13 th Asian Law Institute Conference Thursday and Friday, 19 th & 20 th May 2016, Peking University Law School, People s Republic of China

Transcription

1 Asian Perspectives on Legal Globalisation 13 th Asian Law Institute Conference Thursday and Friday, 19 th & 20 th May 2016, Peking University Law School, People s Republic of China The Role of Globalized Industrial Relations and Collective Agreements for the Promotion of Fundamental Labour Rights in Southeast Asian Garment Industry Andreas Inghammar Vincenzo Pietrogiovanni Department of Business Law, School of Economics and Management Lund University andreas.inghammar@har.lu.se (0) vincenzo.pietrogiovanni@har.lu.se (0) Note: Please note that ASLI will distribute the papers to conference participants only for the sole purpose of discussion. The papers might also be put on a USB thumb drive to be distributed to conference participants. Neither the copies in the USB drive nor the printed copies of individual papers will constitute publication; papers will not thereafter be published by the conference organizers nor made available to individuals or libraries. Presenters retain the copyright to their papers and are free to commit them for publication elsewhere. All papers should not be cited without prior permission from the authors. Submissions may be made separately to the Asian Journal of Comparative Law. Please refer to their website at The decision to publish will be made independently by the journals editorial boards, not the conference organizers or ASLI. For ASLI Secretariat Use Only Date of Presentation: Thursday, 19 th May 2016 Friday, 20 th May 2016 Panel Assigned: D2

2 1. The Globalisation and the Labour Regulation As European scholars, we have been told for (at least) the last ten years that fordism was over. So, according to this vulgate, the peculiar manufacturing system then become a model of economic expansion and technological progress based on mass production 1 whose pillars are the standardization of the production, the employment of assembly lines and living wages for workers in order to let them buy the goods they produce 2 does not exist anymore; for this reason, indeed, we usually label our current societies as post-fordist. Fordism as well as the scientific management known as taylorism, 3 is not over at all, but apparently they just moved elsewhere, where labour and environmental costs are much lower. This shift is global 4 but it is not a recent trend. It has always existed since the very first Industrial Revolution; what in the last four decades we as contemporary witnesses are facing is that it is much more visible and accelerated. There is a clear relation between the de-industrialisation (above all in the manufacturing employment, characterised by labour intensive processes of production) that is hitting Western countries and the industrialization that is flourishing in many other countries of the rest of the world. The phenomenon created by this movement (of capital, labour and enterprises) is called globalisation, at least in its strictly economic terms. This large integration of economic markets at international level has been enhanced (or driven) by two main elements: on the one hand, the development of new technologies (mainly in the information and communication spheres), which created a more interconnected world, where at the speed of light data can be shared all over the world; on the other hand, the increasing international mobility of capital and the process of financialisation of the economy, which definitely boosted the opening of national tariff barriers to the worldwide production of goods and their circulation. The symbol of globalisation is without any doubt the multinational corporation 5 (MNC), whose definition has not reached a general agreement because it may differ whether ownership, management, strategy or structure are taken into account. By the way, we can easily assume that MNC is a (big) enterprise that has its headquarter in a country which historically was a Western one but nowadays the reality is much wider and directly owns or even controls production of goods or services in one or more countries other than their home country. The relationships between the headquarter and the other production plants may assume a variety of forms: the MNC owns directly all the enterprises involved or controls them through (sometimes complex) business organisational structures; the MNC, 1 De Grazia, Irresistible Empire: America's Advance Through 20th-Century Europe, Cambridge - Belknap Press of Harvard University Press, Tolliday, Steven & Zeitlin, Jonathan. The Automobile Industry and its Workers: Between Fordism and Flexibility, St. Martin's Press, 1987, pp Janoski, T., & Lepadatu, D. (2013). Dominant Divisions of Labor: Models of Production that Have Transformed the World of Work. Palgrave Macmillan. 4 Dicken, Peter. Global shift: transforming the world economy, Perlmutter, Howard V., The tortuous evolution of the multinational corporation, Columbia Journal of world business, 4.1 (1969):

