Monitoring International Labor Standards: Summary of Domestic Forums (2003)

QUESTION: What are the difficulties involved in monitoring and compliance?

It is important to have a means for monitoring and measuring compliance at companies, but this becomes very complex at the country level and probably not possible, given the constraints on data and interpretive capabilities; you would need an expert for every country to tease out the nuances in the data.

The fact is that companies are not doing what they should, and in particular they are not integrating compliance with international labor standards (ILS) into all aspects of their business. Different departments within companies either do not know about labor standards issues or simply do not care; for example, buyers are looking for the best price and quality, but is there also a concern for how the people who make the product are being

treated? Also, there is a lot of free-riding among companies; only a few are making the necessary investment in monitoring and compliance; the remainder hide behind a veneer of monitoring activity while they continue to violate ILS.

QUESTION: How should the issue of the informal economy be handled in the National Academies database?

ILS monitoring and compliance should definitely be extended as much as possible to the informal economy. Historically, laws applied to the formal economy have filtered down to the informal economy, but the effect has been haphazard and incomplete, and thus this issue needs to be addressed more directly.

QUESTION: What are the concerns about the number of codes and the confusion this brings?

Clearly there are too many codes, and it is also clear that voluntary initiatives are not working. Codes are not focusing on the International Labour Organization (ILO) core labor standards, but rather on welfare issues, such as cafeterias and bathrooms. If the codes sincerely focused on freedom of association and collective bargaining, they would be much more effective because workers would be empowered to act on their own behalf. The existence of independent unions that are free to act in the interests of workers would go a long way toward eliminating violations of ILS.

The issue of too many codes creating confusion among factory managers is a red herring; these same factories apparently have little trouble handling the extremely complex tasks involved in making clothing.

Too many codes should not be a problem because many are almost exact copies of one another. It is true, however, that factory managers hide behind the argument that there are too many codes and too much confu

sion, and they use it as an excuse for inaction. Improving the observance of freedom of association would certainly help, but it would not be a cure-all for labor rights violations. Financial pressure from multinational corporations (MNCs) is probably a more effective tool to force change.

In a recent visit to a plant, there were 12 different codes of conduct posted on the wall, but there were only minor differences in detail. The large number of codes should not be accepted as an excuse for inaction by factory managers.

There would be no need for codes of conduct, and thus the monitoring and compliance industry, if workers were given the right to form trade unions and to collective bargain. Unions and their members can overcome problems of violations of labor standards and, in the process, enhance employers’ ability to manage. In terms of monitoring compliance with core ILS, unions will become more active once a database is developed because it will provide a legitimate source of information that can’t be attacked by critics as biased.

Unions can’t overcome some problems, such as the active suppression of the right to freedom of association, if the government is not willing to enforce laws or if it narrowly defines the standards for forming a union. In this case, codes of conduct can substitute when unions are repressed and government enforcement is lax.

In some areas of China, workers have been able to develop alternative forms of representation, which the government machinery was not strong enough to prevent. These are not state-sanctioned, and they have arisen because there are simply too many workplaces for the government to monitor. Arguably, the same thing is happening now in Vietnam. If companies

were to allow the development of trade unions, then the anti-union stance of a government would have little impact, and there would be no immediate need for national legislation of the type envisioned by the ILO labor law standards.

QUESTION: What is the role of the institutional investor in the process of monitoring compliance with ILS?

This is a very good approach to enforcing labor rights and one that will probably increase in the future as unions become more sophisticated in their use of workers’ pension fund assets. Financial pressure is the quickest way to get the attention of business.

Greater coordination of investors is happening at this very moment; religious, labor, and other stakeholders are at last getting companies and their boards of directors to at least listen to concerns about labor rights abuses.

The European Parliament resolution has called on pension funds to take into account various labor rights issues when they are investing, and this is a trend at the national level throughout Europe.

QUESTION: What should be in the database? What are the potential problems?

The database has to include the full spectrum of workers’ concerns: What is the labor legislation and what is the impact? What are the mechanisms for enforcement? What resources are devoted to labor standards? Does freedom of association exist? What are the hours of work and the wages, and how are health and safety, child labor, and discrimination handled? A database funded by the U.S. government will have to overcome substantial credibility problems

abroad because the United States has a long history of union-busting activity and has not yet ratified many of the most basic ILO conventions.

It is important that the database incorporate an interactive feature that allows experts to comment on conclusions and, perhaps, to provide evidence that contradicts information in the database. The sources of data should be clearly set forth, and the data should be disaggregated by regional and ownership differences. It is important to identify differences at the company, industry, and regional levels.

When local labor laws and enforcement mechanisms are examined, the criteria used for judgment should be internationally agreed-upon standards and not those of the United States. The exercise of developing the database might be helpful in reforming a country’s labor laws, but it will probably not have much impact on the work of adidas-Salomon.

