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GB.271/MNE/1
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Committee on Multinational Enterprises |
MNE |
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FIRST ITEM ON THE AGENDA
Promotional activities, technical advisory services
completed studies and current research by the Office
I. Promotional activities and technical advisory services
1. Promotional activities were carried out in the United States, where discussions took place in Washington, DC, with the Departments of Labor, State and Commerce, the World Bank, the Overseas Private Investment Corporation, the AFL-CIO, the US Council for International Business, the International Labour Rights Fund, the Caux Round Table; in San Francisco with Business for Social Responsibility; and in New York with the Interfaith Center on Corporate Responsibility, the Council on Economic Priorities, the National Labor Committee and the US Council for International Business.
2. The extensive and wide-ranging discussions in Washington, DC, pointed to the desirability of organizing a series of meetings lasting one to one-and-a-half days in a number of major industrial centres throughout the continental United States to discuss the Tripartite Declaration and Codes of Conduct. ILO constituents, as well as the NGOs contacted, confirmed that they would lend their support to such an undertaking and extend their cooperation and assistance. Such an exercise appears to be the best way of reaching many US corporations, and especially those which have overseas activities in developing countries, and some of which have issued their own Codes of Conduct or similar instruments.
3. It must, however, be borne in mind that FDI/MNE-related activities in the United States and the resulting labour and social problems pale in comparison with the prevailing situation elsewhere. Thus any promotion of the Tripartite Declaration in the United States and the attempt to reach corporations big and small, is aimed at making companies, especially those that have operations "overseas" or are truly global, aware of a universally applicable instrument -- the Tripartite Declaration -- and to work with them in ensuring that this text receives due recognition in subsidiaries, affiliates and joint undertakings "overseas" and effectively applied as well as "reflected" in some way in any corporate, company or enterprise codes.
4. The Tripartite Declaration was also discussed extensively in Jakarta with the Ministry of Manpower, APINDO (the Employers' Association of Indonesia), FSPSI (the Federation of All-Indonesia Trade Unions), the Board of Investment and the Ministry of Production and Distribution, etc. Following the earlier exchanges of views, it was later agreed that an Indonesian tripartite round table on FDI/MNE activities and labour and social issues would be held as early as possible, and before the end of 1997.
5. At the Governing Body's 268th Session (March 1997), the Subcommittee was informed(1) of the preparations then under way for the convening of a Philippine national tripartite round table on MNEs/FDI and labour and social issues. The round table was divided into two stages: the first was the area-based or regional tripartite consultations held in Cebu City and Manila to identify and discuss the concerns of those directly affected by or involved with FDI and MNE activities, and on the basis of the exchanges to draft recommendations that would contribute to resolving the problems. The conclusions agreed upon constituted the draft texts of a Memorandum of Social Understanding for the Philippines. The Office provided financial assistance for the holding of the meetings and advisory services at the consultations, including the presentation of a paper(2) that served as the main basis for the ensuing discussions and the framework agreement.
6. The Memorandum (copy attached) was finalized and adopted at the second and final stage -- the national tripartite round table held on 10 July 1997 following a two-day national tripartite workshop at which a drafting committee put the final text of the Memorandum together. This event marked an unprecedented initiative by the Government and the most representative employers' and workers' organizations in an ILO member State, to put into practice the principles of the ILO's Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy. The Tripartite Declaration provided the foundation for the conclusion of the Memorandum addressed to the national social partners, including multinational enterprises in the Philippines. The context of the Memorandum is intended to encourage all the addressees to adopt policies and practices that are in line with the principles of the core ILO labour standards, ratified Conventions, national labour laws and practice, and the Tripartite Declaration. Areas for action are identified in the Memorandum and so too are the specific measures that the different parties agreed to take with a view to fulfilling the stated objectives. The Government and the social partners agreed to monitor the effect given to the Memorandum through a tripartite oversight committee.(3)
7. At the invitation of the Asia Pacific Regional Organisation of the ICFTU (ICFTU-APRO), the Office participated in and provided technical advice to a Regional Symposium on Multinational Companies and the Asian Trade Union Experts' Meeting on Codes of Practice for Multinational Companies, both of which were held in Singapore, from 22 to 26 July and from 11 to 13 September 1997 respectively. Part of the conclusions adopted at the experts' meeting states:
Government should create a forum or a mechanism to widely disseminate the ILO Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy and the OECD Guidelines on Multinational Enterprises to facilitate continuous dialogue to review their application in actual practice and to suggest appropriate measures for faithful adherence to the principles and the guidelines in letter and spirit by everyone concerned.
