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The ILO Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy and The OECD Guidelines for Multinational Enterprises INTERNATIONAL TRAINING CENTRE OF THE ILO - Turin (Italy) 26 November 2003 (Fons


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Title: The ILO Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy and The OECD Guidelines for Multinational Enterprises INTERNATIONAL TRAINING CENTRE OF THE ILO - Turin (Italy) 26 November 2003 (Fons

The ILO Tripartite Declaration of Principles
concerning Multinational Enterprises and Social
PolicyandThe OECD Guidelines for
Multinational Enterprises INTERNATIONAL
November 2003(Fons Vannieuwenhuyse ICFTU)
What are they?
  • The ILO Declaration and the OECD guidelines
    express the shared view of what is believed to be
    good corporate behaviour.
  • Both are a set of recommendations for
    multinational enterprises agreed by
    governments, trade unions, employer federations
    and, in the case of the OECD Guidelines, some

What they have in common
  • At the national level, they do not replace
    binding regulations (the law) to govern corporate
    activity and global markets.They are in
    addition to that.
  • At the international level, in the almost
    complete absence of international legally binding
    rules, the ILO Declaration and the OECD
    Guidelines are one of the very few agreed
    international instruments for trade unions to
    help create an environment in which workers can
    organise and unions can freely perform their

  • They are not binding in a legal sensebut as
    they have been adopted by governments (i.e.
    governments agreed that this is what is expected
    of companies) they are not voluntary either.
  • They are minimum standardsThis is different
    from a if you want to do something more than the
    others, this is what you can do approach.

  • Their application does not depend on the
    endorsement of companies, as they have been
    adopted at the international level and apply to
    companies in general.
  • Companies can also not pick and choose among the
    provisions of the Declaration and the Guidelines,
    nor subject them to their own interpretations.
  • For both instruments, there is a procedure to
    determine what they actually mean.

No definition of a multinational
  • (ILO Declaration) to serve its purpose this
    Declaration does not require a precise legal
    definition of multinational enterprises.
  • (OECD Guidelines) A precise definition of
    multinational enterprises is not required for the
    purposes of the Guidelines.
  • ()
  • The Guidelines are addressed to all the entities
    within the multinational enterprise (parent
    company and/or local entities).Encourage,
    where practicable, business partners, including
    suppliers and sub-contractors, to apply
    principles of corporate conduct compatible with
    the Guidelines

The difference between them
  • In very general termsThe ILO Declaration has
    more detailed recommendations on labour issues,
    while the OECD Guidelines cover a broader range
    of corporate activities.

  • Both were agreed upon and adopted in the 70s, at
    a time when there was public concern that
    Multinational enterprises were becoming too
    powerful.The OECD Guidelines were adopted in
    1976, the ILO Declaration in 1977. A few years
    later, the negotiations about a UN code on
    Transnationals failed.
  • There was a first phase where both were used
    actively, until the middle of the 80s. Several
    cases on the Guidelines were handled during the
    first 10 years following their adoption.

  • A second phase (during the wild years of
    liberalisation), when they were not used much,
    lasted until the end of the 90s.
  • During the 90s, there was a lot of public action
    concerning specific companies and sectors, that
    became notorious because of their negative
    labour, human rights and environmental
    practices.At the end of the 1990s, this led to
    a boom in Corporate Social Responsibility and
    to much greater public awareness about these
    problems The third fase.
  • As part of this, there was a re-awakening of
    both instruments, mainly of the OECD Guidelines,
    leading to an important revision of the OECD
    Guidelines in 2000. This was also partly a result
    of the failure of the Multilateral Agreement on
    Investment (MAI)

  • The ILO Tripartite Declaration of Principles
    concerning Multinational Enterprises and Social

What is the Declaration about?
  • The ILO Declaration is a set of recommendations
    concerning basic labour practices, based on ILO
  • The Declaration is universally applicable and

  • The significance of the ILO Tripartite
    Declaration is that it identified a long list of
    conventions that contain principles that are
    appropriate to apply to enterprises as well. In
    that sense, it is an important and historic
  • A number of the ILO core conventions were
    transposed so that the principles would apply
    to enterprises as well.

