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86th Session
Geneva, June 1998



Report of the Committee on Contract Labour

Committee report

Submission, discussion and adoption

Original French: THE PRESIDENT -- We will begin today with the report of the Committee on Contract Labour, which appears in Provisional Record No. 16. I call on Mr. Saloheimo, the Reporter, to submit the Committee's report.

Mr. SALOHEIMO (Government adviser, Finland; Reporter of the Committee on Contract Labour) -- I have the honour to present to this assembly the report of the Committee on Contract Labour and the resolution adopted by the Committee.

The term contract labour usually refers to evolving forms of the use of labour in situations that lie beyond the scope and protections of traditional labour law.

One of the main concerns of the Committee has been bilateral relationships between workers and user enterprises which do not meet national criteria for establishing an employment relationship, or which are disguised employment relationships given the form of some other type of legal relationship.

The Committee has also addressed triangular relationships in which two enterprises are involved, namely, the user enterprise, which has ordered specified work or services, and another enterprise, whose workers perform the work on terms and conditions such that they become subordinate to or dependent on the user enterprise.

The Committee was faced with a formidable task. My thanks go to our Chairperson, Dr. Mishra, the Employer and Worker Vice-Chairpersons, Mr. Noakes and Mr. Parrot, as well as all the Committee members, especially my colleagues from the Government group, for their contributions to our work.

As the basis for its work the Committee had before it the texts of a draft Convention and a draft Recommendation which, in turn, were the results of the first discussion last year and of some further elaboration on the part of the Office. The Committee was entrusted by the Conference with the task of finalizing the instruments for adoption.

Unfortunately, I must report to you now that the Committee was not able to fulfil its mandate. Despite all the preparatory work and intensive discussions in the Committee, we were unable to complete our work. Adoption of ILO instruments on this highly complex area is therefore not possible at this stage.

Instead, the Committee was able to agree on the text of a resolution in which we have proposed that the issue of protection of workers in situations identified by the Committee should be placed on the agenda of a future session of the International Labour Conference with a view to completing the work, possibly by means of standard setting within four years from now.

The resolution text, which you will find annexed to the Provisional Record containing the Committee's report, also contains some guidelines for further preparatory work on the item. It is, for instance, suggested that expert meetings should be held to examine situations in which workers are in need of protection and the appropriate means and methods of providing protection where it is deemed necessary.

The resolution was finally adopted by consensus on the basis of proposals submitted by the Employers' and Workers' groups, as well as proposals submitted by various Governments, in order to reconcile the differing views.

This took place after more than half the time assigned to the Committee had elapsed, by which time the Committee had not even concluded its deliberations on Article 1 of the proposed Convention. At that stage it became obvious that the only way to keep this item on the ILO agenda was to reach an agreement on how to defer it, subject to suitable conditions in relation to the timing and the purposes of future deliberations.

There are, no doubt, several reasons for this year's failure to adopt a Convention and Recommendation. The respective positions of the Employers' and Workers' groups have remained strongly opposed as regards the need for new measures which, while extending protection for workers, may also have consequences for commercial relationships.

I am confident that we will soon hear a fuller account of those opposing viewpoints. Perhaps the only common view shared by all constituents has related to the need to combat the use of disguised employment as a means of avoiding legal obligations.

In addition, the Government members of the Committee have continued to have difficulties in dealing with the concepts and criteria used in the proposed texts to define the workers to be protected.

One significant achievement must, however, be recorded on this point. As a result of conceptual and linguistic problems relating in particular to the Spanish and French translations of the term "contract labour", the Committee decided to replace this concept with a mere description of the persons who perform work for purposes of the instrument. This means that any future instrument proposed to regulate the area is unlikely to have the words "contract labour" in its text or title.

With the formal outcome of the work of the Committee being so scant, my presentation of the report could be concluded here. Yet, I ask, Mr. President, for your permission to continue with a few brief reflections on the prospects for future work which, according to the resolution, is needed to complete this unfinished process.

Future preparations may be based on the results and experiences gained in this Committee. It is, however, my understanding that, in order to make progress, a much more analytical approach must be adopted than the one employed in any of the draft texts we have had before us thus far.

Such a new approach might be entitled "the three-pillar approach". The first pillar could relate to conceptual differentiation of the various groups of workers who might be covered by a future instrument. Although the content of Article 1, as adopted by the Committee, is a remarkable achievement in that it encompasses at least three groups of workers under one definition, such an abstract definition alone is not sufficient for practical purposes.

A complementary method can be derived from the resolution, which refers to the possibility of dealing separately with the various situations. This might suggest that a future instrument could be divided into parts, each part dealing with a particular group of workers. If, in that connection, each group of workers were given a more concrete subdefinition, we might achieve more clarity.

The use of such subdefinitions might also help us to avoid the problem encountered by this Committee, namely, struggling with a definition in Article 1 for the entire two-week period of the Conference.

The second pillar could refer to differentiation of the rights of each group of workers in need of protection. It is far from clear that the same list of rights meets the needs of various groups of workers who, indeed, may be in very different situations.