3 on the contrary, does not own the all the enterprises involved in the production organisation but with some of them it enters just into a commercial relationship, controlling and dictating their supply though. The second choice opens to the supply-chain model, which is very common in different industries, for many reasons. The main outcome of such a phenomenon, irrespective of how it is put in place, is the creation of connections in a form of a net rather than in a strict hierarchical structure. The net, indeed, is the other big symbol of globalisation: the network of companies, as mentioned before, as well as the internet, the most evident result of the improvements of new communication and information technologies, without which it could be very difficult to imagine the long-term functioning of MNCs. Globalisation has brought about opposing effects on employment conditions. In the Western countries, many jobs (in terms of quantity and quality) disappeared in the last decades or are about to disappear in the next years. Moreover, the competition on a global scale has put a big pressure on wages and trade unions membership. In the developing countries, some studies have argued that the expansion of global manufacturing promotes social justice 6 by providing opportunities for women and other parts of the population. On the contrary, different studies highlight many examples of persistent violations of fundamental labour rights related to production at global scale 7. Globalisation has deeply influenced the regulation of labour in many ways, changing its ontological structure and its system of sources. 8 The international sources are increasingly focusing on globalisation and the conduct of MNCs. For example, the International Labour Organisation (ILO) adopted the Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy in 1977, 9 whose aim is to offer guidelines to multinational corporations as well as governments and social partners in matter of employment, training, conditions of work and life, and industrial relations; in 1998, always the ILO adopted the Declaration on Fundamental Principles and Rights at Work, which states that all Members, even if they have not ratified the Conventions in question, have an obligation arising from the very fact of membership in the Organization to respect, to promote and to realize [ ] the freedom of association and the effective recognition of the right to collective bargaining, the elimination of all forms of 6 Hossain Ismail & Semenza Renata, Global Manufacturing and Women Workers Rights: The Readymade Garment Industry in Bangladesh, in E. Ales and I. Senatori, The Transnational Dimension of Labour Relations. A New Order in the Making?, Torino, 2013, p Many international organisations and NGOs issue reports on the protection of human rights related to productions and globalisation; among the first one, we can mention The Office of the United Nations High Commissioner for Human Rights, whose resolutions, guidelines and activities of monitoring regarding are available at for the NGOs, we can mention Amnesty International, which issue an annual report for each country, available at 8 For further readings on this topic, please, see Pietrogiovanni Vincenzo, The System of Cources of a Globalised Labour Law, in Laura Carlson, Örjan Edström & Birgitta Nyström, Globalisation, Fragmentation, Labour and Employment Law, Iustus, 2016, pp See the ILO website at the following page 2

4 forced or compulsory labour, the effective abolition of child labour, and the elimination of discrimination in respect of employment and occupation. Also the Organisation for the Economic Co-operation and Development (OECD) firstly adopted in 1976 the Declaration and Decisions on International Investment and Multinational Enterprises, which consists of four elements among which there are the Guidelines for Multinational Enterprises; these instruments are often reviewed. 10 On the self-regulation side, globalisation has improved the recourse to some relevant instruments, above all unilateral documents like the corporate codes of conduct, and bilateral or multilateral documents like the Transnational Framework Agreements (TFAs), whose aim is to establish responsibility for the behaviour of MNCs and to improve the implementation of fundamental labour rights in their production systems. TFAs mirrors the first attempts of industrial relations at global scale, whose role is potentially able to overcome the structural lack of enforcement of international labour standards. A recent study argues that the multinational corporations owning directly the production process through their own company or affiliated one bring to better conditions for workers in developing countries; on the contrary, within the context of a chain involving a number of suppliers, the working conditions are often very poor. 11 For the purposes of the present contribution, we would like to highlight the role of private regulation in terms of global industrial relations in the promotion of fundamental labour rights. Moreover, we analyse to how TFAs between MNCs and trade unions cope with their contractors and subcontractors focusing on the supply chain in the sector of garment in Southeast Asia, namely Cambodia; on the other hand, our attention mainly concerns the capability of such tools to enhance fundamental labour rights. In particular, the core analysis deals with transnational collective agreements signed among MNCs and trade unions at international level and the Labour Arbitration. 2. The Regulation of Garment Industry labour in Southeast Asia, particularly Cambodia The Garment Industry in Southeast Asia has grown into one of the most vital and vivid parts of Southeast Asian economic life. In some countries, where social unrest or civil war and a shortage of human or natural resources have held development back for decades, the globalized garment sector has rocketed and created a significant number of jobs, not least for female workers and seen the establishment of many corporations engaged directly or as sub-contractors in globalized clothing business. The annual growth in the sector has been significantly high during a number of years and the sector s share of the GNP has 10 The last version has been updated in March 2011: 11 Mosley L., Labour Rights and Multinational Production, Cambridge University Press,

