GS speech to Foreign Policy Centre Seminar - Labour Standards and Emerging Economies

FOREIGN POLICY CENTRE SEMINAR, 7 APRIL 2008

Labour standards and CSR in emerging markets

I welcome the opportunity to give the trade union movement's view of this crucially important issue.

As the representative voice of tens of millions of workers in both the developed and developing world, we have a unique perspective to bring to this discussion.

There can be no doubt that labour standards and corporate behaviour in emerging markets is one of the defining issues of our time.

One that cuts right across so many of our contemporary debates.

How we give globalisation a human face as well as an economic dimension.

How we tackle the scourge of global poverty and the inequalities that underpin it.

And how we encourage a model of development that is both sustainable and fair.

At a time when the power, wealth and global reach of business is arguably greater than ever before - with a number of multinationals now worth more than the economies of many developing nations - these are questions that affect us all.

And for the trade union movement, they are right at the top of our agenda.

My argument today is essentially this: that it is only through universal, international standards that we can effectively regulate the behaviour of today's corporate behemoths.

And nowhere does that fundamental principle matter more than when it comes to labour relations.

Because the best way we can begin to enshrine dignity, decency and safety at work is through the four core ILO labour standards - freedom of association, elimination of forced labour, abolition of child labour and elimination of discrimination.

Clear standards, easily understandable by governments and companies alike, that leave no room for any ambiguity about 'local contexts'.

But let me make a couple of things clear at the outset.

One, that the trade union movement regards the ILO standards as a starting point: the absolute minimum around which unions, companies and governments should seek to build a decent work agenda.

And two, that we recognise that some multinationals, Coca Cola being a prime example, are already striving to do the right thing on labour rights and in other areas.

Moving beyond the bare minimum, beyond the simple 'the business of business is business' mantra, and, as Ed outlined, doing some really innovative work that makes a genuine difference on the ground.

As the old joke goes - there's only one thing worse than being exploited by a multinational; and that's not being exploited by a multinational.

The trade union movement wants to work alongside progressive companies to drive positive change - just as we want to work alongside NGOs to put pressure on the firms that do not take their corporate responsibilities seriously, or negate them altogether.

With that very much in mind, I want to make three key points about labour standards and CSR in emerging markets.

First - perhaps most fundamentally - the best way of ensuring that core ILO standards are adhered to is through worker organisation, collective bargaining and strong, effective trade unions.

We know from bitter experience that companies and indeed governments sometimes fail to comply with the ILO norms.

That's why we need an independent trade union presence in workplaces.

Across the world, the trade union movement has a long and distinguished history of fighting for workers' rights, for decent work, and freedom from exploitation.

Indeed many of the issues now confronting unions in developing nations are the same as the ones we encountered here after the industrial revolution.

So the struggle for higher standards goes on.

And trade unions are also uniquely placed to ensure that basic rights and standards are actually enforced.

With enforcement regimes weak or non-existent in the developing world - labour inspectorates typically being chronically under-resourced - we are often working people's first and last line of defence against unscrupulous practice.

And because prevention is better than cure, we want to work with companies not just at the local plant level but at the global centre - where key business decisions are made.

Which, in a sense, takes me onto my second point: CSR has an important role to play, but it must be much more than just window-dressing PR.

That is not to deny that CSR has the potential to be a genuine force for good.

From labour standards to wider concerns such as environmental sustainability and workforce health, there are already many examples of CSR programmes having a transformative impact.

At a time when pressure from trade unions and NGOs is rising, when consumers are becoming more sophisticated and demanding, and when the media is scrutinising corporate behaviour as never before, the incentives for multinationals to do the right thing are clear for all to see.

But CSR alone can never be a panacea.

We need to get the balance right between voluntarism and hard law, recognising that there are occasions when companies need to go beyond local law - for example in India, where child labour remains commonplace, and in China, where freedom of association remains a distant aspiration.

However, voluntary codes of practice - even when they include credible implementation and verification mechanisms - can never be a substitute for collective bargaining and union organisation.

Indeed the TUC has two important questions about the impact of voluntary CSR codes on labour standards.

First - do they strengthen pressure for national legislation on core labour standards and provisions for decent work, or weaken it by appearing to be a substitute for law?

And second - do they support collective bargaining, or circumvent unions and undermine workers' capacity to organise and speak for themselves?

The truth is it all depends.

Sometimes voluntary codes can be shame governments into action and encourage trade union organisation, ultimately growing into international framework agreements between companies and global union federations.

But sometimes they are worth little more than the paper they are written on.

Many codes, for example, fail to include all the core ILO labour standards - with the record on freedom of association being particularly poor.

With a number of high-profile companies that promote their CSR credentials not recognising trade unions here in the UK, perhaps there's a logical explanation for that.

And there's another, perhaps more fundamental issue with CSR: just which parts of the corporate operation does it cover?

Perhaps this is a good time to move onto my third main point - and that's the importance of addressing labour standards throughout the supply chain.

Multinationals are not just fiendishly complex organisations in their own right - but the growth of outsourcing and subcontracting of key functions, alongside ever more elaborate systems of purchasing, has made the CSR challenge even more acute.

Coca Cola's business model, for example, is based largely around the franchising of bottling plants.

And what matters, of course, is that labour standards are applied right across the organisation's reach.

I know Coke is in the process of consolidating practices across large parts of its global operation, from Russia to India to Pakistan - and that is to be applauded.

Our task now: to ensure this becomes the norm not the exception across the corporate world.

It's no good having robust CSR practices at the centre - talking a good game on labour standards and all the rest of it - if these do not apply to suppliers and contractors.

With the reputational risks to global brand names becoming more acute, this is a reality multinationals simply have to get their heads round.

So there you have it.

Three suggestions about how to make labour standards and CSR a reality in emerging markets.

Encouraging trade union organisation, making CSR more than just a slogan, and applying these principles right across the global operation.

One thing's for sure.

This debate is going to be with us for a long time; and we're only just at the beginning.

And as the voice of ordinary workers, as a counterpoint to unfettered corporate power, as major defenders of human and labour rights, the trade union movement has a central role to play in shaping its outcome.

We face a major challenge in supporting sister unions in the global south to organise workers, to make sure nobody is left out, just as business itself must ensure there no 'ifs' and no 'buts' about when and where decent standards are applied.

In a sense, our job is to provide pressure for change from the bottom up, where as for companies the task is to impose it from the top down.

Hopefully, we can meet somewhere in the middle.

And none of us must lose sight of just what is at stake.

Not just the chance to make corporations a force for progress as well as profit.

Not just the chance to improve the lives of millions of people in the developing world.

But ultimately the opportunity to make globalisation deliver for the many not the few.

And that's got to be a prize worth fighting for.

Thank you.