1996 - TUAC Submission to the CIME

 

 


TUAC Submission To The CIME
1996 Review Of The Role Of The National Contact Points

November 1996

Executive Summary

"As with any internationally negotiated instrument, the Guidelines have sometimes been criticised, for being either too general or too detailed. Some have argued that they do not go far enough in ensuring that MNEs comply with national law and practice.....Another area of debate involves the follow-up, which some say needs to be made stronger.....To date, no formal evaluation of these criticisms has been made." (OECD Report on Trade, Employment And Labour Standards, Paris 1996).

TUAC welcomed the decision of the CIME (DAFFE/IME(96)6) to initiate a review of the role of the National Contact Points (NCPs), with the objective of improving, where necessary, the performance of the NCPs, the familiarity among trade unions and employers of the Guidelines, and the understanding of the effects of the Guidelines and the information flows between the NCPs and the CIME.

For trade unions the NCPs play a pivotal role in determining the degree to which multinational enterprises implement the provisions of the Guidelines. In turn the effectiveness of the NCPs in fulfilling their mandate as set out in the 1991 Second Revised Decision of the OECD Council determines the confidence that trade unions themselves have in the Guidelines. The results from the TUAC survey should be seen in this context. TUAC expects that the results of this survey will feed into the discussions within the CIME on further activities to ensure that the remit of the NCPs is fulfilled.


The results from the TUAC survey suggest that with a few notable exceptions the NCPs are reactive, rather than proactive, and do little to fulfil their terms of reference. Some national trade union centres that did not respond to the survey stated that there was little to report due to the fact that the NCP in their country had fallen into abeyance. It was also reported that requests for information on the Guidelines were often ignored. This has led to a high degree of apathy amongst many TUAC affiliates towards the NCPs and the Guidelines. Equally worrying is the fact that those TUAC affiliates surveyed in the new-Member countries stated, that at the time of the survey, and to their knowledge no NCP existed.

There is now a pressing need for further work by the OECD, its Member governments plus labour and business to raise the profile of the NCPs, and in turn, the Guidelines (see Part II on the questions related to wider aspects of the Guidelines). However, for trade unions a pre-condition for this, is that governments themselves commit the political will and resources to ensure that the NCPs fulfil their remit. In addition to the proposals regarding possible future activities on the NCPs put forward in Committee document (DAFFE/IME(96)6), TUAC would suggest the following :

The 1997 review of the Council Decision which includes the NCPs' terms of reference should, amongst other things, agree measures to ensure that the NCPs operate in line with their mandate, and propose that the Council take effective measures where necessary to effect this.
A clear commitment by OECD Members that the 1991 Second Revised Decision of the OECD Council to initiate the NCPs will be incorporated into the text of the MAI, and that all parties to the Agreement shall adhere to the Decision.
Following the completion of the MAI, all events to promote the Agreement to non-Member governments should include explanatory sessions to cover the implementation of the 1991 Decision, and the Guidelines.


Results of TUAC Survey of Affiliates and Others
on the Effectiveness of the National Contact Points

Introduction

"Member Governments shall set up National Contact Points for undertaking promotional activities, handling inquiries and for discussions with the parties concerned on all matters related to the Guidelines so that they can contribute to the solution of problems which may arise in this connection. The business community, employee organisations and other interested parties shall be informed of the availability of such facilities." (1991 Second Revised Decision of the Council on the Guidelines for Multinational Enterprises).

"When Guidelines issues arise, the onus on attempting a settlement is particularly on the National Contact Point; hence, the effectiveness of the Guidelines depends to a large degree on that of the Contact Points. This effectiveness differs from country to country." (OECD Report on Trade, Employment and Labour Standards, Paris 1996).

In February of this year TUAC surveyed (see Annex 1 for questionnaire) its affiliates and other interested trade union bodies on matters relating to their experience with the National Contact Points (NCPs). As a forerunner to the 1997 OECD review of the Council Decision on the Guidelines, the questionnaire was broadened to include questions on the Chapters of the Guidelines dealing with Employment and Industrial Relations and Environmental Protection.

