The ILO Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy and The OECD Guidelines for Multinational Enterprises INTERNATIONAL TRAINING CENTRE OF THE ILO - Turin (Italy) 26 November 2003 (Fons

1
The ILO Tripartite Declaration of Principles
concerning Multinational Enterprises and Social
PolicyandThe OECD Guidelines for
Multinational Enterprises INTERNATIONAL
TRAINING CENTRE OF THE ILO - Turin (Italy)26
November 2003(Fons Vannieuwenhuyse ICFTU)
2
What are they?

• The ILO Declaration and the OECD guidelines
  express the shared view of what is believed to be
  good corporate behaviour.
• Both are a set of recommendations for
  multinational enterprises agreed by
  governments, trade unions, employer federations
  and, in the case of the OECD Guidelines, some
  NGOs.

3
What they have in common

• At the national level, they do not replace
  binding regulations (the law) to govern corporate
  activity and global markets.They are in
  addition to that.
• At the international level, in the almost
  complete absence of international legally binding
  rules, the ILO Declaration and the OECD
  Guidelines are one of the very few agreed
  international instruments for trade unions to
  help create an environment in which workers can
  organise and unions can freely perform their
  functions.

4

• They are not binding in a legal sensebut as
  they have been adopted by governments (i.e.
  governments agreed that this is what is expected
  of companies) they are not voluntary either.
• They are minimum standardsThis is different
  from a if you want to do something more than the
  others, this is what you can do approach.

5

• Their application does not depend on the
  endorsement of companies, as they have been
  adopted at the international level and apply to
  companies in general.
• Companies can also not pick and choose among the
  provisions of the Declaration and the Guidelines,
  nor subject them to their own interpretations.
• For both instruments, there is a procedure to
  determine what they actually mean.

6
No definition of a multinational

• (ILO Declaration) to serve its purpose this
  Declaration does not require a precise legal
  definition of multinational enterprises.
• (OECD Guidelines) A precise definition of
  multinational enterprises is not required for the
  purposes of the Guidelines.
• ()
• The Guidelines are addressed to all the entities
  within the multinational enterprise (parent
  company and/or local entities).Encourage,
  where practicable, business partners, including
  suppliers and sub-contractors, to apply
  principles of corporate conduct compatible with
  the Guidelines

7
The difference between them

• In very general termsThe ILO Declaration has
  more detailed recommendations on labour issues,
  while the OECD Guidelines cover a broader range
  of corporate activities.

8
History

• Both were agreed upon and adopted in the 70s, at
  a time when there was public concern that
  Multinational enterprises were becoming too
  powerful.The OECD Guidelines were adopted in
  1976, the ILO Declaration in 1977. A few years
  later, the negotiations about a UN code on
  Transnationals failed.
• There was a first phase where both were used
  actively, until the middle of the 80s. Several
  cases on the Guidelines were handled during the
  first 10 years following their adoption.

9

• A second phase (during the wild years of
  liberalisation), when they were not used much,
  lasted until the end of the 90s.
• During the 90s, there was a lot of public action
  concerning specific companies and sectors, that
  became notorious because of their negative
  labour, human rights and environmental
  practices.At the end of the 1990s, this led to
  a boom in Corporate Social Responsibility and
  to much greater public awareness about these
  problems The third fase.
• As part of this, there was a re-awakening of
  both instruments, mainly of the OECD Guidelines,
  leading to an important revision of the OECD
  Guidelines in 2000. This was also partly a result
  of the failure of the Multilateral Agreement on
  Investment (MAI)

10

• The ILO Tripartite Declaration of Principles
  concerning Multinational Enterprises and Social
  Policy

11
What is the Declaration about?

• The ILO Declaration is a set of recommendations
  concerning basic labour practices, based on ILO
  principles.
• The Declaration is universally applicable and
  comprehensive.

12

• The significance of the ILO Tripartite
  Declaration is that it identified a long list of
  conventions that contain principles that are
  appropriate to apply to enterprises as well. In
  that sense, it is an important and historic
  document.
• A number of the ILO core conventions were
  transposed so that the principles would apply
  to enterprises as well.

13

• Extracts of the ILO Declaration

14
Contents

• The ILO declaration has three different chapters
• General Policies
• Employment promotion
• Equality of opportunity and treatment
• Security of employment
• Training
• Conditions of work and life
• Wages, benefits and conditions of work
• Safety and Health
• Industrial relations
• Freedom of Association and the right to organise
• Collective bargaining
• Consultation
• Examination of grievances
• Settlement of industrial disputes

15
Introduction

• Through international direct investment and
  other means, enterprises can bring
  substantial benefits to home and host countries.
• On the other hand, the advances made by
  multinational enterprises may lead to abuse of
  concentrations of economic power and to conflicts
  with national policy objectives and with the
  interest of the workers.

