World Bank should follow socially responsible business practices

IFBWW press release, 28 August 2000

Since several years, the IFBWW has been promoting the application of core labour standards in individual projects through the use of labour clauses in contractual documentation of the World Bank. The IFBWW believes that the insertion of clear and enforceable provisions relating to workers rights is necessary and would be more effective than broad policy statements contained in the Country Assistance Strategy (CAS).

As a matter of general policy, the Bank favours the incorporation of some form of social wording in the CAS: this document provides the framework under which Bank support is provided. Any social wording or policy is a matter for negotiation between client countries and the Bank and therefore it is not clear how forceful such a wording would be in any given case or what level of obligation it would place on the Government concerned. For workers in the construction and building industries the inclusion of effective language in the procurement documents will have an immediate impact.

IFBWW met 1997 and 1999 with the Operational Core Services Network of the World Bank and discussed possible amendments to the Procurement Guidelines and Standard Bidding Documents. The IFBWW states that after these consultations there have been no real policy developments specifically related to procurement. The documentation has not been changed beside that it has been decided to make labour clauses which were previously optional recommended, Ulf Asp, IFBWW General Secretary, wrote in a letter to James D. Wolfensohn, President of the World Bank.

The IFBWW considers that the current provisions are inadequate and do not reflect socially responsible business practices:

The mandatory clauses are minimal and are capable of very subjective interpretation by borrowing countries.
The use of optional clauses places too great a reliance on the willingness of the borrower to observe sound labour practices.
These provisions are tied to existing laws in the borrowing country and offer no real protection to workers in the event of poor or non-existent legal provision.
Neither the mandatory clauses nor the optional clauses that supplement them, incorporate the core Conventions of the International Labour Organisation (ILO).
These labour clauses do not require the Contractor to recognise collective agreements or the right to organise.
The labour clauses contained in the Procurement of Works do not fully reflect the provisions of ILO Convention No.94 concerning Labour Clauses in Public Contracts. The FIDIC terms do not recognise conditions established by collective agreement and /or arbitration.
There are no enforcement or procedural provisions governing the implementation of the labour clauses.

IFBWW framework agreement

Some of big companies in the building and wood trades provide good examples of socially responsible business practices. They committed themselves to observe the core labour standards of the International Labour Organisation (ILO) in their business activities. The IFBWW signed framework agreements on workers rights with transnational companies such as IKEA (furniture), FABER-CASTELL (pencils) and HOCHTIEF (construction).

For example HOCHTIEF is committing itself to observe - in its building activities anywhere in the world - the social standards of the International Labor Organization (ILO). The agreement imposes the same obligation on all HOCHTIEF's subcontractors, whose combined workforce totals many times the group's own 37,000 employees. Friedel Abel, Member of the Executive Board and human resources director at HOCHTIEF, said: By signing this document, we seek to do more than just set the standards for our own behavior. As one of the world's leading construction companies, we want to play a part in the long-term process of improving the rules that govern conduct in our industry. Abel appealed to public-sector and private clients to focus in their future contracts more on quality and not make the lowest bid the only yardstick. He stated: Here, a process of rethinking is urgently needed.

Under the terms of the agreement with the world largest furniture retailer IKEA, all suppliers and manufacturing companies owned by IKEA are requested that their workers enjoy working conditions which at least comply with national legislation or national agreements. Suppliers must, furthermore, respect all ILO Conventions and Recommendations relevant to their operations. This means, for example, that child labour is prohibited and that workers have unrestricted rights to join trade unions and to free collective bargaining. The agreement covers almost 1,000,000 workers in 70 countries.

Against this background the IFBWW attests HOCHTIEF, IKEA and Faber-Castell vis-à-vis state and international institutions and major private clients a particularly positive role as setting a good example of responsible corporate management, the yardstick of which is the implementation of these agreements.

The IFBWW appeals to the Bank to follow these good examples of responsible social business practices. The IFBWW is requesting from the World Bank to consider and reflect the provisions of the core Conventions of the ILO and Convention (No.94) Concerning Labour Clauses in Public Contracts in its procurement practices and to exclude contractors from the bidding process which do not respect international standards pertaining to workers' rights.