The OECD Guidelines as a Supranational Mechanism of Labor Conflict Resolution

Transcription

1 Cornell University ILR School Conflict and its Resolution in the Changing World of Work: A Conference and Special Issue Honoring David B. Lipsky The OECD Guidelines as a Supranational Mechanism of Labor Conflict Resolution Michele Ford University of Sydney Michael Gillan University of Western Australia Htwe Htwe Thein Curtin University Follow this and additional works at: Thank you for downloading an article from DigitalCommons@ILR. Support this valuable resource today! This Article is brought to you for free and open access by DigitalCommons@ILR. It has been accepted for inclusion in Conflict and its Resolution in the Changing World of Work: A Conference and Special Issue Honoring David B. Lipsky by an authorized administrator of DigitalCommons@ILR. For more information, please contact hlmdigital@cornell.edu.

2 The OECD Guidelines as a Supranational Mechanism of Labor Conflict Resolution Abstract This paper explores supranational conflict resolution through an examination of the OECD Guidelines for Multinational Enterprises and a specific instances mechanism through which unions and other interested parties can raise complaints and resolve disputes related to alleged breaches of the Guidelines. Based on an analysis of descriptive statistics generated from an original database of all specific instance complaints and qualitative assessment of a selected number of union-led complaints, the paper assesses the impact of the mechanism as an instrument of conflict resolution. In doing so, it focuses on the form and structure of the national agencies which deal with complaints; their methods and practices of dispute resolution; and the outcomes produced within the context of sovereign nations own industrial relations processes. In doing so, it contributes to the conceptualization of conflict resolution in MNE-labor relations and the significance of overlapping levels and forms of governance. Keywords conflict management, multinational corporations, trade unions, dispute resolution, labor regulation Comments Suggested Citation Ford, M., Gillan, M., & Thein, H. H. (2017, November). The OECD guidelines as a supranational mechanism of labor conflict resolution [Electronic version]. Paper presented at Conflict and its Resolution in the Changing World of Work: A Conference and Special Issue Honoring David B. Lipsky, Ithaca, NY. Retrieved [insert date], from Cornell University, ILR School site: Required Publisher Statement Copyright held by the authors. This article is available at DigitalCommons@ILR:

3 The OECD Guidelines as a Supranational Mechanism of Labor Conflict Resolution Michele Ford*, Michael Gillan** and Htwe Htwe Thein*** (authors listed alphabetically) * Sydney Southeast Asia Centre, Brennan-MacCallum, A18, University of Sydney, Sydney, Australia michele.ford@sydney.edu.au ** UWA Business School, University of Western Australia, Perth, Australia, michael.gillan@uwa.edu.au ***Curtin Business School, Curtin University, Perth, Australia, htwehtwe.thein@curtin.edu.au Presenting author: Michael Gillan The University of Western Australia PHONE Michael.Gillan@uwa.edu.au 2

4 The OECD Guidelines as a Supranational Mechanism of Labor Conflict Resolution Understanding conflict management in and beyond the workplace and the social and behavioral dynamics of formal negotiation and dispute resolution processes has been a longstanding research agenda within the discipline of industrial/labor relations (Lewin 2008; Lipsky et al. 2015). However, studies of conflict management and dispute resolution have focused largely on internal organizational processes of integrated conflict management (Lipsky et al. 2014). Where scholars have examined external mechanisms of labor dispute resolution, they have concentrated on the role of national mechanisms, such as industrial tribunals, or on litigation through national court systems leaving the international or supranational dimensions of conflict management and conflict resolution underrepresented in industrial relations research (Blackett and Trebilcock 2015). Through a close examination of the complaints mechanism embedded within the Guidelines for Multinational Enterprises issued by the Organization for Economic Co-operation and Development (OECD), this article contributes to the conceptualization of labor conflict resolution in the supply chains of multinational enterprises (MNEs) and the significance of overlapping levels and forms of governance in that process of conflict resolution. Globalization and the growth of complex production networks have drawn scholars to the need to conceptualize labor relations as not bounded, nor solely determined, by national actors and institutions (Lakhani et al. 2013; Tapia et al. 2015). Labor relations are increasingly global, and globalization is recognized not only as a source of labor and workplace conflict, but also as a trigger for changes in the dynamics of conflict resolution within particular national contexts. 1 At the same time, enforceable collective bargaining and conflict resolution remain primarily linked to the authority of sovereign states. It is this disconnect between the overlapping geographic scales that shape labor relations and the nationally bounded nature of formal institutions of regulation and dispute resolution that makes it especially important to understand the few mechanisms of supranational conflict resolution that do exist. This article furthers our understanding of supranational mechanisms of conflict resolution through a study of the parties, process dynamics and outcomes produced by the OECD Guidelines specific instance complaints mechanism. One of the oldest international mechanisms for addressing complaints about the conduct and practices of MNEs, the OECD Guidelines are a form of soft regulation and therefore voluntarist and non-binding. The Guidelines nevertheless allow a genuinely transnational space for justice claims to be lodged, publicly assessed and verified and, potentially, resolved by means of mediation or mutual agreement. Moreover, because they are situated within an intergovernmental international institution in which national agencies and authorities are meshed together, they also do not neatly conform to a binary reading of transnational versus national authority in managing conflict. 3