For instance, employees of the labour-supplying enterprise may need to have only specific rights guaranteed vis-à-vis the user enterprise, while workers doing work for the user enterprise under a bilateral arrangement other than an employment relationship may need more basic protection.

Finally, the third pillar would permit differentiation of national options in accordance with various national situations. An example concerning the regulation of bilateral relationships might shed light on this aspect.

The deliberations in the Committee have shown us that in order to cover a gap in legal protection it may be justified in some member States to create a new category of workers falling between regular employees and independent contractors.

In other member States the national concept of an employee is already so wide that the creation of such a new category would be not only unnecessary, but highly problematic from the point of view of retaining a coherent labour law system.

These Members might, on the other hand, have an interest in regulating the rights of workers and the obligations of enterprises in triangular relationships. For these reasons, any future standard setting in the area should provide member States with sufficient flexibility and a range of options.

It is with this hope for greater success in the future in dealing with these complex but key issues that I respectfully ask the Conference to adopt this report.

Mr. NOAKES (Employers' delegate, Australia; Employer Vice-Chairperson of the Committee on Contract Labour) -- May I congratulate the President on his election to preside over this session of the Conference and may I express my personal pleasure at being able to speak under his presidency.

At the last session of this Conference, the Committee on Contract Labour presented the report it had adopted at the conclusion of its first discussion. That report proposed the adoption of a Convention and Recommendation on contract labour. When the report was presented to the session of the Conference last year, I indicated on behalf of the Employers' group that we remained convinced that contract labour was not a suitable subject for standard setting. I set out the major concerns which we had with the draft instruments proposed by the Committee at that time and said that we were implacably opposed to the adoption of instruments on this subject.

The second discussion was preceded by an unprecedented step taken by the Office, which, with the agreement of the Employers' and Workers' groups, issued a new text shortly before the discussion was due to commence. That new text was issued in response to the criticisms and concerns expressed, principally by employers' organizations and governments, about the text adopted after the first discussion.

The Committee has now presented the report adopted at the end of its second discussion, together with a resolution.

The Committee no longer proposes the adoption of a Convention and Recommendation on contract labour, and to that extent our concerns have been recognized and accepted by the Committee. The report is in fact a highly unusual, if not unique document. It records that the Committee did not complete its consideration of even one article of the proposed Convention, or one paragraph of the proposed Recommendation. Instead, the Committee engaged in a lengthy process of attempting to understand and resolve the linguistic, conceptual and definitional complexities of the issue of contract labour. The Committee did not resolve these complexities, although it attempted to do so by eliminating consideration of the terms "contract labour", "contract worker", "subcontractor" and "intermediary" and thus seeking to confine the scope of its discussions. Nothing could better illustrate the problems faced by the Committee than this development.

The resolution now presented to this Conference is also a highly unusual document. It was drawn up as a joint resolution of the Employers' group and the Workers' group, and it received the unanimous support of the Committee. In essence, the resolution brings to an end consideration of the issue of contract labour and proposes that further consideration be given to certain other issues which had arisen in the course of the Committee's discussions. In this respect, it is significant that the resolution does not mention contract labour as such.

It is not necessary for me to say very much about the content of the resolution. It records that the Committee has begun to identify situations where workers require protection, and it invites the Governing Body to place these issues on the agenda of a future session of the Conference with a view to the possible adoption of a Convention and Recommendation if considered necessary. The Governing Body is also invited to ensure that this process is completed within the next four years.

I should say at this point that our view, at least at this time, is that having regard to the work already carried out, that process would probably only need to involve a single discussion.

The resolution also invites the Governing Body to instruct the Director-General to ensure further work be carried out on the matters referred to in the resolution. This work includes meetings of experts and it is also necessary for me to say that it is understood by the Committee that one or more meetings may be necessary.

I want now to make it clear that the work carried out by the Committee has not diminished the principal concerns of the Employers' group, despite the attempts made by the Committee to narrow the issues it was faced with.

We remain concerned about the potential which exists, in dealing with these issues, for there to be unwarranted and unacceptable interference with commercial contracts and with employment contracts. We remain concerned about the creation of a third category of worker, who, it has been suggested, should receive many of the benefits of an employee without having the formal status of an employee and we remain concerned about the notion that responsibilities for a worker should be allocated between two different enterprises, even where the worker is clearly an employee of one of those enterprises.

Finally, and importantly, we remain concerned about the potential for interference with labour market flexibility and job creation.

I want now to make a number of observations which we draw in our group from consideration of the issue of contract labour.

First, it is clear to us that the issue of contract labour should not have been on the agenda of this session of the Conference as a standard-setting item, given the complexity of the issue, the lack of understanding of the issue and the inadequacy of the preparatory work. Significant resources have been expended on a subject which, as the resolution makes clear, no one wishes to be considered further.

My second and related observation is that the Governing Body needs to exercise greater care in the selection of agenda items, so that the experience with contract labour is not repeated.

