ILERA 2013 European Congress
“Global strategies and local union rights in Latin America: institutional patchwork or harmonized
complementarities?”
Dr Christina Niforou
University of Birmingham
c.niforou@bham.ac.uk
Introduction
Global union strategies targeting multinational corporations with the aim to improve labour
standards in the Global South are driven by two seemingly countervailing forces: global integration
and local differentiation. In a bid to deal with the above dilemma, global union federations (GUFs)
have been prioritizing the promotion of trade union rights in regions of the world where legislation is
weak particularly with regards to recognition for collective bargaining purposes. The underlying
assumption is that, by strengthening local union organizing, GUFs increase their representation
capacity and set the grounds for achieving greater gains in the future.
Despite the absence of a binding legal framework at the global level, GUFs’ corporate campaigns
enjoy a certain degree of institutional support in multiple levels offered by both public and private
arrangements including: international framework agreements, unilateral codes of conduct, ILO
supervisory bodies, local labour Tribunals and relevant workplace policies. However, whether the
coexistence and interaction of the above arrangements operates in a complementary or
outweighing manner is an issue for which we still know very little.
Moreover, academic enquiry on transnational unionism in the field of industrial relations has been
accused of being atheoretical and uncritical (see Hyde and Ressaissi 2008). In other words, existing
literature seems to lack any theories and testable generalizations but largely comprises best practice
case studies mainly aimed at celebrating successes thereby refraining from the real question of
whether and when transnational union structures and actions produce effective and durable
outcomes (ibid: 49).
The paper contributes to the above debate by examining the role of multi-level dynamics in ensuring
compliance with the right to organize and bargain collectively in Latin America. It draws from
research on two MNCs in the textiles and telecoms industries respectively, and borrows concepts
from International Political Economy in order to demonstrate how interactions and
interdependencies among actors and institutions at different levels account for successes and
failures.
Institutional leverage for global labour: developments and impasses
The foundation of the International Labour Organization (ILO) in 1919 and the adoption soon
thereafter of the first conventions on labour rights constitute the first significant attempts for the
global governance of labour. The establishment of international labour standards has been the core
activity of ILO, which has elaborated two forms of standard setting: Conventions that needed to be
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ratified by member-states and Recommendations. Despite the binding status of Conventions (at
least in principle) and the existence of reporting systems and quasi-judicial arbitration mechanisms,
labour rights have been repeatedly violated while the number of violations is increasing (Gibb 2005).
Although violations do not negate the legality of the norm, they nonetheless challenge the
organizational ability of ILO to impose conformity with its fundamental principles. The enforcement
capacity of ILO has been largely questioned by the ascending number and heterogeneity of
members. Since the early 1950s, the accession of a significant number of developing and less
developed countries that rely on informal economy, cheap labour and flexible working conditions in
order to attract foreign direct investment (FDI) not only increased the economic asymmetry and
disparity among ILO members, but it also undermined ILO claims for universal validity and
application of labour standards (Senghass-Knobloch 2004). Moreover, the legal status of the
Conventions generated further debates on whether they fall under international law agreements or
treaty-contracts or whether they are binding by virtue of membership regardless of whether they
have been ratified. ILO has been self-critical on the relevance of ‘hard’ mechanisms in the face of its
increased membership and has therefore shifted towards ‘softer’ approaches based on awarenessraising, persuasion and capacity-building of local (social and administrative) actors (ibid).
It is within this context of softer techniques that the ILO Declaration of Fundamental Principles and
Rights at Work was adopted in 1998. The Declaration reiterated the binding status of Conventions by
virtue of membership and prioritized the promotion of eight Conventions on human rights that have
become known as Core Labour Standards (CLS). These include the freedom of association and the
right to organize, the right to collective bargaining, abolition of forced labour, abolition of child
labour, equal remuneration and non-discrimination. The Declaration builds on ‘the obligation to
policy targets rather than precise rules’ (Senghass-Knobloch 2004: 19) regarding CLS and has
therefore attracted considerable criticism by both academics and practitioners. Alston (2004) makes
a distinction between CLS and the remaining conventions on labour standards arguing that the
former have a lower status, which is based on the notion of ‘principles’ rather than ‘rights’. Scholars
further question the effectiveness of moral suasion or else, the ‘mobilization of shame’ and technical
assistance as ILO mechanisms aimed at generating compliance. In this respect, the absence of trade
sanctions is considered an institutional weakness (Van Roozendaal 2005).
ILO’s policy turn to soft law needs to be situated within wider debates of linking trade to labour
standards. Provisions on labour standards have been included in unilateral or bilateral trade
agreements where the country that gives preferential treatment to the product of a developing
country expects ‘some good will’ (Gereffi and Mayer 2004) regarding labour practices. Examples
include the ‘side agreements’ NAFTA, and the US-Jordan and US-Cambodian Free Trade Agreements
where labour and environmental provisions were incorporated in the main text of the accords.
However, linking trade with labour standards has been a contentious issue for global regional
economic organizations and trade zones (EC 2009). The effectiveness of the labour clauses in trade
agreements has been largely questioned. Usually such clauses stipulate the application of local
labour laws (i.e. the NAFTA side agreements), whereas references to labour regulation are absent
from other important regional arrangements, as for instance, in the ASEAN Free Trade Agreement.
Another example is MERCOSUR where there is a Social and Labour Commission charged with the
task of monitoring labour standards but it is rather weak and lacks formal authority (ibid).
