The International Framework for Employee Relations: What’s Behind it All?

I’m Alan Wild and welcome to the Wild side podcast series … managing global employee relations in modern times 10 minutes at a time.  Today is the first of three episodes dealing with the international framework for employee relations.   We’re going to talk about the United Nations, the International Labour Organization, and the OECD, the Organisation for Economic Cooperation and Development.  If you wonder whatever national labour code in the world you look at, they cover similar issues in similar ways … that is because they are all based on the Conventions of the International Labour Organization.  There are exceptions … and the United States is one …    but all of that in a moment.

As you know by now, I’m a Senior adviser on global employee relations to the HR Policy Association … the leading voice of CHRO’s today.  Welcome to the Wild Side.

The International Labour Organization was established right after the First World War in 1919 and its formation was a part of the Treaty of Versailles.  For those familiar with the ILO and who suggest that it is more open to the voice of labour than business … you are correct.  Employers find voice in many organizations like the World Bank, the International Monetary Fund, the World Economic Forum and to an extent the OECD … the ILO is a place where labour has probably more than equal voice.  So why did the employers of the traded nations that won the first world war enthusiastically agree to the creation of the ILO.  Put simply, the ILO was established to combat the rise of Communism by giving a voice to workers in the world’s market economies.  

The ILO is a tripartite body comprising representatives of employers’ organizations, trade unions and governments … I won’t go into the complex decision making and voting processes. I was on the Governing Body of the organization and later its Chief Human Resources Officer based at the Geneva headquarters.  

The organization negotiates and agrees the international labor Conventions that are used by national governments across the world to set national labor laws.  The “standard setting” part of the ILO has many critics. The truth is that in addition to the setting and assuring the application of employment laws, the organization does a huge amount in the areas of child labour, forced labour, social security and small business development in emerging economies.  In the 10 minutes we have I’ll focus on what the ILO calls standard setting. 
 It is really important to understand that the ILOs Conventions apply to the Governments that ratify them and NOT to companies.  The ILO cannot accept complaints about the behaviors of companies … it can only accept complaints about countries that have ratified Conventions but failed to apply them properly.  Any company codes of conduct that commit to following ILO core Conventions are making a major mistake … but more of that later.  

The ILO has developed an international labor code of some 190 Conventions throughout its 100 plus year history.  In recent years though, it has spent very little time developing new Global Employment Standards.  The latest Convention, number 190, and passed in June 2019 deals with the “Elimination of Violence and Harassment in the World of Work”.  This is consistent with the focus across the globe on harassment at work brought into sharp relief by the #Metoo movement.

The ILOs 190 Conventions have been ratified by varying numbers of countries. I chaired the world employers in strong opposition to the “The Working Conditions (Hotels and Restaurants) Convention”, 1991.  Although it was passed by majority vote of governments and workers at the conference in Geneva, just 16 countries from around 190 ILO member states have ratified it … employer opposition has made it a “dead letter” insofar as national law makers are concerned.   Things are very different however on the ILOs big ticket items.  These are the eight core … or fundamental … Conventions. You will most likely have heard of these, and many people know the numbers of two of them. Conventions 87 and 98 on questions of Freedom of Association and Collective bargaining. There are two Conventions each on forced labour, child labour, gender equality and trade union recognition that are widely ratified by the vast majority of the world’s countries.  The most ratified is … perhaps not surprisingly … Convention 182 on the worst  forms of child labour which has been universally ratified by every ILO member state. The last to do so being Tonga in 2020.

Other work underway in the ILO at the moment is focused on three issues; the future of work; the gig economy and contract workers; and most recently artificial intelligence in the workplace.  

Let’s go back to those Conventions …. as I said, the ILO is most famous for its eight core or fundamental Conventions and these find their way into the Work of the United Nations, the OECD, company codes of conduct, international framework agreements with international trade unions and independent codes of practice  like that of the Fair Labor Association.  You will recall that I stressed that ILO Conventions apply to countries and not companies. Why does that matter so much? Well …  Article four of Convention 98 says those ratifying the Convention should; “encourage and promote the full development and utilisation of machinery for voluntary negotiation between employers or employers' organisations and workers' organisations, with a view to the regulation of terms and conditions of employment by means of collective agreements.”  The idea is that governments should promote collective bargaining through laws that provide for trade union recognition for collective bargaining … like those in the US requiring majority employee support.  If a company were to agree to the terms of the Convention there is nothing to stop it introducing collective bargaining in their workplace of its own accord and in line with the  “encourage and promote” commitment.

