International: Update on global agreements

An important recent development in transnational industrial relations has been the conclusion of global agreements on workers' rights and corporate social responsibility in a small but growing number of multinational companies. We examine eight recent agreements and the views of trade unions and employers on this issue.

The past few years have seen an increasing number of "global agreements" or "international framework agreements" signed in multinational companies. These are accords concluded with international and national trade union organisations or other employee representatives which commit the company to observing standards and principles in its operations worldwide (or occasionally in a particular region). These standards and principles generally relate to various aspects of workers' rights, employment and other areas of corporate social responsibility (CSR), most often taking the form of a relatively wide-ranging code (though sometimes focusing on one or more specific issues).

Taking this definition, and excluding agreements signed on the employee side solely by national trade unions or employee representatives, there are currently around 30 global agreements in place. While the number is small, the companies involved include some of the world's largest, most high-profile and "internationalised" multinationals. For example, the US/German motor manufacturer DaimlerChrysler employs some 370,000 workers worldwide, the German motor manufacturer Volkswagen 320,000, the French retailer Carrefour 300,000, and the Danish business services organisation ISS 250,000. In total, the companies involved have a workforce of around 2.5million.

New agreements are now being signed on a regular basis, and here we examine some of their key features, highlighting eight accords (see the table below) signed since EIRR last reviewed the issue in June 2002 (International: Global agreements spread).

Recent global agreements on workers' rights and CSR in multinational companies

Company (Sector)	Home country	Agreement	Date	Employee-side parties
AngloGold (Gold mining)	South Africa	Agreement on the promotion and implementation of good human and industrial relations	September 2002	ICEM and South African union
DaimlerChrysler (Motor manufacturing)	Germany/USA	Social responsibility principles	September 2002	World works council (on behalf of IMF)
Eni (Energy)	Italy	Agreement on transnational industrial relations and corporate social responsibility	November 2002	ICEM and Italian unions
General Motors Europe (Motor manufacturing)	USA	Agreements on principles of social responsibility	October 2002	EMF and EWC
ISS (Business services)	Denmark	Letter of agreement on fundamental human rights and working conditions	May 2003	UNI
Leoni (Wires and cables)	Germany	Declaration on social rights and industrial relationships	April 2003	EMF and EWC
Norske Skogindustrier (Paper manufacturing)	Norway	Agreement on development of good working relationships	June 2002	ICEM and Norwegian union
Volkswagen (Motor manufacturing)	Germany	Declaration on social rights and industrial relationships	June 2002	IMF and world works council

Companies involved

The global agreements phenomenon affects multinationals with headquarters all around the world. However, companies based in France and Germany are the most prominent in this area, together representing just under half of all multinationals involved. Groups based in the Nordic countries come next, at around a sixth of the total. Other countries with two or more multinationals involved are Italy, Spain and the USA. Recent months have seen the first agreement in a firm headquartered in Africa - the South African goldmining organisation AngloGold.

In broad sectoral terms, manufacturing accounts for more than four out of 10 of the multinationals concerned, services and utilities/energy/mining for around a fifth each, and construction for around 10%. In manufacturing, the past year has seen a notable increase in agreements in metalworking, and especially motor manufacturing; there are now agreements in place at three of the world's largest car producers - DaimlerChrysler, General Motors (GM) Europe and Volkswagen.

Employee-side signatories

Global Union Federations (GUFs) - the international groupings of trade unions in a particular sector, formerly known as International Trade Secretariats - remain the main employee-side signatories of global agreements. So far, they have signed some 80% of all such accords. Reflecting the sectoral distribution of agreements, the most successful GUFs in this regard have been: the International Federation of Chemical, Energy, Mine and General Workers' Unions (ICEM) - six agreements; the International Federation of Building and Wood Workers (IFBWW) - five agreements; the International Union of Food, Agricultural, Hotel, Restaurant, Catering, Tobacco and Allied Workers' Associations (IUF) - four agreements; Union Network International (UNI) - four agreements; and the International Metalworkers' Federation (IMF) - three agreements. However, only about 20% of all agreements have been concluded by GUFs alone, with a further 50% co-signed by national trade unions (usually in the home country of the multinational concerned) and two by World Works Councils (WWCs).