Moreover, attempts to integrate core labour rights in the World Trade Organization (WTO)
agreement (the so-called social clause debate) were unsuccessful (Van Roozendaal 2002). The failure
to link trade with labour standards reflects the negative stance of developing countries that consider
the improvement of labour conditions as the result of economic growth rather than the cause, and
hence resist any regulation linked to trade as protectionism (Gadbaw and Medwig 1996). Finally,
apart from concerns about protectionism, a social clause in the WTO regime would raise further
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questions on the capacity of developing countries to control and regulate the behaviour of private
market actors and especially the MNCs (Gereffi and Mayer 2004).
Labour governance at the MNC level has been at the core of developments of the European Social
Dialogue that culminated in the enactment of the 1994 Directive on the establishment of European
Works Councils (EWCs). The latter are ‘transnational, pan-European forums of employee
representatives within multinational corporate groups for the purposes of information disclosure
and consultation with group-level management’ (Gold and Hall, 1994: 177-178). EWCs are the first
‘genuinely European’ institutions of employee interest representation at MNC level reflecting the
need to respond to the Europeanization of business which has been largely a result of the single
European market (Patriarka and Welz 2008). Although they have often been characterized as
‘passive’ bodies that receive information without actually being consulted (Telljohann 2005), there
have been instances where EWCs have gone beyond the rights stipulated by the Directive
developing a growing negotiating role in corporate practice. Indeed, recent scholarly research
advocates that the EWC is an institution in process along a number of dimensions (Waddington
2011): EWC representatives are developing a European identity that goes beyond national interests,
the content of EWC agreements is progressively shaped to meet representatives’ objectives while a
number of EWCs engage in activities that extend beyond the boundaries of the states that have
implemented the Directive.
Given their key role in directing capital mobility and their increasingly strong position to control,
coordinate and even set their own standards of production, MNCs have also become the focus of
regulatory efforts by international institutions. The idea behind these efforts is to compel leading
corporations to set higher labour and environmental standards, which would be subsequently
imposed to suppliers in the face of company vulnerability to charges of violations that could damage
their public image (Gereffi and Mayer 2004). International efforts to ‘mainstream’ and ‘standardize’
CLS (Hassel 2008) resulted into instances where responsibilities are shared between the public and
private realms. The OECD Guidelines for Multinational Enterprises adopted in 1976 (and significantly
revised in 2000) and the UN Global Compact adopted in 1999 provide a general framework for the
employment of codes of conducts by MNCs. Both instruments are ‘soft’ and encourage companies to
abide by certain principles and to extend them to their supply network (ibid).
Both the Global Compact and the OECD Guidelines have inspired immense debates. International
monitoring mechanisms are deliberately excluded from the UN Global Compact (Hassel 2008) and
MNCs are expected to provide information on implementation in their business reports. The OECD
Guidelines, on the other hand, foresee the establishment of national contact points with
governments and the preparation of an annual report. On the one hand, the absence of sanctions
for non-compliance makes both initiatives attractive to companies and this could eventually lead to
benchmarking processes and spill-over effects (Ruggie 2008). However, opponents emphasize the
contested transparency in monitoring procedures and argue that in essence the initiatives are used
as a way to prevent harder measures (Clapp 2005).
The development of public institutional support has been accompanied by a number of private
initiatives. The latter include the proliferation of corporate codes of conduct adopted by MNCs
initially as a response to consumer campaigns and gradually as a response to demands for socially
responsible corporate behaviour (Hassel 2008). Corporate Social Responsibility (CSR) emerged as a
fashionable discourse during the 1990s and has even developed into an industry in its own right.
However, critics advocate that the proliferation of CSR codes of conducts seems to be far from a
viable solution to address the governance deficit since their objective in most cases is to bypass
regulation and collective representation of worker interests, and therefore, they avoid provisions
that would establish dialogue with trade unions (Pearson and Seyfang 2001). Since private codes of
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conduct are unilateral initiatives serving managerial prerogatives to avert bad publicity, MNCs follow
a ‘choose and pick’ approach on the recognition of labour standards while there is an absence of
pragmatic commitments for compliance and monitoring (Tørres and Gunnes 2003). Furthermore,
they stipulate only minimal (if any) responsibilities for suppliers and subcontractors (Gibb 2005).
Besides MNC codes of conducts, private responses embrace a wide range of multi-stakeholder
initiatives, which are largely triggered and driven by non-governmental organizations (NGOs). The
Global Reporting Initiative (GRI) and Social Accountability 8000 (SA8000) are the most prominent
among developments. The GRI is an alliance of NGOs, consultants, academics and companies whose
purpose is to outline principles and indicators that companies can use to benchmark their social and
environmental performance. SA8000 is also a benchmark for social standards that was established
by Social Accountability International (a non-governmental organization). SA8000 builds on ILO CLS,
the UN Convention on the Rights of the Child, and the Universal Declaration of Human Rights. Both
initiatives are voluntary while the main criticism has to do with the contested legitimacy and
accountability of NGOs (Trubec et al 2000) as their founders and leaders.
Questions on the legitimacy of NGO-driven developments are situated within wider discourses on
the underdeveloped and even antagonistic relationship between NGOs and Global Union
Federations (GUFs) (Senghass-Knobloch 2004). NGOs have been mostly engaged in lobbying
initiatives regarding human and labour rights and, over the last decades, their focus has shifted from
governmental institutions towards corporations (Egels-Zandén and Hyllman 2006). GUFs are
distinguished by industrial sector and have a network of national affiliate organizations from over
120 countries (Croucher and Cotton 2009). In contrast to NGOs, GUFs aim more at creating and
defending space for local unions while their methods include solidarity work, education and, since
1988, the negotiation of International Framework Agreements (IFAs) (ibid).