This survey should not be viewed as an exhaustive study of the NCPs (some NCPs are in place that do fulfil their remit, on which the relevant TUAC affiliate has not responded to the survey). Neither should it be viewed as an authoritive statement on the way in which governments implement, and multinational enterprises (MNEs) adhere to the Guidelines. Nevertheless, the responses to the survey should cause concern among governments over the way in which some NCPs operate, and the way in which the Guidelines are implemented across the OECD. Part I of this paper notes the various trade union organisations that responded to the survey, and reviews the replies to the questions on the NCPs. Part II reviews the survey responses on matters relating to the Guidelines' chapters on Employment and Industrial Relations, and Environmental Protection. Part III summarises the main findings of the paper and sets out the next steps for the OECD with the NCPs and the wider issue of the Guidelines.


Response to the Survey

In total TUAC received 15 replies to the survey from the following organisations.

National Affiliates - 11 from 8 countries: Belgium (CGSLB, CSC), Czech Republic (CMKOS), Denmark (AC Denmark, LO Denmark), Italy (CGIL), Mexico (FESEBS), Sweden (LO Sweden, TCO Sweden), United Kingdom (TUC), United States (AFL-CIO).

Partner Organisations - 1 - Hungary (MSZOSZ).

International Trade Secretariats - 3 - International federation of Chemical, Energy, Mine and General Workers' Unions (ICEM), Public Services International (PSI), Postal, Telegraph and Telephone International (PTTI).


National Contact Points: Breakdown of Responses

The following responses were received from TUAC affiliates, its partner organisation and ITSs concerning 6 questions related to the NCPs.

Question 1. Has the NCP in your country consulted the trade unions on its terms of référence ?

The Swedish NCP is reported to be the only one to consult trade unions proactively on its terms of reference. The Belgian NCP does so reactively. All other affiliates replied negatively.Trade unions in the Czech Republic, Hungary and Mexico are unaware of any NCP.

In sum 2 respondents replied positively and 10 negatively.


Question 2. Has the NCP involved trade unions in its work? if yes, has this been on a permanent basis or only ad-hoc ?

The Swedish NCP systematically involves the trade unions in its work. The Belgian NCP involves the unions on a ad-hoc basis. All other affiliates replied negatively.

In sum 2 respondents replied positively, and 10 negatively.


Question 3. Has the NCP actively assisted in solving specific cases brought to its attention ?

NCPs are reported to have been actively involved in solving cases in Belgium, Sweden, and the UK. However, in these cases this followed trade union pressure, and the outcome has not always been positive. Positive outcomes include Sweden and the UK. Belgian unions have raised concerns about the process and outcome of certain cases. These concerns can be traced to the conduct of the business representatives, and also that of the NCP. In the US, concerns have been raised over the failure of the NCP to assist actively in solving certain cases brought to its attention; in one instance this followed a positive outcome in the CIME. Moreover, there appears to be a generalised lack of follow-up and unwillingness to contact relevant unions once a case has been filed with the NCP. In Mexico the lack of a NCP has militated against a case being raised where a MNE has clearly breached the provisions of the Guidelines. All other respondents suggest that the NCP has fallen into abeyance.

In sum 5 respondents replied relatively positively, and 7 negatively.


Question 4. Has the NCP taken up any cases on its own initiative ?

All respondents stated that to the best of their knowledge no NCP had taken up a case on its own initiative.

In sum no respondents replied positively.


Question 5. In which way has the NCP assisted the trade unions in promoting knowledge of the Guidelines ?

Promotional activities with trade unions are rare. A hand book was produced in Swedish in 1988, but the 1994 OECD 'green book' was not: other activities are scarce. Information and the 1994 'green book' is supplied upon request by the Belgian NCP, but few other activities are undertaken. A request by the Danish unions that the 'green book' be translated into their native language was refused on the grounds of costs. All other respondents replied negatively.

In sum 4 respondents stated that limited promotional activity had occurred, and 8 replied that no promotional activities had occurred.


Question 6. On the basis of trade union experience with the NCP, in what way could their performance be improved ?

