World Bank’s potential big step backwards on workers’ rights
The very slow but steady progress among international financial institutions (IFIs) towards recognition that their projects need to comply with fundamental workers’ rights could be reversed if the World Bank adopts the draft social and environmental safeguards policy revision that was leaked about ten days ago. It will be discussed by the World Bank’s Committee on Development Effectiveness this Wednesday, and the TUC is one of several union voices to lobby their national representatives at the World Bank.
In 2006, the World Bank’s private-sector lending arm, IFC, became the first multilateral lending institution to require that its borrowers abide by the ILO’s core labour standards: no child or forced labour or discrimination, and respect of freedom of association and right to collective bargaining. It also required borrowers to provide a safe working environment and written information about working conditions, and to ensure that contract workers receive the same rights and benefits. The European Bank for Reconstruction and Development adopted similar labour requirements for its borrowers in 2008 and the African Development Bank did so in 2013.
The new policy would apply a labour standards requirement, called “Environmental and Social Standard 2: Labour and Working Conditions” (ESS2), to borrowers from the public-sector divisions of the World Bank, IBRD and IDA, for the first time. The absence of a labour safeguard for the majority of the Bank’s loans, which go to public entities, has been criticised by many civil society organisations including trade unions as a recipe for potential abuse, and by the Bank’s own Independent Evaluation Group as a serious inconsistency given that IFC has had such a requirement for several years.
However, if it is adopted in its current form, the new labour safeguard would be an empty gesture, since it would apply to almost no one. ESS2 breaks with the template of the regional development banks’ labour safeguards – and that of IFC – by specifying that it would apply only to “workers employed directly by the Borrower”, thus excluding the employees of contractors and sub-contractors who usually make up the bulk of workers in Bank-funded infrastructure projects.
ESS2 simply deletes the sections on contract or third-party workers and on supply chains that one finds in all the other IFI labour safeguards. This is a major absence, not only because so many of those working on Bank projects are contract workers, but because this category of workers is particularly vulnerable to exploitation and abuse, such as unsafe working conditions, discriminatory practices and unjust dismissals.
The greatest improvements to which the labour standards at IFC and the regional banks have contributed are for sub-contracted workers, as I have written about in the case of Iraq. The exemption of contract workers from ESS2 may in fact constitute an incentive for borrowers and project managers to engage in an even greater degree of sub-contracting.
As for those who would be covered by the new safeguard, the Bank proposes that only a limited section of ESS2 would apply to “government civil servants,” principally the health and safety clauses. These workers would specifically have no right to receive information about their conditions of employment, to a grievance mechanism or to freedom of associations. One wonders who would be covered by the entire ESS2, since all direct employees of the borrowing state entity would normally be civil servants, and all contract workers are exempted.
Last but not least troublesome is the proposal in the new safeguard that the ILO’s core labour standards need not all be complied with in Bank-funded projects. The draft ESS2 requires compliance with specific interdictions concerning forced and child labour and discriminatory practices, but as concerns freedom of association and right to collective bargaining, these rights would only be protected “where national law recognises” them.
This unequal treatment of the different elements of the core labour standards constitutes an important departure from ILO principles and practices. Since the 1998 Declaration on Fundamental Principles and Rights at Work, the ILO has expected member countries to comply with all of the core standards.
It also constitutes a break in precedent with the existing labour safeguards at the IFIs – the IFC and the regional banks that have adopted them – which state that whether or not freedom of association and right to collective bargaining are completely protected in national law, the borrower or contractor “shall not discriminate or retaliate against workers who participate or seek to participate in [workers’] organisations and engage in collective bargaining” (this precise wording is IFC’s).
By not prohibiting managers of World bank-funded projects from taking repressive measures against workers who seek to exercise their freedom of association, as the other IFIs have done in safeguards applied to both public- and private-sector borrowers, ESS2 could potentially acquiesce to inacceptable anti-labour practices.