16
Employment promotion

• Multinational enterprises, particularly when
  operating in developing countries, should
  endeavour to increase employment opportunities
  and standards.
• Multinational enterprises should give priority
  to the employment, occupational development,
  promotion and advancement of nationals of the
  host country at all levels.

17
Equality of opportunity and treatment

• All governments should pursue policies designed
  to promote equality of opportunity and treatment
  in employment, with a view to eliminating any
  discrimination based on race, colour, sex,
  religion, political opinion, national extraction
  or social origin.

18
Security of employment

• In considering changes in operations (including
  those resulting from mergers, take-overs or
  transfers of production) which would have major
  employment effects, multinational enterprises
  should provide reasonable notice of such changes
  to the appropriate government authorities and
  representatives of the workers in their
  employment and their organizations so that the
  implications may be examined jointly in order to
  mitigate adverse effects to the greatest possible
  extent. This is particularly important in the
  case of the closure of an entity involving
  collective lay-offs or dismissals.

19
Training

• multinational enterprises should ensure that
  relevant training is provided for all levels of
  their employees in the host country, , to meet
  the needs of the enterprise as well as the
  development policies of the country.
• Such training should, to the extent possible,
  develop generally useful skills and promote
  career opportunities.

20
Wages, benefits and conditions of work

• Wages, benefits and conditions of work offered
  by multinational enterprises should be not less
  favourable to the workers than those offered by
  comparable employers in the country concerned.
• They should be at least adequate to satisfy
  basic needs of the workers and their families.

21
Safety and health

• Multinational enterprises should maintain the
  highest standards of safety and health, in
  conformity with national requirements .

22
Industrial relations
23
Freedom of association and the right to organise

• Workers employed by multinational enterprises,
  as well as those employed by national enterprises
  should, without distinction whatsoever, have the
  right to establish and, subject only to the rules
  of the organization concerned, to join
  organizations of their own choosing without
  previous authorisation.
• They should also enjoy adequate protection
  against acts of anti-union discrimination in
  respect of their employment.

24

• Where governments of host countries offer
  special incentives to attract foreign investment,
  these incentives should not include any
  limitation of the workers' freedom of association
  or the right to organize and bargain
  collectively.

25
Collective bargaining

• Workers employed by multinational enterprises
  should have the right, in accordance with
  national law and practice, to have representative
  organizations of their own choosing recognized
  for the purpose of collective bargaining.
• Measures appropriate to national conditions
  should be taken with a view to the regulation
  of terms and conditions of employment by means of
  collective agreements.

26
Follow-up procedure

• The ILO Declaration is, unfortunately, not very
  effective in practice.
• This is, in large part, because the procedures
  for implementation are weak.
• It basically relies on
• periodic surveys to accomplish its work.
• a procedure for submission of cases for
  interpretation to a sub-committee of the ILO
  Governing Body on Multinational Enterprises. This
  comes in the form of requests for
  interpretation.

27

• The procedure excludes any cases concerning
  violation of freedom of association and the right
  to collective bargaining. Such cases are
  better dealt with in the Committee of Freedom of
  Association of the Governing Body.
• For other cases, the receivability rules make
  access difficult. There have been only a small
  handful of cases in history.It has been very
  difficult for requests for interpretation to be
  considered.

28

• There is also no problem-solving role for the ILO
  Declaration as there is for the OECD Guidelines.
  
• Trade unions had hoped that this would in effect
  create an international complaint procedure
  against specific companies but, in fact, specific
  companies are not mentioned.

29
The OECD Guidelines for Multinational Enterprises
(OECD Organisation for Economic Co-operation and
Development)
30
What are the OECD Guidelines for Multinational
Enterprises?

• The text (the guidelines) are recommendations for
  good corporate behaviour, primarily addressed to
  enterprises whose headquarters are based in those
  countries that adhere to them.
• The adhering countries are the 30 OECD countries
  -plus Argentina, Brazil, Chile, Estonia,
  Lithuania, Slovenia and Israel.
• However, they apply to the corporate activities
  of companies from these countries wherever they
  operate worldwide.

