁾ In such cases, the government's role was progressively reduced to that of planning, defining and coordinating activities, with the social partners collaborating in formulating proposals on the most appropriate ways of meeting the skill requirements of the labour market. MNEs cooperated in national training programmes through their representation on tripartite training bodies and the management boards of training institutions.⁽²²¹⁾ That was said to satisfy both MNEs' requirements and contribute to the needs of others in the industry.⁽²²²⁾ Furthermore, an equal number of private and public sector employers were represented on a training board to ensure that the government's training efforts met the needs of the market and received the support of all the actors involved.⁽²²³⁾ MNEs participated in the setting and monitoring of training and certification standards, as well as curriculum development activities.⁽²²⁴⁾ By concluding collective agreements containing provisions for the training of workers, by providing both in-house and overseas training for staff in different occupational categories, and by accepting apprentices under government training programmes, MNEs contributed to the development of human resources in a number of countries.⁽²²⁵⁾ Enterprises also signed agreements with government institutions for the running of alternating training programmes.⁽²²⁶⁾ MNEs shared the cost of the stipends of trainees whom they accepted, participated in national programmes by sending staff on courses, and initiated training projects in collaboration with governments.⁽²²⁷⁾ MNEs benefited from training facilities through government agreements with both local and multinational enterprises, enabling them to utilize government institutions for their own training activities,⁽²²⁸⁾ and they also benefited from subsidized training schemes.⁽²²⁹⁾ As regards initiatives by MNEs, some had implemented basic educational and literacy programmes on a voluntary basis,⁽²³⁰⁾ others had concluded collective agreements providing for training and the setting-up of a bipartite body to handle questions pertaining to the promotion of staff.⁽²³¹⁾ Guidelines issued with the aim of engendering good social practices among MNEs operating abroad, also contained provisions urging them to organize internal training activities and to take into account the needs of host countries with regard to the transfer of technology.⁽²³²⁾

93. While many respondents were of the opinion that MNEs played a positive role in the development and upgrading of workers' skills, there were, none the less, opposing views from certain quarters. There were countries in which MNEs were said not to have supported training initiatives.⁽²³³⁾ Other arguments were that training was targeted mainly at highly qualified staff, and it was also implied that the benefits derived by MNEs from the financial incentives and training facilities provided by host country governments, far exceeded the contribution that they made in the field of training.⁽²³⁴⁾ It was also argued that there was a "contradiction between MNEs' policies of training young persons and their employment practices as regards this group".⁽²³⁵⁾

94. From the reports, it can be concluded that in a number of countries the contribution of foreign enterprises to the development of human resources was significant. They ran training programmes, provided different forms of support for, and participated in, government training activities. However, the fact that there were unsatisfactory experiences in certain contexts suggests that policy and institutional changes may be required to improve consultations and cooperation between enterprises, host country governments and representatives of employers' and workers' organizations, in order to maximize the potential gains of enterprise-based and national training programmes.

Conditions of work and life

Paragraphs 33-35 (Wages, benefits and conditions of work)

(1) Please comment on wages, benefits and conditions of work offered by multinational enterprises taking into account the recommendations in paragraphs 33-34.

(2) What (new) measures, if any, have been adopted by the government so that lower-income groups and less developed areas benefit from the activities of MNEs?

No. of respondents: 61 governments, 33 employers' organizations and 24 workers' organizations. Total: 118.

95. Only in isolated cases,⁽²³⁶⁾ was there any divergence between the reports of the relatively small number of workers' organizations that responded and those of governments, which for the most part indicated that there were few, if any, problems associated with wages and benefits paid by MNEs.