IFAs constitute an alternative attempt of GUFs to address the inefficacy of existing national and
international mechanisms for labour governance and also to enhance their own independency and
capacity as global social actors (Fairbrother and Hammer 2005; Riisgaard 2005). The first agreement
was concluded in 1988 between Danone and IUF and since then IFAs have increased to about 80,
while the majority of them were negotiated after 2002. In the absence of a formal, universal
definition, IFA definitions can be encountered in various global union position papers, statements
and guides to affiliates. The definitions are very similar and essentially involve the signature by the
MNC and the GUF, the reference to international labour standards and the application to the global
MNC operations. The overwhelming majority of IFAs have been concluded by MNCs headquartered
in Europe. This trend partly reflects GUFs’ initial strategy.
The European institutional tradition of collaborative industrial relations proved a fertile ground for
IFAs’ emergence and further development (Croucher and Cotton 2009; Stevis and Boswell 2007;
Schömann et al 2008). The EWCs provided a solid institutional setting that facilitated the adoption of
IFAs acting as a ‘building block’ for organized labour. Initially, the idea was to approach European
companies with a reputation of being favourably predisposed to trade unionism and make requests
to negotiate and conclude an agreement. Once a sufficient number of IFAs was reached, GUFs hoped
to make more ‘difficult’ MNCs to follow by using the existing texts as a way to contact the
competitors of the signatory companies. The strategy has to a certain degree succeeded and global
giants such as Carrefour, DaimlerChrysler, Bosch and EADS have all signed IFAs. In 2008, G4S became
the first UK-based multinational to conclude an agreement.
Union practice towards IFAs has developed in parallel with attempts to conclude collective
agreements at the international sector level (see Anner et al 2006; Lillie 2004). Although in principle
the structure and sector affiliation of GUFs allows for such a development, the agreements on pay
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and working conditions of seafarers signed between the ITF and the International Maritime
Employers’ Committee can be considered as the only international collective agreements so far.
Although the ITF agreements cannot be classified as IFAs, global unions hope that a large number of
IFAs with MNCs of the same sector will provide legitimate grounds for raising a request for a sectoral
text (Croucher and Cotton 2009). Although sectoral IFAs would be ‘easier and cheaper’ for GUFs to
conclude (ibid), employers from their part have voiced concerns over the prospects for international
(sectoral) collective bargaining -a development they are clearly opposed to since it would involve
negotiations on wages (IOE 2007).
However, wages are far from a priority for GUFs when targeting MNCs and negotiating IFAs. Instead,
the emphasis is on provisions regarding trade union recognition, which is perceived as the most
fundamental of the CLS since it sets the grounds for achieving greater gains (Croucher and Cotton
2009). Global unions are increasingly making efforts to improve the status, language and content of
already established agreements and for that they make use of the IFA review meetings with the
MNCs. As an example, the IUF has concluded a number of national and international Labour
Recognition Agreements that prioritize the organizing and bargaining rights of workers and in
essence shift the focus to the rights of local trade unions (ibid).
The protection of local union rights especially in the Global South has developed into a growing
concern for GUFs. Their latest efforts seek to integrate the adoption of IFAs in two different (albeit
not mutually exclusive) strategies: (a) international organizing campaigns and (b) global networks at
the MNC level. On the first, the Chiquita agreement is one of the very few instances where an
international campaign led to an IFA (see Riisgaard 2005). The second strategy refers to the creation
of ‘stable groups of union representatives from different units of a multinational company or sector
who are in communication with each other’ (Croucher and Cotton 2009: 69). Yet, IFAs and global
networks are largely ‘being kept apart by companies who dispose of the necessary resources’ (ibid:
79). However, apart from managerial prerogatives, the above is also explained by a lack of stability
and continuity of existing networks as well as marked differences among their current forms.
Although both practices are underdeveloped, they are nonetheless perceived as the way forward for
more and stronger agreements (Stevis and Boswell 2007). Indeed, GUFs strategies have resulted into
a variety of IFAs and have raised concerns about the proliferation of ‘weak’ texts with patchy
outcomes (see Niforou 2012; Williams et al 2013).
Our argument and methods
The global segmentation of production and distribution has resulted in highly complex global value
chains (GVCs) where vertical and horizontal dynamics are equally important in determining labour
conditions and providing points of leverage for workers, trade unions and other lobbying
organizations. GVC governance is perceived as a spectrum where the degree of control and
coordination as well as power imbalances change significantly as a GVC moves from the high end to
the low end (Gereffi et al 2005; Ponte 2008). At the high end of the continuum, GVC governance is
top-down and chains are vertically integrated (‘hierarchical governance’). The lead firm drives the
chains in a ‘hands-on’ manner through, for instance, long-term contracts and high levels of
involvement with suppliers. At the low end, the chain is driven by the market (‘market governance’)
while the lead firm (if any) is just one of the many economic entities responding to market forces.
Finally, in between the two ends of the continuum, there are varying degrees of ‘hands-off’
governance by the lead firm through the use of codification techniques and standard-setting, and
preferences for involving agents and intermediaries.
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Combining notions of multi-level and GVC governance, we propose an analytical framework for
describing and explaining success and failure of labour agency (in this case, trade unions) when
attempting to improve labour conditions along GVCs. Our starting point is that the high complexity
of GVCs and the absence of a global overarching authority have been balanced by the emergence of
governance mechanisms of different forms and at different levels. These mechanisms emphasize
process over institutions: governance is about the processes of integrating the different institutional
levels in ways that promote the goals of the system overall (Peters and Pierre 2004). Governance
hence links the individual with the collective; and the local with the national, the international and
the transnational (Whitman 2009). In other words, global governance is essentially multi-level
(Marks and Hooghe 2004) where issues of power are central. Citing Whitman (2009: 66),
‘governance arrangements … are both outcomes of political deliberation and contention. Indeed,
contention extends to differences that arise between the many kinds and levels of governance’.