  • Extracts of the ILO Declaration

  • The ILO declaration has three different chapters
  • General Policies
  • Employment promotion
  • Equality of opportunity and treatment
  • Security of employment
  • Training
  • Conditions of work and life
  • Wages, benefits and conditions of work
  • Safety and Health
  • Industrial relations
  • Freedom of Association and the right to organise
  • Collective bargaining
  • Consultation
  • Examination of grievances
  • Settlement of industrial disputes

  • Through international direct investment and
    other means, enterprises can bring
    substantial benefits to home and host countries.
  • On the other hand, the advances made by
    multinational enterprises may lead to abuse of
    concentrations of economic power and to conflicts
    with national policy objectives and with the
    interest of the workers.

Employment promotion
  • Multinational enterprises, particularly when
    operating in developing countries, should
    endeavour to increase employment opportunities
    and standards.
  • Multinational enterprises should give priority
    to the employment, occupational development,
    promotion and advancement of nationals of the
    host country at all levels.

Equality of opportunity and treatment
  • All governments should pursue policies designed
    to promote equality of opportunity and treatment
    in employment, with a view to eliminating any
    discrimination based on race, colour, sex,
    religion, political opinion, national extraction
    or social origin.

Security of employment
  • In considering changes in operations (including
    those resulting from mergers, take-overs or
    transfers of production) which would have major
    employment effects, multinational enterprises
    should provide reasonable notice of such changes
    to the appropriate government authorities and
    representatives of the workers in their
    employment and their organizations so that the
    implications may be examined jointly in order to
    mitigate adverse effects to the greatest possible
    extent. This is particularly important in the
    case of the closure of an entity involving
    collective lay-offs or dismissals.

  • multinational enterprises should ensure that
    relevant training is provided for all levels of
    their employees in the host country, , to meet
    the needs of the enterprise as well as the
    development policies of the country.
  • Such training should, to the extent possible,
    develop generally useful skills and promote
    career opportunities.

Wages, benefits and conditions of work
  • Wages, benefits and conditions of work offered
    by multinational enterprises should be not less
    favourable to the workers than those offered by
    comparable employers in the country concerned.
  • They should be at least adequate to satisfy
    basic needs of the workers and their families.

Safety and health
  • Multinational enterprises should maintain the
    highest standards of safety and health, in
    conformity with national requirements .

Industrial relations
Freedom of association and the right to organise
  • Workers employed by multinational enterprises,
    as well as those employed by national enterprises
    should, without distinction whatsoever, have the
    right to establish and, subject only to the rules
    of the organization concerned, to join
    organizations of their own choosing without
    previous authorisation.
  • They should also enjoy adequate protection
    against acts of anti-union discrimination in
    respect of their employment.

  • Where governments of host countries offer
    special incentives to attract foreign investment,
    these incentives should not include any
    limitation of the workers' freedom of association
    or the right to organize and bargain

Collective bargaining
  • Workers employed by multinational enterprises
    should have the right, in accordance with
    national law and practice, to have representative
    organizations of their own choosing recognized
    for the purpose of collective bargaining.
  • Measures appropriate to national conditions
    should be taken with a view to the regulation
    of terms and conditions of employment by means of
    collective agreements.

Follow-up procedure
  • The ILO Declaration is, unfortunately, not very
    effective in practice.
  • This is, in large part, because the procedures
    for implementation are weak.
  • It basically relies on
  • periodic surveys to accomplish its work.
  • a procedure for submission of cases for
    interpretation to a sub-committee of the ILO
    Governing Body on Multinational Enterprises. This
    comes in the form of requests for

  • The procedure excludes any cases concerning
    violation of freedom of association and the right
    to collective bargaining. Such cases are
    better dealt with in the Committee of Freedom of
    Association of the Governing Body.
  • For other cases, the receivability rules make
    access difficult. There have been only a small
    handful of cases in history.It has been very
    difficult for requests for interpretation to be

  • There is also no problem-solving role for the ILO
    Declaration as there is for the OECD Guidelines.
  • Trade unions had hoped that this would in effect
    create an international complaint procedure
    against specific companies but, in fact, specific
    companies are not mentioned.

The OECD Guidelines for Multinational Enterprises
(OECD Organisation for Economic Co-operation and
What are the OECD Guidelines for Multinational
  • The text (the guidelines) are recommendations for
    good corporate behaviour, primarily addressed to
    enterprises whose headquarters are based in those
    countries that adhere to them.
  • The adhering countries are the 30 OECD countries
    -plus Argentina, Brazil, Chile, Estonia,
    Lithuania, Slovenia and Israel.
  • However, they apply to the corporate activities
    of companies from these countries wherever they
    operate worldwide.

