Globalisation has drawn serious attention to the importance of core workers’ rights on a global basis. There is a strange paradox in the treatment of labour when it comes to mainstream debates about globalisation. Survey’s on foreign investors intentions suggest that in most sectors market access, good governance, skills and education levels are more important in attracting investment than low wages or submissive workers. Yet rather than improving living and working conditions, globalisation appears to pressure governments into reducing workers’ rights to minimise labour costs and attract foreign investment.
Take export-processing zones where semi-manufactures or raw materials are processed into goods for export by foreign companies, outside the normal laws and regulations of the host country. They may operate very differently in different parts of the world, but they tend to have one over-riding characteristic in common: trades unions are tolerated in few, if any, of them. This is disturbing. An update in 2000 to an OECD report on trade and labour standards noted that the number of export processing zones worldwide had risen from some 500 in 1996 to about 850, not counting China’s special economic zones. EPZ’s have become common place in many parts of Asia and Central America and are now spreading to Africa as development model.
Multinational companies may also simply decide to switch country, or at least threaten to do so, when faced with labour dissatisfaction or the prospect of a cheaper labour market, and this in good as well as in hard times. A study by Cornell University in 2000 found that despite the longest boom in US history, workers were feeling more insecure than ever before. More than half the firms surveyed, when faced with union action, had threatened to close the plant and move to another country. In some sectors the figure rose to 68%. The fact that only 5% of firms actually moved away does not lessen the perceived risk of the threat, increasing the imbalance of relative power of unions and employers in the labour market.
The trade union response to globalisation must be to ensure that in terms of labour conditions we start a “race to the top” and stop the “race to the bottom” between multinational companies. At the level of TUAC we are giving priority to maintain and encourage enforcement of the OECD Guidelines for Multinational Enterprises, revised by governments in consultation with labour unions, businesses and NGOs in 2000. The guidelines are recommendations for good corporate behaviour, primarily addressed to corporations based in countries that adhere to them but applying to their operations worldwide that covers 85% of total foreign direct investment.
The MNE guidelines may not be binding in a legal sense at the international level, but they are not optional for corporations either. If companies could simply pick and choose among the provisions of the guidelines or subject them to their own interpretations, then the guidelines would have no value. Nor does their application depend on endorsement by companies. The OECD’s MNE guidelines are the only multilaterally endorsed and comprehensive rules that governments have negotiated, in which they commit themselves to help solve problems arising with corporations. Most importantly, the ultimate responsibility for enforcement lies with governments. This makes the guidelines more than just a public relations exercise.
To judge by experience of the last two years since the MNE Guidelines were revised, we have made some tentative assessment of how they are functioning in practice and what can be done to improve their implementation. One problem is that probably still less than half of the signatories of the OECD Guidelines have National Contact Points set up to vet the implementation of the guidelines which are really functioning. Though an improvement on the situation before 2000, we have still not arrived at a critical mass of governments who take their responsibilities seriously.
Another problem is that the guidelines still need to be better known compared with other instruments, like the UN Global Compact. Within TUAC we have organised a project to raise awareness among trade unions, including a User’s Guide for trade unionists that is now available in several languages. With our partners we are running workshops and seminars on the guidelines, particularly in non-OECD countries. But we feel governments could do much more. Also, although cases are now appearing before NCPs they are often being dealt with very slowly. Of the 20 cases which have been raised over the last year by trade unions as of June 2002 only five have been resolved or have led to recommendations being issued.
One might ask whether the OECD could not devote more resources to the implementation of the MNE guidelines. If the OECD does not take them more seriously, who will?
But there are other instruments in an evolving “tool-box” that the global union movement can use to counteract the social downside of globalisation. They include work by the Global Unions Federations to develop collective bargaining relationships with companies at an international level. some 20 global framework agreements have been concluded – most in the last two years – between the federations and companies in sectors such as mining, chemicals, food, forestry, services and automobiles.
TUAC is also part of a joint Global Unions Committee reviewing the social performance of enterprises in which workers’ pension and saving funds are invested and beginning to train union trustees.
We have also been working closely with the European Trade Union Confederation and the European Parliament to ensure that at the European level initiatives can be taken to achieve better enforcement of the OECD MNE Guidelines and linkages developed with European Works Councils.
There are also non-government activities in which unions are participating such as the Global Reporting Initiative’s (GRI) work to establish common international standards for corporate reporting on social and environmental sustainability (see article), or certification schemes such as SA 8000..
The International Labour Organisation itself is having to define its own role in the area of corporate social accountability – one task for the newly established ILO World Commission on the Social Dimension of Globalisation.
For labour perhaps the greatest danger is not globalisation itself; it is rather to argue policy paralysis as a result of it. Some of the tools to prevent this paralysis are there – the union movement to make sure it uses them effectively, but governments cannot absolve themselves from their own ultimate responsibility for managing markets globally.
Kate Bronfenbrenner (2000), Uneasy terrain: The Impact of Capital Mobility on Workers, Wages, and Union Organizing, Cornell University, report prepared for US Deficit Review Commission.
©OECD Observer No 234, October 2002