Labour standards in the global economy MN7374 Lecture 7 8th March 2018

Outline Another look at the assignment questions What are labour standards and why are they relevant to IHRM? The national context: individual and collective labour law

Identify the possible challenges and opportunities for MNCs arising from the UK’s exit from the European Union and critically discuss the role of human resource management in responding to economic change. “Each ‘host’ country represents a unique challenge for an MNC’s HR management.” Critically discuss this statement with reference to the ‘Varieties of Capitalism’ (VoC) approach. What are the strengths and weaknesses of this approach in understanding national differences?

3) Using the example of either a) performance management, or b) equality/diversity, critically discuss the factors influencing the way MNCs transfer international ‘best practice’ from ‘home’ to ‘host’ countries. 4) Compare and contrast the roles of a) ‘corporate social responsibility’ and b) trade union organisation in improving labour standards in multinational corporations and their suppliers and/or contractors. Use examples where appropriate.

Individual employment law Concerns the employee’s rights at work Unfair dismissal Discrimination Minimum wage Health and Safety These can often be collective issues

One view “The relation between an employer and an isolated employee or worker is typically a relation between a bearer of power and one who is not a bearer of power. In its inception it is an act of submission, in its operation it is a condition of subordination, however much the submission and the subordination may be concealed by the indispensable figment of the legal mind known as the 'contract of employment'. The main object of labour law has been, and... will always be a countervailing force to counteract the inequality of bargaining power which is inherent and must be inherent in the employment relationship.” Kahn-Freund, 1972:8

Collective employment law Collective organisation, Representation and bargaining - this takes different forms in different countries Industrial action

The International Labour Organisation United Nations institution The International Labour Organisation United Nations institution. Formed in 1919 Aims to “take wages out of competition”

The ILO’s ‘core’ labour standards No use of forced labour (C29) Abolition of the ‘worst forms of’ child labour (C182) Freedom of association and collective bargaining (C87) Right to organise and to collective bargaining (C98) Freedom from discrimination (C111)

International labour law C87: Freedom of association UK ratified 1949 And ratified by 151 other countries C98: Freedom to organise and collective bargaining UK ratified 1950 And ratified by 162 other countries Neither convention has been ratified by the USA, China

Convention 87 In force since 1950; Ratified by 154 states #2 “Workers and employers, without distinction whatsoever, shall have the right to establish and, subject only to the rules of the organisation concerned, to join organisations of their own choosing without previous authorisation.” #3 “The public authorities shall refrain from any interference which would restrict this right or impede the lawful exercise thereof.” Why is this contentious?

Why are labour standards contentious? For MNCs: - Additional wage costs, - Potentially makes employer subject to international jurisdiction. For states: - Limits competitive advantage of developing countries. - Erodes national sovereignty in setting appropriate standards.

How are labour standards enforced? ILO enforcement power extremely limited Promotion of standards via employers (corporate social responsibility) Negotiation of standards with trade unions (national or international level)

International union organisation

International framework agreements IFAs are agreements made between multinational companies and global unions Typically aim to cover the company’s global operations Some also specify contractors and suppliers Focus on the ILO’s core labour standards (eg C87 and C98)

The ILO’s ‘core’ labour standards (2) No use of forced labour (C29) Abolition of the ‘worst forms of’ child labour (C182) Freedom of association and collective bargaining (C87) Right to organise and to collective bargaining (C98) Freedom from discrimination (C111)

The potential of IFAs 5 IFAs in 2000 Over 110 today IFAs negotiated mainly with MNCS headquartered in European counties. Potential for international collective bargaining

Lafarge’s presence in the world

MNC Subsidiary

Captive contractors

Weaknesses of International framework agreements Very limited in content Coverage of MNCs still limited Difficulty of monitoring practice in suppliers and contractors Mixed evidence on effectiveness Enforcement requires existing trade union organisation

Discussion point Why do MNCs sign international framework agreements? Do core labour standards provide a ‘level playing field’ for companies/countries? What are the options for enforcing labour standards in MNCs’ contractors and suppliers?

Hammer, N. (2005) ‘International Framework Agreements: Global Industrial Relations Between Rights and Bargaining’, Transfer 11(4): 511-530 Riisgaard, L and Hammer, N (2011) ‘Prospects for Labour in Global Value Chains: Labour Standards in the Cut Flower and Banana Industries.’ British Journal of Industrial Relations, Vol. 49, No. 1, pp. 168–190. Seidman, G. (2007), Beyond the Boycott, N.York: Russell Sage Foundation. Williams, G., S. Davies, and C. Chinguno, (2015), ‘Subcontracting and labour standards: Reassessing the potential of International Framework Agreements’, British Journal of Industrial Relations, 2015: 53(2): 181-203. World Trade Organisation (1996), Singapore Ministerial Declaration.