Putting the Guidelines to work

The OECD Guidelines for Multinational Enterprises have been rewritten to bring them up to date with today’s world. This is a good step. Now it is time to think about where we go from here on implementation and enforcement. First, a reminder of some basic points. The Guidelines are important, but being guidelines they are not a substitute for binding legal regimes that protect workers, the environment, and corporations that follow a high road from those who would degrade workers and despoil the environment. However, they do have an important role in establishing the OECD standard that governments have agreed should be followed wherever their multinationals operate.

The real work must begin by ensuring that their contents apply in every workplace, whether in Seattle, or Shanghai. Equally important is the need to ensure that they are enforced at home and around the world. Without that, the cynicism that grew up around the original Guidelines during the last decade or more will haunt governments anew, and further feed the popular backlash against globalisation.

The aim of the international labour movement is to use the Guidelines to start a race to the top in corporate behaviour, with socially responsible enterprises creating long-term wealth, which is equitably distributed among all stakeholders. History teaches us that multinationals earn the right to be called socially responsible when they respect the human rights of workers, whether directly employed or in their subsidiaries and suppliers, to form and join trade unions, and bargain collectively in good faith with management. That gives workers a platform upon which to negotiate their wider terms and conditions of employment, such as family-friendly working hours, decent pension and healthcare arrangements, workplace education and training, and a working environment that is both healthy and environmentally safe.

My worry is that too many among us have still to relearn those lessons of history. Meeting that goal brings challenges for all of us which may or may not be unique. But the initial guiding principle has to be to work in a spirit of co-operation and partnership.

So, what challenges do we in fact face? The main challenge facing governments is to claim individual and collective ownership of the Guidelines. The former requires that National Contact Points (NCPs) – the government agency or agencies responsible for all Guidelines activities – work closely with trade unions, including where possible through tripartite structures, namely government, business and labour. Some governments have done that. We see this as a positive development, and would hope others will follow that path. Some governments have set up multi-agency NCPs as well, linking investment officials with their colleagues working on labour and environmental matters. That too is a positive development, which should be followed by others. Ways will also have to be found to hear the views of civil society groups on matters of importance to them, such as the environment.

Consciousness raising is urgently needed among company management and unions about the Guidelines, a key test of government ownership. Each needs to be made aware of their rights and responsibilities when implementing the Guidelines at the workplace.

Ownership must, therefore, be expressed through widespread practices that leave no doubt that governments embrace, and expect corporations to follow the Guidelines. Effective ownership also requires that NCPs intervene at the earliest opportunity, using the instrument as a tool to change corporate behaviour. When cases are brought to the attention of NCPs, they should be dealt with speedily, and expeditiously, and not get mired in bureaucratic delays. That contributed to cynicism in the past.

The annual NCP meetings will offer an opportunity to benchmark the best and worst performing business. The aim must be to harmonise upwards the performance of all to those at the leading edge. A way must be found to allow trade unions to effectively present their views to these meetings, so as to help achieve this.

Governments have a wider responsibility to familiarise their colleagues abroad with the workings of the instrument. Such an approach will help in problem solving, especially in non-adhering countries.

The Guidelines can be used in other public policy areas as well. One example of collective government action would be to link the Guidelines to other intergovernmental efforts around corporate social responsibility. The UN Global Compact, an initiative of UN Secretary General, Kofi Annan, is a process to promote a dialogue between international sectoral trade union bodies and multinationals, among other things.

Where the two instruments overlap, for example on employment related issues, it would make sense to use all the procedures of the Guidelines to contribute to the implementation of the Compact. In addition, unilateral action could be taken, for example, to link the Guidelines to the granting of official export credit support to corporations. Governments could work together to develop a common framework for this, to be administered through the OECD.

The public expects that corporations based in OECD countries who receive official support, such as publicly underwritten loans and guarantees to indemnify their work in developing countries, respect labour rights and environmental standards. Access to export credits should, therefore be made conditional on multinationals proving that they respect the Guidelines. That would go some way to balancing the rights and responsibilities of recipient corporations.

This could also apply to the World Bank Public Procurement Guidelines. The OECD can play its part in this collective ownership too, by operating as an effective backstop if national action over the Guidelines fails. There will be times when, and for whatever reason, an NCP fails in its duty to correctly interpret the Guidelines where a multinational has abused their contents.

The new OECD level follow-up procedures acknowledge this possibility. When it happens, and is proven, the will of the majority must prevail to ensure that the enterprise brings its conduct into line with the Guidelines. The annual NCP meetings will also allow governments to collectively examine these cases, and make recommendations to ensure the effective implementation of the instrument. Trade unions must also be allowed to present their views on this to the meetings.

Turning to the challenges facing business, it is not for me to speak for them, but to them. The key challenge facing individual corporations and business federations is to ensure that the Guidelines are known and apply on the ground in all their operations, all the way down through the supply chain. In this they have ideal partners in the International Trade Secretariats (ITSs), and national trade union centres. Co-operation, not confrontation, should be the watchword.

The international labour movement faces challenges too. One is to work co-operatively with all concerned to equip our people on the ground with the guidance and help they need to use the Guidelines, whether as a stand-alone tool, or as part of a broader tool-box of campaigning mechanisms, including European Works Councils, and shareholder campaigns. We should use them to stimulate a dialogue between enterprises and ITSs which could lead to framework agreements, such as the one recently agreed between the Union Network International (UNI), which groups together service sector unions representing 15.5 million workers and the Spanish based telecommunications multinational, Telefonica. The UNI / Telefonica framework agreement obliges the company to respect the trade union rights (among other conditions of employment) of their 120,000 workers in the 9 countries where they operate.

We will of course need to actively and carefully engage trade unions in non-adhering countries, so that the Guidelines can be mobilised to improve standards globally.

The agenda I propose may appear ambitious, and meeting the challenges will not be easy for any of us. But they must both be met fully if the Guidelines are to become a living instrument of governance for multinationals worldwide. The approach should be one of co-operation and partnerships. That may surprise those who see trade unions as preferring conflict over consensus, yet it is clearly in everyone’s interest to seek a common high ground.

However, there must be no doubt that we will be vigilant in seeing that governments deliver on their commitments to implement and enforce the Guidelines. And that vigilance will extend to cover those multinationals that do not implement the Guidelines in good faith.

©OECD Observer No 225, March 2001 

Economic data

GDP growth: +0.6% Q1 2019 year-on-year
Consumer price inflation: 2.3% May 2019 annual
Trade: +0.4% exp, -1.2% imp, Q1 2019
Unemployment: 5.2% July 2019
Last update: 8 July 2019

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