5 Based on a qualitative analysis of all specific instance complaints lodged with the OECD to June 2016 and an assessment of complaints pertaining to industrial relations issues, this paper evaluates the impact of the complaints mechanism as an instrument of conflict resolution. In doing so, it considers the structure of the various (national) agencies within the OECD complaints mechanism; methods and practices of dispute resolution; and outcomes produced within the context of the industrial relations processes of particular sovereign states. In terms of unions use of this mechanism, it is clear that it offers a conduit for collaboration across geographical scale. Our analysis also suggests that combining a specific instance complaint with parallel proceedings in local courts or tribunals, strike action or a global campaign may enhance union effectiveness in addressing and resolving disputes. In terms of the mechanism itself, our findings confirm that the agency and strategic choice of corporations is highly significant in this essentially voluntarist process. However, the national institutional context of the MNE s home country appears to be a significant determinant of corporations agreement or refusal to engage in dispute resolution under the mechanism. The structure of National Contact Points (NCP) the national-level structures through which the mechanism is operationalized appears to be less significant in determining the take-up and outcomes of cases, though national sovereign regulatory authority produces inconsistencies in interpretations of the scope and the procedural requirements of the Guidelines, which affects the capacity of NCPs, and thus the specific instance mechanism, to resolve conflicts. Labor Relations and Conflict Management via Supranational Institutions There is burgeoning interest in transnational labor regulation and the governance and regulatory gaps that characterize the social and economic dynamics of MNEs and global supply chains (Marginson 2016). Labor governance and regulatory institutions, where once conceived as national and circumscribed, are increasingly understood to be multi-actor and multi-scalar. However, concern with emerging forms of global private regulation and the governance of value chains has not been matched by research on how these regulatory structures interact with the authority and effect of national institutions and international organizations (Bartley 2011; Kolben 2011). Indeed, little attention has been afforded to the role of states and international organisations in this process, allowing the place of public authority to sink into the shadows as the focus rests on private power, broadly conceived as represented by both firms and civil society organisations (Mayer et al. 2017: 130). There is also a growing but still limited body of research on the process and outcomes of supranational labor-management negotiation. The negotiation of global or regional framework agreements between labor unions and MNEs has led to several studies that engage with the processes that have given rise to these agreements and initial assessments of their effect. Helfen and Sydow (2013) have deployed negotiation process concepts to interpret the varying behaviors, contexts and outcomes of Global Union MNE bargaining to create Global 4

6 Framework Agreements (GFAs) on labor standards and governance. Dehnen (2013) has likewise studied the interaction between European-level labor institutions (European Works Councils), Global Union Federations and MNEs in motivating and determining the form of GFAs. While negotiation can rightfully be understood as one of many forms of conflict management, purpose-specific institutions (tribunals and arbitral bodies, mediators, courts etc.) exist to resolve specific grievances and disputes between parties and therefore have their own unique characteristics. Research on supranational dispute resolution institutions is scarce. In many respects, this paucity simply reflects the absence or weakness of institutions and mechanisms for transnational labor law and labor dispute resolution: while corporations have developed international systems of arbitration to resolve commercial and investment disputes, there has been no equivalent development of transnational arbitral mechanisms and systems of labor dispute resolution and there is limited capacity for lodging specific complaints via the International Labour Organization (ILO) (Claussen 2015). There are, nonetheless, several salient institutions that can and do play a role. As Claussen (2015) notes, dispute resolution clauses under bilateral or multilateral trade agreements provide at least some scope to serve as a space where disputes can be considered and resolved. Fudge and Mundlak (2016: 128) have also argued that the dispute resolution mechanisms of the World Trade Organization (WTO) and the Court of Justice of the European Union (CJEU) are emerging as important venues for articulating competing claims of justice, asserting that these forums increasingly allow the interests and claims of non-state actors (unions, employers' associations, commercial actors) to be voiced. Both institutions are flawed and limited in significant but different ways. The WTO mechanism is particularly weak, since it does not permit NGO advocacy or for unions or employers' associations to prepare independent positions that cross the state borders (Fudge and Mundlak 2016: 145). The CJEU has greater scope for civil society advocacy and claim-making and flexibility to design remedies that enhance participation and facilitate ongoing negotiation between various actors representing multiple interests but has mainly done so with regard to contentious issues with supranational regulatory implications such as rules surrounding the use of posted workers by contracting firms in the European Union (Fudge and Mundlak 2016: 152). Another example is the labor dispute mechanism that exists under the North American Free Trade Agreement (NAFTA) by virtue of its supplemental labor pact, which allows unions and other parties to file complaints on one or more of the eleven principles included in the pact. The North American Agreement on Labor Cooperation (NAALC) is overseen by the Commission for Labor Cooperation, which consists of a ministerial council and a secretariat, and administered through National Administrative Offices, which receive complaints pertaining to NAFTA members other than the one where the office is located (Compa 2001). Ministerial consultations can be initiated where there is a failure to enforce laws pertaining to any of the eleven principles. 5

7 A committee of experts can be convened in cases pertaining to principles other than freedom of association, the right to collective bargaining and the right to strike. Independent arbitration, the highest level of the mechanism, is available for complaints related to child labor, minimum wages and occupational health and safety, and may lead to fines or firm-specific, industry or sectoral trade sanctions in cases where arbitration fails (Kay 2005). However, following an initial burst of complaints, 37 of which were lodged in the early years of the mechanism s existence (Garcia 2011), the failure of the mechanism to effect substantive change led to a subsidence in its use, with only three cases lodged after 2005 (US DOL 2017). International and intergovernmental agencies the ILO and the OECD, among others have been characterized as only advancing weak and uneven remedies for an ever more evident governance gap in a globalized and network based economy (Marginson 2016: ). However, in the absence of any alternative supranational authority structures their role in global labor governance remains significant. John Ruggie, formerly the UN Secretary General s Special Representative on Business and Human Rights, has described OECD s specific instance mechanism as the the most important complaint mechanism today in the field of business and human rights (Ruggie and Nelson 2015: 123). In many respects, the OECD is an unlikely champion of labor rights claims and labor advocacy. Formed in part with the intent of promoting trade and economic cooperation, it has been characterized as representing the concerns and agendas of the world s most developed nations. Its role in developing and disseminating normative labor standards has been limited and it has been said to be following in the ILO s wake rather than competing with it (Thouvenin 2015: 394). It has, nonetheless, a unique contribution in supranational governance through its complaint mechanism that allows for various parties be they labor unions, NGOs, individuals or business organizations themselves to lodge a complaint, known as a specific instance, in cases where the OECD Guidelines may have been breached. The OECD lays claim to being the only governmental, non-judicial grievance mechanism, providing access to remedy to stakeholders wishing to raise issues related to operations of companies operating in or from adhering countries (OECD 2016: 11). The fact that the OECD Guidelines have national authority structures nested within it by virtue of the involvement of NCPs means that they are quite different from corporate-led, multi-stakeholder or global Corporate Social Responsibility (CSR) initiatives such as the Global Compact, where MNEs choose to abide by a set of standards or principles that should guide their conduct. In other words, the fact that countries, rather than companies, opt in and agree to adhere to the Guidelines means that complaints can be brought against the companies domiciled in those countries even where they have not explicitly consented to abide by the Guidelines (Baccaro and Mele 2011: 454). 6