5 risen correspondingly. 12 For Cambodia, the country in the region we focus on in a more specific way, the garment and footwear sector employs an exceeding workers in some 640 factories in the country, an impressive increase of close to 10 per cent on a yearly basis. 13 The garment and footwear industry is by far the largest and most important sectors as share of foreign export and estimates together at least 70 per cent of the total Cambodian export. 14 The workers in the garment industry come from all over the country and are predominantly female (80-90 per cent). 15 Due to the importance of the Cambodian garment industry both in numbers of workers and in impact on production and export, the sector has emerged as the role model of wage setting and labour rights enforcement in the country. The development of a tripartite minimum wage setting mechanism or procedure has focused the garment sector only for regulatory influences, even though the legislation allows for, and even refers to, a more general minimum wage. 16 The garment industry constitutes a very intricate and interesting sector in the Southeast Asian business environment. At large it is dominated by a number of high profile western brands, such as H&M (Sweden) and Zara (Spain) but is primarily organized in fractions and supply chains of contractors and subcontractors. 17 In line with emerging consumer demands, especially in the aftermath of disasters like the Rana Plaza Bangladesh which killed over 1100 workers in 2013, 18 the garment industry has since a number of years paid increasing attention to the sustainability of their production abroad. The rapid development of the sector and the desperate ambitions of low income developing countries to benefit from the globalized economy have in many places contrasted to the enforcement of fundamental labour rights and the establishment of more mature industrial relations. The garment industry was for a number of years subject to significant influences from global or bi-lateral trade agreements which established limitations for some countries and promoted others when selected or preferred for delivery to western 12 ILO Labour Standards in Global Supply Chains, A Programme of Action for Asia and the garment sector. Cambodia Garment and Footwear Sector Bulletin, Issue 1. Growth continues for Cambodia s garment and footwear sector, July 2015 (ILO Geneva). 13 ILO Labour Standards in Global Supply Chains, A Programme of Action for Asia and the garment sector. Cambodia Garment and Footwear Sector Bulletin, Issue 1. Growth continues for Cambodia s garment and footwear sector, July 2015 (ILO Geneva). 14 Estimates are made that the garment sector together with footwear represents almost 80 per cent of Cambodia s export and one third of the GNP, see further, Mech Dara, Garment Sector Minimum Wage Raised to $140, in, Cambodia Daily, October 9, See also Welsh, David, Fair Trade for the Global Garment Industry, OP-ED Contributor, The New York Times, 20 May Art Cambodian Labor Law. See also for 2016, Mech Dara, Garment Sector Minimum Wage Raised to 140, in, The Cambodia Daily, 9 October 2015, available at: ( ). 17 H&M is reported to manage their Cambodian production through almost 60 sub-contracting factories ( ). 4

6 consumer markets. John Hall and Kevin Kolben have both in depth described how these relations helped the Cambodian garment industry to rocket over the past 20 years. 19 In relation to most other sectors, we recognize the garment sector as specifically vulnerable to both production disturbances, since the fashion cycle is rapidly changing and seasonal variations in Europe and the US have high impact on sales, 20 and consumer reactions on sustainability issues, particularly fairness at work-related issues. While other sectors might face some consumer driven pressure on the establishment and enforcement of labour rights, the garment sector end-consumer possess a much strong consumer influence making global clothing brands much more sensitive. The possibility to more or less direct identification with foreign garment workers, in relation to health and safety at work, trade union rights or minimum payment is likely to play an important role, compared to other sectors with more complicated and less transparent supply chains. In countries like Cambodia, the enforcement of proper judicial system in general and adequate labour and employment law systems have suffered tremendously from corruption, lack of transparency and limited respect for the rule of law. 21 While shortage of societal trust and transparency are common features in countries like Cambodia, the development of industrial relations and models for governing, monitoring and enforcing labour rights are significantly premature. 22 Even though the country, to a large extent as a result of the foreign influence established after the withdrawal of Vietnamese troops and during and after the UNTAC transitional period of control of the country, has a rather comprehensive body of legal instruments in the field of labour law, the enforcement of rights in the society and the establishment of adequate procedures are disappointingly weak. While the provisions are in place, the Cambodian Labour Law was introduced in 1997 implementing among other features also the core conventions of the ILO, Hall, John, The ILO s Better Factories Cambodia Program: A Viable Blueprint for Promoting International Labor Rights?, Stanford Law & Policy Review Vol 21, 2010, , and Kolben, Kevin, 20 Thomassey, Sebastien, Sales forecasts in clothing industry: The key success factor of the supply chain management, International Journal of Production Economics, No. 128, (2010), , particularly p , also H&M corporate supply chain presentation at ( ). 21 The Transparency International annual monitoring report on corruption positions Cambodia at the absolutely lowest end, at place 150 of 167 countries, beaten only by a category of countries still at war or subject to natural disaster (Syria, Afghanistan, Somalia, Haiti) or with much less participation in the global economy (Zimbabwe, North Korea). The judicial system is considered extraordinarily corrupt in Cambodia. Transparency International Corruption Index 2015, available at ( ). 22 For an example, in late 2013 and early 2014 workers demonstrating for increased minimum wages clashed with police and military police leading up to five workers being shot when the police opened fire upon the crowd, see further Saing Soenthrith, in, Cambodia Daily, 6 January 2015, available at ( ). 23 Cambodia has ratified all eight of ILOs core conventions. 5