Therefore, in order to address the ‘[governance] of, by and for whom’ question and therefore take
into account power relations (ibid: 70), it is imperative to examine the interactions between the
different levels. The relationship between the different levels is far from hierarchical. Marks and
Hooghe’s (2004) writings depart from conceptualizations of multi-level governance as inevitably
connoting governmental hierarchy. Structure is largely absent from this system of governing, while
the absence of government-type hierarchy is associated with a high sense of autonomy between
(and –we would add– within) the different groups of actors at the different levels (Rosenau 2004).
The relaxation of regulatory frameworks and the overlap with different areas discussed below allow
for more strategic and autonomous actor behavior (Peters and Pierre 2004). The range of
relationships includes (i) top-down processes/pressures or devolution of responsibilities to lower
levels (for instance, from the lead firm to supplier sites and from GUFs to local union
representatives), (ii) bottom-up processes/pressures or upward delegation of responsibilities (for
example, employees at supplier sites bringing issues to the attention of lead-firm actors), (iii)
jurisdictional duplication (either reinforcing complementarities or creating conflict), and (iv) absence
of any relationship (each level constitutes an independent and autonomous jurisdiction).
In multi-level governance, the focus is on interdependencies rather than clearly delineated
territories (Jessop 2004). Actors at different jurisdictions may interact (a) because they are tied by
formal institutionalized or informal ad-hoc arrangements (practical interdependencies), (b) in order
to realize their convergent and/or complementary needs and interests irrespectively of whether
they are tied by formal or informal arrangements (strategic interdependencies), and (c) driven by
political reasons (political interdependencies). As we move from the high-end to the low-end of the
GVC spectrum, the degree of interdependency changes. Our main argument is that the concept of
interdependencies can be useful in explaining the outcomes of labour use of power along GVCs. In
the following analysis of labour agency in two GVCs, we discuss how interdependencies shape GUF
strategies aimed at promoting trade union rights in the Global South.
The three lead-firms under scrutiny belong to Telefonica and Inditex. Both companies have a strong
presence in Latin America and have adopted IFAs and unilateral corporate codes of conduct among
other global initiatives (discussed below). Methods include semi-structured interviews with key
managerial and union actors involved in the adoption, implementation and monitoring of IFAs and
codes of conduct at both global and local levels. Documentation obtained and analysed includes the
texts of the two IFAs and unilateral codes, company collective agreements, social responsibility
reports, trade union letters to affiliate branches or MNC headquarters, minutes of meetings of CSR
monitoring committees and case law on local violations. Documentary information was scrutinized
and compared with interview and document data in order to detect potential gaps between policy
and practice. A small-scale survey targeting key informants was also distributed to managerial actors
in 21 Telefonica subsidiaries with the assistance of headquarters. The survey was used in order to
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contextualize the in-depth findings. Despite corporate involvement in the launching of the survey,
the responses were directly communicated to the researcher by participants as a way to eliminate
bias and social desirability.
Data: The right to bargain and negotiate collectively
Telefonica
Telefonica operations are spread across 25 counties. Main activities comprise fixed and mobile
telephony, broadband services and call centers while peripheral businesses include media and
management consultancy. Telefonica has 257.000 direct and 333.000 indirect employees. 51% of
direct employees work in call centers while 61% of call centre employees are women. Latin America
is the biggest market of Telefonica products and services, and employees in the region account for
67% of the total workforce. In Spain, Telefonica employees are represented by the telecom branches
of the two major trade union confederations CCOO and UGT. 70% of the Spanish workforce are
covered by collective agreements. CCOO enjoys the majority of representation.
In terms of social responsibility, the company incorporated the Global Compact in 2002 and has also
elaborated an internal code of ethics (named ‘Business Principles’). The ‘Business Principles’ entail
rather generic provisions on trust and integrity, respect for the laws and human rights but also more
specific provisions addressing clients, employees, shareholders, the community as a whole and
finally suppliers. The company has established a Business Principles Office (BPO) which is responsible
of disseminating the Business Principles, provide training with regard to its content, intervene in
cases of misinterpretations and monitor its implementation. Moreover, Telefonica produces annual
social responsibility reports in 17 countries all of which are externally verified using the GRI and
AA1000AS indicators.
Table 1: Summary of Telefonica Business Principles
General principles comprise:
Honesty and trust, respect for the law, avoidance of bribery and anti-corruption, respect for human
rights
Employee-related principles:
Commitment to professional development, fair compensation, health & safety, respect for human
rights (the latter principle involves brief references to child labour, harassment, respect for
employees’ right to join a trade union)
Customer-related principles:
Commitment to high quality products and services, communications and advertising
Shareholder-related principles:
Commitment to highest standards of corporate governance, shareholder value, transparency,
provision of appropriate internal controls, efficient use of company assets
Community-related principles:
Commitment to the social, technological and economic development of the countries where
Telefonica operates, environmental protection
Supplier-related principles:
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Management of conflicts of interest, commitment to fairness and transparency, responsibility (the
latter refers to requirements to meet similar ethical standards and to comply with existing legislation
and regulations in the countries where they operate)
The global union federation UNI has more than 3 million members in the telecommunications
industry in more than 130 countries. UNI is organized into three divisions: ‘UNI-Europa’, ‘UNIAmericas’ and ‘UNI-Apro’ (the latter represents affiliates in Asia, Pacific and Africa). IFAs or ‘global
agreements’ as GUFs prefer to call them, are at the core of UNI campaigns targeting MNCs. UNI
perceives IFAs as global strategies that foster cross border cooperation between local and national
trade unions and ensure that multinationals come to the bargaining table in good faith in every
country in which they operate. The signature of the IFA was the culmination of union efforts from
Latin America to bring their local issues to the attention of global corporate management. The text
was signed in 2001 by the CEO, UNI and the telecom representatives of CC.OO and UGT.
