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Multinationals dominate the economy but no international body exists to defend workers in supply chains.
How do we seek justice and remedy for the world’s workers? The closest thing we have to an international labour court is the Committee on the Application of Standards of the International Labour Organization. CAS hears reports of violations of workers’ rights during the International Labour Conference every summer. But it only hears complaints against governments, not companies, and has little power to sanction.
It is technically feasible for the ILO to manage global labour arbitration through an international agreement, akin to the Paris Agreement on climate change or the Universal Declaration of Human Rights. This however would require the political will of member states, currently lacking.
The ILO was founded in 1919 to create institutionalised compromise between capital and labour, managed through tripartite structures with the state and overseen by standards set by an international body. The impetus behind the oldest international organisation in the United Nations system was the first world war and fear of revolution. After the war tore apart the structures of the old world, revolutionary waves spread through Russia, Germany and elsewhere. The governments of the world realised that without social justice there would be no peace, and set about creating a global body to govern the world of work through social dialogue.
As the threat of revolution has faded, and capitalist realism come to dominate, there has been a retreat from the values of the ILO. States have colluded to undermine the right to strike and ILO conventions are often not respected. The global resurgence of authoritarian regimes means that there are growing violations of workers’ rights worldwide. Even in advanced democracies, labour laws have been loosened or avoided with the development of platform work and workers’ rights have taken a significant step backwards.
Despite the decline in the influence and status of the ILO, the need to manage capital and prevent its worst excesses remains, and the idea of a global deal between capital and labour has reasserted itself in other ways. In the absence of a robust international system upheld by global social dialogue, a patchwork of measures has emerged to hold companies to account.
Global supply chains
Many consumers are appalled to learn that the products they buy are produced by exploited workers and have demanded action from companies and governments. The result has been a growing body of legislation governing global supply chains.
The most advanced is the German supply-chain legislation, the Lieferkettengesetz. From January 1st, workers and their advocates will be able to sue German companies in German courts for environmental and human-rights breaches, including of workers’ rights. Similar if less ambitious legislation exists elsewhere and the European Commission has proposed a directive on due diligence.
The Guidelines for Multinational Enterprises from the Organisation for Economic Co-operation and Development offer another avenue. These are not legally binding but each of the 50 adhering countries has a national contact point which handles grievance resolution. Negotiations are also under way on a UN Binding Treaty on Business and Human Rights. IndustriALL Global Union calls for an International Labour Conciliation and Arbitration (ILCA) mechanism to enforce binding agreements between global unions and multinational corporations.
In 2016, IndustriALL and UNI Global filed an arbitration case with the Permanent Court of Arbitration in The Hague against two garment brands, for violations of the Bangladesh Accord established in the wake of the Rana Plaza disaster in 2013. The PCA is an international service which can resolve contract disputes through arbitration, conciliation and mediation. The Bangladesh case was the first time it had been used to resolve a dispute between global unions and multinational corporations.
One brand reached a settlement in December 2017, the other the following month. In 2018, the PCA closed the case as the brands had met all the terms of the settlements, including paying more than US$2.3 million towards remediating unsafe conditions in Bangladesh ready-made garment factories. The accord distributed the money to eligible factories.
While this victory was important, the process was expensive, time-consuming and complex, showing the need for a better way to resolve international labour disputes. In the settlement, the brands also contributed to the global unions’ Supply Chain Worker Support Fund. This was used to support development of an ILCA mechanism, based on The Hague Rules on Business and Human Rights Arbitration. The Hague Rules put into practice the UN Guiding Principles on Business and Human Rights, creating a robust tool, in line with international standards, which can be incorporated in agreements between global unions and multinational companies.
The labour movement has taken collective bargaining to a global level through Global Framework Agreements with multinationals. Since the first GFA—between IUF, the food workers’ international, and Danone in 1988—many more have been signed.
GFAs use the collective bargaining power of the union in a multinational’s home country to extend workers’ rights to other countries where the company operates, usually guaranteeing—as a minimum—neutrality and no attempts to stop workers from unionising. Although some GFAs have a legal basis in national law, it is difficult to enforce them in all jurisdictions. In some cases there is no sanction for violation, except withdrawal from the agreement.
To create a legally-binding GFA with a mechanism for resolving disputes, an ILCA mechanism would need to be included. But companies are reluctant to sign binding agreements, seeing them as bringing liabilities without benefits.
It was the need to be seen to take action after Rana Plaza which led many global garment brands to sign the legally-binding Bangladesh Accord with UNI and IndustriALL. The accord has since been expanded into an International Accord, focusing on health and safety in the sector. The terms make it binding because it is enforceable in the signatories’ home countries.
The absence of a single global system has led to a patchwork of mechanisms to hold companies to account. This is becoming increasingly dense and complex, and innovative work is being done to piece together global grievance mechanisms from existing components. Even in the absence of global agreements that include an ILCA mechanism, unions have been able to win justice for workers by combining legislation, OECD guidelines, commitments made in collective agreements, company codes of practice and so on.
In the textile and garment sector, for example, unions use:
- the legally-binding International Accord, signed by 174 brands;
- the ILCA mechanism, with which accord members can resolve disputes;
- GFAs between global unions and brands;
- union networks, which allow home-country unions to raise issues on behalf of unions in producer countries, and
- legislation in a growing number of countries requiring brands to demonstrate due diligence.
Because many developing countries do not have well-developed industrial-relations or social-security systems, some brands have partnered with unions to develop tripartite social dialogue through the Action, Collaboration, Transformation programme. ACT includes a grievance-resolution mechanism, which the parties involved—global brands, supplier factories and global and national unions—accept as binding.
As this network of laws, agreements and mechanisms grows, the framework for a global system begins to take shape. But as these instruments are binding only in some jurisdictions, they give a competitive advantage to companies based in countries where they are free to violate workers’ rights, while companies which need to demonstrate due diligence are at an expensive disadvantage.
The most obvious case is China, where many of the world’s products are produced by workers with no right to independent representation. But we should not forget that the United States has failed to ratify core ILO conventions. Many US states have restrictive anti-union laws, and north-American companies have generally failed to sign the International Accord, GFAs and other global agreements.
In the long term, we thus need a binding UN treaty and an ILO convention on supply chains, as well as a global system of arbitration managed through the ILO or a separate panel along the lines of the International Panel on Climate Change. The best way to achieve the necessary political will is to demonstrate that a global system is less complex and more just than a patchwork of cobbled-together standards. It is in the interests of companies and countries to insist on a level playing-field for workers’ rights, as the World Trade Organization does for trade.
The best dispute resolution is local: a global arbitration system would function by supporting robust national systems, with independent unions, employers’ associations and governments aiming to resolve disputes at the lowest level possible—ideally the workplace, through the involvement of the union. If this fails, remedy could be sought through the national arbitration system—countries would need social-security arrangements capable of distributing remedies to workers, as well as unemployment benefits, pensions and so on—and only as a last resort the global system.
There are growing calls worldwide for basic workers’ rights to be universally recognised and respected. Many workers in developed countries have seen the link between exploitation in developing countries and lower wages and the erosion of their rights at home. Global labour standards stop the ‘race to the bottom’ and protect workers everywhere.
Unions need to help shape this call into a global system that can hold capital to account and deliver justice to workers everywhere.
This is an edited version of an article on the IndustriALL web site, a version of which also appeared on Equal Times