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Status of multilateral development banks’ labour standards requirements

Status of multilateral development banks’ labour standards requirements. Peter Bakvis, Francesca Ricciardone ITUC/Global Unions - Washington Office Workshop on Labour Standards in MDB Lending Geneva, 2 May 2012. 2. Focus on workers’ rights issues in international institutions.

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Status of multilateral development banks’ labour standards requirements

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  1. Status of multilateral development banks’ labour standards requirements Peter Bakvis, Francesca Ricciardone ITUC/Global Unions - Washington Office Workshop on Labour Standards in MDB Lending Geneva, 2 May 2012

  2. 2. Focus on workers’ rights issues in international institutions • Several international forums in 1990s express need to broaden respect for fundamental workers’ rights as an underpinning for a more equitable development model, e.g. World Summit for Social Development, Copenhagen 1995 • 1998: International Labour Conference adopts Declaration on Fundamental Principles and Rights at Work, by which ILO member countries are expected to comply with 8 fundamental rights (CLS) conventions • Starting 1998, trade union organizations urge World Bank, other MDBs to ensure that activities they finance do not violate CLS

  3. 3. Development of World Bank and regional banks’ labour standards requirements (i) • 1999-2001: WB supports three of four CLS and does research to determine whether freedom of association & right to collective bargaining are “consistent with” WB’s development mission • 2001: Following instructions from donor governments to IDA (WB’s concessionary lending arm), WB prepares CLS Toolkit that says CLS “can contribute” to WB’s mission • 2001: New ADB social protection policy states that “in the design and formulation of its loans, ADB will comply with the internationally recognized core labor standards” • 2003: WB report Unions and Collective Bargaining concludes that freedom of association and right to collective bargaining do not harm growth but do foster more equal distribution of income

  4. 4. Development of World Bank and regional banks’ labour standards requirements (ii) • 2003: Following some cases of workers’ rights violations in IFC projects, head of IFC (WB’s private-sector lending arm) states that CLS will become a requirement for all loans • 2004: IFC loan to garment manufacturer in Haiti & Dominican Republic includes, for the first time, a CLS requirement • 2004: WB procurement department begins to review labour requirements in Standard Bidding Document for Procurement of Works (SBDW) with secondment from BWI • 2004: Labour research group in Indonesia publishes study showing several violations of CLS on WB-funded construction sites

  5. 5. Development of World Bank and regional banks’ labour standards requirements (iii) • 2006: WB board adopts IFC’s Social Environmental Performance Standards with obligatory CLS requirement in PS 2; enter into effect May 2006 • 2006: ADB’s CLS Handbook recommends incorporating CLS in ADB activities but specifies they are “not policy requirements” • 2007: Clauses on all four CLS incorporated on voluntary basis as WB-specific clauses in SBDW • 2008: EBRD adopts Performance Requirements including CLS loan requirement, effective starting November 2008 • 2009-2011: IFC undertakes revision process of Performance Standards

  6. 6. Development of World Bank and regional banks’ labour standards requirements (iv) • 2010: Procurement departments of all MDBs adopt harmonized labour standards contract clauses, including CLS, for major construction works but no implementation measures adopted • 2010: Report of WB’s Independent Evaluation Group calls for “adequate coverage of labor issues”, not currently covered by safeguards, in investments of WB’s public-sector arms (IDA & IBRD) • 2011: Start of process to revise WB’s social and environmental safeguards, scheduled to be completed end 2013

  7. 7. Development of World Bank and regional banks’ labour standards requirements (v) • July 2011: ITUC holds one-day workshop with WB executive directors (EDs) and staff on need for labour safeguard • November 2011: ITUC publishes report underlining policy inconsistencies on CLS within World Bank Group and recommends comprehensive labour safeguard • Jan 2012: IFC’s revised Performance Standards enter into effect; retains CLS requirement and some improvements • Jan 2012: AfDB posts draft labour safeguard with CLS requirement and begins consultations • March 2012: Several national trade union representatives lobby their WB EDs on labour safeguard during meetings in Washington

  8. 8. IFC’s Performance Standard 2 (PS2): Labour and working conditions (i) (Jan 2012 version) • IFC’s Performance Standard 2 has become template for labour language within WBG and at other MDBs • Contains requirements on Forced labour, Child labour, Non-discrimination and “Workers organizations” • Other clauses on Human resources policy, Working conditions and terms of employment, Retrenchment, Grievance mechanism, Occupational health and safety, Workers engaged by third parties, Supply chain

  9. 9. IFC’s Performance Standard 2 (PS2): Labour and working conditions (ii) • “Workers’ organizations: “In [countries that recognize freedom of association and those that do not] …, the client will not discourage workers from electing worker representatives, forming or joining workers’ organizations of their choosing or from bargaining collectively, and will not discriminate or retaliate against workers who participate or seek to participate in such organizations and collective bargaining. The client will engage with such workers’ representatives and workers’ organizations, and provide them with information required for meaningful negotiation in a timely manner.”