7 the legal infrastructure outside the written provisions is not strong enough to facilitate reasonable access to justice The labour legislation in brief The 1997 Cambodian labour law is, as briefly described above, to a large extent a comprehensive legislation, which is supposed to provide for most of the general labour rights, such as freedom of association, rights to strike and collective action as well as individual rights related to employment protection and discrimination. The 1997 Labour Law is based on the 1993 Constitution, drafted during the UNTAC period of governance in Cambodia, which entails the fundamental collective rights world-wide recognized as the core of labour relations. 24 Discrimination of workers is prohibited under Art. 12 of the Labour Law in relation not only to race, colour, sex and religion, 25 but also to from Cambodian perspectives more sensitive issues such as political opinion, social origin and membership in trade unions or the exercise of union rights. 26 Furthermore does the 1997 Labour Law provide regulation on fairness of dismissal, both in relation to individual cases and collective dismissals, as well as redundancy payment for employees let off. 27 In relation to collective labour law, the legislation explicitly forbids the employer interference into trade union affairs on the contrary the employers are required to cooperate and explore solutions together with their collective partners. 28 The right to strike is guaranteed under the law, but the exercise of the right is applicable only once peaceful means and arbitration has been extinguished. 29 The Ministry of Labour and Vocational Training might, after consultation with Labour Advisory Committee, decide to extend a collective agreement to all employers and workers in the sector (sectorial erga omnes), 30 and as well as for laying the working conditions for a particular occupation if there is no collective 24 Art Cambodian Constitution Art 12 Cambodian Labour Law, dated 13 March 1997, See also Kong, Phallack, Cambodian Labor and Employment Law, in, Hor Peng, Kong Phallack, Jörg Menzel (eds.) Introduction to Cambodian Law Konrad Adenauer Stiftung 2012, p Art 271 Cambodian Labour Law, Kong, Phallack, Cambodian Labor and Employment Law, in, Hor Peng, Kong Phallack, Jörg Menzel (eds.) Introduction to Cambodian Law Konrad Adenauer Stiftung 2012, p. 298 f. 27 Art 73- Art 95 Cambodian Labour Law (1997). 28 Art 12 and Art 280 Cambodian Labour Law. As is discussed briefly in Kong, Phallack, Cambodian Labor and Employment Law, in, Hor Peng, Kong Phallack, Jörg Menzel (eds.) Introduction to Cambodian Law Konrad Adenauer Stiftung 2012, p. 298, the employers might not exercise any financial or other form of pressure against the trade union activities. However, due to a number of reasons, the disparate structure of the employees collective organizations, such pressure or interference is likely to emerge. 29 Art Cambodian Labour Law. 30 This opportunity is of great significance in many European countries, most thoroughly exercised in the Netherlands, but also in France, Germany, and more recently introduced in Finland and Norway. 6

8 agreement applicable to the particular situation. 31 To our knowledge the erga omnes principle laid down in the provisions has never been exercised. To a large extent appears, actually more so than in many developed countries, the wording of the 1997 Labour Law explicit, comprehensive and adequately modern. However, as we will discuss below, the enforcement of labour rights, through court decisions, reasonable trade union negotiations or public interference continues to constitute the crucial and sad story of Cambodian labour law. During Spring 2016, the National Assembly (Parliament) has processed and proposed new draft legislation on trade unions. 32 The discussions about both how the law is drafted, but also how it has been processed by the Government have been intense and trade unions and international NGOs have criticized the Government for delayed publication of the draft version and for decreased trade union influence through the proposed legislation, while employers federations on their side have complained about the content on a number of issues, primarily on the number of workers it takes to form and register a trade union, but also qualifying criteria for workers representatives. 33 The new legislation, which is supposed to come into force later in 2016 specifies in a rather detailed fashion a number of features which, from a comparative perspective, are usually developed through years of case law, tradition or collective bargaining. First of all, the law is only applicable to those already covered by the Cambodian Labour Law (1997), which excludes a number of categories of employees, such as teachers and civil servants, but also informal workers, from the collective rights established under the law. 34 Furthermore does the new law delimit the opportunity for workers to form trade unions by stipulating that trade unions have to be registered (and somehow approved) by the Ministry of Labour and Vocational Training and that such registration will only to applicable if the organization (trade union) represents 10 employees at the local branch of the enterprise. 35 Moreover, the new Trade Union Law does constrain the eligibility of the union officials and stipulates all such officials or leaders registered under the law are required to be either Cambodian citizens or have been working in Cambodia for a minimum period of at least 24 months, be able to read 31 Art 99 and Art 100, the Ministry can issue a Prakas, a ministerial order, for the definition of the working conditions of the occupation after the approval of the Labor Advisory Committee. See also Kong, Phallack, Cambodian Labor and Employment Law, in, Hor Peng, Kong Phallack, Jörg Menzel (eds.) Introduction to Cambodian Law Konrad Adenauer Stiftung 2012, p The new legislation was passed by the National Assembly 4 April 2016, and was faced with some violent demonstration from trade union activists and parliamentarian protest from the opposition party, CNRP. Naren, Kuch, Khoun Narim, Violence as Assembly Passes Trade Union Law, in, The Cambodia Daily, 5 April Pech Sotheary, Committee wraps up trade union law talks, in, The Phnom Penh Post, 20 January 2016, available at: ( ) as well as 34 Art 3 Cambodian Trade Union (Draft) Law 2016, see also Baliga, Ananth and de Carteret, Daniel, Letter reveals ILO s cautious criticisms of draft union law, in, The Phnom Penh Post, 1 April 2016, available at: ( ). 35 Art Cambodia Trade Union (Draft) Law

