International: Global agreements spread

Increasing numbers of multinational companies are concluding global agreements on workers' rights with trade unions and other employee representatives. We review the contents of six recent agreements.

Over recent years, a small but growing number of multinational companies have concluded global agreements or agreed codes of corporate conduct with international or national trade union organisations or, in some cases, their European Works Councils (EWCs). These agreements generally commit the company concerned to observing certain minimum standards in their worldwide operations - often based on International Labour Organisation (ILO) Conventions - while in some instances they also cover other aspects of employment and industrial relations policy.

Some of the agreements also establish some type of global forum where management and trade union/employee representatives meet regularly, usually to discuss the implementation of the agreement but also in some cases for wider-ranging discussions about the company's business and policies. A worldwide level of industrial relations is thus arguably emerging in these multinationals, similar in some respects to the European level created by EWCs.

There are now 24 known companies with such agreements or similar initiatives, and they seem to be spreading relatively fast (a full list is provided in our associated IRS journal, European Works Councils Bulletin, issue 39, May/June 2002). Furthermore, a number of agreements have been revised or renewed in recent months.

The companies involved are most commonly based in France (Accor, Air France, Carrefour, Club Mediterrané, Danone, Suez Lyonnaise des Eaux and Vivendi), Germany (Faber-Castell, Freudenberg, Hochtief and Volkswagen), the Nordic countries (IKEA, ISS, Skanska and Statoil), Italy (Artsana and Merloni) and Spain (Endesa and Telefónica). There are also multinationals involved from Greece (OTE), the Netherlands (Ballast Nedam), New Zealand (Fonterra), the UK (Hyder/Glas Cymru) and the USA (Chiquita Brands International).

Here, we examine the contents of six recent global agreements, in order to highlight the common trends and the areas where the accords vary:

• Air France: A "social charter and code of ethics" was approved on 25 June 2001 by the trade unions represented on the company EWC and then "ratified" by the company and the European Transport Workers' Federation (ETF). Air France, in which the French state is a majority shareholder, is one of the world's largest airlines. It has some 54,000 employees worldwide - mostly in France, but with staff in most European countries.
• Ballast Nedam: An agreement "concerning the rights of its own employees and the employees of contractual parties" was signed on 18 March 2002 by this Dutch-based construction multinational, the International Federation of Building and Wood Workers (IFBWW) and the Dutch building workers' union, FNV Bouw. Ballast Nedam has around 7,000 employees worldwide, and is involved in infrastructure and civil engineering projects in Argentina, Canada, Ghana, India, Malaysia, Saudi Arabia, the UK, the USA and Vietnam.
• Endesa: A "protocol institutionalising dialogue at the international level between the company's general management and the trade union representatives" was signed on 25 January 2002 by senior management, representatives of the Spanish trade unions CCOO and UGT and the International Federation of Chemical, Energy, Mine and General Workers' Unions (ICEM), on behalf of unions representing Endesa workers worldwide (International: Global accord at Endesa). Endesa is one of the world's largest private electricity groups, with 20 million customers in 12 countries (Spain, Argentina, Brazil, Chile, Colombia, the Dominican Republic, France, Italy, Morocco, Peru, Portugal and Poland), along with interests in gas, mining, water treatment, telecommunications and new technologies. It employs about 28,000 workers worldwide, of whom some 15,000 are in Spain.
• Fonterra Cooperative Group Ltd: The world's fourth-largest dairy company signed an agreement on workers' rights and consultation over business changes on 8 April 2002. The New Zealand-based Fonterra employs around 20,000 workers worldwide in some 100 countries, including in Europe. On the employee side, the accord was signed by the International Union of Food, Agricultural, Hotel, Restaurant, Catering, Tobacco and Allied Workers' Associations (IUF) and the New Zealand Dairy Workers' Union (NZDWU).
• IKEA: A revised agreement was signed in December 2001 by the Swedish-based home furnishing company and IFBWW, replacing one initially signed in May 1998. This new version takes account of a new code of conduct which IKEA has developed for its suppliers, entitled "the IKEA way on purchasing home furnishing products". The revised agreement now refers to this code rather than an older, more limited one.
• Merloni Elettrodomestici: A code of conduct was signed on 17 December 2001 by the company and three Italian metalworking unions (Fiom-Cgil, Fim-Cisl and Uilm-Uil), which also represented the International Metalworkers' Federation (IMF). Merloni, whose brands include Ariston and Indesit, has around 14,000 employees worldwide, with 21 subsidiaries and major production facilities outside Italy - in France, Poland, Portugal, Russia and Turkey.