8 The institutions embedded in the OECD Guidelines are dynamic rather than static, and are therefore capable of stagnation, adaptation or interaction with other levels and forms of regulatory institutions over time (Marginson 2016). 2 In the next section we turn to describing the historical development and core characteristics of the specific instance complaint mechanism under the Guidelines, noting, in particular, its limitations and its capacity to become a domain where conflict over various aspects of international business practice among others, labor, environmental, human rights practice can be expressed and potentially resolved through its system of national contact points. Context and Method First formulated in 1976, the OECD Guidelines were initially intended as to establish a set of core principles to guide the international activities of firms headquartered in OECD member countries. Developed and issued by the Committee on International Investment and Multinational Enterprises, and then adopted by the OECD s governing body (Rojot 1985), the Guidelines were an attachment to the OECD Declaration on International Investment and Multinational Enterprises, where they served to link the social responsibility agenda to a broader set of principles designed to enhance and facilitate cross-border investment. The scope of the complaints mechanism is technically limited to MNEs based in adhering countries, but complaints can refer to the business activities of those MNEs elsewhere, and since 2011 to their suppliers and business partners (Reinert et al. 2016). Of 434 valid instances recorded between 2000 and June 2016, just under half pertained to adhering countries, with the other half concentrated in non-adhering countries. Although the Guidelines were initially promotional rather than actionable, it was not long before they were invoked in relation to labor disputes. The Trade Union Advisory Committee to the OECD (TUAC) always took the view that the Guidelines should be assessed in terms of their practical effect and be pushed towards becoming binding and mandatory rules of conduct, which could then form the basis for imposing further obligations on multinationals, including ultimately the obligation to bargain at whatever level the unions thought necessary (Rojot 1985: 380). TUAC submitted a series of industrial relations cases to the OECD s Committee on International Investment and Multinational Enterprises in the 1970s and 1980s ostensibly to test the interpretation and effectiveness of the Guidelines (Blanpain 1983; Blanpain 1985). While the Committee had no mandate to make judgements on the conduct or actions of any individual company in raising these cases, TUAC was essentially pushing for a supranational complaints and dispute resolution mechanism. This aim achieved in 2000 with the introduction of the specific instance mechanism, which enhanced the role of NCPs and through which unions and other interested parties can raise complaints and resolve disputes related to alleged breaches of the Guidelines (Tully 2001). 7

9 The specific instance mechanism includes a significant role for NCPs located in the member states of the OECD and other adhering countries, which not only receive and assess complaints but may also participate in dispute resolution between complainants and the multinational enterprise in question. NCPs have the capacity to reject a complaint on the basis that it falls beyond the scope of the Guidelines. Alternatively, they can issue an adverse finding that those sections of the Guidelines had indeed been breached and recommendations for improved following a full investigation. Businesses may refuse to respond to a complaint or participate in any process conducted by a NCP although most do respond and many agree to participate in dialogue or mediation with the complainant in instances that proceed to a full assessment. Inclusion, however, is not voluntary insofar as it is the national origins of a firm (within an adhering country) that mean it falls within the ambit of the Guidelines. There are important differences between NCPs in their structure and processes, which are governed by the principle of functional equivalence. NCPs can be monoagencies, composed of one or more representatives of a single ministry; monoagencies plus, where the monoagency involves other stakeholders on an advisory basis; interagencies, composed of representatives of two or more ministries; tripartite or quadripartite bodies, where quadripartite NCPs involve NGOs in addition to the traditional tripartite parties; or independent agencies composed of independent experts, generally supported by a secretariat attached to a ministry (OECD 2016: 68-69). Complaints lodged by individuals or organizations with these NCPs cite one or more chapters of the Guidelines allegedly violated by the business. As per the 2011 version of the Guidelines, these include general policies; disclosure; human rights; employment and industrial relations; environment; bribery, bribe solicitation and extortion; consumer interests; science and technology; competition and taxation (OECD 2011). As shown in Figure 1, the chapter dealing employment and industrial relations was the most commonly cited chapter in the period between 2000 and June 2016 and, not surprisingly, the chapter most often cited by union complainants. The 231 of the 434 valid specific instances recorded to June 2016 that cite employment and industrial relations, alone or in combination with another chapter, are the focus of the analysis presented in this paper. [[Figure 1 near here]] Our general analysis draws on a purpose-built dataset of all known specific instances compiled from OECD Specific Instances Database; the OECD Watch Database; and the TUAC Case Database. 3 Data collected included MNE and MNE country of origin; the complainant; the year the complaint was filed; a description of the issue; the industrial sector(s) in which the MNE was operating; the country in which the alleged breach occurred; the nationality of the lead NCP; the NCP type; a textual description of the core elements of the process; the outcome produced; the role played by the NCP; and an assessment of the NCP s regulatory effect in that particular case. 8