The responses to the survey suggest that the following inter-linked measures be enacted at the national level to ensure that the NCPs better fulfil their remit. Where no NCP exists, immediate steps should be taken to overcome this anomaly. Governments where necessary should invest the political will and resources to raise the profile and visibility of the NCPs with trade unions, and to ensure that this work be conducted in a proactive way. As part of this process TUAC will stress to its affiliates the importance of active participation in the work of the NCP.


Employment, Industrial Relations, and Environmental Protection

A range of questions relating to the operation of the Guidelines' Chapters on Employment and Industrial Relations plus Environmental Protection (see Annex 1 for questions) were included in the survey. The responses will give the CIME a 'snap shot' view of the perceptions that trade unions have on way in which MNEs are operating within the OECD area, ahead of the 1997 review of the Council Decision on the Guidelines.

Outside of the US, most MNEs operating in the countries where TUAC affiliates and others responded to the survey appear to be adhering to most of the provisions of the Chapter on Employment and Industrial Relations. Problems seem to relate to paragraphs 3, 6 and 8, and increasingly paragraphs 1 and 2 (basic trade union rights). This shows that the same issues raised by TUAC in cases and consultations since 1979 continue to be relevant. The following is a summary of the comments received.


Belgium : in general the conduct of most MNEs is in line with the provisions of the Guidelines. Specific problems relate to information disclosure (§ 3); the provision of reasonable notice of changes in operations (§ 6); and unfair influence (§ 8). Taking the first two points together, MNEs rarely voluntarily provide information, and notice of changes in plant operations in line with the provisions of the Guidelines. The use by management of threats to re-locate operations are increasingly used to influence the outcome of negotiations.


Czech Republic : in general the conduct of most MNEs is in line with the provisions of the Guidelines. There are, however, increasingly noticeable differences between those MNEs with a European home base and others, with the latter becoming problematic in many areas. In general MNEs investing in "green field" sites, irrespective of their country of origin are also becoming a problem. The same problems as noted above (Belgium, §§ 3 and 6) are widespread and increasing, as are problems relating to unfair influence (§ 8).


Denmark : in general the conduct of most MNEs is in line with the provisions of the Guidelines. Of late, problems have been encountered by Danish trade unions in securing trade union rights in line with the Guidelines with certain inward investors from the US.


Hungary : in general the conduct of most MNEs is in line with the provisions of the Guidelines. Non-European MNEs are increasingly seen as a problem by the unions in many areas relating to the Guidelines, notably those from Japan and the US. The same problems apply in relation to "green field" sites as noted above in the Czech Republic. Similarly, the same problems as noted above (Belgium, §§ 3 and 6) are widespread and increasing, as are problems relating to unfair influence (§ 8).


Italy : in general the conduct of most MNEs is in line with the provisions of the Guidelines. MNEs are, however, increasingly breaching the provisions on unfair influence (§ 8) to influence the outcome of negotiations.


Mexico : trade unions have encountered, and are increasingly encountering severe problems with MNEs in all areas relating to the provisions of the Guidelines. This is especially so in the Maquiladoras regions. Those MNEs with a home base in North America and Asia are said to be the most difficult for trade unions to deal with. The problem is compounded by inter alia the unwillingness of the government to support the implementation of the Guidelines, as evidenced by the lack of a NCP, combined with a perception by the respondent to the survey that the government is willing to allow MNEs to suppress labour standards in order to secure inward investment.


Sweden : in general the conduct of most MNEs is in line with the provisions of the Guidelines. Specific problems in relation to paragraphs 3 and 6 as noted above (Belgium) are on the increase.


United Kingdom : in general the conduct of most MNEs is in line with the provisions of the Guidelines. The same problems as noted above (Belgium, §§ 3 and 6) are growing. Certain MNEs of Asian origin are breaching the Guidelines in relation to trade union rights (§§ 1 and 2). The use by management of threats (§ 8) to re-locate operations are increasingly used to influence the outcome of negotiations.