31
OECD member countries

• Australia Korea
• Austria Luxembourg
• Belgium Mexico
• Canada Netherlands
• the Czech Republic New Zealand
• Denmark Norway
• Finland Poland
• France Portugal
• Germany the Slovak Republic
• Greece Spain
• Hungary Sweden
• Iceland Switzerland
• Ireland Turkey
• Italy the United Kingdom
• Japan the United States

32
The contents of the Guidelines

• I Concepts and Principles
• II General Policies
• III Disclosure of Information
• IV Employment and Industrial Relations
• V Environment
• VI Combating Bribery
• VII Consumer Interests
• VIII Science and Technology
• IX Competition
• X Taxation

33

• Extracts of the OECD Guidelines

34
II. General Policies

• Enterprises should
•  Respect the human rights of those affected by
  their activities consistent with the host
  governments international obligations and
  commitments 

35

• Enterprises should
•  Encourage, where practicable, business
  partners, including suppliers and
  sub-contractors, to apply principles of corporate
  conduct compatible with the Guidelines 

36
III. Disclosure

•  Ensure that timely, regular, reliable and
  relevant information is disclosed regarding
  activities, structure, financial situation and
  performance 
•  Apply high quality standards for disclosure,
  accounting and audit 

37
IV. Employment and Industrial Relations

• Enterprises should,
• Respect the right of their employees to be
  represented by trade unions and other bona fide
  representatives of employees, and engage in
  constructive negotiations, either individually or
  through employers associations, with such
  representatives with a view to reaching
  agreements on employment conditions.

38

• Contribute to the effective abolition of child
  labour
• Contribute to the elimination of all forms of
  forced or compulsory labour
• Not discriminate against their employees with
  respect to employment or occupation on such
  grounds as race, colour, sex, religion, political
  opinion, national extraction or social origin,
  unless selectivity concerning employee
  characteristics furthers established governmental
  policies which specifically promote greater
  equality of employment opportunity or relates to
  the inherent requirements of a job.

39

• Provide information to employees and their
  representatives which enables them to obtain a
  true and fair view of the performance of the
  entity or, where appropriate, the enterprise as a
  whole.
• Take adequate steps to ensure occupational
  health and safety in their operations.
• employ local personnel and provide training with
  a view to improving skill levels

40
In case of relocation

• In considering changes in their operations which
  would have major effects upon the livelihood of
  their employees, in particular in the case of the
  closure of an entity involving collective
  lay-offs or dismissals, provide reasonable notice
  of such changes to representatives of their
  employees, and, where appropriate, to the
  relevant governmental authorities,
• And co-operate with the employee representatives
  and appropriate governmental authorities so as to
  mitigate to the maximum extent practicable
  adverse effects.

41

•  In light of the specific circumstances of each
  case, it would be appropriate if management were
  able to give such notice prior to the final
  decision being taken.
• .while employees are exercising a right to
  organise, not threaten to transfer the whole or
  part of an operating unit from the country
  concerned nor transfer employees from the
  enterprises component entities in other
  countries

42
V. Environment

• Reflects the principles and objectives in the Rio
  Declaration.
• Provide adequate education and training to
  employees in environmental health and safety
  matters,

43
VI. Combating Bribery

• Enterprises should not, directly or indirectly,
  offer, promise, give, or demand a bribe or other
  undue advantage to obtain or retain business or
  other improper advantage.
• Enhance transparency, and use management control
  systems that discourage bribery.

44
VII. Consumer Interests

• Enterprises should take all reasonable steps to
  ensure the safety and quality of the goods or
  services they provide.

45
Chapter VIII-X

• VIII Science and Technology
• Adopt practices that permit transfer and
  diffusion of technologies and know-how in the
  countries where they operate.
• IX Competition
• Refrain from anti-competitive activities like
  fixed prices.
• X Taxation
• Comply with tax laws and regulation and provide
  information to authorities.

46
The review of the Guidelines 1998-2000

• The Guidelines were revised in 1979, 1982, 1984
  and 1991
• A major revision took place in 1998 2000, in
  consultation with trade unions, business and NGOs

47

• Resulted in major improvements
• global applicability of the Guidelines
• reference to the supply chain
• stronger language on human rights
• two new chapters on bribery and consumer
  interests
• reinforced chapter on environment and
• enhanced implementation procedures

48
National Contact Point (NCP)

• According to the OECD Guidelines, every adhering
  country has to set up a National Contact Point
  (NCP) to  promote and implement the
  Guidelines .The NCP role has been made much
  more important after the revision of 2000.