10 This database combines and enriches the original source datasets, allowing us to provide a robust descriptive statistical analysis of the key characteristics of each of these 231 complaints. Our assessment of the procedures and outcomes of specific complaints draws on a sub-set of this data extracted on the basis of a union (TUAC) designation of whether accepted instances those deemed by the NCP to be within the scope of the Guidelines so as to warrant a full assessment and/or offering its good offices for assisting with dialogue to address or resolve the matters raised produced a positive or negative outcome for workers. Since TUAC only assigns an evaluation of the outcomes produced to union-lodged instances, this dataset excludes employment and industrial relations complaints lodged by NGOs or individuals. [[Table 1 near here]] In evaluating the validity of TUAC s assessments, we examined the textual descriptions contained in the OECD and TUAC databases, as well as a range of supplementary documents. Textual data was coded thematically, following a systematic method in terms of data reduction and abstraction (Gioia, Gorley & Hamilton 2012). In Step One, we analyzed 1) the key reason for the complaint; 2) the procedures used by the NCPs to make an initial assessment of the issues in order to decide to accept or reject the complaint; 3) the way the NCPs communicated with the parties when attempting to resolve the issue; 4) the final recommendation; 5) the role played by the NCP in its dialogue with the parties in producing the outcome; and 6) the extent of the NCP s regulatory effect. In Step Two, this analysis was used to produce three codes for Status (Accepted; Rejected and No decision) and three codes for Outcome (Positive; Negative and No TUAC Decision). In Step Three, linkages were made between Status and Outcomes, producing in nine categories of outcome, as shown in Table 1. 4 We then produced summative descriptions of the 88 accepted instances designated by TUAC as having a positive or negative outcome. These included a qualitative assessment of the characteristics of the process; the outcome produced by the process; the role played by the NCP(s); and, for positive outcomes only, the regulatory effect of the mechanism in moderating behavior and resolving the issues raised in the complaint. These summative descriptions underpin our qualitative analysis of the operation and outcomes of the mechanism. The Operation and Outcomes of the OECD Complaints Mechanism While the specific instance mechanism under the OECD Guidelines have been generally understood by industrial relations scholars as a mechanism that unions and other parties may use to address labor issues within multinationals (see, for instance, Marginson 2016), no longitudinal study exists of the characteristics of the unions that make use of it; the industries to which the complaints pertain; and the procedural dynamics and outcomes it has produced. Our analysis shows that the instances designated by TUAC as producing a positive outcome vary significantly in terms of procedures, geographic scale and the interaction between various social actors and 9

11 regulatory institutions. As demonstrated below, complaints lodged through this mechanism have pertained to countries at different levels of development and in different sectors, but those pertaining to employment and industrial relations have been most concentrated in manufacturing. Moreover, while voluntary, our analysis reveals that in some cases the special instance mechanism has a significant impact as a tool of conflict resolution. The Complaints One of the much-discussed features of supranational or transnational regulation is that these seek to address governance gaps with special reference to developing economies. Our analysis reveals, however, that the OECD specific instance mechanism has been used to an equal extent to address corporate conduct in both developed and developing country contexts. As Table 2 indicates, the United States and the United Kingdom feature prominently for all NCP activity. Other frequently cited major industrialized economies include Belgium, Canada, France, Germany, the Netherlands and Switzerland. Of the two Asian countries that are OECD members, South Korea has been a notable site of NCP activity, while Brazil has been prominent as a lead NCP among other adhering countries. 5 [[Table 2 near here]] The distribution of the 231 complaints pertaining employment and industrial relations mirrors this general pattern in the sense that they are concentrated in the USA, Brazil, France, South Korea, and the United Kingdom, which account for just under to 50% of those instances. In relative terms, however, they are concentrated in the Czech Republic, Hungary, Portugal, Romania and Mexico, where 100% of all cases handled by the NCP pertain to employment and industrial relations. Other countries where employment and industrial relations cases account for more than 75% of complaints lodged with the NCP are Austria, Chile, France, Japan, South Korea, and Turkey. As Figure 2 shows, the sectoral distribution of specific instances in which employment or industrial relations is cited varies significantly from the sectoral distribution of all complaints but is closely mirrored by the sectoral distribution of union complaints. [[Figure 2 near here]] The largest proportion of the 434 complaints made using the specific instance mechanism was lodged by NGOs, closely followed by unions. A much smaller, but increasing, number of complaints were lodged by individuals, with businesses and other interested parties accounting for just four complaints (see Table 3). As Table 3 also shows, unions are involved in the vast majority of instances relating to employment and industrial relations. Of the 231 specific 10

12 instances dealing with employment or industrial relations, with 164 involving unions and 14 involving unions and NGOs. [[Table 3 near here]] While the specific instances pertaining to employment or industrial relations are often remarkable for their level of complexity and multi-scalar flows of influence, a relatively small number of core issues were addressed in this sub-set of complaints. Reflecting the dominance of manufacturing-related complaints, many instances concerned enterprise restructuring and/or closure and the failure of employers to provide information and to engage in meaningful consultation with unions and workers. Other common themes related to varieties of concerns on alleged violations of labor union rights and freedom of association: allegations of management seeking through various means to discourage union organizing, undermine collective bargaining, and varieties of employment practices (use of contract labor, harassment, dismissal of activists, threats to transfer production etc.) that undermine or erode collective representation. The Processes By design, the specific instance complaints mechanism is disaggregated through the NCP system of lodgment, assessment and assistance to the parties in resolving whether the Guidelines have been observed. This, and the underpinning principle of functional equivalence, acknowledge variation and a degree of autonomy in the functioning of NCPs. But there would also appear to be an inherent tension with the combined nature of the mechanism, insofar as the interpretation and application of the Guidelines should be at least nominally consistent and for the NCPs to cooperate and coordinate with each other in doing so. Because NCPs are situated within or linked to national governments a multitude of diverse national institutional contexts may be salient. For all of these reasons, it is especially interesting to reflect on the procedural dynamics of the instances in our sample. As explained above, NCPs differ in their structures and the ways in which they are embedded within or independent from government agencies. Whether an NCP is nested within a government department, independent or organized on the basis of tripartism or quadripartism might be expected to have had a significant effect on the process and outcome dynamics in our sample. However, there is little evidence that variation in NCP type leads to observable differences in the mechanism s processes and outcomes, as each category contains considerable within-group variation. For example, within the mono-agency and mono-agency plus grouping, instances demonstrate variation in how these NCP types managed the processes and in the regulatory strength and effectiveness of the outcomes produced. For instance, the Chilean NCP is among the most rigorous in its attention to ongoing consultation, gathering of facts and facilitation of dialog to resolve the matters brought to its attention. By contrast, in two of the 11