United States : trade unions continue to encounter problems with many MNEs on most aspects of the Guidelines. The US is one of the most open economies in terms of FDI. While in the past inward investors were traditionally more receptive to unionisation (though not in all sectors), the picture is changing now. MNEs are increasingly taking advantage of the labour laws in the US to frustrate the collective bargaing rights of workers. Approximately 7,000 organisations exist that offer companies (MNEs are specifically targeted) advice on circumventing unionisation. So called "right to work" States are basing their strategies to attract inward investment on the suppression of trade union rights (the State of South Carolina has a unionisation rate of less than 3 per cent). The provision of information is scant, and MNEs routinely threaten re-location (increasingly to Mexico since the signing of the NAFTA agreement) as a means to influence the outcome of negotiations.


Environmental Protection

The responses to the survey suggest that most MNEs operating in European OECD countries adhere to the provisions contained in the Chapter on Environmental Protection; however, TUAC and its affiliates have pointed to the weakness of this Chapter, and noted that a revision is required. Furthermore, because of the general nature of this Chapter it is difficult to obtain an objective view of the way in which its provisions are adhered to by MNEs, TUAC would suggest that a more structured review process is warranted that would involve trade unions, and aim at appropriate revisions.

The following comments were made in response to the survey. Few concerns were registered in Belgium, Denmark, Italy (except with non-European home based MNEs), Sweden, and the UK. Concerns were raised about MNEs operating in the Czech Republic and Hungary regarding adherence to the health and safety aspects of the Chapter (which are not strong enough anyway), most notably in the construction sector, in addition to environmental problems in the natural resource sector (Czech Republic).

Serious concerns were raised by the respondents in Mexico and the US. Most related to the activities of MNEs operating in and around the Maquiladoras zones on the border regions between the two countries, although MNEs are said to violate the provisions of this chapter in other areas of both countries. Specific reference was made to problems associated with an increase in water and air pollution, hazardous waste dumping, and health risks such as cholera, typhoid and birth defects. As regards the provisions of the Chapter on health and safety, and cooperation with the competent authorities in line with the Guidelines, there is a serious concern in both countries that even these relatively weak provisions are frequently breached.


Summary and Next Steps for the OECD

The results from the TUAC survey on the NCPs indicates, for the most part, that they are failing to fulfil their remit as set out in the 1991 Second Revised Decision of the Council. Three problems were identified with the NCPs. Firstly, respondents from new Member countries (Czech Republic, Hungary and Mexico) stated that no NCP exists. TUAC expects that the Republic of Korea will upon its becoming a Member of the OECD move speedily to create a NCP. Secondly, a majority of other respondents stated that in their view the NCP had lapsed into abeyance. Thirdly, where the NCP appears to function, it is reactive, has few resources, and is not seen as a priority for action by the controlling government department.

There is a clear need for further work to rectify these anomalies. The Executive Summary to this paper sets out a range of proposals to achieve this in a way that would generate a higher commitment from all parties, including trade unions to the NCPs and the Guidelines. TUAC would like to discuss these with the CIME.

Turning to the implementation of the Guidelines' Chapters on Employment and Industrial Relations, and Environmental Protection, the responses to the TUAC survey suggest that for the most part MNEs are adhering to the provisions contained therein. It is also significant that the OECD Report on Trade, Employment and Labour Standards noted that the majority of MNEs did not see the suppression of trade union rights as a key factor when deciding investment locations. However, worrying trends are now appearing, such that there is an increasing divergence in the behaviour of MNEs worldwide. On the one hand there are those with a good record on compliance with labour and environmental standards, and on the other hand there are those seeking to avoid compliance as a means to securing competitive advantage.


Specific examples of this negative trend of behaviour have been highlighted in the TUAC survey. These include widespread problems with information disclosure, the use of threats to re-locate operations as a means to influence the outcome of negotiations, and in some countries non-respect of trade union rights, and non-compliance with environmental standards. This has to be seen against the background in many instances of a failure of the NCPs to play their role in ensuring that the Guidelines are adequately implemented.

