Multinationals adopt Framework Agreements

This article by Andrew Bibby, in a slightly different form, was first published in People Management, 2002

Volkswagen wants to be nice. This is, admittedly, not precisely the wording of the company’s new Declaration of Social Rights and Industrial Relations which VW signed with international trade union bodies this summer (2002). Nevertheless the text is spiced with fine words designed to demonstrate VW’s dedication to core labour standards and to what it calls ‘social commitment’ in employment opportunities.

Volkswagen is the first motor manufacturer to choose to sign a so-called ‘framework agreement’ with the unions, in this case the Geneva-based International Metalworkers’ Federation and VW’s own World Works Council. The agreement was negotiated last year (2001) and adopted at a formal ceremony in Bratislava in June (2002). VW is following, however, what is becoming something of a trend. About twenty similar framework agreements have been signed in recent years between multinationals and Global Union Federations (the bodies until recently, and confusingly, known as International Trade Secretariats). Effectively, the idea of partnership agreements, increasingly popular as an industrial relations tool within individual countries, is now being extended into the global arena.

One of the pioneers of such framework agreements was the French-based multinational Danone which first began negotiations with the IUF, the Global Union representing food and allied workers, as long ago as 1985 and has in the years since then has signed separate agreements covering trade union rights, training and consultation. IUF also has an agreement with hotel chain ACCOR, owner of the Ibis, Novotel and Mercure brands. Another familiar name for British consumers, the Swedish-based furniture empire Ikea, signed up in 1998 to a framework agreement with the building and wood-workers’ federation the IFBWW. Other recent examples of multinationals adopting similar agreements include the Norwegian oil giant Statoil, the Spanish telecoms operator Telefónica and the French based retailer Carrefour; the first of these is with the International Chemical Workers (ICEM) and the other two with Union Network International (UNI). Perhaps interestingly, UK-based multinationals are at present conspicuously absent from the list.

Volkswagen’s Declaration (see side panel) is typical of many of these agreements. It includes formal recognition of its employees’ right to organise in trade unions, with both company and unions committing themselves to working together openly in the spirit of "constructive and co-operative conflict management". There is an anti-discrimination clause, by which the company undertakes to choose, hire and promote employees only on the basis of their qualifications and abilities "regardless of race, skin, colour, sex, religion, citizenship, sexual orientation, social origin or political persuasion (as far as it is based on democratic principles and tolerance towards persons thinking differently)". Another clause commits the company to take appropriate health and safety measures.

The motor industry is heavily dependent on chains of suppliers, tightly integrated into production processes. VW’s Declaration includes a clause which "expressly encourages" its suppliers to take the Declaration into account in their own corporate policies, though without making this a condition of trading with the firm. From the union side, the aim now is to tighten this into a firmer pledge.

The Declaration is set clearly in the overall context of an increasingly globalised economy, and the text talks of the globalisation of Volkswagen as being essential to secure the future of the company. Indeed, the overall significance of the Declaration, according to Robert Steiert of the International Metalworkers’ Federation, is not necessarily in the impact it will have on existing VW plants in the West. "It is most important for workers at plants to be built or taken over by Volkswagen, especially in lesser developed countries," he says. Clauses in the Declaration outlawing the use of forced labour and child labour follow the lead set by the International Labour Organization (ILO) in its recent ‘decent work’ initiative, and are clearly more appropriate in the context of developing countries.

Framework agreements are one element in the growing interest and debate about the role of multinational companies in the global economy, at a time when multinationals are themselves exploring the implications of corporate social responsibility. The ILO, the Geneva-based UN agency which is unique in its tripartite structure (it works with governments, employers’ representatives and workers’ representatives), points to its Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy as the key international agreement here. The Declaration, first adopted after lengthy international debate in 1977 and since updated, calls among other things on multinationals, governments and social partners to sign up to the ILO’s Fundamental Principles and Rights at Work and to endorse the ILO conventions on child labour and the minimum working age.

The ILO Tripartite Declaration remains, however, a voluntary code and a little-known one at that. The ILO has tried to improve its visibility with the publication this summer of a sixty-page Guide to the Declaration (subtitled Knowing and Using Universal Guidelines for Social Responsibility), which offers examples of good practice involving multinationals from around the world.

There are a number of other international initiatives covering multinational corporate responsibility. The OECD’s Guidelines for Multinational Enterprises, agreed in 1976 and revised in June 2000, cover not only employee relations but also behaviour towards national governments and consumers. To help promote the Guidelines, the OECD has created a network of National Contact Points (in the UK, this is the DTI). Kofi Annan’s UN Global Compact, drawn up at the Davos forum in 1999, is another attempt to create a set of internationally agreed guidelines for multinational behaviour.

Do fine words really make a difference, however? For Steve Taylor, Works convenor of VW’s Bentley plant in Crewe and a member of VW’s World and European Works Councils, his company’s new Declaration is something to welcome. He points out that, with VW plants in, among other places, China, Brazil, South Africa and Argentina, there is the need to ensure proper terms and conditions worldwide. "This is a firm commitment from the company," he says.

BOX OUT

The VW Declaration on Social Rights and Industrial Relationships identifies seven ‘basic goals’:

• Freedom of association
• No discrimination
• No use of forced labour, debtor servitude or involuntary prison labour
• No child labour
• Compensation at least to national legal minimum requirements
• Work hours correspond to national requirements/standards
• Occupational safety and health protection

There are four clauses relating to the realisation of these goals:

• Employees to be informed of these provisions
• VW to ‘expressly encourage’ suppliers to develop similar corporate policies
• Declaration can be discussed by World Works Council
• Declaration is not retroactive.