9 and write Khmer language and guarantee or declare that they have never been convicted for any misdemeanour or criminal offence. 36 Interestingly, the corresponding section about employers organization representative does not include the requirement on language skills in Khmer. 37 More crucially does the new Trade Union Law restrict the right to strike (which is also laid down in the Cambodian Labour Law from 1997) by imposing on the trade union to put into it statutes/articles of association that strike can only be allowed after the union has assembled a majority of its members which might prove to be very difficult in large organizations and only once 50 per cent of the present workers/member vote for industrial action to be executed Ministerial and government influence The political influence over the labour market in Cambodia can only be described as massive, regardless of the establishment of a tripartite advisory council and the legislation of freedom of association in the Labour Law. The examples of government involvement are plenty and here is only room to briefly touch upon some of them. Moreover, and in the past few years the ministerial mandate to set a minimum wage has been used to improve the wages in the garment sector, but the process has also been subject to significant social unrest and recent criticism. 39 In 2015, the tripartite labour advisory committee, organized under the Ministry of Labour and Vocational Training, suggested an increase of the minimum wage in the garment and footwear industry from 128 to 135 USD/month, which was subsequently raised with another 5 USD to 140 USD/month upon interaction by the prime minister himself. 40 The decision on increased minimum wage in the garment and footwear sector is the last (yet) of a number of adjustments over the past 10 years. In 2006, the minimum in the sector was still only 55 USD/month. 36 Art 20 Cambodia Trade Union (Draft) Law Art 21 Cambodia Trade Union (Draft) Law Art 13 Cambodia Trade Union (Draft) Law It is reported that the ILO, in a secret, yet leaked letter to the Government, has judged the provisions to make strike action difficult, if not impossible, for the larger trade unions. Baliga, Ananth and de Carteret, Daniel, Letter reveals ILO s cautious criticisms of draft union law, in, The Phnom Penh Post, 1 April 2016, available at: ( ). 39 The strikes and subsequent killing of workers in December 2013 and early January 2014 represents the culmination of discussions about a new minimum wage, more in line with the requirement of decent standards of living, as provided for in Art 104 Cambodian Labour Law. Reports on the strikes and killings are numerous, see for instance Saing Soenthrith, in, Cambodia Daily, 6 January 2015, available at ( ). 40 Ministry of Labour and Vocational Training No. 409/15 KB/Br.K, an unofficial English translation of the Prakas is available on the Employer Federation GMAC website, see further ( ). 8

10 The Government is also indirectly empowered to execute significant control through the Labour Inspector unit, 41 which operates under the Ministry of Labour and Vocational Training. The roles of the Labour Inspection are, according to the 1997 Labour Code, plentiful and entail a vast number of control functions, stretching from evaluation of sanctions against employees due to misconduct to termination of fixed term employment contracts even if the parties are in agreement of the termination Monitoring bodies Apart from the comparatively speaking traditional monitoring bodies, such as Labour Inspectorates, is the Cambodian labour market subject to some extraordinary features of monitoring. Most prominently hereof is the ILO Better Factory initiative. 43 The Better Factories Cambodia project was initiated in 2001 as a result of the US-Cambodia bilateral trade agreement with the direct ambition, related to the trade agreement, to monitor working conditions directly in factories in Cambodia, but also to initiate promotion of labour rights in the country. 44 The Better Factories project, with a staff of around 30 persons, conducts numerous monitoring visits, apart from producing information and education material for managers and workers in the garment industry and promoting and publishes research in the field of labour rights and working conditions. The group forms a significantly impartial body and has repeatedly been described as a successful role model for the modern, more active and integrated role of the ILO Access to justice and dispute resolution Cambodian labour disputes are supposed to be settled through proceedings in a Labour Court. Both the Cambodian Labour Law and the more recent Trade Union Law (2016) refers to a Labour Court. There is however, not yet any Labour Court established in the country. The Trade Union Law, more explicitly, refers to a future such court with the jurisdiction to hear cases in labour disputes The Labour Inspectorates are regulated directly in the 1997 Labour Law and is closely related to the Ministry of Labor and Vocational Training. 42 The role of the Labour Inspectors are regulated in numerous places in the code, see for instance Art 73 Labour Law. 43 The ILO Better Factory Cambodia program was established in year XX with the explicit task to monitor the implementation of fundamental labour rights in the garment factories in the country ( ), for an early evaluation of the program, see Kolben, Kelvin, Trade, Monitoring, and the ILO: Working to Improve Conditions in Cambodia s Garment Factories, in, Yale Human Rights & Development Law Journal, Vol 7, [2004] Iss. 1, Art 3. Pp Labour standards in global supply chains. A programme of action for Asia and the garment sector. Cambodia Garment and Footwear Sector Bulletin, Issue 1, July 2015, International Labour Organization, see also, Hall, John A., Human Right and the Garment Industry in Contemporary Cambodia, in, Stanford Journal of International Law, Vol 36 [2010] pp Art 28 and 29, Draft Proposal for Law on Trade Union, (English version as of ), as well as Art 84 Cambodian Labour Law (1997). 9