As the pace of globalisation increases so to will the competitive pressures faced by MNEs. The danger is that the negative trends outlined above will become more widespread. In this new paradigm labour standards will increasingly come under pressure from those MNEs that seek to undermine workers' rights as a means to maintain their competitive position. This will in turn put pressure on those MNEs with a good record on labour rights issues. The so called 'race to the bottom' will be cemented in place. Governments now more than ever need, therefore, to ensure that the Guidelines are implemented, and adhered to by MNEs.

The 1997 wider review of the Council Decision on the Guidelines will examine the issues raised by trade unions in response to this survey, and TUAC will play its part in this. In the meantime, TUAC would propose that the OECD initiate a work programme to include, inter alia :

a broader review of the literature on motives for FDI; and the effects of FDI on host country economic growth, incomes and labour markets ;
closer sector and region specific analysis of the link between FDI and core labour standards, including in particular the issues of child labour exploitation, EPZs and subcontracting of MNEs; and
a thorough evaluation of the impact of the OECD Guidelines.
an evaluation of the follow-up process on Guidelines related matters in the CIME or the chosen mechanism having competence for the Guidelines following the completion of the MAI ;
a thorough evaluation of the link between FDI and the environment, with a view to the possible revision of the Guidelines' chapter on the environment; and
an evaluation of the impact of the MAI on labour standards in developing countries.

The results of this work should feed into and guide the 1997 review of the Guidelines, and shape the outcome.



Annex 1

TUAC QUESTIONNAIRE

ON THE OECD GUIDELINES FOR MULTINATIONAL ENTERPRISES

Background

The focus of the 1996 OECD Periodic Review of the operations of the Guidelines for Multinational Enterprises is on the effectiveness of the National Contact Points. OECD countries are obliged to set up a National Contact Point, and certain countries wishing to join the OECD have indicated that they would set up a National Contact Point. This section of the TUAC questionnaire is, therefore, of particular relevance to TUAC affiliates and its "Partner" organisations.

TUAC is currently pressing the OECD to conduct a wider review of all operational aspects relating to the OECD Guidelines. In light of this the TUAC questionnaire has been broadened out to embrace the Chapters of the Guidelines on Employment and Industrial Relations and Environmental Protection. Given that OECD governments support the extension of the Guidelines to all States, and in particular developing countries, these sections of the questionnaire will be relevant to ITS's and TUAC "Partner" organisations, in addition to TUAC affiliates.

The OECD Guidelines are seen as running parallel to the ILO Tripartite Declaration on Multinational Enterprises and Social Policy. The ILO is currently conducting its Sixth Survey on the effect given to its Tripartite Declaration (see ICFTU Circular No. 2 1996). TUAC affiliates and others may wish, therefore, to cross refer to the ILO survey when responding to the TUAC questionnaire. To assist respondents a reference has been included following the TUAC questions to the relevant paragraphs of the ILO survey on the Tripartite Declaration.


  1. TUAC Questions on the National Contact Points
  2. The terms of reference of the National Contact Point are that they should: gather information on experience with the Guidelines, promote them, handle enquiries on the Guidelines, discuss matters related to the Guidelines and assist in solving problems which may arise between business and labour in matters covered by the Guidelines.

    1. Has the National Contact Point in your country consulted the trade unions on its terms of référence ?
    2. Has the National Contact Point involved trade unions in its work? If yes, has this been on a permanent basis or only ad-hoc ?
    3. Has the National Contact Point actively assisted in solving specific cases brought to its attention ?
    4. If so, what have such cases been and what has been the outcome? Has the National Contact Point sought the involvement of trade unions in these cases? If so, what has been the experience of trade unions ?
    5. Has the National Contact Point taken up any cases on its own initiative ?
    6. In which way has the National Contact Point assisted the trade unions in promoting knowledge of the Guidelines ?
    7. On the basis of trade union experience with the National Contact Point, in what ways could their performance be improved ?


  3. Employment and Industrial Relations
  4. For trade unions a cornerstone of the OECD Guidelines is the Chapter, Employment and Industrial Relations. This Chapter, along with other elements of the Guidelines is non-binding on MNEs, but they are an expression of policies to which governments have committed themselves, and thus have a moral obligation to. To guide affiliates and others in their responses to the TUAC questions here, the Chapter, Employment and Industrial Relations can be found on pages 65-66 of the accompanying OECD booklet. Furthermore, an explanatory note to this Chapter can be found on pages 39-47 of the booklet.