Third, while there was an understanding reached within the Committee that certain issues associated with the broad subject of contract labour require further attention, these issues have not yet been precisely identified, and further work is required for this purpose.

Fourth, significant differences of opinion remain about which issues should be addressed and how they should be addressed. Our group remains at this time convinced that disguised employment is the only issue which can be sensibly and practicably addressed, and convinced that this could be done through the adoption of a Recommendation.

Fifth, the Employers' group will of course participate in and contribute to the further work to be carried out, subject to the strong concerns which, as I have indicated, we still have.

Sixth, the work of the Committee in the second discussion was marred, as it was in the first discussion, by the consistent absence of around half the number of Government members of the Committee. This unsatisfactory situation, which is clearly reflected in the details of the three record votes set out in the report, requires consideration and rectification.

Finally, it is in our view highly significant that the outcome now reported to this session of the Conference was reached by agreement. This is an indication of the pragmatism and flexibility displayed by the members of the Committee and their willingness to accept what is, in our view, the logical conclusion of the work of the Committee.

I want to express the thanks of our group to the Chairperson of the Committee, who had to deal with discussions on a difficult subject under difficult circumstances. I also wish to thank the Reporter for the excellent work carried out on the preparation of the Committee's report. To Mr. Parrot, the Worker Vice-Chairperson, I convey my thanks for the way in which we have been able to maintain good relations while holding strongly divergent views about the issues under discussion.

I also thank all Government members of the Committee for their contributions to the work carried out.

To the secretariat of the Committee and to the Office in general I express our thanks for the work done for the Committee. This work was always of a high standard although it did not always coincide with our own views. I also wish especially to thank the Office for its initiative of issuing a new text in advance of the second discussion. This was done in recognition of the difficulties facing the Committee, and was a welcome example of flexibility within the Office.

In conclusion, let me repeat that the report and resolution now before this session of the Conference represent the logical, perhaps the inevitable conclusion of the work of the Committee on Contract Labour. Future work will need to be more tightly and more narrowly focused, and must be approached with greater rigour and discipline. Substantial preparatory work will be required to separate out, from the multiplicity of issues embodied in the ill-defined and little-understood subject of contract labour, those issues which require further attention. Great care should be taken by all those involved in this process to avoid a repetition of the events of the last few years.

Mr. PARROT (Workers' delegate, Canada; Worker Vice-Chairperson of the Committee on Contract Labour) -- First of all, I would like to say how very disappointed the Workers' group are not to have achieved this year a draft Convention and draft Recommendation, despite the efforts made last year.

Nevertheless, we are pleased to say that we support this report and the resolution that is in it very strongly, because they address the idea of the amount of work that needs to be completed at a future Conference.

I would also like to say, as Mr Noakes has already mentioned, that the Employers identified one issue that they considered should be addressed in order to finalize a Recommendation or be able to set a standard. This morning I would like to make it clear that we believe there are three problems and three situations where workers are victims because they are not protected.

The usual ways in which workers are protected continue to be the employment relationship which is based on labour law. Yet there are millions of workers who should receive the protection of an employment relationship, who are, for a variety of reasons, unprotected. Let me give some examples. A lawyer advises an employer to inform low-skilled assembly workers that they can send someone else to do their work. A court interprets this to mean that the workers are independent contractors and not employees and by this these low-skilled workers are stripped of protection. Or a qualified construction worker is killed on the job but his family will receive no compensation because it cannot be determined which of two enterprises is his real employer. Taxi drivers and truck drivers are treated as contractors. Yet despite taking risks they cannot share the profits of an enterprise that completely controls their work. In the case of technicians performing exactly the same work in the same place under the same conditions supervised by the same persons for the benefit of the same company -- some workers have job security and benefits, others do not. They are considered employees of another enterprise: an enterprise that does not control their work, an enterprise established solely for the purpose of supplying a throw-away workforce. And that is what we are talking about -- throw-away workers.

The information age seems to be fostering an emerging professional class consisting of highly skilled workers with new needs and aspirations. The more competitive, more liberalized global marketplace is generating new forms of business organization.

Yet these developments are covering old forms of exploitation -- crop-pickers, hotel maids, assembly workers and clerks are not being given any new professional status nor are they being offered any stake in the competition between enterprises. They are being stripped of what protection the law provides and are being offered piecework.

And yes, they are invited to compete, but only with each other and only for throw-away jobs; and, no, they will not be able to collectively bargain for their working conditions with those who control the conditions of their work. So, millions of workers have fallen through the cracks in a floor built by society out of the need to preserve justice and fairness and out of learned experience. The reasons these workers are unprotected are legal. The workers themselves are real and the situations they are in are real. The subject is difficult because it must examine the abstract world of law and the real world of work. The subject is urgent because the number of workers falling through the cracks, always at least a trickle, has now become a flood.

The subject is central to the very purpose of the ILO and cannot be ignored. That is why we have sought international standards on contract labour.

The Committee on Contract Labour did not finish its work. There was resistance, and there were problems, and there were differences. But there was also an understanding that something could, and should, be done. Some of the most important differences were settled and some problems more clearly identified and better understood.