11 Individual labour disputes are supposed to be tried at the civil courts awaiting the introduction of the Labour Court. Political statements relating to the Trade Union Law (2016) indicates the establishment of a Labour Court during However, the Cambodian Court system is signified by a remarkable lack of transparency. The courts of law do not publish any legal arguments in their decision-making and the interpretation of legal criteria and legal features such as fairness of dismissal or reasonableness in relation to remuneration is not discussed publicly in legal cases. In line with our informants within one of the monitoring bodies of the labour market, no individual dismissal or discrimination cases have been tried before any court of law. 48 As we will return to in our analysis below, the enforcement and knowledge about individual labour rights could be significantly improved and the establishment of a Labour Court, distributing transparent judgments containing legal reasoning, would be an important first step. Established in 2003 under the influence of the US-Cambodia Bi-Lateral trade agreement, 49 the Arbitration Council hears collective cases in a semi-judicial proceeding. 50 The Arbitration Council is a tripartite arbitration body which consists of arbitrators with background and experience from employer side, from trade unions or workers representation as well as independent member, such as law professors, who are appointed by the government. During the past 14 years the Arbitration Council has ruled in more than 1000 cases (in 2014 alone more than 360 cases were presented to the Council and 225 arbitral decisions were issued). 51 The Arbitration Council is generally referred to as a well-functioning, non-corrupt, part of the judicial system, 52 but is restricted to the parties voluntary presence before the Council and have no jurisdiction in individual employment cases. The decisions of the Arbitration Council are published and distributed digitally in Khmer language, but do usually contain a summary of the case in English Naren, Kuch, Khoun Narim, Violence as Assembly Passes Trade Union Law, in, The Cambodia Daily, 5 April The information is collected from interviews with monitoring personnel, who for reasons of discretion are not presented by name here. 49 The Trade Agreement was entered into already in 1999 and initiated the development of the ILO Better Factory Cambodia Program, see also Kolben, Kelvin, Trade, Monitoring, and the ILO: Working to Improve Conditions in Cambodia s Garment Factories, in, Yale Human Rights & Development Law Journal, Vol 7, [2004] Iss. 1, Art 3. Pp The Arbitration Council has recently been scrutinized in a paper presentation at the Labour Law Research Network Conference in Amsterdam, July 2015, by Allen Ponak and Daphne Taras, Rule of Law and the Arbitration Council of Cambodia (draft version only) ( ). 52 Kong, Phallack, Cambodian Labor and Employment Law, in, Hor Peng, Kong Phallack, Jörg Menzel (eds.) Introduction to Cambodian Law Konrad Adenauer Stiftung 2012, p. 311, also, Allen Ponak and Daphne Taras, Rule of Law and the Arbitration Council of Cambodia (draft version only, paper presentation at the Labour Law Research Network Conference in Amsterdam, July 2015). 53 Access to the cases is provided at 10

12 3. Industrial Relations and Global Governance: the Transnational Framework Agreement 3.1. The Collective Bargaining Collective bargaining is one of the main pillars of a system of industrial relations, together with representation - the levels and bodies that represent employees before the employer and the employers associations and conflict the right to take collective action in order to strengthen employees and unions requests towards the counterpart. The origin of expression collective bargaining is due to Beatrice Webb, one of the forerunner researchers in industrial relations, who used it for the first time referring to the collective negotiations that had existed since the rise of trade unions during the 18th century in Great Britain 54. So, collective bargaining is the negotiation process between employers and employees (through their organisations) aiming at signing a collective agreement, setting the standards of treatments related to working and employment conditions (wages, working hours, leaves, etc.), in its normative part, and the mutual obligations binding the signatory parties (social peace, representatives rights and entitlements, etc.) in its obligatory part. The right to collectively bargain has been recognised by many Constitutions all around the world, and it is also present in many international fundamental Charters. For example, this right has been identified as a fundamental human right by Art. 23 of the Universal Declaration of Human Rights 55 ; the International Labour Organization (ILO) Declaration on Fundamental Principles and Rights at Work of defines it as a fundamental labour rights along with the elimination of forced or compulsory labour, the abolition of child labour and the elimination of discrimination in respect of employment and occupation, which thus are rights universal rights, applicable to all people in all States, regardless of the level of economic development and whether or not the State have ratified the relevant Conventions. The most important ILO instrument on the right to collectively bargaining is definitely the Collective Bargaining Convention of 1981, n. 154, adopted in 1981 and entered into force in Cambodia, like many 54 Beatrice Webb is the co-author, along with her husband Sydney Webb, of one of the most fundamental books on industrial relations: Webb B, Webb S., Industrial Democracy, Article 23 of the Universal Declaration of Human Rights says: (1) Everyone has the right to work, to free choice of employment, to just and favourable conditions of work and to protection against unemployment. (2) Everyone, without any discrimination, has the right to equal pay for equal work. (3) Everyone who works has the right to just and favourable remuneration ensuring for himself and his family an existence worthy of human dignity, and supplemented, if necessary, by other means of social protection. (4) Everyone has the right to form and to join trade unions for the protection of his interests. see The Universal Declaration of Human Rights at 56 The text of the 1998 ILO Declaration is available at: en/index.htm. 11