13 monoagency instances, the NCPs of Mexico and the US played a limited or a non-constructive role in facilitating the positive outcome that was produced. There is also no evidence that tripartite bodies are more likely to have a powerful regulatory effect than other NCPs. The instances handled by the Chilean NCP a monoagency resulted in agreements with strong to moderate regulatory effect, with one exception where their role was limited by company nonparticipation. By contrast, while several of the instances handled by the tripartite French NCP resulted in adverse findings against the companies concerned, the character of the issues they addressed (restructuring) meant that they had at best a weak regulatory effect. More influential is institutional context, which not only affects the scope and level of engagement of the NCP concerned but also the extent to which companies engage with the process in cases where an instance is accepted by the NCP. There are many contrasting examples as to the scope and extent of NCP activity in managing the process and their relative preference to accept or reject instances. The cases in our sample also illustrate some of the concerns that have been raised about the functioning of the NCPs by both NGOs and unions, namely that while the formal obligations of the Guidelines should not be negated by parallel proceedings these are often used by particular NCPs to limit their role or conclude the complaint and that NCPs may make only limited efforts to encourage corporations to participate in the process. 6 Instances in our sample show that under certain circumstances especially where the NCP did not deem these to preclude an active role in resolving the matters parallel legal proceedings can work in conjunction with the OECD mechanism to strengthen the incentives or provide the necessary leverage for the parties to resolve the dispute. 7 More typically, parallel proceedings delayed or limited the NCP s capacity to address the issues and/or assist the parties to resolve the disputes. For this reason, the determining factor in several instances noted by TUAC as positive was not the use of the NCPs but rather national legal institutional authority, which again is an important point for qualifying assessments of the effectiveness of the OECD Guidelines as a mechanism for labor conflict resolution. For example, in the ChoiShin (2002) instance, the South Korean NCP (and, to a lesser extent, the Dutch NCP) were criticized for missing an opportunity for procedurally fair and sustained intervention to resolve the matter, which was eventually settled by a demand from the Guatemalan government that the employer change their behavior or risk the loss of their export license. The agency, disposition and strategic choice of corporations cited in specific instances is a major determinant of the prospects for conflict resolution via the mechanism in 17 of the instances with unfavorable outcomes for unions, the company concerned either refused to provide any information and/or to participate in meetings or mediation to resolve the issues. In most of these instances, the decision to do so effectively ended the process and the NCP assessment. Of these 17 instances, four of the firms that refused to participate were US firms, two instances related to the same Canada based MNE, and 11 were individual instances linked to companies from different counties. 12

14 Outcomes and Regulatory Effect Overall, the outcomes of accepted instances demonstrate that notwithstanding the voluntarism and lack of sanctions inherent in the makeup of the mechanism it can produce quite significant behavioral change and regulatory effect. Our qualitative assessment classifies a moderate or strong regulatory effect in 56.8 per cent of the 44 accepted instances designated by TUAC as having a positive outcome. 8 While there is no discernible difference related to the structural characteristics of the NCPs, the national institutional context appears to be a significant determinant of regulatory effect of the mechanism. The regional location of the host nation for the accepted instances that were deemed to have produced a positive outcome is striking in several respects: 17 instances pertained to European nations, 10 to Latin America, 11 to Asia, and two were from NAFTA (one Mexico, one US). The final four were multi-country host instances or drawn from other regions. Notably, the Imerys 2004 case the only instance involving the US as a the host nation for a complaint deemed to have produced a positive outcome owed its success to parallel proceedings and a vigorous union corporate campaign rather than via the facilitation of the US NCP. 9 An examination of other US NCP instances that pertain to complaints where the US was the host or home country of the corporation in question shows that parallel proceedings were frequently used as the rationale for rejecting or closing the specific instance, that several of the complainants expressed procedural concerns and that very few produced a positive outcome. The one exception to this generalization is a 2015 case involving Starwood Hotels, which is noteworthy both for the robust regulatory effect of the agreement between the parties and because it was the first instance where a US company agreed to mediation by the US NCP. Unions Use of the Mechanism As noted above, unions are the primary complainant in most cases relating to employment and industrial relations, and the vast majority of union complaints include a reference to employment and industrial relations. This is not surprising given the representational status of unions on employment and industrial relations matters and the capacity of unions to lodge and advance evidence in support of claims for workplace-related disputes. The geographic location of union complainants in relation to the host country is less predictable. As Table 4 shows, most complaints involve host-country unions only, though the Global Union Federations (GUFs) have been active users of the mechanism, acting alone or concert with hostcountry or extra-national unions. As is the case of MNEs, the agency and strategic choice of union complainants was important in shaping process dynamics and the outcomes these produced. Many unions in the accepted instances that produced a positive outcome used the 13

15 complaint in combination with other actions such as parallel proceedings in local courts or tribunals and/or strike action to achieve pressure and build power to address their concerns on corporate conduct. Perhaps most notable is unions use of the OECD specific instance mechanism in combination with international corporate campaigns to create leverage or an opening for genuine dialogue to address union concerns on labor standards and employment practices. [[Table 4 near here]] The use of the mechanism by the International Union of Food, Agricultural, Hotel, Restaurant, Catering, Tobacco and Allied Workers' Associations (IUF) a GUF with a strategic preference and well-developed capacity of global campaigns targeting MNEs for labor rights violations is especially striking. Of the 44 accepted instances deemed by TUAC to have a positive outcome, the IUF was the sole or co-complainant in 10, which suggests that combining a specific instance complaint with a global campaign may enhance the effectiveness of unions in addressing and resolving disputes. Notably, also, several instances lodged by the IUF in 2009 produced quite powerful regulatory effects such as the reinstatement of dismissed workers or agreed limits on the use of contract and precarious workers in factories located in developing countries. These latter instances reflect an alignment between union strategy, an effective role played by the UK NCP in providing access to mediation services and a company (Unilever) that was ultimately open to participation and genuine dialogue through the mechanism to resolve the matters. The extent to which unions are able to engage strategically with the OECD specific instance mechanism may be crucial for its prospects of producing outcomes. A case in point may be 2014 union claims pertaining to Nissan Corporation for alleged labor right violations at a facility in Mississippi, USA. The complaint was accepted by the US NCP, which offered access to mediation services. However, the MNE declined to participate in the process, citing parallel proceedings, and the instance was closed by the NCP. In 2016, the complaint has been resubmitted by the union complainants but this time it was targeted at the Nissan-Renault Alliance, lodged simultaneously in multiple NCPs (Netherlands, Japan and France) and backed by an international corporate campaign (IndustriALL 2016). This renewed complaint may or may not be effective in effecting local change but it nonetheless shows continued union engagement with working the OECD mechanism in combination with other actions to build leverage and effect through multiple means and institutional engagement across scale. To illustrate different aspects of the dynamics of conflict management via the specific instance mechanism, two examples are discussed below. 10 They both pertain to the food industry and all were lodged by the IUF, the global union that has made the most frequent use of the mechanism as part of a broader strategic agenda for pursuing labor rights in its sectors. 14

