Global Framework Agreements: Achieving Decent Work in Global Supply Chains

Background: Growing Importance of Global Supply Chains Trade liberalization and the dynamics in international investment benefited the rise of the “supply chain model”. MNE-controlled GSCs undercut the power of labour to bargain over wages and working conditions. Growing importance: One in five jobs can be linked to supply chains (ILO 2015). A plethora of voluntary forms of regulation has emerged since the 1980s: Codes of conduct – Human Rights Policies (company level)… Global Compact of the United Nations… Certification schemes - ISO-26.000 by the International Organization for Standardization… “CSR Industry“… The challenge: Labour relations are largely missing in these initiatives.

Background: Global Framework Agreements

Background: Global Framework Agreements Labour’s response to globalization of production of MNEs operations (supply chains) are Global Framework Agreements (GFAs). The added value of GFAs compared to other initiatives is that they are the outcome of direct negotiations between the representatives of management and workers in a MNE. GFAs provide a rights based framework to encourage recognition of trade unions. Their role is to promote labour relations at the national, sectorial and enterprise level.

Background: GlobalFramework Agreements Number of GFAs apportioned by Global Trade Union Federations (GUFs) Graph created by the author (n=112)

Background: International Framework Agreements Number of IFAs apportioned by headquarters’ location 1-4 GFAs 4-9 GFAs > 9 GFAs Figure created by the author (n=112)

Background: Global Framework Agreements References in GFAs. Table created by the author (n=41) Sources: Own calculations based on an evaluation of GFAs negotiated during 1994 - 2007 (n=62) compiled by Nikolaus Hammer in Papadakis, Konstantinos (ed) (2008): Cross-border social dialogue and agreements. An Emerging Global Industrial Relations Framework, Geneva, S. 267 ff.; Own evaluation of GFAs newly concluded or renewed during 2009 - May 2015 (n=54).

Global Framework Agreements and Global Supply Chains Global Framework Agreements (GFAs) are a good-practice example that builds on sound labour relations to regulate GSCs. For trade unions GFAs are intrinsically linked to forge solidarity links and to facilitate unionization. Important mechanisms to translate economic benefits into better working conditions along global supply chains are freedom of association, collective bargaining and advocacy by trade unions. GFAs should lead to more democratic industrial relations, and hence to improved working conditions along global supply chains.

References to Global Supply Chains in GFAs Four groups of references to supply chains were identified in GFAs: No Reference Inform and Encourage Suppliers and Subcontractors Potential Termination of the Contractual Relationship Reference to the Entire Global Supply Chain

References to Global Supply Chains in GFAs Source: Evaluation GFAs 1989 - 2008: Telljohann, Volker et al. (2009): European and international framework agreements: Practical experiences and strategic approaches. – Eurofound, Dublin, p. 32; Own evaluation of GFAs negotiated during 2009 - 2015 (n=54).

Joint Activities: Collaboration on Monitoring, Training Programmes and Global Reviews Continuous consultation meetings Joint monitoring and reviews Joint site visits at subsidiaries and suppliers Integration in auditing schemes Supporting suppliers and subcontractors training programmes for the management and workers technical support Disclosure of supplier information Procurement practices: inclusion of GFA-Standards in commercial contracts

Evaluation of Case Studies on the Implementation of GFAs An evaluation of 27 case studies on the implementation of GFAs yields the following results: GFAs are often unknown among managers in MNEs’ subsidiaries, suppliers and subcontractors and within the ranks of local trade unions. Successful examples of good-practices in bringing suppliers, subcontractors and subsidiaries under the GFA umbrella. E.g.: successful unionization campaigns, establishment of trade union networks, rehiring of workers’ representatives after invoking the GFA by trade unions. These good-practice examples provide evidence for the significant role that GFAs and GUFs can potentially play to ensure workers’ rights along the global supply chain of MNEs.

The Way Forward: Evaluation of Case Studies on the Implementation of GFAs It is crucial to strengthen local ownership. MNEs must ensure the agreement is disseminated in the local languages spoken or understood by the workers throughout the company’s operations to all workers & managers AND to all suppliers and sub-contractors. Establishing union networks is of primary importance and should be prioritized. GFAs should include a reference to the entire supply chain of the MNE. GFAs should include the duty of the MNE to treat the respect for provisions in the GFAs as a determining criterion for establishing or continuing business relationships with suppliers and subcontractors. GFAs should include a comprehensive and clear definition of the group of companies that is represented by the MNE in the GFA. Disclosure of information on the companies in the GSC of the MNE.

Global Framework Agreements and the ILO The ILO is already involved in GFAs: GFAs make references to ILO Conventions. Increasing number of references to the MNE Declaration. References to the ILO for arbitration (Aker ASA GFA) and expert advice (Inditex GFA). The bargaining partner seek to further involve the ILO (witness’ signature of ILO’s Secretary General etc.). Key questions: Added value of ILO’s engagement? Challenges for the ILO?

MNE Declaration ILO Tripartite Declaration of Principles concerning MNEs and Social Policy (1977) (MNE Declaration). Amended in 2000 and 2006. Sets core labor principles and promotes effective practices for both multinational and domestic enterprises in the areas of employment, skills training, conditions of work and life, and industrial relations. Is the only international instrument on socially responsible business practices that has been agreed to by governments and representatives of workers’ and employers’ organizations. Framework for companies who want to be in a relation with the ILO.

Update of the MNE Declaration Extend the application of the MNE Declaration to supply chains. Provide guidance to workers and firms on how to maximize the positive economic and social impacts of global supply chain operations. In a revised MNE Declaration the ILO could provide an optional framework to GFA parties for conflict resolution including mediation or arbitration services. Amend the Chapter “Industrial Relations” in the MNE Declaration with specific recommendations on transnational collective bargaining and consultation rights. Create an enabling environment for GFAs; technical assistance and capacity building measures for small and medium-sized suppliers (ILO’s public private partnerships (PPPs).

Conclusions To further strengthen GFAs the involvement of local unions throughout the GFA process, from its initiation, through negotiations, and implementation is crucial. Beyond 2015, for a next generation of GFAs, it is important to further improve the quality of the agreements. The agreements have to be based on cross-border labour relations and involve local unions at the ground. Strengthen implementation, monitoring and conflict resolution procedures. Revise and update the MNE Declaration to provide an optional framework to GFA parties for conflict resolution including mediation or arbitration services.

Excursus: Implications of the UN Guiding Principles on Business and Human Rights The UN Guiding Principles on Business and Human Rights (UNGP) do not build on strong labor relations. The UNGP clarify responsibilities of States and MNEs. The responsibilities of MNEs under the UNGP can go beyond their commitments in GFAs. The UNGP establish the following responsibilities of MNEs: to prevent and mitigate human rights violations throughout its entire supply chain. to exert its influence in minority shareholdings. to increase its “leverage” over suppliers by offering capacity building measures or collaborating with other actors (trade unions). Therefore, the UNGP can provide arguments for stronger and more comprehensive formulations when negotiating new GFAs. However, the starting point for negotiations need to be labor relations.

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