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Core labour standards and the Export Credits Guarantee Department

by Rob Cartridge, Campaigns Director, War on Want

first published 23 May 2002

Summary

Protecting workers’ rights is central to efforts to alleviate poverty. At a minimum, the UK Export Credits Guarantee Department (ECGD) should require all applicants to have policies for achieving core labour standards throughout their supply chains and in the specific projects for which they are seeking ECGD support. Export credit support should also be tied to companies implementing OECD Guidelines for Multinational Enterprises.

This presentation was given at an NGO Seminar on Export Credit Reform, held in the House of Commons, London.

Contents

1. Why are labour standards relevant to poverty alleviation?

"If globalisation is to work for poor people, governments, international institutions and civil society need to promote this awareness [of rights in the workplace] and support policies and regulatory systems that provide legal, physical and social protection for working people."

UK Government White Paper on Globalisation, December 2000.

Globalisation generates a Race to the Bottom in labour standards as corporations seek the lowest global employment costs. Where there is a Race to the Bottom wages will be of such a low subsistence that the benefits of globalisation will not be felt.

2. What do we mean by Core Labour Standards?

Adopted by the Governments of more than 140 countries at the ILO in June 1998, the Core Labour Standards allow for very basic rights at work:-

  • Freedom of Association and the right to Collective Bargaining
  • The elimination of all forms of forced or compulsory labour
  • The abolition of the most hazardous forms of child labour
  • The elimination of discrimination in respect of employment and occupation.

Please note there is no core labour standard on a minimum or living wage. These are fundamental human rights.

3. What is government policy?

UK Government recognises the importance of core labour standards in development policy and wants to see their effective implementation. See for example:-

  • Globalisation White Paper, quoted above.
  • Funding for the Ethical Trading Initiative, see below.
  • At the WTO Ministerial in Doha in November 2001, the UK Government was instrumental in pushing for a strong wording on core labour standards. The final wording agreed by all WTO Member nations was "We reaffirm our declaration made at the Singapore Ministerial Conference regarding internationally recognized core labour standards." The relevant part of the Singapore Declaration reads: "We renew our commitment to the observance of internationally recognized core labour standards. The International Labour Organization (ILO) is the competent body to set and deal with these standards, and we affirm our support for its work in promoting them."
  • Most importantly of all the Government is enthusiastic in its promotion of OECD Guidelines for Multinational Enterprises. These voluntary guidelines are based upon the ILO Core Conventions. The Government has established a National Contact Point to monitor the implementation of the guidelines and deal with disputes. In his introduction to the National Contact Point's Information Booklet Trade, the then Minister Richard Caborn wrote: 'We believe the revised guidelines can have a strong positive impact on business's contribution to economic, environmental and social progress'. He also stated that the guidelines 'represent firm government expectations of business conduct'.

4. What is best practice?

  • Ethical Trading Initiative (ETI) Is an alliance of companies, ngos and trade unions. Its 24 corporate members currently include Marks and Spencers, Debenhams, Sainsburys, Tesco and ASDA. Corporate members sign up to the ETI base code which is built upon the ILO Core Labour Standards. In doing so they commit to making progress towards the achievement of all core labour standards throughout their supply chain and reporting annually on progress.
  • FTSE4Good Currently requires two core labour standards. Progress in the near future.
  • Netherlands and Finland Compliance with OECD Conventions required for ECGD grant.
  • France New company law requires all companies to report on whether their international subsidiaries respect the ILO core labour conventions and on how they promote ILO core labour conventions with regard to their international sub contractors.

5. What should ECGD do?

  • As a minimum require all applicants to have policy commitments to achieving core labour standards throughout their supply chains and in the specific projects being funded.
  • Tie export credit support to companies implementing OECD Guidelines for Multinational Enterprises.
  • At a higher level require membership of ETI, full endorsement of OECD guidelines and/or require full reporting from companies on their labour practices.