OECD member countries
  • Australia Korea
  • Austria Luxembourg
  • Belgium Mexico
  • Canada Netherlands
  • the Czech Republic New Zealand
  • Denmark Norway
  • Finland Poland
  • France Portugal
  • Germany the Slovak Republic
  • Greece Spain
  • Hungary Sweden
  • Iceland Switzerland
  • Ireland Turkey
  • Italy the United Kingdom
  • Japan the United States

The contents of the Guidelines
  • I Concepts and Principles
  • II General Policies
  • III Disclosure of Information
  • IV Employment and Industrial Relations
  • V Environment
  • VI Combating Bribery
  • VII Consumer Interests
  • VIII Science and Technology
  • IX Competition
  • X Taxation

  • Extracts of the OECD Guidelines

II. General Policies
  • Enterprises should
  •  Respect the human rights of those affected by
    their activities consistent with the host
    governments international obligations and

  • Enterprises should
  •  Encourage, where practicable, business
    partners, including suppliers and
    sub-contractors, to apply principles of corporate
    conduct compatible with the Guidelines 

III. Disclosure
  •  Ensure that timely, regular, reliable and
    relevant information is disclosed regarding
    activities, structure, financial situation and
  •  Apply high quality standards for disclosure,
    accounting and audit 

IV. Employment and Industrial Relations
  • Enterprises should,
  • Respect the right of their employees to be
    represented by trade unions and other bona fide
    representatives of employees, and engage in
    constructive negotiations, either individually or
    through employers associations, with such
    representatives with a view to reaching
    agreements on employment conditions.

  • Contribute to the effective abolition of child
  • Contribute to the elimination of all forms of
    forced or compulsory labour
  • Not discriminate against their employees with
    respect to employment or occupation on such
    grounds as race, colour, sex, religion, political
    opinion, national extraction or social origin,
    unless selectivity concerning employee
    characteristics furthers established governmental
    policies which specifically promote greater
    equality of employment opportunity or relates to
    the inherent requirements of a job.

  • Provide information to employees and their
    representatives which enables them to obtain a
    true and fair view of the performance of the
    entity or, where appropriate, the enterprise as a
  • Take adequate steps to ensure occupational
    health and safety in their operations.
  • employ local personnel and provide training with
    a view to improving skill levels

In case of relocation
  • In considering changes in their operations which
    would have major effects upon the livelihood of
    their employees, in particular in the case of the
    closure of an entity involving collective
    lay-offs or dismissals, provide reasonable notice
    of such changes to representatives of their
    employees, and, where appropriate, to the
    relevant governmental authorities,
  • And co-operate with the employee representatives
    and appropriate governmental authorities so as to
    mitigate to the maximum extent practicable
    adverse effects.

  •  In light of the specific circumstances of each
    case, it would be appropriate if management were
    able to give such notice prior to the final
    decision being taken.
  • .while employees are exercising a right to
    organise, not threaten to transfer the whole or
    part of an operating unit from the country
    concerned nor transfer employees from the
    enterprises component entities in other

V. Environment
  • Reflects the principles and objectives in the Rio
  • Provide adequate education and training to
    employees in environmental health and safety

VI. Combating Bribery
  • Enterprises should not, directly or indirectly,
    offer, promise, give, or demand a bribe or other
    undue advantage to obtain or retain business or
    other improper advantage.
  • Enhance transparency, and use management control
    systems that discourage bribery.

VII. Consumer Interests
  • Enterprises should take all reasonable steps to
    ensure the safety and quality of the goods or
    services they provide.

Chapter VIII-X
  • VIII Science and Technology
  • Adopt practices that permit transfer and
    diffusion of technologies and know-how in the
    countries where they operate.
  • IX Competition
  • Refrain from anti-competitive activities like
    fixed prices.
  • X Taxation
  • Comply with tax laws and regulation and provide
    information to authorities.

The review of the Guidelines 1998-2000
  • The Guidelines were revised in 1979, 1982, 1984
    and 1991
  • A major revision took place in 1998 2000, in
    consultation with trade unions, business and NGOs

  • Resulted in major improvements
  • global applicability of the Guidelines
  • reference to the supply chain
  • stronger language on human rights
  • two new chapters on bribery and consumer
  • reinforced chapter on environment and
  • enhanced implementation procedures

National Contact Point (NCP)
  • According to the OECD Guidelines, every adhering
    country has to set up a National Contact Point
    (NCP) to  promote and implement the
    Guidelines .The NCP role has been made much
    more important after the revision of 2000.