16 Positive Outcome: The IUF and Unilever (2009) In March 2009 the IUF lodged a specific instance submission to the NCP of the United Kingdom with reference to a Unilever Tea factory in Khanewal (Pakistan) targeting the extensive use of agency-supplied workers in the factory. The complaint stated that management had developed an employment system that was reliant on workers who had no employment security, who were in practice denied access to union representation and collective bargaining and who were not made permanent despite months or even years of continuous full-time work at the factory. The IUF and the local worker action group further claimed that labor agencies supplying most of these workers were failing to pay required social insurance and benefits, and that workers who had applied for conversion to permanent status had been subject to various forms of discrimination. As with other instances, the IUF twinned its use of the specific instance mechanism with a public campaign on the status of workers at the factory. Initially, Unilever rejected the union s characterization of the matters, pointing to its need to use contractors for non-core operations in order to remain competitive and arguing that while its relationship with agencies was guided by a corporate business partner code of practice, the company was not responsible for the employment status of independent service providers By June 2009, the UK NCP had completed an initial review and accepted the instance for further consideration. The procedural guidelines of the UK NCP required it to then offer the parties access to conciliation and mediation services though, unlike its US counterpart, the UK NCP is mandated to publish a clear statement as to whether or not the Guidelines have been breached and recommendations to the company for future conduct, if necessary in the event that conciliation or mediation is refused or that it fails to produce agreement. In this instance, Unilever agreed to participate in the process and two meetings facilitated by an experienced dispute resolution practitioner were held in London in October The second of these conciliation meetings produced an agreement that resolved the matter and discharged the UK NCP from any further requirement to consider the substance of the issues or to make a determination or statement on whether or in what respects the Guidelines had been breached. The agreement produced a commitment that 200 permanent jobs would be created in the factory and that a joint union-management committee would be formed to ensure a fair and transparent selection procedure for filling these positions. Unilever also committed to ensuring that its business partners and labor supply firms complied with required social security and welfare payment obligations to both employees and government and to a schedule of lump-sum payments to all contract employees at the factory (including those made permanent) as compensation for the failure of these suppliers to meet these obligations in the past. The agreement included a non-discrimination clause to protect workers involved in the union action group that had agitated locally over the issues and all parties to the dispute committed to an ongoing process of dialogue around employment and industrial relations issues at the facility. In 15

17 reporting this outcome, the General Secretary of the IUF acknowledged that the OECD process and access to conciliation had been critically valuable to achieving this outcome (IUF 2009). Negative Outcome: The IUF and Mondelez (2013) In 2013, the IUF filed submissions to the US NCP on the employment practices of Mondelez, a US-based MNE, in its production facilities in Egypt, Tunisia and Pakistan. The submission on Egypt and Tunisia was filed in March It centered on allegations that the MNE had engaged in various forms of discrimination including the dismissal of union officers and avoidance of independent labor union representation in factories based in Alexandria and Tenth of Ramadan City (Egypt) and Tunis (Tunisia). The IUF submission was supported by the Egyptian Democratic Labor Congress (EDLC) and Tunisia s General Federation of Food and Tourism Unions (UGTT).A key incident raised in this submission related to the dismissal of five union officers from a Cadbury factory in Alexandria. As further documented in a freedom of association complaint to the supervisory body of the ILO on international labor standards (ILO 2014), an independent union had been formed in the Alexandria factory in late April Two months later, in mid-july, a Government decree mandated an increase in wages for public (15%) and private sector (10%) workers. Management at the Alexandria plant refused to pay the mandated increases, citing a previously awarded pay increase, prompting workers to take rolling strike and protest action over several shifts on July 26 and 27, Management and the independent local union officers subsequently disagreed as to whether this industrial action was spontaneous or organized. Management then first suspended and later dismissed five senior union officers on the basis of their alleged instigation of illegal strike action. The US NCP conducted an initial assessment and found that the issues raised were material and substantiated insofar as none of the parties denied the existence of these disputes, although in its communications the company denied the union account of key events and of management motivations. It also consulted with NCPs in Egypt and Tunisia to establish that it was the most suitable office to take carriage of the specific instance. Through this process, it determined that that parallel proceedings in labor tribunals in Egypt would not be prejudiced by their own offer of assistance to the parties to develop a dialogue to resolve the conflict. In July 2013, the US NCP contacted the IUF and Mondelez to offer its good offices to assist the parties in undertaking a dialogue to seek a positive resolution, inviting the parties to participate in a mediation process facilitated by the Federal Mediation and Conciliation Service (FMCS). The US NCP was careful in its final statement to point out that its finding that the issues raised by IUF were bona fide does not indicate the U.S. NCP concluded that Mondelez acted inconsistently with the Guidelines, but rather that the U.S. NCP considered it appropriate to facilitate a discussion between the parties of the issues raised. Nonetheless, in August 2013 the company informed the NCP that it would not participate in a pre-mediation information session or any mediation process. 16