With that important point made, let me talk about how the core Conventions actually find their way directly into companies through organizations outside of the ILO.  It all changed in 1998 with the agreement between employers, unions and governments on “The ILO Declaration on Fundamental Principles and Rights at Work”. Prior to this time ILO Conventions could not have global applicability as they had not been universally ratified by all countries … especially as the United States, then the world’s biggest economy had only ratified two of the eight core conventions.  Another of the world’s biggest economies, China, has only ratified four of the eight conventions … not having accepted those on forced labour and trade union recognition.  

So why in 1989 did the world’s employers agree to an instrument that brought ILO Conventions to their doorstep. The Declaration on fundamental rights was signed at a time when the World Trade Organization was at the point of including core labour rights into trade Treaties.  The ILO responded with a binding instrument that confirmed the agreement of every country in the world … not to the Conventions themselves … but to the fundamental principles that underpin the Conventions on equality, slavery, child labour and trade union rights.    This kept the definitions of labour rights within the ILO, but also opened the door to a new world … and it wasn’t long before the United Nations itself acted.

First came the UN Global Compact. Although the United Nations had touched on employment issues in the aspirational Universal Declaration on Human Rights in 1948, their work in the modern era started with the launch of the voluntary Global Compact initiative in 2003. The Compact is made up of Ten Global Principles on Human Rights, Labor, the Environment and Anti-corruption and has around 17,000 company members in 160 countries. The obligations on companies are light … it is voluntary, requires acceptance of principles only, and the reporting of company progress in some form.

The work of the UN took on a new form with the launch of the Ruggie Principles published in 2008 and adopted by the Human Rights Council in 2011. The principles solidified issues that had long debated in a practical “Framework for Human Rights in the Workplace”. The framework is based upon the late John Ruggie’s  “protect, respect and remedy” concept.  It set out for the first time the role of government to protect their citizens; companies to respect their obligations to their employees and workers in their sphere of control … the supply chain; and the rights of victims to remedy. Again, business generally supported the Human Rights Principles … first because it was hard not to, but it also gave clarity to the role of companies. The RESPECT principle places the responsibility for due diligence in supply chain operations in the hands of the companies at the head of the supply chain.  The principles themselves spawned detailed work by Ruggie and others putting the principles into action and reporting on outcomes.

Many companies today follow these principles and use them as a base for human rights audits and reporting within the company and in the supply chain.  The framework remains voluntary, although the ideas within it have been adopted by employers’ organizations and amongst many international companies. Its power has gone beyond pure voluntarism because of pressure to apply through stakeholders and name and shame campaigns from activist NGOs and trade unions.   Future prospects are for making the standards, reporting requirements and complaints mechanisms mandatory.  This shift from soft law to hard law has already been jumped on by a number of countries who have built supply chain responsibility into their national laws … a good example is the UK law on modern forms of slavery which goes beyond national boundaries and hold a company responsible in national law for its behaviors around the world.  This will shortly take a massive leap in the European Union with a Directive on supply chain standards. 

Let me talk for a few moments about another institution that makes supra national employment laws. The European Union adopts laws, or Directives, that apply to member states and onward to companies through national legislation.  EU Directives are Europe’s equivalent of Conventions, and there are many of them.  The EU however has had a greater impact on the world of work in Europe in that their Directives must be adopted by member states and the European Court of Justice is available for complaints and acts as a Court of Appeal.  Whilst the ILOs powers are by and large limited to name and shame penalties and potentially trade sanctions, the ECJ has enormous power …  the 2019 decision of the European Court of Justice that requires member states to assure the detailed and accurate recording of all working time for all employees needs to be followed in every member state.    The EU has also found a way to focus on international companies specifically, with laws like the European Works Council Directive, requiring companies to inform and consult international groups of employee representatives on a systematic basis.  The EU is also expressing an interest in new measures in four areas; a tightening of the requirements of the EWC Directive; new laws on the gig economy; the extension of supply chain standards including “human” (i.e. labor) rights; and Artificial intelligence in the workplace.

Finally, and well worth a mention, is the OECD and the further development of the OECD Guidelines for Multinational companies.  The guidelines can and are used against companies specifically. They have been tightened over recent years and their complaints mechanism used increasingly against companies headquartered in the OECD member states. Some 650 cases have involve Maersk, Pepsi, Uber, Credit Suisse and FIFA..  The complaints mechanism has become a weapon of choice by the International Foodworkers’ Union (IUF) and more recently IndistriALL to draw attention to the behaviors of companies in countries outside of the OECD.  
  
So that is an introduction to the international framework for employee relations in ten minutes … and of course there is so much more. In this vein look out for two more episodes dealing with the International Trade Unions and Corporate Campaigns.

If you want to learn more about what we do or participate in one of our formal programs you can get me on awild@chro.org or on Linked In.

I’m Alan Wild and you have been listening to “a walk on the wild side”.