From the TUC

The new OECD Guidelines for Multinational Enterprises: should workers care?

26 May 2011, by Guest in International, Uncategorized

Yesterday the OECD launched its updated Guidelines for Multinational Enterprises –the key global treaty that can potentially hold big business to account for its impacts on workers and the environment. After 12 months of furious lobbying and negotiations, the new text is definitely a step forward for workers and their unions – but we’re still many steps behind.

Easily the biggest win during the update is the inclusion of the concept of “due diligence” in the text. Developed by the UN Special Representative on Business and Human Rights, John Ruggie, this concept requires an enterprise to identify and address the negative impacts it’s causing, wherever they occur.

Previously it was unclear whether the Guidelines extended into the vast network of supply and distribution chains that multinationals rely on – with their tens of thousands of suppliers and tens of millions of mostly vulnerable workers. Now they do. So workers can potentially challenge a multinational for using the trickery of outsourcing and agency work to deny them their fundamental rights at work – even if they are not directly employed by that company. As I’ve blogged elsewhere:

Under Ruggie’s proposed due-diligence test, the fact that, say, a luxury clothing brand may not have a Delhi home worker on the payroll is irrelevant. If their sourcing contracts are denying her a living wage or resulting in unsafe working conditions, then they need to act.

Elsewhere the new Guidelines have a new chapter on Human Rights and trade unions lobbied hard to secure language on wages for the first time. Now an enterprise should provide: “the best possible wages…  at least adequate to satisfy the basic needs of the workers and their families”. This is not technically a living wage, but is still a big victory.

Yet it doesn’t matter how good the substantive rights are in the new text, if they’re effectively unenforceable. The Guidelines are still non-binding on companies, but with strong procedures backing up an open and public process, the Guidelines have helped bring some companies into line. This brings us to the main battle ground during the update: improving the largely dysfunctional complaints mechanisms set up under the Guidelines.

Under the Guidelines, each signatory government is required to set up a National Contact Point (NCP) – a government body hearing complaints and generally promoting the Guidelines. But they are given a wide discretion under the treaty as to how these NCPs should function. Unfortunately out of the 40 or so signatory governments, barely a handful have functioning NCPs (the UK NCP is generally regarded as one of the best). Some seem to be little more than an in-tray on the desk of a low ranking, overworked civil servant.

Unions sought to include strong procedural rules for NCPs in the update. And the UK government adopted a progressive approach – there’s a statement you don’t read on touchstone everyday – to this issue, largely seeking to introduce its own good procedural rules into the treaty text. And it achieved some success – particularly on requiring time limits for the processing of complaints, and sensible guidance on what an NCP should do when a complaint filed with it is already the subject of a parallel legal proceeding elsewhere.

Most other union priorities on procedural reforms were included, such as establishing an NCP oversight body, conducting peer reviews and improving transparency, but were watered down with language making them optional.

The biggest disappointment for unions on procedure was the failure to require all NCPs to issue a “determination” on whether or not a company had breached the Guidelines. The threat of a public determination is the single most effective way to force companies to adhere to the Guidelines. It is what helped get Unilever to the negotiating table and sign off on a settlement that everyone could live with. Someone else put this much better: “’Mediation without the credible threat of judicial determination is the sound of one hand clapping”.

Determinations are also essential to send a clear, public and government-endorsed message that cowboy companies abusing human rights are in breach of the Guidelines. This is what the UK NCP has done against Afrimex and Vedanta. The problem here is that these cowboys are unlikely to change their practices unless NCPs have the power to impose sanctions against them – something that the UK, let along the OECD Guidelines, isn’t doing yet. Unions and civil society across the globe will now have to work overtime to pressure all NCPs to start issuing determinations with teeth.

On balance, unions globally through our Trade Union Advisory Committee to the OECD have welcomed the new Guidelines. They are certainly better than the version they are replacing. But they are yet to become the fabled silver bullet to hold companies to account – more like a water pistol that can now squirt a bit further.

TUC