18 The refusal of the company to participate in mediation led to the conclusion of the specific instance process. The company stated in its communications that it had undertaken an internal review of the NCP inquiry and the US NCP suggested that the findings of this review might be used to consult directly with the IUF to resolve the matters at hand. In this instance, then, the specific instance process did not lead to a direct resolution. Nevertheless, the IUF successfully leveraged the mechanism in support of its broader campaign strategy. Despite protestations to the US NCP that the IUF deliberately misused and diluted the company s trademarks and intellectual property, Mondelez agreed to reinstate the dismissed workers in 2014 nearly a year after the US NCP closed the specific instance and following on from direct negotiation with the IUF. All back-pay and entitlements were restored and the officers of the independent union were subsequently re-elected as factory representatives in August of that year (IUF 2014a; 2014b). Another specific instance submission filed by the IUF in December 2013 concerned a Mondelez (Cadbury) factory in Balochistan (Pakistan), where the union alleged that the MNE had not complied with several chapters of the OECD Guidelines pertaining to disclosure, human rights and industrial relations. The submission centered on the extensive use in the factory of nonpermanent workers employed on a casual basis and/or by labor agencies, with the union claiming that only 49 of close to 700 workers were employed directly and on a permanent basis. The IUF further claimed that many non-permanent workers had in fact been engaged in full-time work for up to seven years in the factory yet lacked access to sick leave or pension entitlements as required for fulltime employees under Pakistani labor law. The IUF further alleged that factory management had refused to agree to the inclusion of terms that would require the conversion of contract or agency workers to regular employment in collective bargaining processes with the tiny proportion of workers employed on a regular permanent basis. On this basis, the IUF argued that the employment model at the factory was built around a disguised employment relationship that denies rights, as described in the ILO Employment Recommendation 198 referenced in the Guidelines. While the case had strong similarities with the Unilever instance discussed above, it produced a very different outcome. While Mondelez did not provide a formal response to the IUF s claims, it suggested in communications with the US NCP that the IUF claims were misleading and false in regard to the alleged breach of international labor standards. In its final statement, the US NCP reported that it had found no compelling evidence that the company had breached local labor law. It nonetheless noted the very high rate of contract workers in the factory, suggesting that contracting may not always be consistent with the spirit of Guidelines. Ultimately, however, the refusal of the company to agree to mediation meant that the US NCP had no basis to continue to engage with the parties. In accordance with its procedural rules, it made no determination on whether the Guidelines had been breached in this instance. Moreover, 17

19 in contrast to the instance discussed above, the IUF s global campaign did not produce sufficient pressure to compel a change in the position of the company. Conclusion Globalization has posed a fundamental challenge to the political space that mediates conflicting claims (Fudge and Mundlak 2016: ). The OECD Guidelines specific instance mechanism is a noteworthy example of multilevel and over-lapping governance, sovereignty and regulatory authority. As with any complaints-based and external system of conflict resolution, the mechanism requires the parties to make a significant organizational commitment and devote substantial resources to pursuing a complaint. While it is very different from litigation or court proceedings, it requires complainants to gather and compile information to lodge a specific instance complaint and remain committed to the processes thereafter to try to secure their desired outcome. This could be seen as a disincentive for the use of the mechanism, which is compounded by the uncertainty that the issues raised will be addressed at all given the discretion of NCPs to accept or act on the matters and the fact that corporations may simply refuse to be a party to the process. A great deal remains unknown regarding the motivations and incentives for MNEs to participate in resolving conflict through this means; the complex strategic choices and opportunity structures that condition different union bodies use of the mechanism; and the extent to which different NCPs have developed or failed to develop in terms of supporting the observance of the Guidelines and the resolution of conflict. As our analysis has shown, a complex combination of variables and conditions shape the prospects of achieving a mutually agreed resolution: the functioning of NCPs and their handling of a specific instance submission; the national and local context in which the conflict has occurred; MNEs decision whether or not to engage in the process; and the strategic use of mechanism by global and/or national labor unions either in isolation or more typically in conjunction with other measures such as public campaigns. In some ways, then, the OECD complaints system remains a black box. At the same time, however, the specific instance mechanism continues to be used as a means of addressing labor rights complaints with an international dimension. As such, this mechanism stands in contrast arbitration or dispute systems embedded within international trade agreements, which are used only occasionally or have declined in popularity. Moreover, for all of its evident limitations and lack of enforceability, the mechanism can under the right circumstances assist with the resolution of disputes with an international dimension. In some instances, use of the mechanism has generated a supranational space for genuine dialogue on rights and employment standards capable of resolving the workplace-level conflict and reshaping prevailing patterns of employment relations. 18

20 The complex web of hard and soft forms of regulation that comprise multilevel governance in global supply chains has been identified as a crucial area of research for contemporary industrial relations. The same challenge remains for understanding how local workplace conflicts can be expressed and managed across multiple geographic scales through supranational institutions. This research demonstrates one such means of navigating this complexity to resolve conflict, although the voluntarism and circumscribed authority of this system of conflict management invariably will limit its use and effectiveness. References Baccaro, Lucio and Valentina Mele For lack of anything better? International organizations and global corporate codes. Public Administration 89(2): Bartley, Tim Transnational governance as the layering of rules: Intersections of public and private standards. Theoretical Inquiries in Law 12(2): Blackett, Adelle and Anne Trebilcock. (Eds.) Research Handbook on Transnational Labour Law. Cheltenham: Edward Elgar Publishing. Blanpain, Roger The OECD Guidelines for Multinational Enterprises and Labour Relations, Deventer: Kluwer. Blanpain, Roger The OECD Guidelines for Multinational Enterprises and Labour Relations, Deventer: Kluwer. Brown, Edwin and Tracy Chang PACE International Union vs. Imerys Groupe: An organizing campaign case study. Labor Studies Journal 29(1): Claussen, Kathleen The use of arbitration to decide international labour issues. In Adelle Blackett and Anne Trebilcock (Eds.), Research Handbook on Transnational Labour Law, pp Cheltenham, U.K.: Edward Elgar Publishing. Compa, Lance NAFTA s labor side agreement and international labor solidarity. Antipode 33(3): Daniel, Caitlin, Joseph Wilde-Ramsing, Kris Genovese, and Virginia Sandjojo Remedy Remains Rare: An Analysis of 15 years of NCP Cases and their Contribution to Improve Access to Remedy for Victims of Corporate Misconduct. Amsterdam: OECD Watch. Accessed at (July 2016). Dehnen, Veronika Transnational alliances for negotiating international framework agreements: Power relations and bargaining processes between global union federations and European works councils. British Journal of Industrial Relations 51(3): Fudge, Judy and Guy Mundlak Justice in a globalizing world: resolving conflicts involving workers rights beyond the nation state. In Yossi Dahan and Hanna Lerner and Faina Milman-Sivan (Eds.), Global Justice and International Labour Rights. Cambridge: Cambridge University Press. García, Kimberley transnational advocates and labor rights enforcement in the North American Free Trade Agreement. Latin American Politics and Society 53(2):

