1 Fichter, Helfen & Sydow: Ensuring Core Labor Standards through IFAs? Setting Standards of Labor Practices in Global Production Networks – Trade Union Involvement via International Framework Agreements? Michael Fichter, Markus Helfen & Jörg Sydow Institute of Political Science & Institute of Management, Freie Universität Berlin, Germany GUF Workshop Friedrich-Ebert-Foundation / Hans-Böckler-Foundation IGM Bildungsstätte May 18, 2009 Introduction: Taking Stock of IFAs

2 Fichter, Helfen & Sydow: Ensuring Core Labor Standards through IFAs? Context: Trends in labor related standards and Initiatives Sanctions, Obligations EU directives National state regulation WTO rules OECD Guidelines for Multinational Enterprises ILO Tripartite Declaration of Principles ISO Scope International Framework Agreements Corporate codes of conduct SA 8000 Global reporting initiative (GRI) UN Global compact OHSAS Social investment Stewardship and charity ILO Conventions ILO core labour standards CSR Europe Business Social Compliance Initiative

3 Fichter, Helfen & Sydow: Ensuring Core Labor Standards through IFAs? … based on contract relationships between transnational corporations (TNCs) und global union federations (GUFs) which within a defined space afford a mutual recognition of both sides, provide for mechanisms of conflict resolution and set standards regarding ILO core labour standards (union rights and collective bargaining, no forced or child labour, no discrimination), additional ILO conventions (i.e. work- ing time, pay, health & safety, repre- sentation). As such, IFAs are an instrument of regulating international labour relations positioned between unilateral self-restrictions of TNCs and international law (ILO). Definition: International Framework Agreements (IFAs) are… Total number of IFAs (1994 to 2008) But: there is only a relatively small number of IFAs (ca. 80), compared to some 65,000 TNC (UNCTAD 2006: 122) !

4 Fichter, Helfen & Sydow: Ensuring Core Labor Standards through IFAs? What motivates TNCs on the one hand, and trade unions or employee representatives on the other hand, to negotiate and sign IFAs? How are IFAs being implemented at multiple levels of the global production network? To what extent are managers, suppliers and unions informed and involved at different levels? Research Questions

5 Fichter, Helfen & Sydow: Ensuring Core Labor Standards through IFAs? Research Design Key Variables in Regard to Implementation (Impact and Interaction to be determined): The structure of the particular branch or sector TNC organization structures and management. Labor relations in the TNC and the global value network. The political, institutional and socio-economic environment of TNC operations (country-specific; global impact)

6 Fichter, Helfen & Sydow: Ensuring Core Labor Standards through IFAs? Research Design Empirical Research across the Global Value Network Dual Focus on Management and Trade Unions/Employee Representatives Embedding the Empirical Findings in Broader Social Science Discourses Global Governance Corporate Social Responsibility Global Production Networks Cross-Border Labor Relations

7 Fichter, Helfen & Sydow: Ensuring Core Labor Standards through IFAs? Context: IFAs and the regulation of labor Management of global production networks (GPN), including IHRM “Global governance” and industrial relations: ILO labor standards, GUFs, NGOs, … TNCs and corporate social responsibility (CSR) IFAs

8 Fichter, Helfen & Sydow: Ensuring Core Labor Standards through IFAs? Research Design: Case Study Selection HQ Sub1-4 Sup1Sup2 Case Selection: First Wave – 16 TNC Four GUFs account for 72 of 80 IFAs: BWI, ICEM, IMF, UNI Region of Origin (EU) + Location of Subsidiaries Second Wave – 8 TNC expert interviews (1 x management, 1 x union/wc) identification of "good practice"

9 Fichter, Helfen & Sydow: Ensuring Core Labor Standards through IFAs? IMF: Bosch, Daimler, Leoni, BMW, GEA, VW ICEM: Rhodia, Evonik, Freudenberg BWI: Lafarge, Hochtief, Skanska UNI: ISS, Carrefour, G4S, Securitas All IFA cases (80 cases) Pre-selection (16 cases) Potential case studies (8 Fälle) Case Studies (4 cases) Criteria: GUFs, region of origin, host countries Expert interviews: Identification of „best practices“ Research design: Case selection

10 Fichter, Helfen & Sydow: Ensuring Core Labor Standards through IFAs? Region of origin One TNC per industry/GUF Host countries Continental Europe IMFUNIICEMBWI BrazilIndiaTurkeyUSA Research design: Criteria of case selection 4 Industries (four GUFs have signed the majority of IFAs). metalworking (IMF) services (UNI) chemicals (ICEM) building & construction (BWI) 4 Host countries (regional diversity, international division of labor): Brazil India Turkey USA 1 region of origin (majority of IFAs has been negotiated and concluded by TNCs from continental Europe).