13 other countries, has not ratified it, but by virtue of the 1998 ILO Declarations, they should implement the right of collectively bargaining anyway The Collective Bargaining at Global Level: The Transnational Collective Agreement The rise of the multinational corporation as the new centre of regulation brings about the necessity to adjust the corporate governance at a transnational level. Although collective bargaining has emerged as a tool of self-regulation on labour and employment mainly in a nation-based dimension, global forms of collective bargaining are becoming more and more common in both industrial relations theory and practice. The collective bargaining at transnational level goes in the direction of aiming at creating governance in the context of the internationalization of markets. This kind of collective bargaining is called transnational because it goes beyond national boundaries but, unlike supranational and international bargaining, they are indifferent to any territory and, above all, to any territorial institutions, namely the States and all the bodies related to Post-Wesphalian history. Supranational regulations, indeed, refer to regional organisations, like the European Union or the the Council of Europe, while international labour law consists basically of treaties, conventions and other instruments adopted by the United Nations or, more pertinently, its specialised agency, the ILO: they both have States as main addressees of their obligations. Transnational regulation, on the contrary, does not acknowledge any hierarchical position of States providing horizontal norms, originating from the centre (the headquarter) to the periphery (the production plants or the supply chain). According to Dominique Michel, Team Leader of the ILO's Multinational Enterprises Programme, An international (or global) framework agreement (IFA) is an instrument negotiated between a multinational enterprise and a Global Union Federation (GUF) in order to establish an ongoing relationship between the parties and ensure that the company respects the same standards in all the countries where it operates. Sectoral trade unions from the home country of the multinational also participate in the negotiation of the agreement. Although framework agreements are not corporate social responsibility (CSR) initiatives, they are often referred to in the CSR debate because they are one of the ways in which companies can express their commitment towards the respect of certain principles. However, the specific aspect that distinguishes frameworks agreements from CSR initiatives is that they result from negotiation with international workers' representatives. 57 C154 - Collective Bargaining Convention, 1981 (No. 154) Convention concerning the Promotion of Collective Bargaining, available at:

14 Framework agreements are thus one of the possible developments of industrial relations in the era of globalization. 58 On the employer s side, of course, there is the multinational corporation that is willing to put in practice these agreements; on the employees side, on the contrary, the transnational framework agreement are negotiated and signed by global union federations, along with different signatory unions of different levels or sectors, which can vary from case to case. Among the global unions, we can mention IndustriALL Global Union, the GUF formed from the merging of the International Metalworkers' Federation (IMF), the International Federation of Chemical, Energy, Mine and General Workers' Unions (ICEM) and the International Textile, Garment and Leather Workers' Federation (ITGLWF), UNI global union (UNI), the Building and Wood Workers' International (BWI), the Education International (EI), the International Federation of Journalists (IFJ), the International Arts and Entertainment Alliance (IAEA), the International Union of Food, Agricultural, Hotel, Restaurant, Catering, Tobacco and Allied Workers' Association (IUF), the International Transport Workers' Federation (ITF) and Public Services International (PSI). The Commission of the European Union and the ILO worked together in order to set up a database of the transnational collective agreements, openly accessible. 59 To date, on the database 282 agreements are registered, but in reality there are much more agreements. And the number of such agreements rises steeply year after year. In the garment industry, the most important agreements have been signed by H&M (Sweden) in 2015, Inditex (Spain) in 2014, Mizuno (Japan) in 2011 and Triumph (Switzerland) in The Potentialities of a Transnational Collective Agreement If we consider what happened with the H&M transnational collective agreement, for example, we can have some ideas of how these instruments may be able to work. H&M is one the biggest garment retailers in the world, and the counterparts that signed the agreement are IndustriALL Global Union, representing 50 million workers, together with the Swedish trade union IF Metall: the result of such an agreement is that, theatrically, this instrument may improve the protection of about 1.6 million garment workers. This agreement marks an innovative step for the upcoming model of industrial relations at global level, because emphasises the importance of collaboration between the management and the workers representatives is the best way to ensure effectiveness to fundamental labour rights at work all around the thousands of factories involved in the H&M supply-chain. As Jyrki Raina, IndustriALL 58 See International Framework Agreements: a global tool for supporting rights at work, available at: 59 The database is available at Size=0&sectorId=7&year=0&esp=0&geoScope=0&refStandard=&keyword=&mode=advancedSe archsubmit. 13