21 Gioia, Dennis, Kevin Corley and Aimee Hamilton Seeking qualitative rigor in inductive research: Notes on the Gioia methodology. Organizational Research Methods 16(1): Helfen, Markus and Jörg Sydow Negotiating as institutional work: The case of labour standards and international framework agreements. Organization Studies 34(8): Human Rights Watch US: Review of the National Contact Point for the OECD Guidelines for Multinational Enterprises, statement of Arvind Ganesan before the US Bureau of Economic, Energy, and Business Affairs. Accessed at (April 2017). ILO Interim Report - Report No 372, June Accessed at INT_TEXT_ID: (October 2017). IndustriALL Trade unions file OECD case against Renault-Nissan Alliance in three countries. Accessed at (December 2016). IUF Unilever, IUF settlement resolves conflict over precarious work at Lipton Pakistan, 26 October Accessed at (October 2017). IUF. 2014a. IUF and Mondelez International welcome the settlement of the Alexandria Egypt dispute. 4 August 2014 Accessed at (October 2017). IUF. 2014b. Cadbury 5 re-elected to union executive at Mondelez Alexandria, 5 September Accessed at (October 2017). Kay, Tamara Labor transnationalism and global governance: The impact of NAFTA on transnational labor relationships in North America. American Journal of Sociology 111(3): Kolben, Kevin Transnational labor regulation and the limits of governance. Theoretical Inquiries in Law 12(2): Lakhani, Tashlin, Sarosh Kuruvilla and Ariel Avgar From the firm to the network: Global value chains and employment relations theory. British Journal of Industrial Relations 51(3): Lewin, David Resolving conflict. In Paul Blyton and Edmund Heery and Nicolas Bacon and Jack Fiorito (Eds.), The SAGE Handbook of Industrial Relations, pp London: Sage. Lipsky, David, Ronald Seeber and Ariel Avgar From the Negotiating Arena to Conflict Management. Negotiation Journal 31(4): Lipsky, David, Ariel Avgar and J. Ryan Lamare Conflict Resolution in the United States. In William Roche, Paul Teague and Alexander Colvin (Eds.), The Oxford Handbook of Conflict Management in Organizations. Oxford: Oxford University Press. Marginson, Paul Governing work and employment relations in an internationalized economy: The institutional challenge. ILR Review 69(5):

22 Mayer, Frederick, Nicola Phillips and Anne Posthuma The political economy of governance in a global value chain world. New Political Economy 22(2): OECD Implementing the OECD Guidelines for Multinational Enterprises: The National Contact Points from 2000 to Accessed at 15-years-National-Contact-Points.pdf (July 2016). OECD OECD Guidelines for Multinational Enterprises 2011 Edition. Paris: OECD Publishing. Accessed at (July 2016). Office of the U.S. National Contact Point Public statement. Specific instance between International Union of Food, Agricultural, Hotel, Restaurant, Catering, Tobacco and Allied Workers Association (IUF) and Mondelez International for operations in Tunisia and Egypt 29 October. Office of the U.S. National Contact Point Public Statement. Specific instance between International Union of Food, Agricultural, Hotel, Restaurant, Catering, Tobacco and Allied Workers Association (IUF) and Mondelez International for operations in Pakistan, 6 June. Oldenziel, Joris, Joseph Wilde-Ramsing and Patricia Feeney Years On: Assessing the Contribution of the OECD Guidelines for Multinational Enterprises to Responsible Business Conduct. Amsterdam: OECD Watch. Reinert, Kenneth, Oda Reinert and Gelaye Debebe The new OECD Guidelines for Multinational Enterprises: Better but not enough. Development in Practice 26(6): Rights and Accountability in Development (RAID) in association with The Corporate Responsibility (CORE) Coalition and The Trades Union Congress (TUC) Fit for Purpose? A Review of the UK National Contact Point (NCP) for the Organisation for Economic Co-operation and Development (OECD) Guidelines for Multinational Enterprises Accessed at (March 2017). Rojot, Jacques The 1984 revision of the OECD Guidelines for Multinational Enterprises. British Journal of Industrial Relations 23(3): Ruggie, John and Tamaryn Nelson Human rights and the OECD Guidelines for Multinational Enterprises: Normative innovations and implementation challenges. The Brown Journal of World Affairs 22(1): Tapia, Maite, Christian Ibsen and Thomas Kochan Mapping the frontier of theory in industrial relations: The contested role of worker representation. Socio-Economic Review 13(1): Thouvenin, Jean-Marc Diffusion and leveraging of transnational labour norms by the OECD. In Adelle Blackett and Anne Trebilcock (Eds.), Research Handbook on Transnational Labour Law. Cheltenham: Edward Elgar Publishing. TUAC TUAC Submission to the Annual Meeting of National Contact Points: Analyses of NCPs, June Accessed at 21

23 ability/tuac%20analysis%20of%20ncps.pdf (November 2016). Tully, Stephen The 2000 review of the OECD Guidelines for Multinational Enterprises. The International and Comparative Law Quarterly 50(2): UK National Contact Point for the OECD Guidelines for Multinational Enterprises Final Statement by the UK National Contact Point for the OECD Guidelines for Multinational Enterprises. Complaint from the International Union of Food, Agricultural, Hotel, Restaurant, Catering, Tobacco and Allied Workers Associations against Unilever plc on Pakistan s Khanewal factory. 20 November. US DOL Submissions under the North American Agreement on Labor Cooperation (NAALC). Accessed at (April 2017). 22

24 Employment and industrial relations General policies Human rights Environment Disclosure Bribery, bribe solicitation and extortion Other All complaints Union complaints Figure 1. Thematic Analysis of Specific Instances to June

25 Figure 2. Sectoral Distribution of Specific Instances Table 1. TUAC Outcomes Status Positive Negative No TUAC Data 24