11 Fichter, Helfen & Sydow: Ensuring Core Labor Standards through IFAs? ManagementLaborNGONo. of Interviews HeadquartersHRMGUF ProductionNational Trade Union(s) SourcingWWC/EWC/other SubsidiaryHRMNational Trade Union(s) Productionemployee reps. Sourcingother TU, empl. reps. SupplierHRM/Prod.Trade Union(s) empl. reps SupplierHRM/Prod.Trade Union(s) empl. reps. Minimum / Maximum per Case Study: 12 / 25 Research Design: Interview plan

12 Fichter, Helfen & Sydow: Ensuring Core Labor Standards through IFAs? global union federations (5): IMF, ICEM, BWI, UNI TNCs (11): TNCs with an IFA: Evonik, Freudenberg, Rhodia, Leoni, BMW, Daimler, Lafarge, Hochtief, ISS TNCs without an IFA: Deutsche Bank, BASF country experts, NGOs, Employers (8): Brazil, India, Turkey, USA, NGO, IOE First Results: Case Studies and secondary content analysis Secondary data Primary data: 24 Interviews Additional information for 16 TNCs which might enter the case study group and 4 GUFs Qualitative and quantitative content analysis of IFA texts (Atlas.ti): Goals and Motives: HRM, competitiveness, labour relations Substantial Rules: ILO core conventions and additional ILO conventions, other substantial rules, etc. Procedural Rules: Forms of monitoring, extension to suppliers, etc. data set of 72 IFA cases containing information on year of agreement, industry, ownership structure, number of employees, etc.)

13 Fichter, Helfen & Sydow: Ensuring Core Labor Standards through IFAs? Political, institutional and socio- economic conditions at a TNCs‘ country of origin IFA Origins: Country and Sector (GUFs) Activities and strategies of GUFs IFAs by TNCs‘ country of origin (n=72) IFAs by global union federation (GUFs) (n=72)

14 Fichter, Helfen & Sydow: Ensuring Core Labor Standards through IFAs? Initial findings: Actor constellation on employees‘ side IFAs by actor constellation on labour‘s side (n=72) Actor constellation on labour‘s side is marked by diversity: a) global union federations (GUFs), b) In around 75 percent of all cases national unions and/or employee representatives (EWC) are additionally involved. c) Interpretation: successful cooperation or vertical and horizontal divergence of interests?

15 Fichter, Helfen & Sydow: Ensuring Core Labor Standards through IFAs? Initial findings: Monitoring of subsidiary’s compliance IFAs by form of monitoring (n=72) Forms of monitoring show differing degrees of institutionalization depending: a) on the GUF involved in negotiations (*): IMF: EWC embodiment, ICEM, UNI: meetings only, BWI: special bodies. b) on TNCs’ country of origin (*): German TNCs and Western Europe: EWC embodiment, South European TNCs: special body, Scandinavian TNCs: meetings only.

16 Fichter, Helfen & Sydow: Ensuring Core Labor Standards through IFAs? Initial findings: Formal extension to suppliers Formal extension to suppliers by sanctioning is positively associated with: a) form of monitoring (*): (EWC embodiment and special body go along with stronger forms of sanctioning), b) individual complaint procedures(*): (participatory HR management style) c) specific GUFs (*): (IMF and BWI) and d) TNC‘s country of origin (*): (Western and Southern Europe vs. Scandinavia and other countries). Extension of IFAs to suppliers by type of sanctions (n=72)

17 Fichter, Helfen & Sydow: Ensuring Core Labor Standards through IFAs? Initial Findings on actors‘ motivation: Goals and expectations of management credibility of CSR activities risk management and legitimation of management decisions management of global production networks by standardization Avoidance of state regulation Transnational Corporations (TNCs)Global union federations (GUFs) recognition as a negotiation partner institutionalization of collective conflict resolution minimum labour standards definition of an independent role for GUFs creation of organizing space

18 Fichter, Helfen & Sydow: Ensuring Core Labor Standards through IFAs? Initial Findings: Overall CSR typology Fichter, Helfen & Sydow: IFAs and the Transfer of Practices in Global Production Networks Voluntary CSR initiatives Initial stage of CSR Implementation process special monitoring procedures Robust conflict-resolution mechanism reference to Corporate Governance Standards complaint handling by management „meetings“ code of conducts reference to global compact standard reporting & controlling issue management & public relations integration of sustainability dimensions several management functions, processes, structures and locations involved management incentives and empowerment Union involvement in management practices Holistic-integrated management approach

19 Fichter, Helfen & Sydow: Ensuring Core Labor Standards through IFAs? Initial Findings: Headquarter-Subsidiary relationships Problems for implementation and monitoring emerge out of complicated HQ- subisdiary relationships, and complex supplier relationships in value chains: Subsidiaries as legally independent entities, sometimes not fully owned by focal multinational Subsidiaries as joint-ventures, partnerships Subsidiaries as completely owned and controlled by focal multinational Sub-contracting: first and second tier suppliers Sub-contracting: informal economy

20 Fichter, Helfen & Sydow: Ensuring Core Labor Standards through IFAs? Initial Findings: Implementation: processes, instruments Implementation ad hoc vs. implementation by integration in management practices systematic implementation: special monitoring procedures and bodies, definitions of sanctions for suppliers and union involvement ad-hoc approach of implementation: complaint handling by management and „meetings only“ The type of GUF involved has an impact on the potential of labour-related CSR to be effectively implemented throughout GPN.

21 Fichter, Helfen & Sydow: Ensuring Core Labor Standards through IFAs? IFAs have a very limited impact in the global economy IFAs may protect workers from financialization pressures, but could become less relevant in the crisis. Multiple actors (signatories) on labor side could indicate still unresolved conflicts and power struggles Unions generally junior partner in implementing and monitoring IFAs. Need for stronger union input. Management places IFAs in context of a broader CSR repertoire Newer IFA (e.g. Rhodia, ISS) are models for using IFAs for union organizing. Preliminary Conclusions