49

• Governments have to set up these NCPs within
  their administration (e.g. inside a ministry, or
  as an multi-agency, covering several
  ministries).
• NCPs can be organised differently (tripartite,
  tripartite NGO, or government office)-
  governments have the ultimate responsibility.
• Representatives of labour, business and other
  interested parties (NGOs) need to be informed of
  their availibility.
• NCPs shall develop and maintain relations with
  representatives of trade unions, business and
  NGOs.

50
What do they do?

• NCP are supposed to
• Promote the guidelines
• Prepare reports on their activities for the OECD
  Committee on International Investment and
  Multinational Enterprises (CIME).
• Meet annually to share their experiences with
  their counterparts.
• One of its main functions is problem solving

51
In case of a violation of the Guidelines

• When a company is believed to be in violation of
  the Guidelines, a trade union or other party can
  raise the case with the NCP. (the OECD refers
  to a Guidelines case as a specific instance)
• Cases can be brought to the NCP of the country
  where the violation of the guidelines is
  occurring, or to the NCP of the country where the
  company involved has its headquarters.
• The NCP first has to make an initial assessment
  as to whether the case merits examination (and
  give reasons if it thinks the case doesnt merit
  examination)

52

• If the case goes ahead, the NCP is required to
  help the parties to resolve the problem.
• The NCP will act as a forum for discussion and is
  supposed to assist the parties involved in an
  efficient and timely manner. It can (and is
  supposed) take the following steps
• Offer conciliation or mediation to assist in
  dealing with the issues.
• Seek advice from relevant authorities, trade
  unions, business, NGOs and other experts.
• Consult the NCP in the other country or countries
  concerned
• Seek guidance of the CIME where there is doubt
  about the interpretation of the Guidelines.

53
In case that doesnt work

• If the parties are unable to agree on how to
  solve the problem, the NCP is normally required
  to issue a public statement on the case.
• If appropriate, it should make recommendations to
  the parties on how the Guidelines apply to the
  case. NCPs may, therefore, inform a company that
  its activities breach the Guidelines.
• There are some limits as to publicly commenting
  on the case (facts and arguments may bring some
  people in danger) but in essence, if the parties,
  after the proceedings, still do not agree, they
  are free to comment publicly on the case.

54
One step higher

• The OECD headquarters have a body that is
  responsible for the guidelines CIME (the
  Committee on International Investment and
  Multinational Enterprises)
• CIME is the next step in the procedure when
  things go wrong at the national level.
• It is the forum where requests are considered for
  assistance from the NCPs about how to carry out
  activities, including handling specific cases.
  This includes how to interpret the guidelines
  when a problem arises.

55

• Trade unions, employers or governments also have
  the right to take a case to the CIME if they
  believe that an NCP has not fulfilled its
  procedural responsibilities related to a
  specific case.But they have to go through the
  NCP procedure first.

56

• CIME is the body that can clarify the OECD
  guidelines.
• In an important clarification to the meaning of
  freedom of association, CIME has stated that
  The thrust of the Guidelines in this area is
  towards management adopting a positive approach
  towards the activities of trade unions and other
  bona fide representatives of employees of all
  categories and, in particular, an open attitude
  towards organisational activities of workers
  within the framework of applicable rules and
  practices.

57

• If the procedure has been followed and the
  company still refuses to change its behaviour
  then the involved trade union organisation(s)
  should return to the NCP and request
  intervention.
• The procedure foresees some form of closure of
  the procedure, after which the argument can be
  used that the company is refusing to comply.

58
Did the revision work?

• There are signs that many governments are taking
  their responsibilities to implement the revised
  Guidelines seriously.
• Many NCPs that were previously dormant or
  non-existent have been re-activated.
• The OECD guidelines are mentioned by many
  different organisations and in many documents,
  statements or decisions.

59

• The OECD guidelines have been used as benchmarks
  in resolutions by the European Parliament and
  communications from the European Commission.
• The Dutch Government has taken the decision to
  link access to export credits to companies'
  compliance with the OECD Guidelines for
  Multinational Enterprise
• Some of the framework agreements have borrowed
  text from the Guidelines.

60
Who does what?

• On the trade union side, a lot of the work
  related to the OECD Guidelines is being carried
  out by TUAC (Trade Union Advisory Committee to
  the OECD).
• TUAC is based in Paris, represents national trade
  unions centres of the member countries of the
  OECD with the OECD. Most TUAC affiliates are
  also affiliated with the ICFTU.