It is important to know that we have been talking about the same things. From the very beginning this Committee has used the term "contract labour" to mean work performed through contractual arrangements other than a contract of employment. The Employers, in one of their amendments, proposed defining contract workers as "a worker performing work under the terms of a contract which ... is not a contract of employment". Also, from the very beginning, everyone was talking about whether work, or the workers who perform this work, should fall under labour law; and the Employers agreed that there was one problem in this respect that could be addressed by an ILO instrument. In their view the problem was disguised employment and the instrument was a Recommendation. Our difference with the Employers is that the Workers' group understood the problems of unprotected workers, while legal in nature, to go beyond just applying the law to cases of disguised employment. A substantial majority of Government members of the Committee agreed with us and this fact is reflected in the record of the Committee and by the votes on amendments that concern this central question.

What the draft text was addressing, and what the Worker members maintain, is that there were two legal problems other than the problem of disguised employment. One problem was the need to distinguish more clearly between commercial law, based on contracts among equals, and labour law, which makes possible contracts between unequals, but ones that are also fair. The other legal problem was the need to update labour law to reflect the changing realities of work.

The Committee considered three situations, where unprotected workers are victimized by one or more of these legal problems. Only one of these situations was purely disguised employment, often created by an employer seeking to avoid the obligations of labour law.

A second situation involves workers in triangular relationships. Generally, most labour law recognizes one, and only one, employer who could be required to assume obligations. That is no longer true. New forms of business organization are placing many workers in the situation of being the employees of one enterprise, but performing work under conditions that are controlled by another enterprise.

The number of workers involved in these triangular relationships is increasing in absolute numbers and as a percentage of the workforce. Moreover, the variety of these relationships is multiplying. Some countries have updated their law to reflect this growing reality and others are in the process of doing so.

A third situation for workers involves ambiguous relationships that more often than not reflect an inability to distinguish between commercial and labour law. One aspect of this problem is the increasing ability to manipulate the criteria for judging whether an employment relationship should be recognized. The case for continuing the work of the Committee on Contract Labour is compelling. The decision to do so would not establish a bad precedent, but it would correct a bad precedent. There was no common understanding of the meaning of the term at the time the Governing Body placed this item on the agenda. There was no general discussion of the subject by any Conference, which is a frequently used preparatory step before including a standard-setting item on the agenda. There was no meeting of experts, another preparatory step; and the one research project consisting of a survey of 20 countries was not yet completed at the time the ILO secretariat had to prepare its law and practice report.

The situation was further complicated by the decision of the Governing Body to revise the Fee-Charging Employment Agencies Convention (Revised), 1949 (No. 96), in a single sitting and at the same time as the first discussion on contract labour was taking place. Neither the general discussion in 1994, nor the discussion that produced a revision of this Convention in 1997, were focused on the protections to be accounted workers in triangular relationship.

The Governing Body therefore took that decision not realizing that this would not be ready for discussion at the time it was brought in front of the Conference last year.

The resolution adopted by the Committee proposes meetings of experts to consider some of the questions raised in the course of our discussions. One question originates from using the tests for determining the existence of an employment relationship as the tests for determining where workers should be protected. Many Governments understood that there was a difference. The expressed concern of many governments was that this formula could lead to a conclusion that there should be a new category, recognized in law, consisting of workers who were neither self-employed nor employees. These governments made it clear that their concern was that any new category would diminish the protection now being provided to workers.

One question that the experts should address is therefore whether the Convention could be used to diminish protection for any workers.

Another question concerns the best terminology to use. The term "contract labour" seems to mean too many things in English and not exactly the right thing in either Spanish or French. I can tell you that in French it is not the mot juste.

A further question concerns whether the draft Convention should define the work of the workers. Our discussions have revealed there to be advantages and disadvantages in either choice. We want a Convention to protect workers who should be protected but are not, because of the situations that they are in. It is nobody's intention to define, let alone legitimize, a new form of atypical work.

So, we want a Convention that recalls the reason for, and the continuing relevance of, the employment relationship. We want a Convention that calls upon governments to take measures to prevent employers from avoiding their obligations under labour law. We want a Convention that encourages member States to update their labour law for the purpose of protecting workers, accompanied by a Recommendation that shows the best way to do this. We want a Convention that reaffirms the underlying reason for the employment relationship -- a Convention whose meaning, in the end, is that where workers do not control their conditions of work, protection must be provided.

The resolution submitted in the report to this Conference is the result of an agreement between the Workers and the Employers and adopted by consensus.

The resolution is clear in what it says and in what it does not say.

It does not say that any item to be placed on the agenda of a future session should be called contract labour. It does not say that any item should be set for a double-discussion procedure. There could be a single discussion -- that decision is left to the judgement of the Governing Body.