Table 2: Overall Industrial Relations Structures in Telefonica
Levels
Actors
Global
UNI, CCOO,
global HR
Regional
Instruments/Outcomes
1. Joint committee for
monitoring the IFA
2. Alliance
1. ‘Social Protocol’;
2. ‘UNI-Telefonica Code of
Conduct’ (name for IFA)
3. ‘Business Principles’
1. UNI-Americas’ Reports
2. Minutes of meetings
kept by global HR reps
Reports and minutes of
meetings
Company agreements; a
framework of basic
standards is set by the
national cross-federal
agreement
Company agreements
Latin
America
UNI, UNI-Americas,
global HR
Alliance annual
meetings
Europe
Telefonica Europe,
EWC
CCOO, UGT, HR from
different subsidiaries
EWC meetings
UK
CWU, Connect, O2
Peru
Fetratel, SETP,
SUTTP, fixedtelephony
management
Cepetel, Foetra,
Foeesitra, fixedtelephony
management
Collective bargaining –
annual negotiations
on pay
Collective bargaining –
annual negotiations
on pay
Spain
National
UGT,
Mechanisms
Argentina
Collective bargaining
Collective bargaining annual negotiations
on pay
Company agreements
Company agreements
Table 3: Issues covered by the UNI-Telefonica IFA & references to ILO
1.
2.
3.
4.
Free selection of employment: references to ILO Conventions 29 and 105
Employment discrimination: references to ILO Conventions 100 and 111
Child labour: references to ILO Conventions 138 and 182
Freedom of association & the right to collective bargaining: references to ILO Conventions 86
and 98
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5. Worker representatives’ rights: references to ILO Convention 135
6. Minimum wages: references to national legislation and collective agreements (as set out in
ILO Conventions 94, 95 and 131)
7. Working day: references to national legislation, collective agreements and industry standards
(as set out in ILO Conventions 1, 47 and Recommendation 116)
8. Health and safety: references to ILO Convention 155
9. Working environment: commitment to harmonious relations and respect at the workplace
10. Development and training: commitment to training especially with regard to the use of new
technology
11. Employment stability: references to national legislation and agreements
12. Respect for the environment: commitment to ensure that all environmental concerns are met
There have been widespread disputes in the company’s Latin American subsidiaries regarding
violations regarding violations of trade union recognition and collective bargaining rights. In Atento
Mexico, a subsidiary of Telefonica which provides services to big companies and their clients through
call center operations, there are two trade union organizations: one with sectoral representation
(telecommunications and transport-SPTCTRM) and one representing a specific profession (union of
telephony workers –STRM). The latter is affiliated to UNI but it is not recognized by the company for
collective bargaining purposes. The company has a collective agreement only with the former trade
union organization in full compliance with Mexican labour law. Legislation on trade union
recognition stipulates that, in companies where industry unions and unions representing employees
of a specific profession co-exist, a collective agreement with the latter will be reached only when the
number of their members is bigger than the number of the employees of the same profession who
are affiliated to the industry union. STRM does not meet the above criteria but it also argues that the
union enjoying majority rights is in reality controlled by the company and it has signed one of the socalled ‘protection contracts’. The latter are ‘fake’ collective agreements concluded without the
knowledge or participation of the employees and they serve managerial prerogatives of officially
complying with the law while unofficially avoiding contractual obligations. STRM accuses Atento of
violating Article 2 of the IFA. Yet, for corporate management, the IFA ‘is not above national laws’ and
since the actions of Atento Mexico are ‘lawful’ they cannot intervene.
During 2006-2008, trade unions in Atento Puerto Rico faced similar issues of recognition for
collective bargaining purposes. The company opposed the conduct of union elections for collective
bargaining representatives –a position permitted by national legislation. The union filed a petition to
the National Labor Relations Board to direct the election process after conducting a hearing. During
the period culminating to the hearing, management engaged in an anti-union campaign including 15
lay-offs of employees who were members of the union organizing committee and distribution of
letters to the workforce ‘informing’ them that trade union affiliation deprives them of their
individual rights before their employer. UNI intervention resulted in the reinstatement of the above
employees after a series of meetings and formal email communication with corporate management
in Spain. Yet, the anti-union campaign did not cease and UNI representatives traveled to Puerto Rico
to meet with local management and inform them of their ‘obligations’ as parties of the Global
Agreement between Telefonica and UNI. Local managers refused to assume any such ‘obligations’
and corporate management proposed to both parties (company and local union) to suspend the
elections in order to examine in which way neutrality would be maintained. Again Atento went on
with the campaign until the issuing of a ‘Settlement Agreement’ by the National Labour Relations
Board. The agreement obliged the company to post notices in the workplace stating that they would
not interfere when employees exercise their rights to form and join a trade union and to negotiate
collectively. Atento finally complied with the Settlement Agreement but the union lost the elections.
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In Colombia, Telefonica is a minor shareholder of Telebucaramanga, a telecom company owned by
public local authorities. The company refuses to recognize the USTC (the UNI affiliate in Colombia)
for collective bargaining purposes. The above is largely allowed by national laws on collective
bargaining rights of public sector employees. Despite the ratifications of Conventions 151 and 154
on labour relations in the public services and collective bargaining respectively, collective bargaining
is largely the privilege of private sector employees. Public sector employees can only submit
‘respectful requests’ that do not cover wages, benefits and employment contracts. USTC therefore
resorted to Telefonica in order to achieve recognition under the IFA provisions but corporate
management did not intervene due to the company’s minor participation. In their words, ‘when you
own less than 10% of a company, you cannot act as if you were the boss’ (interview note – global
headquarters).
In Peru, trade union recognition issues emerged from the privatization processes of the company.