    The following questions should be answered in the context that MNEs should follow the Guidelines within the framework of law, regulations and prevailing labour relations and employment practices, in each of the countries in which they operate. (§§ 1-7, ILO Tripartite Declaration).

    1. Do MNEs respect the rights of their workers to be represented by trade unions and other bona fide organisations? Have MNEs engaged in constructive negotiations on employment conditions? (§§ 8-12 and 40-58, ILO Tripartite Declaration).
    2. Do MNEs provide facilities and information to employee representatives to negotiate meaningfully on conditions of employment, and reach collective agreements? (§§ 8-12 and 48-55, ILO Tripartite Declaration).
    3. Do MNEs provide employee representatives with information which enables them to obtain a true and fair view of the performance of the enterprise (§§ 48-55, ILO Tripartite Declaration).
    4. Do MNEs observe standards of employment and industrial relations not less favourable than those observed by comparable employers in the host country? (§§ 33-35, ILO Tripartite Declaration).
    5. Have MNEs utilised, trained and prepared for upgrading their labour force, in cooperation with representatives of employees and, where appropriate government authorities? (§§ 13-20 and 29-32, ILO Tripartite Declaration).
    6. Do MNEs provide reasonable prior notice of changes in operations, in particular on intended closures, collective lay-offs and dismissals? (§§ 24-28, ILO Tripartite Declaration).
    7. Do MNEs refrain from discriminatory practices in all of their employment practices? (§§ 21-23, ILO Tripartite Declaration).
    8. Do MNEs refrain from seeking to influence negotiations with employee representatives, or while employees are exercising their right to organise? Such influence could include threats to transfer production or workers abroad (§§ 48-55, ILO Tripartite Declaration).
    9. Do MNEs enable workers' authorised representatives to conduct negotiations on collective bargaining or labour management relations issues with their authorised managerial counterparts? (§§ 48-55, ILO Tripartite Declaration).


  5. Environmental Protection
  6. The June 1991 OECD Ministerial Council meeting decided to revise the Guidelines to include a Chapter on environmental protection which includes issues concerning health and safety. To guide affiliates and others in their responses to the TUAC questions in this area, the Chapter, Environmental Protection can be found on pages 66-67 of the accompanying OECD booklet.

    The following questions should be answered within the context that MNEs are expected to take account of the need to protect the environment and avoid creating environmentally related health problems, within the framework of laws, regulations and administrative practices in the countries in which they operate.

    1. Do MNEs assess and take into account in decision making, foreseeable environmental and environmentally related health consequences of their activities? Key areas for this are: siting decisions, the impact of activities on indigenous natural resources, and foreseeable environmentally related health aspects of products as well as from the generation, transport and disposal of waste (§§ 36-39, ILO Tripartite Declaration).
    2. Do MNEs cooperate with the competent authorities to provide adequate and timely information regarding the potential impacts on the environment and environmentally related health risks of all activities? (§§ 36-39 ILO Tripartite Declaration).
    3. Do MNEs take appropriate measures in their operations to minimise the risk of accidents and damage to health and the environment, and to cooperate in mitigating their adverse effects? Key area for this include: the implementation of education and training for their employees, the introduction of a system of environmental protection at the enterprise level, including where appropriate the use of environmental auditing, and the preparation of contingency plans and support for public information and community awareness programmes. (§§ 36-39, ILO Tripartite Declaration).


  7. Further Observations
  8. The role of the government in setting national standards covering such areas as labour standards, fiscal measures and competition policy frequently influence the employment policies and other operational policies of MNEs and their subsidiaries in host counties. TUAC would be interested to hear of any moves by governments to weaken labour standards and competition policy or to offer fiscal and other incentives to attract MNEs to their country. In particular, TUAC would like to hear if governments in developing countries have taken measures to restrict the operation of trade unions, notably in Export Processing Zones, or come under any pressure from employers or their organisations to do this.


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