What the resolution does say is unambiguous. It requests the Governing Body to place a standard-setting item, with a view to a possible Convention, supplemented by a Recommendation, on the agenda of a future ILO Conference. It does not seek a general discussion item, nor does it seek a possible Convention only, nor a possible Recommendation only. In adopting this resolution, this session of the Conference would not be deciding that the ILO should adopt a Convention. That is why the resolution specifies using the normal procedures. This means that the decision as to whether to have a Convention or not, or any instrument or not, should be made by the Committee convened at a future session of the International Labour Conference or by the Conference itself at that time.

In other words, the decision as to whether to consider a draft Convention, supplemented by a Recommendation, is not being left to the experts or to the International Labour Office to decide. The Office and the experts are being asked to work under the discipline of producing a ratifiable draft Convention by addressing some of the problems encountered by the Committee on Contract Labour.

The questions raised here are central to how workers are to be protected. The sense of the Committee is that it would be a mistake to avoid these questions and the sense of the Committee is that something can and should be done. Therefore I have the pleasure to commend to this session the adoption of this report, including the resolution attached to it.

In conclusion, I wish to say that the Workers' group have agreed that I was going to be the only speaker for the Workers' group, which is why you may have felt I was a little bit long. I also want to use this opportunity to thank Mr. Noakes for the way in which he has worked with us. Like he said, we have had some real differences, and from the remark he just made and the one I just made, I think we are still going to have some differences when we come back to this question in the future. But at least I think we are trying to address some issues and hopefully with the work to be done by the experts we will be able to resolve those differences.

I also want to thank the secretariat and the Office for the work they have done for us, and also the Rapporteur. Finally I want to thank the President and congratulate him on his election. And I want to thank all those who have participated in the debates. I think we have learned a lot on this Committee and we are ready, I am sure, to come back in order to adopt a good Convention, and a good Recommendation, in a very few years from now.

Mr. MISHRA (Government delegate, India; Chairperson of the Committee on Contract Labour) -- At the outset I would like to congratulate Mr. Oechslin on his election as President of the 86th Session of the ILC and on the admirable acumen with which he has been conducting its proceedings.

The distinguished Government delegate of Finland and Reporter of this Committee has presented a brief but clear account of the discussion which took place in the Committee and the outcome thereof. He has also added a couple of constructive reflections to his report on the future course of action to be undertaken. He has been ably supplemented by the distinguished Vice-Chairpersons of the Committee. While the distinguished Vice-Chairperson from the Employers' side considers contract labour as a subject not suitable for standard setting by the ILO, the distinguished Vice-Chairperson from the Workers' side has articulated several concerns with a lot of empathy and sensitivity about the increasing plight and predicament of a growing contract labour force in the wake of shrinkage of the regular workforce and recourse to subcontracting or outsourcing.

Both remained consistent in their stand throughout and deserve to be congratulated for the depth of understanding, the pragmatism, the maturity, the sensibility, and complete command over the subject displayed by them in the course of the marathon discussion spread over 18 sittings and long hours.

They indeed tried to live up to the expectations of the President, Mr Oechslin. In his very first address to this session of the ILC he said the members of the Committee on Contract Labour would have to display much imagination and a spirit of compromise in their endeavours to produce a result which is acceptable to the broad majority and, above all, of use to those potentially affected by this subject. It is evident that without this it would not have been possible for the Committee to be where it is today.

There is an old adage -- "Hope springs eternal in the human breast". Likewise, in the lives of institutions, as in the lives of individuals, there is always hope of correction, redemption and improvement. There is, therefore, no occasion to think, and far less to conclude, that the adoption of a resolution is the terminal point in the life of this Committee. There is undoubtedly much more to do beyond this very limited accomplishment.

I had the opportunity and privilege of chairing the first meeting of the Committee in June 1997 when, after a long and lively debate, both the Committee as well as the plenary adopted conclusions with a view to a Convention and Recommendation on contract labour, along with a resolution calling for a second discussion regarding the proposed adoption of such texts.

In pursuance of the decision of the Conference an item entitled contract labour was included on the agenda of the 86th Session of the Conference for a second discussion.

It was clearly the mandate of the 86th Session to propose the text of an international instrument on contract labour for adoption by the ILC. This mandate could not unfortunately be fulfilled at the current sitting due to serious legal, terminological, definitional and conceptual problems and ambiguities.

It was therefore felt appropriate, by adopting a resolution by consensus, that the subject should be considered afresh by the ILC four years from now, only after further in-depth studies and examination of the subject by experts.

As Chairperson of the Committee, I am placed in an extremely unenviable position. I am to maintain a position of total neutrality and objectivity, and I am not ordinarily expected to comment on the quality of the proceedings, far less on their outcome.

I would nevertheless be failing in my duty if I did not venture to seek to place the entire issue in a constructive and holistic global perspective and spirit. It is important to do so on two counts.

One, we are celebrating the 50th anniversary of the Universal Declaration of Human Rights and the 50th anniversary of the adoption of two core international Conventions, namely Convention No. 87 and Convention No. 98.

Two, regardless of legal, nomenclatural, definitional, terminological and conceptual problems which might appear on the surface, the emergence of contract labour is a harsh ground-level reality. The same is quite vulnerable to exploitation and therefore is clearly in need of protection.