15 general secretary, has affirmed: This agreement opens an exciting new chapter in the relationship between IndustriALL Global Union and H&M. It cements the path towards a sustainable garment industry with unionized workforce, constructive labour-management relations, living wages through industry level collective agreements, and safe workplaces. 60 When it comes to the fundamental labour rights, the agreement promotes the negotiation and the signing of collective agreements at factory, company and industrial level, the access for workplace representatives to the functions that they need to put in place and the protection for them against any possible discrimination. The agreement should also entitle workers to refuse unsafe work. The parties agree on the obligation for the employers to provide training for management and union representatives in the factories; on the other side, trade unions engage themselves in ensuring peaceful conflict resolution. The keystone of the system of industrial relations designed by this agreement lies on the monitoring system of the implementation of the agreement itself. According to Anders Ferbe, IF Metall president, The agreement creates a unique system for committees made up of the parties on the labour market, on national as well as international level. Implementing the agreement, primarily through communication and training of trade unions and their member, suppliers and employer associations, but also employers in factories where there are currently no unions, will be the most important task. 61 In a mature system of industrial relations, responsibilities on both parties are usually enforced by a number of sanctions, which aim at compensating the damages as well as at threatening the parties to comply with the rules. Unfortunately, none of these sanctions is present in the agreement, but we should always consider that the global level of industrial relations is still in its way to increase. The reflections on this topic may definitely result in a great help for industrial relation to improve towards this direction. 4. Development of labour standards in Cambodia The premature features of the Cambodian labour market has left it sadly open to violations of fundamental labour rights and left it to suffer from poor enforcement of conventional rights and standards provided for and ratified under international labour law. We will touch upon three significant aspects of these problems and provide some recommendations to the development of the labour market, with a primary focus on Cambodia and the globalized garment industry. Basically, all aspects we discuss refers, one way or another, to enforcement and transparency. First of all, the Cambodian labour legislation is, as we have touched upon above, much more comprehensive and explicit and modern as one could imagine. It 60 See IndustriALL website at 61 See IndustriALL website at 14

16 features collective action, formation of trade unions, anti-discrimination and protection against unfair dismissal, along with health and safety regulation and paid maternity leave, provisions that are yet to be introduced or not in many developed countries. However, the extreme lack of opportunity to execute those rights and for individuals to bring claims under the legislation to court, in order to have one s day in court, manifests a major hurdle for the development of labour rights in Cambodia. The lack of a specialized Labour Court almost 10 years after the mentioning of such a court upon the introduction of the 1997 Cambodian Labour Law, is, in our opinion, a major, contributing factor to the poor access to justice. Designed trials before a tripartite, specialized Labour Court could manifest a cost-effective fast-track to industrial justice and also create a body of knowledge and jurisprudence through case law. Naturally, cases before a Labour Court, or a Supreme Labour Court, should be published and have precedence for the labour market as such. The general lack of transparency in the Cambodian judicial system, where there are no publicly presented legal reasoning in court decision (which, by the way is not prohibited, but just doesn t appear), is a fundamental problem to the development of the country s legal system, and is a deep concern also in relation to labour and employment cases. It is likely to be a contributing factor to the documented corruption of the courts since the legal reasoning behind a court s decision cannot be examined, debated and opposed in public. Moreover, the lack of public case law also diminishes the opportunity to interpret and determine the requisites of the law and its reasonableness in various details. Furthermore is it hampering for the process of educating employers, workers and the public on legal situations in the labour market. The semi-judicial Arbitration Council has established itself as a new actor in this area and the case law and legal reasoning presented and made public by the Arbitration Council represents a totally new step in Cambodian labour law. While acknowledging the importance of transparency the Arbitration Council has emerged as the noncorrupt judicial body in the jurisdiction. In our opinion, many lessons are to be learnt from this example and the formation of a Labour Court which could continue the recently established tradition of the Arbitration Council and bring them alive also inside the core of the judicial system would represent a major and most appreciated improvement. Such legal developments have partly been discussed, but remains mainly with the National Assembly to address. Secondly, the empowerment of a more mature body of industrial partners is urgently required. While the Cambodia has ratified the ILO instruments on freedom of association and collective bargaining, and the domestic legislation allows and to some extent encourages collective bargaining and trade union activity, some major obstacles remain, obstacles related to the underdeveloped structure of the industrial relations. 62 The trade unions in Cambodia are divided or scattered and do not form a significantly unit or even balanced picture. 63 There 62 Most significantly Freedom of Association and Protection of the Right to Organize Convention C87 (1948) and the Right to Organize and Collective Bargaining Convention C98 (1949). 63 According to figures from the one of the Employers federations, there are around trade unions in Cambodia (as of 2015). See further Cambodia s Trade Union Law. A necessity. Employers position paper. Cambodia Federation of Employers and Business Associations (CAMFEBA), 2015, available at: 15