Employee-side signatories

The six agreements illustrate the various constellations of employee-side signatories that have developed. The workers' representative bodies that have signed global agreements or been involved in some other way in the initiatives in question are predominantly International Trade Secretariats, or "global trade union federations" as they now prefer to be known, which have been involved in around three-quarters of cases. The most active global federations in this area are IFBWW, IUF, Union Network International (UNI, which groups private sector services and white-collar unions), ICEM and IMF.

In some cases - as at IKEA - a global union federation is the only employee-side signatory. However, the most common pattern is for the involvement of global federations to be alongside that of national unions from the multinational's home country - as illustrated by Ballast Nedam, Endesa, Fonterra and Merloni. EWCs are signatories of around a quarter of global agreements - in the case of Air France, alongside a European regional trade union industry federation (ETF).

Content

The core of all global agreements is a commitment to observe certain workers' rights or labour standards (sometimes alongside non-employment standards, such as those relating to the environment). In some cases, the agreements refer to single issues - such as trade union rights at Accor - but they more usually constitute a wider-ranging code of conduct. The "classic" core content of these codes (in many cases referring to ILO Conventions) comprises:

• a ban on child labour;
• a ban on forced or prison labour;
• the principle of equality and non-discrimination; and
• rights to freedom of association and free collective bargaining, plus protection of employees' representatives.

These are the four matters covered in the ILO's 1998 Declaration on Fundamental Principles and Rights at Work. All four of these areas are covered by five of the agreements examined here. The exception is the Endesa accord, which refers explicitly only to bargaining/union rights. However, it does refer generally to international labour standards and human rights, and commits the parties to negotiating a fuller code of conduct in future. Indeed, most of the agreements contain similar broad references to international labour standards and fundamental human rights.

Still within the "classic" code of conduct area, global agreements commonly add a number of further principles, most frequently:

• observing health and safety (and sometimes environmental) standards and "decent" working conditions;
• paying adequate or standard wages; and
• ensuring that working hours are not illegal or unreasonable.

The Air France, Ballast Nedam and IKEA agreements refer to all three of these topics, while the other three agreements refer specifically only to the health and safety/working conditions issue.

A number of the agreements go beyond the strict code of conduct remit to cover issues that are more related to the companies' employment and industrial relations policies and procedures. For example, the Fonterra agreement provides for information and consultation over changes in business activities affecting employment. The accord provides that, when management contemplates the introduction of major changes that are likely to result in a loss of jobs, it will:

• as soon as possible, provide the affected employees' trade union with relevant information, including the reasons for the major changes contemplated, the number and categories of employees likely to be affected and the period over which the terminations of employment are intended to be carried out; and
• consult with the affected employees' union on measures to avoid or minimise the terminations and to mitigate the adverse effects of any terminations on the affected employees.

The Air France social charter deals with a wide range of employment policy issues. For example, the company will:

• undertake to ensure security and stability of employment;
• promote the development of a "meaningful social dialogue and working relations based on trustworthiness" at all levels of its organisation. The company will therefore supply information and the "means for consultation" to employees or their representatives "in sufficient time for treatment of the matter at hand";
• contribute to a "lasting and equitable development of the company" through various forms of financial participation (including profit-sharing) and benefits for workers;
• remove obstacles to employee mobility; and
• give a high priority to training, providing "sufficient resources for training and its continuous adaptation".

The Endesa agreement refers to vocational training, service quality, and expansion and employment growth.

This kind of content in global agreements - going beyond pure labour standards concerns - is, it appears, becoming increasingly common, with recent examples including the initiatives at Chiquita, Danone, Freudenberg, OTE, Statoil, Telefónica and Volkswagen.

Implementation and joint structures

A fundamental aspect of any code of corporate conduct or similar initiative is how its implementation is monitored and followed up. Among the many unilateral codes of conduct adopted by multinational companies, it is comparatively rare for any party but the company itself to monitor implementation. One of the distinctive features of codes agreed with unions or other employee representatives is that the latter are involved in monitoring. From the industrial relations perspective, a key point of interest in agreed codes of conduct or global agreements is that many set up a structure or procedure involving the signatories to monitor the application of the agreement, and sometimes to discuss other matters.