One of key problems over the years has been the lack of credibility of data, whether they come from unions or employers; the database will overcome this hurdle. The database should include information from the ICFTU (International Confederation of Free Trade Unions), each of the international trade secretariats, and the AFL-CIO.

It should be recognized that data on labor relations and labor markets are difficult to get, and even if they can be found, there is the issue of comparability across countries. The most important question is how to measure freedom of association. This would involve looking at the percentage of the workforce that is unionized, the percentage covered by collective bargaining, the incidence of termination of union leaders and workers who are trying to organize, the number of fines paid for labor law violations, and the amount of violent crime against union workers. Much of this information will not track across borders.

One area not yet mentioned is training expenditures; this reflects the commitment of employers and government to human resource development. It is critical to capture in data the existence of hostile organizing environments; how do you measure this?

To fully reflect economy-wide employment, it will be necessary to incorporate the views of small business owners and statistics covering small businesses.

Improvement of compliance monitoring should be viewed as a process, and it may be useful to examine the European experience. For example, the European Industrial Relations Observatory has people in the field reporting from individual countries. This network of correspondents might be a model to consider for collecting the information to be included in the database. It might be possible to collaborate with local unions or universities in gathering the data.

The database should be easily available to the public, and it should include the informal economy and indicators that give a sense of the labor rights climate. This would achieve the objective of capturing anti-union employer and government activities that infringe on the exercise of freedom of association. Potential proxies include the extent of the use of subcontractors and temporary workers; a high level of such workers can suggest an anti-union bias.

The data to be collected depends on what purpose the database serves—is it for consumers to use to make buying decisions, or is it for the government to use to identify countries with labor rights compliance problems? Is the U.S. government the right body to undertake this project, or should it be in the hands of the ILO?

In order for the database to be accurate and credible, it must contain input from consumers.

QUESTION: What is the appropriate level of worker involvement in monitoring? Have workers been involved in designing and monitoring codes of conduct, and if so, how?

Through their union, workers were involved in the recent agreement between the Chiquita Company and the International Union of Foodworkers. The agreement was based on the major ILO Conventions, and it is the first international agreement to cover workers in the southern hemisphere. It has improved labor–management relations and working conditions in Chiquita’s facilities and those of its suppliers, even though it does not include any sanctions for labor rights violations. It established an arbitration mechanism for resolving disputes between workers and management, and this has been used and proved beneficial.

QUESTION: What should be included in the database? What is the best way to develop it?

This is a very ambitious project, and we need to recognize that there are no magic bullets. It will require the efforts of individuals and organizations at all levels of the issue, and it is particularly critical that local capacity (government, nongovernmental organizations [NGOs], and trade unions) be built up and its inputs actively sought. The best way to monitor is through independent trade unions.

Local organizations need to be involved and their capacities, which are rather limited at this point, must be strengthened. The ILO is the best

monitor because it is tripartite and its deliberations are fairly transparent. With respect to enforcement, consideration should be given to providing incentives, and not just sanctions, for countries that improve their adherence to ILS. One example of this is the Cambodia–U.S. free trade agreement that increases the export quota to the United States if ILO core labor standards are met.

QUESTION: What is the response to the recent decision of the Sri Lankan government to increase the permissible number of hours of overtime from 60 per year to 100 per month?

This is a very difficult issue for MNCs and for supplier factories because they face contradictory demands; the host-country government is saying that this is legal, while company codes may not allow for such a policy. These kinds of dilemmas perhaps argue for the centrality of unions as the best mechanism for monitoring and enforcing core labor rights.

QUESTION: Are the many ILO Conventions, two major guidelines (ILO and OECD), and thousands of codes of conduct harming the movement to improve compliance with core labor standards?

The proliferation of codes is not surprising; it is a natural outgrowth of the relative newness of the codes. It is important to note that codes exist because of the low level of enforcement of labor standards by national governments, and this in turn reflects the lack of incentives for enforcement. Foreign governments are concerned about alienating investors. Although the confusion is somewhat inevitable, it is hoped that instead of leading to even greater confusion, it will lead to a greater standardization of codes and consolidation in their number.

Codes exist primarily because of lax labor law enforcement, and this is largely attributable to the absence of unions with real power in most coun

tries. If unions existed and were free to pursue their interests, there would be no need for codes of conduct. The challenge is how to use the codes and monitoring procedures to create strong unions; in other words, we need to move toward a situation where codes are not necessary because unions are the enforcers and monitors of labor law.

In Latin America over the past 20 years, there has been a systematic dismantling of the state apparatus, and this has left many countries incapable of monitoring and enforcing basic labor laws. What is needed is a reempowerment of the state so that it can perform its rightful functions, including enforcing labor standards.