‘Telefonica del Peru’ was created by the merger of two formerly public companies represented by
rather strong unions. After the acquisition, the company was subdivided into distinct legal entities
according to different operations. Further acquisitions led to the emergence of numerous
subsidiaries the majority with small workforces. The above resulted in extensive lay-offs while the
employees who were selected to pass to a new company were ‘obliged to voluntarily resign’
(interview note - SETP) before signing a new contract. According to Peruvian unions, in most cases
the new contracts entailed inferior terms and conditions of employment. In one case in 2001, trade
unions signed an agreement with management stipulating company’s commitment to ensure that
the employees would maintain their trade union rights. Apart from local instruments, the text made
references to the Social Protocol and the IFA albeit in a brief and largely political and symbolic
fashion: the local agreement was reached only a few months after the signature of the IFA and it was
the only time the IFA was incorporated in a local document. Yet, after the signature of the local
agreement, the company proceeded with compulsory redundancies.
Trade union recognition for collective bargaining purposes in Peru is impeded by national legislation,
which foresees collective bargaining at company level. Although trade unions currently seeking
recognition are registered as company unions, they were nonetheless established when Telefonica
was operating only in the fixed-telephony business. The law therefore does not allow them to
bargain collectively in any other companies of the group on the grounds that these are distinct
companies representing distinct activities. Unions have engaged in legal disputes with the company
and they are also considering a merger in order to be able to negotiate and bargain at group level.
Yet, a merger seems to be impeded by inter-union rivalries as evident in the case of Fetratel.
Although Fetratel originally registered as a telephony company union federation, since 2008 it has
acquired an industry status aiming at increased affiliation in telecommunications and hence
coverage of Telefonica mobile telephony, call centres and peripheral operations (i.e. consultancy
service providers, multimedia companies etc). Fetratel’s move has not been received well by the
other two trade unions (SUTTP and SETP) who fear that they might lose potential and current
members.
In 2004, there was a serious conflict in Telefonica Argentina (fixed telephony operations) regarding
pay. The dispute lasted four months and employees were on strike for a total of 34 working days. As
pay is considered a local issue, the IFA was not invoked. Global headquarters did intervene mainly to
get information on the dispute and to try to mediate its impact. Yet, the conflict was resolved locally
‘with gains and losses for both sides’ (interview note - Argentinean ‘responsable de pais’). Moreover,
local trade union claims to organize mobile telephony and call center employees have been rejected
on the grounds that both activities belong to the commerce sector (i.e. retail and customer service)
and not to telecommunications. The commerce sector is covered by national collective agreements
that set the framework of terms and conditions of employment and leave detailed aspects to be
10
agreed at company and/or plant level. Managers argue that employee contractual terms are agreed
according to the sector agreements and hence are fair. In mobile telephony, management resorted
to the ministry of labour invoking relevant legislation on company obligations to negotiate with
unions that belong to the same activity and as a result, telephony unions lost the battle. According
to union representatives, the company therefore pays commerce salaries to telecoms workers. In
call centers, managers further argued that union representation was not an employee claim but
more an attempt to be forced upon them by unions.
However, there has been one case where the IFA had some impact on resolving a local dispute. The
agreement partly contributed to the recognition of Cepetel, a small Argentinean union of engineers
and technicians. Cepetel resorted to the Tribunals and used the IFA as a means to publicize the issue
via UNI. It is striking that the two other unions representing Telefonica Argentina engaged in a legal
battle against Cepetel in collaboration with the company because they were afraid they would lose
the majority of representation. Other reasons behind this inter-union hostility comprised differences
in political backgrounds and orientations. Cepetel was eventually legalized by a court decision and,
in 2008, it was recognized by the company for collective bargaining purposes.
Inditex
Inditex operates in the textile and garment industry and employs 89.112 direct staff. The company is
trading well-known brands such as ZARA, Pull & Bear, Massimo Dutti etc. It has 4.607 stores in 74
countries across Europe, America, Asia-Pacific, Middle East and Africa. Europe is Inditex’s biggest
market accounting for almost 82% of its total number of stores. In 2001, the company elaborated a
‘code of conduct for external manufacturers and suppliers’ which was modified in 2007. Since 2005,
Inditex has incorporated the Ethical Trading Initiative (ETI) and in 2006, it elaborated separate
guidelines for the implementation of the code of conduct.
ITGLWF is the International Textile, Garment and Leather Workers Federation with 217 affiliate
organizations in 110 countries. The Inditex IFA was signed in 2007 by the CEO and the general
secretary of ITGLWF. In contrast to Telefonica and Endesa, home-country unions (CC.OO and UGT)
were absent from the signature of the Inditex IFA. So far it is the only ITGLWF agreement and the
first covering the supply chain of a global retailer. The IFA was welcomed by the ITGLWF as signaling
a new approach to ensuring decent work in the textile, garment and footwear supply chains. The
Inditex document is also one of the few among existing documents with the title ‘International
Framework Agreement’.
Table 5: Summary of Inditex Code of Conduct for manufacturers & suppliers
General commitment to:
-The agreements of the ILO.
-The Universal Declaration of Human Rights of the United Nations.
-The Principles of the Global Compact of the United Nations.
-The Directives of the OECD for multinational companies.
-The Base Code of ETI.
-The locally applicable employment legislation.
-The local legislation in environmental matters and, in the absence thereof, the international legislation that is in force.
Principles:
1. Forced labour
2. Child labour
3. Discrimination
4. Freedom of association & the right to collective bargaining
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5. Inhumane treatment
6. Health & safety
7. Wages
8. Working time
9. Environmental awareness
10. Regular employment
Table 6: Issues covered by the ITGLWF-Inditex IFA & references to international standards
References to the Universal Declaration on Human Rights, the UN Convention on the Rights of the Child, the
OECD Guidelines for Multinational Enterprises and ILO (Conventions Nº 29, 87, 98, 100, 105, 111, 135, 138,
155, 159 and Recommendation 143).