The Air France and Merloni agreements do not establish any new structure to oversee their implementation, but use existing European and/or national level bodies (as does the Endesa agreement, alongside a new structure), in both cases giving a new role to the companies' EWCs - see the box below. This approach is taken in about a quarter of all known global agreements, and the monitoring of codes of conduct may increasingly become a new issue on the agenda of EWCs.

TheAir France social charter provides that the company's management and its EWC will guarantee implementation. The charter's practical supervision will be the responsibility of the EWC's employee-side select committee, "in concert with and not superseding" employee representative bodies in all countries with Air France employees. The select committee will have the authority to alert concerned staff and management representatives when necessary to guarantee the implementation of the charter. A progress report on the charter's implementation will be placed on the agenda of the EWC's annual meeting.

The Merloni code provides for monitoring of both the company's own production units and activities, and those of its suppliers, by a joint commission (already set up at national level on the basis of Merloni's company agreement in Italy). Furthermore, the company must report on the implementation and status of the agreement at the annual meeting of the Merloni EWC and at the national-level information meeting provided for by the relevant Italian collective agreement. For countries not covered by the EWC, employee representatives and unions at individual plants must receive this information from local management.

The four other agreements all provide for the creation of a new international management-union meeting or structure, an approach taken by around half of all global agreements. At Ballast Nedam, management, IFBWW and FNV Bouw will meet once a year to review the agreement's implementation. The agreement also establishes a reporting system for contraventions of its terms, with the unions and employee representatives within the company, or in companies with contractual ties with Ballast Nedam, reporting such breaches to the company's executive board, which will examine and take measures to remedy the issue. The group will appoint an officer responsible for the application of the agreement. Questions of interpretation will be clarified jointly between Ballast Nedam, IFBWW and FNV Bouw.

Similarly, the IKEA agreement provides for a joint IKEA- IFBWW group to meet twice per year, one meeting being organised by IKEA and the other by IFBWW. The company will inform IFBWW of the progress of the implementation of the code annexed to the agreement "for advice and comments from the group". Should IFBWW become aware of any contravention of the code, it will report this to the group, which will review the matter and propose appropriate measures. Furthermore, at these meetings, the parties will exchange general information and experiences within the field of subjects covered by the code.

The Fonterra agreement provides for the company and IUF/ NZDWU to appoint up to five persons each to a review committee, which will meet annually to review the application of the agreement, with a view to "jointly agreeing actions that will ensure compliance with this agreement and that will further develop good employee relations practices". The agreement also provides that this review committee may discuss Fonterra's financial position, its business activities and other areas of mutual interest. Furthermore, an extraordinary meeting may be convened at the request of either party, if a situation arises that requires urgent discussion. Agendas of meetings will be agreed in advance and both parties will provide information relevant to the observance and implementation of the agreement.

This agreement is to be "applied consistently" by Fonterra, but should not replace or diminish the importance of local employee relations practices, problem-solving and bargaining. Local parties should therefore make every effort to resolve their differences at that level. Recourse to the review committee, besides its general annual review function, will be restricted to alleged serious or systematic violations of the rights contained in the agreement that cannot be satisfactorily resolved locally. Fonterra, IUF and NZDWU will "cooperate to give practical effect" to the agreement.

The Endesa agreement differs from the others in that its main focus is on dialogue and cooperation between the parties, with the code of conduct-type provisions being less central. The accord establishes two forms of international meeting between unions and management, described as "a channel of dialogue and international trade union consultation" at the highest level of Endesa and an "effective tool for achieving an adequate exchange of relevant information" between the parties.

First, a representative of ICEM will, at least once a year or "whenever required by the relevant nature of the topics to be discussed", attend one of the existing national meetings between Endesa management and Spanish unions, in order to address the international dimension of the topics discussed.

Second, at least every six months or "whenever the relevance of the topics to be dealt with so justifies", a meeting will be held between Endesa human resources management, senior officials of the signatory union organisations and one representative of an ICEM-affiliated union from every country outside Spain where Endesa controls companies. The basic content of this meeting will be "analysis and mutual exchange of information concerning the most relevant happenings in the labour area, as well as the short- and medium-term outlook, and specifically as regards the evolution of employment." In addition, the parties may agree and adopt initiatives aimed at achieving "the basic objectives and principles that inspire the present agreement, including participation in international programmes that are consistent with the jointly adopted principles. In keeping with this, both parties consider it a matter of priority to work to draw up a code of conduct which is consistent with said principles."