  • Governments have to set up these NCPs within
    their administration (e.g. inside a ministry, or
    as an multi-agency, covering several
  • NCPs can be organised differently (tripartite,
    tripartite NGO, or government office)-
    governments have the ultimate responsibility.
  • Representatives of labour, business and other
    interested parties (NGOs) need to be informed of
    their availibility.
  • NCPs shall develop and maintain relations with
    representatives of trade unions, business and

What do they do?
  • NCP are supposed to
  • Promote the guidelines
  • Prepare reports on their activities for the OECD
    Committee on International Investment and
    Multinational Enterprises (CIME).
  • Meet annually to share their experiences with
    their counterparts.
  • One of its main functions is problem solving

In case of a violation of the Guidelines
  • When a company is believed to be in violation of
    the Guidelines, a trade union or other party can
    raise the case with the NCP. (the OECD refers
    to a Guidelines case as a specific instance)
  • Cases can be brought to the NCP of the country
    where the violation of the guidelines is
    occurring, or to the NCP of the country where the
    company involved has its headquarters.
  • The NCP first has to make an initial assessment
    as to whether the case merits examination (and
    give reasons if it thinks the case doesnt merit

  • If the case goes ahead, the NCP is required to
    help the parties to resolve the problem.
  • The NCP will act as a forum for discussion and is
    supposed to assist the parties involved in an
    efficient and timely manner. It can (and is
    supposed) take the following steps
  • Offer conciliation or mediation to assist in
    dealing with the issues.
  • Seek advice from relevant authorities, trade
    unions, business, NGOs and other experts.
  • Consult the NCP in the other country or countries
  • Seek guidance of the CIME where there is doubt
    about the interpretation of the Guidelines.

In case that doesnt work
  • If the parties are unable to agree on how to
    solve the problem, the NCP is normally required
    to issue a public statement on the case.
  • If appropriate, it should make recommendations to
    the parties on how the Guidelines apply to the
    case. NCPs may, therefore, inform a company that
    its activities breach the Guidelines.
  • There are some limits as to publicly commenting
    on the case (facts and arguments may bring some
    people in danger) but in essence, if the parties,
    after the proceedings, still do not agree, they
    are free to comment publicly on the case.

One step higher
  • The OECD headquarters have a body that is
    responsible for the guidelines CIME (the
    Committee on International Investment and
    Multinational Enterprises)
  • CIME is the next step in the procedure when
    things go wrong at the national level.
  • It is the forum where requests are considered for
    assistance from the NCPs about how to carry out
    activities, including handling specific cases.
    This includes how to interpret the guidelines
    when a problem arises.

  • Trade unions, employers or governments also have
    the right to take a case to the CIME if they
    believe that an NCP has not fulfilled its
    procedural responsibilities related to a
    specific case.But they have to go through the
    NCP procedure first.

  • CIME is the body that can clarify the OECD
  • In an important clarification to the meaning of
    freedom of association, CIME has stated that
    The thrust of the Guidelines in this area is
    towards management adopting a positive approach
    towards the activities of trade unions and other
    bona fide representatives of employees of all
    categories and, in particular, an open attitude
    towards organisational activities of workers
    within the framework of applicable rules and

  • If the procedure has been followed and the
    company still refuses to change its behaviour
    then the involved trade union organisation(s)
    should return to the NCP and request
  • The procedure foresees some form of closure of
    the procedure, after which the argument can be
    used that the company is refusing to comply.

Did the revision work?
  • There are signs that many governments are taking
    their responsibilities to implement the revised
    Guidelines seriously.
  • Many NCPs that were previously dormant or
    non-existent have been re-activated.
  • The OECD guidelines are mentioned by many
    different organisations and in many documents,
    statements or decisions.

  • The OECD guidelines have been used as benchmarks
    in resolutions by the European Parliament and
    communications from the European Commission.
  • The Dutch Government has taken the decision to
    link access to export credits to companies'
    compliance with the OECD Guidelines for
    Multinational Enterprise
  • Some of the framework agreements have borrowed
    text from the Guidelines.

Who does what?
  • On the trade union side, a lot of the work
    related to the OECD Guidelines is being carried
    out by TUAC (Trade Union Advisory Committee to
    the OECD).
  • TUAC is based in Paris, represents national trade
    unions centres of the member countries of the
    OECD with the OECD. Most TUAC affiliates are
    also affiliated with the ICFTU.