European-level trade union organisations - the European Metalworkers' Federation (EMF) and the European Transport Workers' Federation (ETF) - have signed around 10% of all agreements, usually along with European Works Councils (as, recently, at GM Europe and Leoni). EWCs have been the sole signatories of around 10% of agreements. In total, European or World Works Councils have been involved in signing around three out of 10 agreements.

The main new development in this area over recent months has been the role played by WWCs in concluding the global agreements at DaimlerChrysler and Volkswagen (in both cases alongside the IMF). WWCs are rare, but their numbers are increasing (not least because of the global agreements phenomenon), with examples including SKF (Sweden, bearings and seals), NatWest (UK, banking), Renault (France, motor manufacturing), DaimlerChrysler and Volkswagen. Companies such as BASF (Germany, chemicals), GM Europe, Nestlé (Switzerland, food) and Kone (Finland, cranes) are also reported to be discussing the establishment of WWCs, and many GUFs are promoting their introduction. The Volkswagen WWC is a relatively long-established body, set up in 1998, and the conclusion in June 2002 of a "declaration on social rights and industrial relationships" followed lengthy work and a preliminary "declaration of intent" in September 2001. The DaimlerChrysler WWC was created in July 2002, only a few months before an agreement on "social responsibility principles" was signed with management.

Contents

By definition, global agreements commit the signatory company to observing certain rights, principles or standards. These may be "free standing" but are much more likely to refer to external international standards, usually International Labour Organisation (ILO) Conventions. The basic workers' rights content of global agreements thus typically 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 and they are included, in varying ways, in all eight recent agreements considered here. Beyond these four key issues, the labour rights-related content of global agreements commonly includes a commitment to: observe health and safety (and sometimes environmental) standards and "decent" working conditions; pay adequate or standard wages; and ensure that working hours are not illegal or unreasonable. Health, safety and environment issues are referred to in all eight recent agreements; pay issues in six (DaimlerChrysler, GM Europe, ISS, Leoni, Norske Skogindustrier and Volkswagen); and working time matters in five (DaimlerChrysler, GM Europe, ISS, Leoni and Volkswagen). These references vary in their exact content and degree of detail.

A number of the agreements go beyond these basic labour rights issues to cover topics which are more related to the companies' employment, personnel and industrial relations policies and procedures. The most common is a commitment to training and skills development - as at DaimlerChrysler, Eni, GM Europe, ISS and Leoni - with other examples including provisions on employment of people with disabilities - as at GM Europe - and on respect for others at work (eg freedom from harassment) - as at ISS.

Outside the direct employment area, some accords deal with issues more related to general business behaviour and ethics, such as good relations with, and a positive contribution to, local communities - as at AngloGold, Eni and GM Europe - or fair competition - as at GM Europe and ISS. A general commitment to observe human rights and/or fundamental freedoms is included in the agreements at AngloGold, Eni, GM Europe, ISS and Leoni.

As mentioned above, it is common for global agreements to refer to international standards drawn up by external bodies. ILO Conventions (and sometimes Recommendations) are by far the most common points of reference, mentioned in over 80% of all agreements. This may take the form of references to observing specific Conventions. The basic "package", in line with the ILO's 1998 Declaration on Fundamental Principles and Rights at Work, is made up of the following Conventions: Nos. 87 (freedom of association and the right to organise) and 98 (the right to organise and collective bargaining); Nos. 100 (equal pay) and 111 (non-discrimination); Nos. 138 (minimum employment age) and 182 (elimination of the worst forms of child labour); and Nos. 29 and 105 (prohibition of forced labour). All eight Conventions are cited explicitly in the agreements at AngloGold, Eni, ISS and Norske Skogindustrier. A reference to Convention No.135 (protection and facilities for workers' representatives) is added at Eni, ISS and Norske Skogindustrier, while Recommendation No.143 (on the same issue) is mentioned in the latter two accords. The ISS agreement is the most thoroughly grounded in ILO Conventions, as it also cites Conventions Nos. 1 (hours of work in industry), 47 (40-hour week), 155 (occupational health and safety) and 167 (health and safety in construction), plus Recommendation 116 (reduction of hours of work).

