Developing countries already accounted for 12 per cent of world components' exports in 1999, a share which will increase with the growing prominence of emerging markets, particularly in Central and Eastern Europe, China and India, says the report. Viewed from the perspective of the importance of the automotive industry for a country's merchandise exports, the report also found that automotive products accounted for over 20 per cent of exports in Canada, Cyprus, Japan, Mexico and the Slovak Republic, over 10 per cent for countries such as Belarus, Czech Republic, Hungary, the Republic of Korea, Lithuania, Poland, and Slovenia, as well as the EU (15) and almost 10 per cent for South Africa, Turkey and the United States.
World Trade Organization (WTO) data for automotive products as a whole indicate that there are significant exports from export processing zones (EPZs) for China, the Czech Republic, Hungary, Malaysia, Mexico, Morocco and the Philippines. Data for the past ten years show how Mexico's share of exports of automotive components from its maquiladoras has been increasing rapidly.
The potential for companies in advanced countries to lower labour costs by outsourcing coupled with the pressure to continuously reduce costs, diversify, and deliver to just-in-time schedules, will impact on working conditions in suppliers, and require even greater flexibility on the part of the workforce.
The report noted that both automobile manufacturers and suppliers have been in the forefront of negotiating and signing International Framework Agreements (IFAs) with the International Metalworkers' Federation and local union representatives. These IFAs promote social dialogue and recognize the core labour standards in accordance with the provisions of the ILO Declaration on the Fundamental Principles and Rights at Work, including Conventions Nos. 87 and 98 on freedom of association and collective bargaining, Conventions Nos. 100 and 111 on equal opportunities and treatment, Conventions Nos. 29 and 105 on forced labour and Convention No. 138 on child labour. The companies involved expect their suppliers to adhere to these same standards as part of their continuing business relationship.
The meeting concluded that:
- Safeguarding existing employment was a priority for all economies, as was ensuring that any new investment brought high-quality jobs contributing to improved social and economic conditions and development.
- When outsourcing or restructuring was inevitable, employers, in consultation with trade unions and workers' representatives, should - as early as practicable - explore alternatives to avoid, reduce or mitigate the negative impacts of restructuring and/or job loss. In such cases, information, consultation and negotiated agreements between workers' representatives and employers were essential to the process.
- Governments, in consultation with workers' representatives and employers, had the responsibility to ensure social protection and security in the case of restructuring, as well as to implement active labour market policies, including retraining and lifelong learning throughout the entire production chain that would assist workers to be reassigned within a company or find employment elsewhere.
- Decent work should be a global objective. It was a broad concept stemming from the ILO mandate to improve social justice and included six dimensions: opportunities for work, freedom of choice of employment, productive work, equity in work, security at work, and dignity at work. A reduction in decent work deficits, where they exist, in the industry and all sub-sectors, was essential.
- The Meeting noted with interest the work of the ILO Governing Body on EPZs and on corporate social responsibility (CSR). Large employers could assist small- and medium-size enterprises to adapt to changing economic circumstances in their supply chain.
- Research, data collection and monitoring should continue in order to provide an early warning of impending changes and help to ease the social policy burden. The ILO should continue and sustain its work on a regularly maintained and updated database for the metal trades industries to support social dialogue.
Since the ILO meeting, the EU Commission launched a major initiative to boost the competitiveness of the lagging European automobile industry "CARS 21" ( Note 3) to carry it into the next century. And in a related development, the United States has submitted a proposal to the WTO ( Note 4) to address non-tariff barriers (NTBs) as an integral part of the Doha Round, equally important as addressing tariff barriers themselves.
Note 2: Automotive industry trends affecting component suppliers, Report for discussion at the Tripartite Meeting on Employment, Social Dialogue, Rights at Work and Industrial Relations in Transport Equipment Manufacturing (Geneva, ILO, 2005).
Note 3: Competitive Automotive Regulatory System for the 21st Century, 13 January 2005.
Note 4: WTO: U.S.PROPOSAL ON NEGOTIATING NTBS RELATED TO THE AUTOMOBILE SECTOR, TN/MA/W/18/Add.6, Negotiating Group on Market Access, 28 January 2005.