The agenda of the meetings of this new structure will be distributed in advance by management to participants. The parties to the agreement can, with notice, raise "other topics that are considered relevant in terms of their general or current importance" to be dealt with at the meetings. Endesa will provide participants with the communication facilities necessary to maintain contact among themselves and with trade unions. It will also bear the "reasonable costs " of organising and attending the meetings. The accord lays down confidentiality provisions for the international meetings and specifies that the information exchanged "will not replace or interfere with labour relations at the local level".

The Fonterra and Endesa agreements thus create a form of "world council" at which representatives of management and trade unions discuss not only the implementation of the agreement but a range of business and employment issues similar to those dealt with by EWCs. The EWC-type approach extends to provisions on matters such as facilities, costs and training for employee-side participants, confidentiality provisions and extraordinary meetings. New bodies with similar agendas have also been created by the agreements at OTE and Statoil, and to a lesser extent at Freudenberg and Telefónica.

Conclusion

Although they are still quite uncommon, global agreements and the regular world-level joint meetings that many provide for are without doubt a significant development, pointing towards the establishment of a global level of industrial relations in multinational companies. The number of agreements is growing fast, and spreading geographically and across sectors. This trend can be expected to continue in the coming years, with growing attention being given to the social dimension of multinationals' activities, and not least because of the increasing priority attached to the conclusion of such agreements by international trade union organisations. For example, UNI's strategic objectives for 2002-05, approved in April 2002, state that its sectoral organisations, both globally and regionally, "will identify those companies where there is the potential to negotiate regional and/or global agreements with employers". Furthermore, global trade union councils and networks in multinationals, which often have as one of their key aims the conclusion of a global agreement, are spreading fast.

However, a key issue in determining whether or not the global agreement phenomenon becomes genuinely widespread will of course be the receptiveness of management. It is arguable that not many will take the position of Craig Norgate, Fonterra's chief executive. On the conclusion of the Fonterra agreement, he stated that the company was committed to financial, environmental and social performance, and saw the agreement with IUF and NZDWU as contributing to all three: "These aspects of performance are entirely complementary and we are pleased to commit to ILO principles not just in New Zealand but globally, and determined to work constructively with NZDWU and other relevant unions to promote them."

This article is based on research and material contributed by Mark Carley, chief editor of the European Industrial Relations Observatory and co-editor of European Works Councils Bulletin.

Joint structures and procedures for implementing global agreements

Company	Structure/ procedure	Composition	Frequency of meetings	Role and scope	Other provisions
Air France	EWC and employee-side select committee.	Management and employee representatives on EWC, latter only on select committee.	Annual for full EWC.	Select committee: overseeing implementation of code. EWC: considering annual report on code.	-
Ballast Nedam	Meetings.	Management, IFBWW and Dutch union.	Annual.	Reviewing agreement's implementation and clarifying interpretation.	-
Endesa1 (1)	Attendance of ICEM at existing Spanish union-management meetings.	Management and Spanish unions, plus ICEM representative.	At least annual or when required.	Discussion of international dimension of agenda items.	-
Endesa1 (2)	Meeting.	Management, ICEM, Spanish unions, and national unions from other countries.	At least every six months or when necessary.	Information exchange on main labour developments, and company's outlook, specifically on employment. Adopting initiatives to achieve agreement's objectives and principles, including code of conduct. Dealing with important matters arising.	Provisions on meeting agendas, facilities, costs and communication.
Fonterra	Review committee.	Up to five representatives each of management and of IUF/New Zealand union.	Annual, with extraordinary meetings on request.	Reviewing application of agreement and agreeing actions to comply with it and promote good practice. Discussing company financial position, business activities and other areas of mutual interest.	Provisions on meeting agendas, training and communication.
IKEA	Joint group.	Management and IFBWW.	Twice a year.	Information, advice and comments on implementation of code, plus proposing measures in event of a breach. Exchanging information and experience within field of subjects covered by code.	-
Merloni	Existing Italian joint bodies and EWC.	Management and employee/union representatives.	Annual for EWC.	Italian bodies: monitoring of code's application. EWC: considering annual report on code (separate procedure for countries not covered by EWC).	-

¹The agreement sets up two forms of international meeting between employer and employee representatives.