A proper code of conduct -- similar to the one developed by the tripartite partners in the Philippines in July 1997 -- should be developed and the necessary conditions created to encourage its wider acceptance and strict adherence.
8. Moreover, useful discussions were held with officials of ICFTU-APRO as part of the continuing effort to cooperate in and identify areas for research on the social and labour effects of multinational enterprises (MNEs) in different Asian countries.
9. As part of the globalization process, foreign investment is flowing into Latin America, in particular Argentina, Brazil, Mexico, Venezuela and Colombia, which between them account for some 70 per cent (1988-94) of all such investment in the region. Brazil, with US$10 billion, was reported to be the largest recipient in 1996. Argentina's share was US$4.3 billion, putting it in third place, behind Mexico at US$7.5 billion.
10. MERCOSUR (Argentina, Brazil, Paraguay and Uruguay), with its potential market of some 200 million people, has been a magnet for FDI. This has given rise to MERCOSUR-based production networks being set up or expanded by multinational enterprises.
11. Privatization is "credited" with having played an important part in drawing FDI (it is estimated that so far some US$60 billion worth of state-owned enterprises have been sold, and that numerous others with a total value exceeding this sum are now being prepared for privatization) to this region.
12. The flow of FDI via MNEs has, however, extracted a price. Due to restructuring and technical or technological innovations, etc., some 120,000 railway workers are reported to have lost their jobs, as have 50,000 in the petroleum sector, 22,000 in post and telecommunications, and about the same number in the electricity and energy industries in Argentina alone. This appears to be only part of a much larger picture, which is repeating itself in the other MERCOSUR countries.
13. Hence, in response to the request made by the representatives of the Argentinian trade union movement, discussions were held in Buenos Aires with the Ministry of Labour and Social Security, employers' representatives (Grupo de los ochos) and representatives of the trade unions. Discussions were also held with Members of the Parliament of Argentina, who are active players in the MERCOSUR group of parliamentarians.
14. Having obtained what was termed "most useful advice" from the principles of the Tripartite Declaration, which would be extremely useful in particular in the current national context, the Ministry of Labour and Social Security of Argentina is having copies of the Tripartite Declaration and explanatory notes thereon distributed to the heads of the network of ministry offices throughout the country.
15. The workers' representatives have also undertaken to ensure the widest possible distribution of the Declaration and explanatory notes among their members.
16. Discussions were also held in Montevideo with the national tripartite partners: the Ministry of Labour and Social Security, Cámara de Industrias del Uruguay, Cámara Nacional de Comercio, Cámara Mercantil de Productos del País and the Plenario Intersindical de Trabajadores (PIT), as well as the Convención Nacional de Trabajadores (CNT) and the senior staff of the MERCOSUR secretariat.
17. The MERCOSUR countries are in the process of discussing a Social Charter (carta social), and thus the discussions in Argentina and Uruguay were particularly timely and welcome in that context. The principles of the Declaration would constitute highly appropriate and useful input for the draft of such a text. This question will be examined with great interest and close attention by the MERCOSUR secretariat and the Working Group on the Social Charter.
18. It was the general view throughout the discussions in both countries that tripartite meetings on FDI and labour and social issues would be highly useful. However, opinions had not yet crystallized on whether such meetings should be at the national or subregional (MERCOSUR) levels, whether there should be national meetings followed by one at the MERCOSUR level, or whether such meetings should be held for each group of social partners separately (governments, employers and workers). This matter would have to be re-examined following possible missions to Brazil and Paraguay so that the participants from each country in whatever form of meeting finally agreed would have the same exposure to the Tripartite Declaration.
19. Through contacts established in Argentina in the course of the discussions, the Tripartite Declaration and descriptive texts have been distributed to all 64 members of the group of parliamentarians from MERCOSUR, in which each of the member States is represented by 16 of its Members of Parliament.