96. The general perception seemed to be that during the period under review, wages, benefits and conditions of work in MNEs compared favourably with, and often exceeded those, prevailing in comparable local enterprises. While recognizing that certain MNEs provided good wages, benefits and conditions of work in host countries, reservations were nevertheless expressed by some of the respondents.⁽²³⁷⁾

97. In general, national legislation provided the guidelines that enterprises, both local and multinational, must follow with regard to their wage policies. Virtually all the respondents from countries which had a statutory minimum wage were of the view that MNEs paid higher wages. Different types of wage-fixing machinery existed. They included: minimum wages prescribed by law and industrial awards, or set by wage councils, bipartite boards and tripartite bodies.⁽²³⁸⁾ However, according to one respondent, wages, benefits and conditions of employment were agreed between employers and workers or their representatives in all enterprises, and there was no government intervention as long as there were no discriminatory practices based on sex, race or trade union affiliation.⁽²³⁹⁾ Another contended that since firms operated in response to market forces, it could be assumed that both local and foreign enterprises offered competitive wages and benefits in order to attract and retain their workers.⁽²⁴⁰⁾

98. Practices differed with regard to wage setting by MNEs. A number of respondents noted that wages higher than the legal minimum could be obtained through collective bargaining,⁽²⁴¹⁾ and in some instances they were reported to be better than those paid by comparable local enterprises.⁽²⁴²⁾ Privatized SOEs in a certain CEEC entered into "social agreements" with workers' representatives guaranteeing that workers would be able to retain certain rights and privileges, including wage and social security entitlements for a period of time.⁽²⁴³⁾ In one case MNEs were said to set on a voluntary basis, wages that were 25 to 30 per cent higher than those in comparable enterprises for jobs in the same occupational categories.⁽²⁴⁴⁾ In another, certain MNEs were said to have refused to negotiate with unions and to have revised wages and benefits unilaterally, even though they were operating in industries covered by sectoral collective agreements.⁽²⁴⁵⁾

99. Wage levels in MNEs appeared to be influenced by the industry and sector in which the enterprises operated, the size of their operations and the skill levels of the workforce. Large MNEs or MNEs involved in activities requiring highly skilled labour tended to pay higher wages than comparable local enterprises.⁽²⁴⁶⁾ Only exceptionally was it reported that wages in foreign-owned SMEs were better than those in local enterprises.⁽²⁴⁷⁾ The growing preference of certain MNEs for giving individual contracts of employment and introducing performance-related pay schemes were said to have an impact on wages in MNEs.⁽²⁴⁸⁾ In general, MNEs offered advantageous remuneration packages and good job opportunities for skilled technical and professional personnel.⁽²⁴⁹⁾ In contrast, workers in low-skilled, labour-intensive activities did not enjoy similar benefits.⁽²⁵⁰⁾ The length of time that enterprises were present in a country was also said to have an influence on wages, benefits and conditions of work. For example, in one case it was mentioned that foreign enterprises involved in public works projects of limited duration offered less favourable terms of employment and conditions of work than those MNEs which had been operating in the country for longer periods.⁽²⁵¹⁾

100. MNEs did not always pay better wages than comparable local enterprises. Where there was a statutory minimum, they generally respected it, and in certain cases when the national standard was higher, it had to apply to most foreign workers employed by MNEs.⁽²⁵²⁾ None the less certain workers' organizations were of the view that the wages paid by MNEs could have been better.⁽²⁵³⁾ Low wages in certain multinationals were attributed in certain instances to the workforce not being organized.⁽²⁵⁴⁾ An employers' organization noted that according to workers in the country in question, most MNEs provided "adequate" wages, benefits and conditions of work, but there were others in which they were only "marginal or near marginal".⁽²⁵⁵⁾

101. There were certain countries in which the labour legislation stipulated not only the minimum wage but also the minimum package of benefits to be provided by all enterprises, including MNEs.⁽²⁵⁶⁾ MNEs often offered benefits that were said to be better than those given by comparable local enterprises. Many included accommodation, transport, medical facilities, meals, bonuses, child allowances and loans, including for housing.⁽²⁵⁷⁾ Some extended medical facilities to the families of workers.⁽²⁵⁸⁾ There were also profit-sharing schemes and possibilities for workers to buy shares in the companies.⁽²⁵⁹⁾ Just as in the case of wages, the bargaining strength of organizations representing workers in MNEs seemed to have had an impact on the benefits offered. In certain MNEs where there were either enterprise agreements or collective agreements, wages and benefits were found to be more favourable than those in other comparable enterprises.⁽²⁶⁰⁾

102. With respect to working time, it was generally regulated by national legislation, and in the case of EU Member States the provisions of Directives in this regard had to be incorporated in national legislation.⁽²⁶¹⁾ On the whole working time arrangements in