  10. 10. Revisions to IFC’s PS2, January 2012 (i) • New requirements in PS 2 entered into effect January 2012: • Protections for migrant workers • Conditions of accommodation (when provided) • Obligations for borrowing companies to consider alternatives to retrenchment, such as “negotiated working-time reductions programs, capacity-building programs, long-term maintenance works during low production periods” • Obligation to monitor application of PS2 to contract workers and some labour practices in supply chains

  11. 11. Revisions to IFC’s PS2, January 2012 (ii) • Global Unions had recommended scope of application to contract workers; first revised version actually included additional restrictions, which were removed in final version • At behest of Global Unions, IFC's revised Policy on Environmental and Social Sustainability added the following stipulation (Para. 22):  "Persistent delays in meeting these [social and environmental] requirements can lead to loss of financial support from IFC.” • Global Unions and allies recommended that IFC improve access to information and monitoring of PS compliance in end-projects funded through financial intermediaries (about 45% of IFC's current lending portfolio); not resolved in revised PS

  12. 12. Implementation procedure for IFC standards • Depending on risk level, client obliged to submit Social & Environmental Assessment and Action Plan to correct potential risks and impacts including on labour as defined in PS2 • These must include consultation with “affected communities” and be publicly disclosed • IFC’s Environmental and Social Procedures establish inspections & monitoring reports according to risk level • IFC has prepared Guidance Notes for implementation of PS2 and carried out staff training • Complaints about non-compliance with PS2 can be addressed to IFC’s Environmental and Social Development Dept (CES), which has accelerated multilingual procedure since 2009 • Complaints about non-compliance can be also submitted to Compliance Advisor/Ombudsman (CAO)

  13. 13. Experience with application of IFC standards • Up to April 2102, trade unions submitted 28 cases alleging non-compliance with PS2 in IFC investments • 26 of the cases were submitted by unions to CES, three to CAO and representation on one case made to EDs • Global Unions’ Washington office involved in all but four cases • About 2000 IFC investments carried out during this period • According to Wash. Office assessment, out of the 28 cases: • Positive changes or responses (meeting unions’ concerns partially or totally) obtained in 10 cases • Unsatisfactory response in 4 cases • Trade union complaint withdrawn or not pursued in 9 cases • Project suspended or cancelled in 3 cases • Outcome pending in 2 cases

  14. 14. Experience with application of IFC standards: four cases (i) Grupo M -Haiti & Dominican Republic – a pre-PS 2 “test case” • Jan 2004: IFC accepts ICFTU/ITGLWF proposal to include CLS loan condition because of high risks of violation • June 2004: 300 Grupo M workers in Haiti dismissed for striking for union recognition • Mid-2004-early-2005: IFC pressures company, hires mediator • July 2005: Company agrees to rehire workers, recognize union • December 2005: Collective agreement concluded between Haitian union and Grupo M

  15. 15. Experience with application of IFC standards: four cases (ii) Bujagali-Uganda: BWI’s pre-emptive use of PS 2 to protect freedom of association in construction project • Feb 2007: ITUC/BWI learn of proposed $360 million WB assistance to Bujagali hydroelectric project, including $120 million from IFC • Mar 2007: BWI and Ugandan affiliate plan organizing campaign • Apr 2007: IFC officially announces project • May 2007: BWI affiliate encounters resistance to unionization from contractors; BWI informs IFC of difficulties • Aug 2007: Construction work begins on Bujagali project • Sept-Oct 2007: BWI affiliate successfully recruits most workers without hindrance • Oct 2007: Bujagali contractors accept to abide by industry CBA

  16. 16. Experience with application of IFC standards: four cases (iii) Avianca Colombia: More than three years of procedures after ITF complaint about discrimination against union activists show up weaknesses in enforcement and access to information • Sept 2008: Complaint made to IFC concerning discrimination in job assignments against activists of pilots’ and attendants’ unions • 2009: IFC claims labour audit confirms union assertions, but action plan leads to no real change; no access to documents • 2010: Repeat of 2009 actions, but no resolution • June-July 2011: Letter to CEO of IFC and meeting with loan officer; action promised but none taken • Nov 2011: Union complaint made to CAO • April 2012: Avianca refuses CAO mediation; CAO investigators submit report for further action

  17. 17. Experience with application of IFC standards: four cases (iv) Coca-Cola-Pakistan: IUF complaint about anti-union practices during project consideration leads to suspension of loan demand, contributes to successful union recognition • May 2010: Informed of request for IFC loan, IUF prepares detailed dossier about anti-union practices in Coca-Cola’s Pakistan operations • June 2010: Company suspends loan request after being informed by IFC of complaint • July 2010: Coca-Cola and IUF negotiate on Pakistan operations and Coca-Cola agrees to correct anti-union practices • Aug-Sept 2010: Successful union organizing and recognition campaigns in two Coca-Cola bottling plants in Pakistan

  18. 18. Strengths and weaknesses of IFC and EBRD labour standards loan requirements • PS 2 and PR 2 based on ILO’s CLS conventions and stipulates specific obligations of borrowing company • Important incentive to respect and apply IFC’s PS2 and EBRD’s PR2 since they are compulsory requirements of the lenders; non-compliance can be grounds for loan default • Unless complaints filed about violations, IFC and EBRD rely on self-reporting by borrowers on applying PS 2 and PR 2; short window – 30 or 60 days – between project publication and loan decision • Information-gathering and monitoring by IFC on fulfilment of PS 2 was initially weak; improvements made on monitoring but reluctance to confront recalcitrant employers • Limited trade union experience with implementation of EBRD’s PR 2

  19. 19. Sources of information about IFC investments • Text of IFC’s PS2 in English: http://www1.ifc.org/wps/wcm/connect/2408320049a78e5db7f4f7a8c6a8312a/PS2_English_2012.pdf?MOD=AJPERES • IFC Projects Database: www.ifc.org/projects • Global Unions Washington Office: • Regular updates on IFC loans • Requests for information as needed on IFC, other World Bank or regional bank projects • Assistance in formulating and pursuing complaints

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