Multinational Enterprises and Social Policy in Pacific island countries

Multinational enterprises (MNEs) and their value chains represent an important share of the private sector in many developing and industrialised economies. According to the 2013 UNCTAD estimates, approximately 80 per cent of global trade activities were within the global value chains of MNEs. New forms of globalized production systems have profoundly changed the conditions of competition around the world and the way of doing business. These far-reaching systems are one of the most distinctive factors that have transformed the world of work in recent decades.

Their impact is felt in virtually every facet of industry, trade, services and business activities. MNEs do not only hold the potential for job creation, they also stimulate a wider economic development through skills development and technology transfer. At the same time, the activities of MNEs have come under increasing pressure to demonstrate that they operate in a socially responsible manner and contribute effectively to sustainable and inclusive development. Many MNEs and large domestic enterprises have adopted policies governing employment and labour aspects of their operations at the global level, including in relationship to their supply chains, and a growing number are engaging in multi-stakeholder or industry initiatives.

Governments are also introducing Corporate Social Responsibility (CSR) regulations and policies to stimulate good business behaviour through trade, investment and public procurement, at home and abroad. Multilateral institutions are promoting their respective CSR instruments to encourage responsible business practices and address emerging issues. Smaller local producers are also becoming increasingly aware of sustainable and responsible business practices as they become integrated into the global supply chains.

In Fiji, little information exists on the contribution of MNEs to the national economy and local development. Information concerning CSR and socially responsible business practices amongst enterprises are also not readily available. A better understanding of these efforts is needed in order to maximise the contribution of MNEs to national priorities, especially in promoting more and better jobs in Fiji. In the Pacific Islands, Fiji takes a pivotal role in trading with the countries outside the region through communication and transportation. There are opportunities for MNEs in the traditional economic sectors as well as in emerging sectors like ITC and tourism development. In 2013, economic growth picked up, stimulated by an expansion of government expenditure and increased domestic investment and consumption. Business confidence continues to strengthen as clear progress is made toward elections scheduled for the 17th September 2014. Sustaining recent increases in domestic demand and private sector investment is vital to maintaining growth and achieving fiscal sustainability in the long run. The Fiji Commerce and Employers Federation (FCEF) has long established itself as the employer organization representing the interest of employers in Fiji since 1960. FCEF has expanded its role by representing the collective voice of members in all industries, including multinational enterprises operating in Fiji, on a wide range of business concerns. FCEF has been closely working with the ILO and through the assistance of the ILO's Bureau of Employers Activities (ACTEMP), FCEF has launched its Industrial Relations Service in 2011. In the meantime, the ILO has been promoting the principles of the Tripartite Declaration concerning Multinational Enterprises and Social Policy (MNE Declaration) in the business sector as precursor to the advent of influx of investors and multinationals, some of whom have already a foot in Fiji and bidding time for elections and the return to normalcy. Some of the MNEs currently operating in Fiji include Nestle, Goodman Fielder, Fiji Water, Banks: ANZ, Westpac and BSP; and hotel chains such as Accor Group, Shangri-La and Starwood Groups. Other local manufacturers include garment factories such as Ranjit garments, Mark One and food manufactures such as Flour Mills of Fiji, Lees Trading and Punjas.

ILO broad response

The point of reference for the ILO’s work on responsible business is the Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy (MNE Declaration). The MNE Declaration is the only universal instrument addressed to enterprises which has been agreed to by the representatives of the governments, employers’ and workers’ organisations.
The ILO MNE Declaration is the ILO global policy framework to maximise the positive contribution of enterprises to socio-economic development and national development priorities, and minimise the negative impacts of their operations. It speaks directly to companies about how they can contribute to local economic development through job creation, skills development, technology transfer, promotion of backward and forward linkages, and provide guidance on conditions of work and life, and industrial relations. It highlights the importance of obeying the national law, and ensuring that company operations are in harmony with national development priorities. It also explains what governments should do to create an enabling environment for companies to operate in a more responsible and sustainable manner.

In order to assist companies, the ILO has established the ILO Helpdesk for Business on International Labour Standards. The Helpdesk is a one-stop shop for company managers and workers on how to better to better align business operations with international labour standards and build good industrial relations.

The ILO has also created an E-learning module on the MNE Declaration to explain the principles of the Declaration in a greater detail and to provide concrete examples of its application. Dialogues and workshops are currently being carried out in a number of sectors and countries to support national and company efforts in putting the principles of the Declaration into practice.