20. As part of the regular programme of work, promotional activities carried out included: participation in a Round table on globalization, export processing zones and industrial upgrading in developing countries, organized by the International Institute for Labour Studies, which brought together panellists from the ILO, trade union circles and academic institutions; briefings and discussions with delegates to the 1997 International Labour Conference, visitors from employers' and workers' organizations, ILO officials assigned to positions at headquarters and in field offices, and university researchers, etc. As in previous years, a stand was maintained at the Palais des Nations during the 85th Session of the International Labour Conference, where extensive documentation was displayed, in particular working papers and studies, etc. published under the Multinational Enterprises Programme. As a result of this and the ensuing discussions with many delegations and visitors, a number of requests for round tables, seminars and fellowships were made.
21. Discussions and arrangements for a tripartite round table on labour and social issues arising out of the activities of multinational corporations in Viet Nam are at an advanced stage.
22. The English, French and Spanish versions of the Tripartite Declaration are now available on the ILO's Internet site, in the ILOLEX pages of the section concerning international labour standards and human rights.(4)
II. Completed studies and current research in areas
covered by the Tripartite Declaration
23. Since the Subcommittee met in March 1997 two working papers have been published; one is a case-study of the situation of women workers and working conditions in retailing in Canada;(5) the other deals with employment and working conditions in selected courier service enterprises. The main focus of the latter is on the operations of Federal Express and UPS in the United States.(6)
24. In response to resolutions adopted at various ILO sectoral meetings over the years, working papers are being prepared on subjects covering different aspects of the social policies and labour practices of enterprises in the following sectors and industries: retailing; telecommunications; offshore data processing services; the automobile industry; plantations; the textile, clothing and footwear industries; and property services (which encompass contract cleaning and private security services). These papers focus on developments in industrialized, developing and transitional economies in different parts of the world (the European Union (EU), Argentina, Barbados, Hungary, Jamaica, Kenya and Tunisia).
25. In the case of country case-studies, it is hoped that papers will be published in the official languages of the countries concerned. The observations made by certain governments and by employers' and workers' organizations in their replies to the Sixth Survey on the Effect Given to the Tripartite Declaration also pointed to some areas in which research could be undertaken. For this reason, and in the interest of examining the impact of multinational enterprises (MNEs) in different social and economic contexts, research on the following subjects was initiated in November 1997: employment and training in MNEs in Namibia and Zimbabwe; and an assessment of the impact of European Works Councils on consultation practices in MNEs (paragraph 56 of the Tripartite Declaration) and the initiatives of MNEs and workers' organizations in this regard. The Office aims to publish these working papers in the course of 1998.
Geneva, 26 January 1998.
Tripartite Memorandum of Social Understanding
of the Philippines
The Philippine Tripartite Round Table
on Labor and Social Issues Arising Out of the Activities of
Multinational Enterprises/Foreign Direct Investments
MEMORANDUM OF SOCIAL UNDERSTANDING
Preamble
In an increasingly interdependent and competitive world that is being drawn closer through globalization, domestic and foreign investments have become more important factors in development.
Investors that commit themselves to being responsible and reliable partners in developing and sustaining the country's human and natural resources, providing employment opportunities, introducing technology suitable to current needs as well as future requirements and improving infrastructures; and thus enhance economic, industrial and social development within the framework of established national policies, are welcome in the Philippines.
Lasting and fruitful relationship between the Philippines and its investors, including multinational enterprises/foreign direct investors, should be based on mutual benefits, shared responsibilities, long-term commitments, trust and equity.Guided by the ILO's Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy, the Government, employers and workers in the Philippines, through their representatives, adopt the following guiding principles and courses of action; and call on all current and potential investors in the country to respect, as a minimum, the provisions thereof:
Guiding principles
General principles
The Philippine tripartite partners:
- reaffirm their commitment to the observance of the principles of the core ILO Conventions(7) and their corresponding Recommendations; the examination of other Conventions and Recommendations with a view to ratification, as may be practical and applicable; and respect the Tripartite Declaration of MNEs;
- underline that labour should always be an equal partner in the process of development and, consequently, investment in human resource enhancement should be prioritized as key to productivity and global competitiveness;
- believe that a peaceful industrial relations climate is essential for the growth of domestic and foreign investment; consequently, they call for observance of tripartism, consultations and dialogues, based on respect, mutually beneficial and productive social partnership, in the shaping of investment-related policies and programmes and the promotion of sound labour-management relations; and
- underscore the urgent need for the active involvement by individuals as well as government, employers' and workers' organizations in discharging their mutual responsibilities towards sustainable development, environmental conservation and protection.