The entire issue of drawing up an international instrument on contract labour may be divided into certain specific areas. I intend to do this without any prejudice to what obtains in national law and practice and what may emerge out of further study and research.

Who are our target groups? How do we identify them? What is the situation in which they are placed? What is the protection needed by them? What is the precise nature of that protection? What is the manner in which the protection can be extended to them?

Let me attempt an objective and dispassionate answer to these questions to the best of my ability. Our target groups are those persons who are rendering certain services personally for the user enterprise without a contract of employment, but in conditions of subordination and dependency. They may not include independent contractors, self-employed persons and employers of the user enterprise. How do we identify them? The number of such persons would be large, and it is growing. They would be working in primary, secondary and tertiary sectors, would be spread over large areas and would be in the process of changing their employers and the nature of their employment off and on. Evidently their identification is not going to be an easy task. They can, however, be identified with the help of statutory authorities appointed under national law and practice and also with the help of trade union organizations.

The use of contract labour is synonymous with the changing forms of work which are a reflection of the changes being brought about by the new technologies of globalization. Changes in the nature of work and changes at the workplace are inevitably necessitated by new firms or business organizations in a fiercely competitive global environment and these do give rise to the emergence of various forms of contract labour.

The rationale of protection which is needed by such categories and sub-categories of workers obtains from the unequal structure of the power relationship which is the logical, inevitable corollary in a liberalized and globalized economy. The protection could be in a variety of forms, such as accident insurance, health insurance, safety, social security, welfare of the workers and so on. The protection needs to be extended normally and suo motto in conformity with the provisions of national law and practice, and where it is not so extended, compliance of law can be secured through the filing of claims and adjudication of claims by legally constituted authorities and also by judicial directives.

This is only an illustrative way of identifying the areas of concern, and I do not intend it to provide any guidance or direction to the experts who are expected to go into the various facets of contract labour on their own in due course. This should not on any account be construed as an axiomatic or a priorital conclusion. There is such a bewildering variety of forms of contracting and subcontracting obtaining in different countries that it would be almost impossible to lay down the complete exhaustive list by anticipating all possible situations and outlining the scope for possible state intervention in all those situations. It is in this overall context that the subject of contract labour was the subject of animated and lively discussion over 18 sittings. The debate undoubtedly helped to demystify some of the grey and untreated areas and did bring out wide-ranging dimensions of this complex and mind-boggling issue.

The Employers' side remained consistent in its implacable opposition to the adoption of an international instrument and came forward to have only a Recommendation to deal with the situation of disguised and fraudulent employment while the Workers' side maintained a strong and unassailable position on the protection and anti-exploitative aspects of the international instrument.

The participation of distinguished Government members, both individually as well as in groups, did bring out several interesting facets of the problem of contract labour. Some perceived it as a problem of the future arising out of the pressures of structural adjustment and globalization. Some were clear and unequivocal in their approach that a person is either an employee or an independent contractor and that the international instrument should not create a new category of workers whose rights would be inferior to those engaged in a classic relationship of dependency.

According to them the instrument should protect only those persons not always protected by law. Some Government members perceived serious terminological problems and felt rather strongly that contract labour is not synonymous with subcontracting as emerges from the Spanish translation of the English text. Some felt that the focus should be on bilateral relationships and questioned the propriety, the wisdom and the rationale of full protection proposed in the text of the Convention to workers who have an indirect and triangular relationship, while some others wanted it to determine the preciseness of such protection and who precisely should provide it.

Some were clearly in favour of laying down norms of substantive tests based on the concept of dependency and subordination. The areas on which, however, there was general agreement amongst members of a few Government groups were: (a) flexibility in the labour markets is the key norm that would facilitate ratification by member States; (b) new relationships have emerged which no longer fit into the traditional parameters of employer-employee relationships; (c) any instrument now or in the future should promote rather than reduce the potential for job opportunities; (d) any instrument now or in the future should not unduly restrict the rights of the parties to reach voluntary agreement; (e) any instrument proposed now or in the future should exclude the workers who are already protected by the existing ILO Conventions; (f) contract workers should enjoy minimum levels of protection in the areas of occupational health and safety, health insurance, workmen's compensation and so on.

Linguistic problems did give rise to conceptual difficulties in understanding and internalizing specific concepts. Contract labour is not the same as subcontracting or outsourcing although the Spanish translation of "contract labour" in the documents circulated by the secretariat did seek to produce that impression. Even though it was clarified by the secretariat that there is no other appropriate expression for "contract labour" in Spanish than "subcontratación". The distinguished delegates from the Latin American countries did not feel satisfied. I sympathize with them over this particular linguistic predicament. At the same time, I would like to emphasize that language is merely a vehicle of expression or communication and should not overlook areas of central concern. What is the area for central concern? Whether it is contract labour as the target group or subcontracting and outsourcing as a process or activity, it is the plight and predicament of contract workers which should be our central concern and this needs to be addressed adequately and effectively with as much clarity, transparency and conviction as possible. This is what was sought to be brought out very forcefully by the distinguished Vice-Chairperson from the Workers' side.