61

• TUAC has consultative status with the OECD and
  its various committees.  It co-operates closely
  with the ICFTU and the GUFs on a wide variety of
  economic policy, sectoral and other issues.
• Obviously, as all this concerns international
  issues, all the Global Union Federations have an
  important role to play in bringing forward and
  developing cases.

62
Concrete examples

• Before the revision of 2000
• The Renault case Belgium 1997
• The question what constitutes reasonable notice
  of changes in operations? (the company announced
  one morning that the factory in Belgium was going
  to close)
• The answer it would be appropriate, in the
  light of the specific circumstances of each case,
  if management were able to provide such notice
  prior to the final decisions being taken.

63

• The Rio Tinto case Australia 1999
• The question Is compliance with national law
  necessarily, in of itself, sufficient to conform
  to the Guidelines? (the company wanted to
  replace collective bargaining with individual
  contracts the Australian NCP decided that this
  was no in breach with the Australian law)
• The answer Although compliance with national
  law is necessary, this is not necessarily
  sufficient to observance the Guidelines.The
  guidelines are not substitute for national
  lawsThey represent supplementary standards of
  behaviour of a non-legal character).

64

• After the revision of 2000
• Marks and Spencer - 2001(announcement of
  closure done without prior consultations)
• Result French NCP stated publicly that MS had
  not consulted its employees properly. In a
  letter to the company, the NCP pointed out that
  the company had violated the Guidelines.

65

• Several cases have been introduced in relation to
  companies operating with Burma.(in France,
  Sweden, USA, Canada, UK and the Netherlands to
  NCPs on companies in their countries and by TUAC
  to CIME for clarification)
• The results varied. Some cases are ongoing.
• CIME replied to TUAC that delegates emphasise
  the important contribution that observance of the
  Guidelines recommendations by MNEs can make to
  the elimination of all forms of forced or
  compulsory labour, in Myanmar and
  elsewhere.The AFL-CIO never received a reply.
• In France, Accor left Burma. In the Netherlands,
  the case was stopped as the Premier Oil left
  Burma.

66

• A number of cases were settled after the
  companies involved agreed to negotiate and take
  part in social dialogue.
• Siemens and Bosch Czech republic 2001
  (companies threatened to fire workers if they
  formed a union).
• Choi Shin/Cima textiles (Korean firm) harrased
  and threatened workers in Guatemala as part of an
  anti-union campaign.(case raised by the
  ITGLWF)Result the company signed a first
  collective bargaining agreement and started to
  reinstate the union members that had been
  dismissed.

67

• In general, the results of the work of the NCPs
  and/or the further decisions and clarifications
  by CIME have been satisfactory for many cases,
  from a trade union point of view.
• In some cases, the case didnt go anywhere
  because the information provided was not
  sufficient or not sufficiently clear. Other cases
  did not continue for various reasons.
• Well prepared cases have a better chance of
  succeeding. TUAC can provide assistance in this
  respect.

68

• Why are the ILO Declaration and the OECD
  guidelines important?

69
Whats the purpose?

• Both the OECD guidelines and the ILO declaration
  should be seen as  tools in a toolbox . There
  are many ways to use them.
• They are, on the one hand, an instrument as such
  and can be the core of a campaign in trade
  union campaigns involving key global corporations
  on issues such as trade union rights violations,
  human rights, supply chain issues, the
  environment, etc..

70

• But - they can also be seen as just one part of a
  larger campaign, an extra form of pressure.The
  introduction of a guidelines case (or threat
  thereof) can be considered in addition to other,
  more usual campaign tactics, such as strike
  action or political campaigning at the national
  level.

71

• Both are international standards that have been
  adopted by governments and others. They
  therefore also are benchmarks for other
  standards. And they (or part of them) can be
  used as an integral part in other benchmarks.

72

• With the explosion of all kinds of Corporate
  Social Responsibility efforts, its useful to
  have these instruments to counter self-made
  standards. These are often drawn up by companies
  and used in codes of conduct. Many of these codes
  are vague, dont mean much and do not have
  accepted standards as a basis.
• Multilateral examples where the Guidelines have
  been used the Global Reporting Initiative,
  Socially Responsible Investment standards, social
  labels,

73

• Unlike, most of what is labelled corporate
  responsibility, the Guidelines do not represent a
  privatisation of the government role to ensure
  that workers rights are protected. Indeed,
  they extend the role of the State so that it
  reaches beyond national boundaries.