A different approach is taken at DaimlerChrysler and Volkswagen, where the rights and principles set out in the global agreements are said to be oriented towards ILO Conventions generally, but without citing specific Conventions. Leoni also includes a general reference to ILO Conventions, but refers specifically to Nos. 87 and 98.

ILO Conventions are not the only CSR "benchmark" drawn up by international institutions. The global agreements at AngloGold and DaimlerChrysler are among the first such accords to refer to the United Nations' Global Compact. This initiative, launched by the UN secretary-general, Kofi Annan, in 1999, calls on companies to observe nine principles in the areas of human rights, labour standards (including the basic package of issues referred to above) and the environment. Over 750 companies have so far signed up to the scheme (including around a third of those with global agreements).

Finally, the GM Europe agreement is the first to be based not on the standards laid down by international institutions, but on a "private" initiative, the Global Sullivan Principles. Launched in 1999 by the Reverend Leon Sullivan, a former member of the GM board of directors, these Principles comprise a code of conduct that aims to provide a framework for socially responsible companies and organisations to work towards the goals of human rights, social justice and economic opportunity. Companies of all sizes, as well as other types of business and non-profit organisations, governments and education providers are invited to endorse the Principles. By doing so, organisations make a commitment to work towards the Principles' aspirations, including the implementation of internal policies, procedures, training and reporting structures. In 2002, some 192 companies had endorsed the Global Sullivan Principles.

The Global Sullivan Principles are arguably rather less specific and more "aspirational" than other basic CSR references, such as ILO Conventions. They also, notably, do not refer to collective bargaining rights. However, the GM Europe agreement does not merely reproduce the Global Sullivan Principles, but adds somewhat more specific or extra provisions in a number of areas. Notably, it: adds a commitment to the right to collective bargaining; provides that employees may neither be advantaged nor disadvantaged as a result of their membership of employee organisations or trade unions; and promotes constructive cooperation with unions.

A final point related to the content of the recent agreements is that most of them (those at DaimlerChrysler, GM Europe, ISS, Leoni, Norske Skogindustrier and Volkswagen) either require or encourage the multinational's suppliers and/or business partners to comply with the principles and rights laid down - thus potentially multiplying their impact.

Joint implementation

A key feature of global agreements is that they usually provide for some procedure or structure for the signatories jointly to monitor and discuss their implementation (thus distinguishing them from unilateral codes of corporate conduct which are in almost all cases self-monitored by the company concerned). There are two basic approaches to this issue - using existing transnational structures or procedures or establishing new ones.

Looking at our eight recent examples, the first approach is, unsurprisingly, taken in most of the agreements signed by an existing transnational employee representative structure. Thus the implementation of the accords at GM Europe and Leoni is subject to discussion in the companies' EWCs and the Volkswagen agreement at its WWC. The DaimlerChrysler agreement is silent on this issue, but will presumably be discussed at the WWC.

The other four agreements all set up some kind of new global-level management-union forum or process to discuss implementation. The ISS accord does not provide specifically for a new structure, but for an ongoing dialogue between the company and UNI, with meetings as the need arises, to examine the implementation of the agreement and any reported breaches. The three remaining agreements create a new forum with regular meetings and an agenda which, to varying degrees, goes beyond purely discussing implementation.

The signatories to the AngloGold agreement - management, ICEM and the South African National Union of Mineworkers - will meet "as often as is necessary, but at least annually" to review past practice, preview "future plans relevant to their interests" and discuss the terms of the agreement. A subcommittee will consider plans and proposals from either party resulting from any alleged breach of "accepted standards of conduct" that cannot be resolved at local or national level. The Norske Skogindustrier agreement provides for an annual meeting in order to review its "principles, practice, effectiveness, and impact". The aim is to "exchange views regarding the current situation, and jointly develop further good working relations." These meetings will involve representatives of ICEM and the Norwegian United Federation of Trade Unions (Fellesforbundet), Norske Skog's chief shop steward and representatives of corporate management.