Despite the legal, terminological, definitional, nomenclatural and conceptual problems which prevented us reaching a consensus in the Committee in a number of areas, I must say that we had a lively and comprehensive debate carried out in a very neat and orderly manner in the best of democratic traditions and in a very warm and congenial environment. This demonstrated the essential strength and vitality of tripartism. Tripartism, Mr. Oechslin, is not merely a structural framework; it is largely a matter of attitude, approach and spirit, you have demonstrated this over nearly five decades of your active partnership in this field.

Fundamental differences amongst the constituents cannot be obliterated, they can only be harmonized and this is what the Committee on Contract Labour sought to translate into reality. The quality of the debate itself was of a very high order and reflected the strength and the clarity, the courage and strength of conviction of the constituents. I would like to record my deep sense of appreciation for the overall qualitative contribution made by all the constituents to the debate. The distinguished delegate from the United States, Mr. Sweeney, played a very constructive role like last year in coordinating the efforts of Government members to reach consensus among themselves while the Legal Adviser, Mr. Devlin, contributed significantly in throwing light on areas of doubt and uncertainty. My grateful thanks to both of them, as also to the secretariat members, Mr. Ozaki, Mrs. Trebilcock, Mr. Egorov, Mr. Escobar, Mr. Daza-Perez and Ms. Thomas for their unremitting efforts.

In summing up I would like to appeal to the collective social conscience of the distinguished Members of this august international body. As globalization marches ahead and leads to the creation up of an international economic order, new in its perspectives and dimensions, the contract workers in many countries who constitute one of the low visibility areas of humanity slide lower and lower down the ladder of development and become marginalized. Let jargon, phraseological, nomenclatural or definitional ambiguities not hide the real ground-level realities and let them not pose an impediment to protective and anti-exploitative measures which can secure for them their rightful place in a just, fair and egalitarian social order and promote their dignity, beauty and worth more as human beings and less as workers. Let this collective international conscience mobilize scores of right-thinking and progressive forces of society so that while capital creates labour and labour creates capital, both coexist peacefully and harmoniously and contribute to the process of the orderly, holistic and harmonious development of society.

I would like to thank you for your kind attention and commend to this august assembly the text of the report as well as the resolution for their unanimous adoption.

Original French: The PRESIDENT -- The general discussion on the report is now open.

Mr. LAWSON (Employers' delegate, Canada) -- I am pleased to speak to you today on behalf of the Canadian Employers' Council.

The ILO is one of the leading international institutions in contributing constructively and positively to improving the economic, social and personal health of citizens around the world. Its accomplishments are many.

Many times in the life of the ILO we have witnessed its leadership in embracing new issues that have evolved as economies and societies have evolved. At the same time, too many Conventions have not been ratified by the vast majority of Members, in the face of local realities and the evolving nature of work. This situation calls for new ways of looking at work and for the more careful focusing of ILO activities. This will help ensure that the ILO is relevant, meaningful and constructive in the new millennium.

Over the last two years, the ILO has attempted to establish standards for contract labour, a term that meant different things to different partners and to different members within each of the partners' groups. Lessons need to be learned. The ILO, and especially the Governing Body of the ILO, must take more care to identify, evaluate and define the need for subjects suitable for standard setting.

Inadequate research was done prior to introducing this topic and it is likely that the issue of contract labour was never an appropriate subject for standard setting. The cost of introducing this topic has been high. Other issues have been ignored, and the ILO and many delegates in this room have expended huge amounts of energy, time and money.

We need to learn from this. Better research should have made it clear that we were without sufficient direction. It was evident in the first year of discussion of contract labour that the issues surrounding the instruments were understood in different ways by the parties concerned. This became more evident as discussion took place in Committee this year.

The best thing that can be said is that this Conference, and the participants in the Committee on Contract Labour, had the integrity to correct the mistake before producing an instrument or instruments that were poorly thought out and which would have been unratifiable.

Another lesson that the Canadian Employers' Council hopes has been learned is that the ILO must take care to support and promote new ways of working and new forms of enterprise. Many workers and small enterprises in developed and developing countries are trying to respond to rapidly changing needs -- needs not only of the enterprise but of the workers themselves. New ways of work are needed to help workers balance work and family and efficiently market their own skills and knowledge. The ILO must help them develop, not inhibit their evolution through the hasty introduction of regulation.

There is no excuse for erecting barriers to economic growth and interfering in commercial relationships on the pretext of establishing minimum labour standards. Such standards have an important place in the labour market where there is proven need, but only so far as is necessary to meet valid social objectives. Even then, they must be evaluated in terms of their benefit and cost to all the social partners.

No evaluation has been done, and to our knowledge no assessment is planned, to determine whether the issues arising from the discussion on contract labour and the restrictions being sought by some of the participants in the discussion have any economic or social impact on governments, workers or enterprises. There is no excuse for the ILO to have on its agenda an item that leaves any questions as to the economic impact of standard setting. To do so is irresponsible and could ultimately bring the relevance of the ILO into question.