‘ITGLWF will work with Inditex to help secure full compliance with the following standards set out in the
international instruments mentioned above and the Inditex Code of Conduct for External Manufacturers and
Suppliers:
1. No Forced Labour.
2. No Child Labour.
3. No Discrimination.
4. Respect for Freedom of Association and Collective Bargaining.
5. No Harsh or Inhumane Treatment.
6. Safe and Hygienic Working Conditions.
7. Wages are paid.
8. Working Hours are Not Excessive.
9. Environmental Awareness.
10. Regular Employment.
11. Code Implementation’.
In early 2007, a supplier of GAP in Peru made 85 employees redundant. According to Peruvian
unions, the supplier gave no specific reasons for the redundancies and aimed at eliminating union
presence in the plant since all 85 dismissed employees were union members. Local unions contacted
CC.OO in Spain who assisted them in communicating with representatives of GAP and the global
union ITGLWF. Both parties travelled to Peru and after a two-day meeting signed an agreement that
reinstated the dismissed employees. Yet, in 2008 the company proceeded with further dismissals.
The IFA was invoked in 2008 in the case of a Portuguese supplier that employed two workers of 14
and 15 years of age. Initially Inditex announced that it would proceed with the termination of the
business contract but Spanish and Portuguese trade unions interfered in order to save 140 jobs that
would be lost if the contract was terminated. Instead, the supplier committed to undertake
corrective measures. The measures were outlined during a meeting between ITGLWF
representatives, home-country and local unions, the CSR director of Inditex, managers of the
incompliant supplier and representatives of the Portuguese business association of the sector along
with their legal advisor. The measures gave unions a leading role in disseminating information on
employee and trade union rights.
Discussion: The role of power and interdependencies
12
In the case of Telefonica, the analysis revealed top-down dynamics in the cases of dissemination of
global company arrangements (IFA & ‘Business Principles’) by global headquarters to the senior
management of the unionized Latin American operations of the group and by UNI to local trade
union leaders. Downward devolution of responsibilities is weak in the cases of practical
implementation and monitoring. Awareness-raising from the part of local unions has been minimal
while monitoring mechanisms are missing. Similarly, an adaptation of the text to local realities was
perceived as unnecessary by senior local management who neither disseminated the IFA to middle
managers and employees within subsidiaries nor elaborated specific instruments for implementation
and monitoring. Although Telefonica’s structure is rather hierarchical, it is nonetheless found that
strong top-down processes are impeded by the degree of autonomy enjoyed at lower levels. Local
management has made a distinct use of autonomy in the case of the IFA when compared to the
social responsibility and human resources policies that are elaborated at the global group level. All
the arrangements formulated at the global level allow for considerable scope for adaptation which is
usually the responsibility of local managers. Yet, the latter have chosen not to engage with the IFA
text.
In terms of duplication and overlap of policies and practices at more than one levels, the absence of
specific responsibilities and clear roles from the generic IFA & Business Principles texts has allowed
for different interpretations and therefore different outcomes. Although the ‘Business Principles’
text makes only a brief reference to employees’ right to join a trade union and no reference to the
right to collective bargaining, compliance with the respective rights is monitored using ‘soft CSR’
auditing channels available in the BPO. In other words, the code of conduct has overshadowed the
IFA. As the Telefonica Europe HR manager put it, the IFA ‘guarantees rights for employees, not for
trade unions’. Where (strong) unions are present, the standards stipulated by local and/or national
collective agreements supersede the minimum requirements of the texts which in turn are
attributed a symbolic value in the eyes of local managers. Where unions are not recognized and seek
recognition, precedence is given to (unfavourable) local legislation (i.e. Colombia, Puerto Rico, Peru)
and to sector arrangements (i.e. case of Argentina). Although the IFA document stipulates the
signatories’ commitment to the freedom of association and the right to collective bargaining as
conferred by the relevant ILO conventions, the latter cannot automatically meet union recognition
claims. Moreover, in cases of non-ratifications or ‘patchy’ ratifications, the ILO realm cannot really
serve as a strong leverage point for unions.
The above have been accompanied by the emergence of a number of bottom-up dynamics. Local
unions use the annual meetings of the Alliance as a means for direct upward communication by
bringing local issues to the attention of global headquarters. On a more frequent basis, they engage
in indirect upward communication with the global human resources team via the Spanish union
federations taking advantage of their proximity to the corporate centre and their good working
relationship with management. Whether direct or indirect, upward communication has had positive
outcomes. Global headquarters and UNI have taken responsibility for local disputes and have jointly
mediated their impact (as, for instance, in the case of Puerto Rico). It is therefore evident that
bottom-up dynamics can lead to top-down and vice versa.
Overall, the power of global headquarters is exercised with the purpose to maintain and safeguard
local business, institutional and cultural independency. The power of UNI is exercised in a reactive
and rather political manner in local disputes while it is largely absent on a more frequent basis. Apart
13
from its mediator role in cases of conflicts, UNI involvement is limited to producing and publishing
brief reports and updates on labour issues in the company while instances of more proactive use of
its power have been rare. In 2008, it undertook a small union survey on the implementation of the
IFA and despite the extent of the deficiencies it revealed, no further actions were taken. Local unions
experience UNI as ‘distant’ and bureaucratic in that it puts too much emphasis on ‘formality’ rather
than action.