The remit of the AngloGold and Norske Skogindustrier meetings suggest that discussions may exceed solely monitoring the global agreement. This is much more explicit at Eni, where the agreement, as well as laying down CSR principles, seeks to promote a "system of information, consultation and dialogue" between the Italian energy group Eni and the signatory trade unions. To this end, an annual meeting will be held, involving Eni management, the national secretariats of the three Italian unions involved (Filcea-Cgil, Femca-Cisl, Uilcem-Uil) and ICEM's general secretariat. At this meeting, "complete information" will be provided on:

• economic and financial topics relating to the ongoing development of Eni at world level;
• the current performance and future prospects of Eni's main operating activities, focusing on the most significant geographical areas and on employment figures;
• the development of the group's industrial relations in the various countries and areas where it operates, with particular attention to "potentially critical situations", including any problems identified in the monitoring procedures for the agreement's implementation; and
• CSR actions and programmes undertaken by Eni, along with initiatives on health and safety at work.

The agreement thus creates a new structure which, alongside implementation, discusses a range of business and employment issues similar to those dealt with by EWCs - essentially a kind of world works council. Other agreements creating such "councils" have been signed at companies such as Endesa (Spain, energy), Fonterra (New Zealand, food), OTE (Greece, telecommunications) and Statoil (Norway, energy).

Finally, the Norske Skogindustrier agreement is interesting in that it provides for local joint monitoring of its implementation, involving local management, workers and their representatives, health and safety representatives and local trade unions. To enable local representatives to play a full role in the monitoring process, they will be given "adequate time" for training and involvement in the process. The company will ensure that local representatives are provided with information, access to workers and rights of inspection necessary to monitor compliance effectively.

Trade union pressure for global agreements

Most GUFs now have an active policy of pursuing global agreements in multinationals, and have been giving the issue increasing priority lately. For example:

• at its world congress in August 2002, the International Transport Workers' Federation (ITF) decided to seek framework agreements with key transport undertakings, committing them to observing fundamental trade union and human rights. ITF currently has no global agreements;
• the ICEM world conference for the energy sector held in November 2002 "resolved to forge greater unity and solidarity amongst all workers in the energy exploration, extraction, production and supply industries by pursuing global agreements with multinational companies and establishing global worker networks"; and
• the October 2002 world conference of UNI Graphical - the graphical sector section of UNI - adopted a work programme for 2002-06 which includes the objectives of conducting negotiations with companies over global agreements and setting up global works councils. The global agreements should provide for minimum standards across the multinationals concerned, irrespective of which country they operate in, in respect of trade union organisation and recognition, health and safety, equality and dignity at the workplace and training.

Some GUFs report that negotiations over global agreements are underway in a number of multinationals, while further companies have been targeted for future pressure to conclude such accords - such as Goodyear (USA, tyres) and Quebecor (Canada, graphical sector).

The reasons for GUFs' increasing interest in global agreements can be illustrated by the case of the IMF, which is committed to pursuing such deals in all multinationals where its affiliates have members, and has recently devoted a special section of its website to the issue (www.imfmetal.org/ifa). The IMF sees international framework agreements (IFAs) as a way of: protecting workers' rights where legislation is inadequate; ensuring respect for the ILO core labour standards in all facilities of a multinational; and protecting the interests of workers where unions are weak or non-existent. Since IFAs are "negotiated on a global level and require the participation of trade unions", they are seen as an ideal instrument for dealing with the issues raised by globalisation.