Labour standards being considered in the future must meet a variety of needs. One is that such standards should provide the highest level of flexibility and promote employment and economic growth. Labour standards should not be restrictive. They must accommodate the rapidly changing world of work and the diverse range of economies, social systems and cultures that are developing and changing throughout the world.

I would like to conclude by congratulating the participants in the discussion of contract labour for their integrity and their ability to demand that the topic they were addressing be sent back for further reflection.

Mr. VELLA (Employers' adviser, United States) -- This year, as well as last year, I participated in the contract labour discussions. With me were many other representatives of Employers, Workers, and Governments of various member States. Our objective was to find a way to resolve a problem called "contract labour". We were over 200 intelligent and dedicated people who met for more than 200 hours, yet we could not achieve our objective. Why did that happen? To answer that question, the ILO and the Governing Body should reconsider the process for selecting the issues regarding which international standards are to be set. Clearly, if a wide tripartite representation does not have a clear understanding of the problem in hand, then any resolution of that problem will not attract wide tripartite support.

With contract labour, many of us thought we were trying to find ways to remedy disguised or hidden employment relationships between a user enterprise and a worker. However, we soon found ourselves discussing the regulation of commercially-contracted triangular relationships, whereby the employees of another enterprise providing a service to a user enterprise would somehow be considered employees of that user enterprise as well!

Although last year's discussion resulted in a draft Convention and Recommendation, they did not have wide tripartite support. The ILO recognized the problem and sought to clarify some of the issues by submitting revised alternatives to the draft instruments as a basis for this year's discussion.

Unfortunately, this year's discussion, once again, confirmed that the concept of contract labour is understood differently, with the result that a definition cannot be agreed upon. Not only were we faced with linguistic and translation differences, but we soon realized that wide tripartite support for any definition of contract labour would not be possible, and that therefore the only sensible course of action was to terminate the second year's discussion and refer the subject back to the Governing Body. That resolution was unanimously adopted by our Committee earlier this week and is detailed in the report before us today.

The contract labour experience demonstrated that there are lessons to be learned. First, there was a significant lack of government participation when the Office conducted a survey to identify and document the problem. Unfortunately, that lack of participation continued throughout the first and second discussions. Second, the ILO failed to carry out adequate research and analysis of the issues, including the language and linguistic problems we faced in trying to define the term "contract labour". Although Report V2(b) was useful, it was inadequate in clarifying the problems, and it was provided too late to be fully reviewed and discussed in this year's sitting. Third, when the Office suggested that contract labour might be defined as of triangular commercial relationships, it added to the confusion. We believe that the ILO is overstepping its authority when it attempts to involve itself in regulating commercial contracting.

In conclusion, we do not think the term "contract labour" will ever come up again. In two years we have been unable to agree on what is meant by those words. The problem may lie in fraudulent employment relationships which could be marked as a contract with a worker, and thereby deny that worker employment protections. If so, I agree with the ILO that fraudulent or disguised employment might better be handled through enforcement or development of local law in the member State, rather than through international regulation.

Clearly, if the ILO and the Governing Body are to have credibility in standard-setting initiatives, we should never again be handed an intended solution and then devote two unproductive years to attempting to find a problem to fit that solution.

Mr. PARROT (Workers' delegate, Canada) -- I think it is always important to be factual and I just want to put on the record of this Conference that the decision to put contract labour on the agenda of the Conference has been determined by an agreement between the Workers' and the Employers' group which, after that, was supported by the Governments. The two groups together agreed to put this item on the agenda, so we cannot blame the Office for the work they should or should not have done. We are the ones who insisted on putting it on the agenda.

The second fact which I think it is important to mention is that the Governing Body has already changed its procedure concerning items chosen for the agenda. There is a larger choice of items today than there was a few years ago, and I think this has changed completely.

I thought those two facts should be put on the record.

Original French: The PRESIDENT -- We shall now adopt the report itself. I first submit for adoption the body of the report, paragraphs 1 to 216. May I take it that the report is adopted.

(The report is adopted -- paragraphs 1 to 216.)

Resolution concerning the possible adoption of international instruments for the protection of workers in the situations identified by the Committee on Contract Labour: Adoption

Original French: The PRESIDENT -- We shall now move on to the adoption of the resolution submitted by the Committee concerning the possible adoption of international instruments for the protection of workers in the situations identified by the Committee on Contract Labour, the text of which appears in Provisional Record No. 16.

If there are no objections, I shall take it that the resolution is adopted.

(The resolution is adopted.)

Finally, I would like to thank the Chairperson as well as the Officers and members of the Committee. As the Chairperson of the Committee said, I invited them to use their imagination to give an unusual new slant to the work. That they have done. Thanks to their work and also to the statements that have been made at this session, I think we have made some progress. We have clarified the problem, and the ILO will be able to continue in its task to protect workers who need protection.

Updated by VC. Approved by RH. Last update: 26 January 2000.