  • TUAC has consultative status with the OECD and
    its various committees.  It co-operates closely
    with the ICFTU and the GUFs on a wide variety of
    economic policy, sectoral and other issues.
  • Obviously, as all this concerns international
    issues, all the Global Union Federations have an
    important role to play in bringing forward and
    developing cases.

Concrete examples
  • Before the revision of 2000
  • The Renault case Belgium 1997
  • The question what constitutes reasonable notice
    of changes in operations? (the company announced
    one morning that the factory in Belgium was going
    to close)
  • The answer it would be appropriate, in the
    light of the specific circumstances of each case,
    if management were able to provide such notice
    prior to the final decisions being taken.

  • The Rio Tinto case Australia 1999
  • The question Is compliance with national law
    necessarily, in of itself, sufficient to conform
    to the Guidelines? (the company wanted to
    replace collective bargaining with individual
    contracts the Australian NCP decided that this
    was no in breach with the Australian law)
  • The answer Although compliance with national
    law is necessary, this is not necessarily
    sufficient to observance the Guidelines.The
    guidelines are not substitute for national
    lawsThey represent supplementary standards of
    behaviour of a non-legal character).

  • After the revision of 2000
  • Marks and Spencer - 2001(announcement of
    closure done without prior consultations)
  • Result French NCP stated publicly that MS had
    not consulted its employees properly. In a
    letter to the company, the NCP pointed out that
    the company had violated the Guidelines.

  • Several cases have been introduced in relation to
    companies operating with Burma.(in France,
    Sweden, USA, Canada, UK and the Netherlands to
    NCPs on companies in their countries and by TUAC
    to CIME for clarification)
  • The results varied. Some cases are ongoing.
  • CIME replied to TUAC that delegates emphasise
    the important contribution that observance of the
    Guidelines recommendations by MNEs can make to
    the elimination of all forms of forced or
    compulsory labour, in Myanmar and
    elsewhere.The AFL-CIO never received a reply.
  • In France, Accor left Burma. In the Netherlands,
    the case was stopped as the Premier Oil left

  • A number of cases were settled after the
    companies involved agreed to negotiate and take
    part in social dialogue.
  • Siemens and Bosch Czech republic 2001
    (companies threatened to fire workers if they
    formed a union).
  • Choi Shin/Cima textiles (Korean firm) harrased
    and threatened workers in Guatemala as part of an
    anti-union campaign.(case raised by the
    ITGLWF)Result the company signed a first
    collective bargaining agreement and started to
    reinstate the union members that had been

  • In general, the results of the work of the NCPs
    and/or the further decisions and clarifications
    by CIME have been satisfactory for many cases,
    from a trade union point of view.
  • In some cases, the case didnt go anywhere
    because the information provided was not
    sufficient or not sufficiently clear. Other cases
    did not continue for various reasons.
  • Well prepared cases have a better chance of
    succeeding. TUAC can provide assistance in this

  • Why are the ILO Declaration and the OECD
    guidelines important?

Whats the purpose?
  • Both the OECD guidelines and the ILO declaration
    should be seen as  tools in a toolbox . There
    are many ways to use them.
  • They are, on the one hand, an instrument as such
    and can be the core of a campaign in trade
    union campaigns involving key global corporations
    on issues such as trade union rights violations,
    human rights, supply chain issues, the
    environment, etc..

  • But - they can also be seen as just one part of a
    larger campaign, an extra form of pressure.The
    introduction of a guidelines case (or threat
    thereof) can be considered in addition to other,
    more usual campaign tactics, such as strike
    action or political campaigning at the national

  • Both are international standards that have been
    adopted by governments and others. They
    therefore also are benchmarks for other
    standards. And they (or part of them) can be
    used as an integral part in other benchmarks.

  • With the explosion of all kinds of Corporate
    Social Responsibility efforts, its useful to
    have these instruments to counter self-made
    standards. These are often drawn up by companies
    and used in codes of conduct. Many of these codes
    are vague, dont mean much and do not have
    accepted standards as a basis.
  • Multilateral examples where the Guidelines have
    been used the Global Reporting Initiative,
    Socially Responsible Investment standards, social

  • Unlike, most of what is labelled corporate
    responsibility, the Guidelines do not represent a
    privatisation of the government role to ensure
    that workers rights are protected. Indeed,
    they extend the role of the State so that it
    reaches beyond national boundaries.