Transnational business operations and the global economy raise issues that go beyond the reach of national legislation, states the IMF. Through IFAs, the ILO's core labour standards can be guaranteed throughout a multinational's operations, which is especially helpful in transitional and developing countries, where legislation is sometimes insufficient, poorly enforced or "anti-worker". For multinationals, according to the IMF, IFAs can secure good relations with unions and contribute to a positive public image at a time when "more and more companies increasingly see the need to respond to the growing ethical concerns of consumers and investors". For trade unions, IFAs are a way to promote workers' rights in the global arena. They guarantee "influence and the possibility of a dialogue that is mutually beneficial". Unlike unilateral company codes of conduct, IFAs emphasise implementation, which "paves the way for actual improvements".

The IMF, along with the other GUFs, has abandoned the expression "code of conduct" in favour of IFA, because the former expression is "often used for unilateral initiatives by the management, frequently of questionable value for labour. Most of these 'codes' are instruments for PR or marketing purposes." The IMF highlights the following differences between codes of conduct and IFAs (as promoted by the IMF):

• codes of conduct are unilateral company initiatives, while IFAs are negotiated between labour and management;
• codes of conduct do not necessarily recognise all core labour standards, whereas IFAs do so;
• codes of conduct rarely cover suppliers, while IFAs usually do so;
• monitoring of codes of conduct, where it exists, is controlled by management, whereas unions are involved in the implementation of IFAs; and
• codes of conduct provide only a weak basis for union-management dialogue, contrasted with the strong basis afforded by IFAs.

Employer views

Whatever the strategies of trade unions, the assent of employers is obviously required for the conclusion of a global agreement. The managements of some 30 multinationals have so far been convinced of the value of this course of action. The specific reasons why employers have taken this step are related to the particular circumstances of each company and may involve factors such as the company culture, the strength and priorities of trade unions represented at the firm, the degree of globalisation of the multinational's operations and the nature of the sector in which it operates.

The public comments on their agreements made by senior managers at the companies concerned tend to stress the accords' value as an expression of their commitment to CSR and as an extension of their prevailing company culture and principles. To give three examples:

• "an essential aspect of the corporate culture at GME is respectful cooperation. Our basic principles include equality of opportunity, tolerance and fairness in our dealings with each other. We have practised these principles for many years and will continue to practice them in the future. With the agreement signed today, we want to demonstrate just how important that subject is to us" (Cheri L Alexander, GM Europe's vice-president for personnel);
• "DaimlerChrysler emphasises its commitment to corporate social responsibility as a company strengthening its global orientation. Corporate social responsibility is both the result of and a precondition for value-oriented, sustainable and profitable corporate management. The social principles increase the security and confidence of employees at our locations around the world. We have thus taken a further major step towards good, responsible international cooperation" (Günther Fleig, DaimlerChrysler's board member for human resources); and
• "[the agreement is] an expression of our will and ability to think innovatively in our efforts to be a good employer and a company aware of its social responsibility. We take it for granted that all Norske Skog's activities should respect basic human rights and fundamental ILO Conventions on the protection of employee rights. The agreement harmonises well with our core values of openness, honesty and cooperation" (Jan ReinÃ¥s Norske Skog's chief executive and president).

Despite such positive assessments, it appears that the willingness of a number of companies to sign global agreements has set alarm bells ringing in some employers' circles. Antonio Peñalosa, the secretary general of the International Organisation of Employers (IOE) - the body that brings together most national employers' confederations and represents them at the ILO - has raised a number of concerns about the phenomenon. Mr Peñalosa states that it is important that companies bear in mind the potential effect of concluding global agreements in terms of "legal risk, operational efficiency and reputation. However general or aspirational these agreements may appear, companies need to carefully consider the implications of anything they sign up to: there have been recent examples of companies having signed such global agreements finding themselves with severe adverse publicity at a time of economic downsizing brought about by the demands of the marketplace." He is also concerned that agreements which provide that companies will adhere to ILO core labour standards move responsibility for compliance with ILO Conventions from governments to individual companies, a development that could mean difficulties of interpretation and responsibility at times of conflict. Furthermore, the IOE has expressed fears that global agreements may have unpredictable effects and be used by unions as benchmarks across an industry.

The extent of the future spread of global agreements will arguably be determined to a significant degree by the interplay of these very different employers' views on the issue.

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