At the local level, trade union exercise of power differs according to expectations. When homecountry union and UNI intervention fail, the more realistic local unions wait for the annual meetings
of the Alliance to raise complaints. The unions who expected stronger commitments employ local
means instead of invoking the IFA or other instruments in conflictual situations, while there is a third
category of unions who mix both local and global sources of power with positive results as in the
cases of Cepetel in Argentina and SETP in Peru. These unions represent engineers and technicians
and therefore skills are an additional and important source of power. The (threat of) realization of
strikes and walkouts when combined with the mediation of global actors is sufficient to enforce
compliance.
In the case of Inditex, although the IFA and code of conduct texts make rather detailed references to
international standards as these are set by the ILO, Global Compact, UN declarations etc, none of the
aforementioned instruments were invoked during attempts to resolve local disputes and to address
violations. It could however be argued that by effectively intervening to enforce compliance, both
global headquarters and ITGLWF indirectly reaffirm their commitment to the agreement and hence
to international standards. The analysis reveals the significance of the role of path dependency. The
latter is manifest in actors’ perceptions of both instruments as reinforcing Inditex’s social
responsibility tradition. The references within the IFA text to the code of conduct and to the code’s
guidelines and interpretation documents have informed home-country union and headquarter
action. Home-country unions address the IFA as a CSR issue and have invoked Inditex’s commitment
to the code of conduct when contacting global headquarters who in turn perceive the agreement as
institutionalizing trade union involvement in monitoring the application of the code.
In this respect, the strong CSR commitment of both Inditex and Spanish unions combined with the
impact of convergent needs and interdependencies serve to overcome complexity barriers and make
relevant actors assume responsibility for or intervene to address violations. This is evident in the
Peruvian case where a GAP representative traveled to Lima to meet with the management of
Inditex’s supplier and local trade union officials with positive outcomes. However, besides CSR
interdependencies, there are sector influences in informing actor choices when enforcing
compliance with trade union rights. The apparel industry has been particularly sensitive to social
movement campaigns (as in the famous case of Nike) and more exposed to public scrutiny than the
telecoms. Multinationals including Inditex are therefore cautious not to let disputes follow the legal
route.
Overall, the Inditex case is a notable example of proactive use of power by all the relevant actors
with a view to enforce labour standards compliance at local supplier level. Even though they are not
cosignatories of the text, home-country unions are nonetheless distinguished as the most proactive.
Following the upward communication by local supplier unions, the Spanish federations did not
14
merely act as intermediates between local unions and the GUF but they took it further and engaged
in direct contact with global headquarters. CCOO has been the most proactive of the two, and apart
from the ideological reasons discussed above, this is largely attributable to the fact that corporate
social responsibility has been at the core of its campaigns both within Spain but also internationally.
Moreover, the GUF’s decisive intervention (i.e. Peru) and its coordinating role in designing and
applying the corrective measures (i.e. Portugal) can be attributed to the fact that the Inditex IFA is
their first and so far their only agreement. Equally, it was the first IFA in the apparel industry at the
time of conflicts and therefore both Inditex and the ITGLWF were keen to ‘make it work’. Finally,
outcomes can be explained by the nature of the issues involved and the degree of ‘sensitivity’
attributed to them by lead-firms: the latter are more proactive in cases of child labour when
compared to trade union rights.
Conclusions
The cases above reveal that the institutional support available to workers and their representatives
at different levels has proved ‘toothless’ for two key inter-related reasons. First, both public and
private arrangements are deficient in terms of legality and enforceability. Secondly, jurisdictional
duplication and overlap has allowed for what we call an ‘ill-perceived subsidiarity’: labour issues
tend to be addressed at the most ‘convenient’ level. This type of subsidiarity, in other words, refers
to the ‘choose and pick’ approach by actors (in our case, managers but also global unions) who
prioritize the realization of their strategic interests over substantially improving labour and
employment conditions. As discussed earlier, management seeks to safeguard local business by
maintaining institutional and cultural independency. Global unions, on the other hand, seek to
safeguard their good working relationship and proximity to corporate headquarters of lead-firms.
Going back to Gereffi et al’s (2005) framework, none of our two firms seem to be at the high end of
the GVC spectrum but rather somewhere in the middle. Drawing on multi-level governance, we
further see that labour issues are addressed in a ‘hands-on’ manner only in cases of political and
strategic interdependencies, whereas practical interdependencies in the form of institutional ties are
not strong enough to enforce compliance.
Our findings have implications GUF current and future strategies. GUF attempts to ‘transfer’ the
collaborative industrial relations tradition of Europe to regions such as Latin America have been
largely unsuccessful. The above ill-perceived subsidiarity reflects the persisting barriers to (and
perceptions on the tentative relevance of) homogenizing labour practices across the Global North
and the Global South. GUFs therefore perceive the signature of IFAs by non-European companies as
a more viable strategy where all the actors involved will ‘speak the same language’ both literally and
metaphorically –as, for instance, UNI-Americas’ latest attempts to approach a Chilean MNC with
operations across Latin America (interview note – UNI-Americas). Yet, even in such cases, local interunion rivalries need to be addressed prior to an IFA signature.
GUFs’ approaches towards IFAs have been accompanied by a growing focus on the development of
regional forms of global union networks. Such a network comprises GUF affiliate bodies that
represent the employees of a regional division of a MNC and aims at strengthening communication,
cooperation and coordination among members (i.e. different networks for the South American and
Asia-Pacific operations of a company as for example with the ICEM networks within BASF). In this
15
regard, the UNI network of Telefonica provided fertile grounds for both the adoption and successful
review of the IFA. However, the failure to effectively incorporate European actors in the Alliance
(Niforou –forthcoming) is an additional manifestation that these structures work better when
regional. Union networks would ensure the effectiveness of global company arrangements by acting
in essence as learning exercises on how to overcome ideological and structural imbalances in light of
the pursuit of common objectives.
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