Employment
The Philippine tripartite partners agree to:
- work towards "full, productive, freely chosen(8) employment" in higher value-adding and competency-enhancing occupations, as well as the provision of a living wage and the promotion of dignity of work/labour;
- call for uniform and well-defined policies on alien employment, and their strict implementation. In adopting the alien employment policy, consideration should be given to providing employment opportunities to qualified and available Filipino nationals, the need for transfer of technology and know-how, and the observance of professional and skills standards. Simple and expeditious procedures should be adopted for this purpose.
Training
The Philippine tripartite partners agree that:
- with government providing a favourable policy environment, the social partners will actively cooperate to improve the state of education, particularly developing a market-driven technology-based education and training strategy, to enhance employability, productivity, global competitiveness, job security and social mobility;
- the apprenticeship programme is aimed at enhancing the employability and technical competence of workers and should be implemented only by companies with reasonable absorptive capacity; and
- the dual system which requires training to be carried out in two venues -- in school and in the workplace -- should be adopted as the preferred mode for skills development.
Conditions of work and life
The tripartite partners agree that:
- existing laws on labour standards shall be respected and mechanisms for protecting workers who report violations should be established;
- conditions of work should be humane, and that occupational safety and health standards are non-negotiable. This principle should be observed in setting terms and conditions of employment, including hours of work, overtime and shift work;
- it is a tripartite responsibility to provide workers, whose careers have been prematurely shortened by peculiar working conditions, occupational counselling and options for alternative careers or compensatory benefits;
- the legal minimum wage constitutes a safety net and nothing below it is acceptable;
- increase in productivity should result in higher remuneration, and workers should be involved in the development of productivity improvement schemes;
- the enterprises' need for operational flexibility shall be satisfied in accordance with law and equity, and balanced with the need of employees for social protection;
- immediate steps shall be taken and special efforts exerted towards the elimination of child labour;
- national laws, regulations, and local practices shall be respected; relevant international standards be observed; and cultural differences given due regard; and
- the Department of Labor and Employment shall be primarily responsible for enforcing labour standards, including in economic zones.
Labour relations
The tripartite partners agree that:
- the rights of workers to freedom of association and collective bargaining shall not be impaired;
- in the process of collective bargaining, the parties should take into account workers' need for humane and decent conditions of work, and employers' need for fair return on investment and for the survival and growth of enterprises, especially during their initial years of operations;
- the principle of transparency and sharing of relevant information for meaningful negotiations need to be scrupulously observed; and
- to maximize the contribution of MNEs/FDIs to economic and social development, and promote cooperation among the social partners, measures to make foreign investors familiar with the national laws and regulations, practices and culture of the Philippines should be taken by the Government in cooperation with employers' and workers' organizations.
This tenth day of July 1997 at Pasay City, Philippines, we have affixed our signatures as an expression of commitment to this Social Understanding, even as we extend the call on all concerned to voluntarily support and realize the spirit of this agreement:
(Signed)
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Juan C. Tan
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Miguel B. Varela
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Democrito T. Mendoza
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Lilia B. de Lima
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Ma. Veronica F. Magsino
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Leonardo A. Quisumbing
Secretary
Department of Labor and Employment
Witnesses:
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Richard Szal
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Abebe Abate
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2. A.T. Romero: The ILO's Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy: An introductory essay, background paper presented at tripartite area consultations in Cebu City (30 June-1 July 1997) and Manila (3-4 July 1997).
3. Memorandum of Social Understanding of the Philippines, adopted on 10 July 1997, 4 pp. and annex containing action programme (mimeo).
4. http://ilolex.ilo.ch:1567/public/english/50normes/infleg/iloeng/multie.htm
5. I.U. Zeytinolu and M. Crook: Women workers and working conditions in retailing: A comparative study of the situation in a foreign-controlled retail enterprise and a nationally-owned retailer in Canada, Multinational Enterprises Programme, Working Paper No. 79 (Geneva, ILO, 1997), 88 pp. plus annex (10 pp.).
6. S.C. Wisniewski: Multinational enterprises in the courier service industry: Aspects of employment and working conditions in selected enterprises, Multinational Enterprises Programme, Working Paper No. 81 (Geneva, ILO, 1997), 58 pp.