The ILO Declaration on Fundamental Principles and Rights at Work (1998) addresses the issue of "social clause," which links labor standards to international trade. According to the ILO, a "universal consensus now exists that all countries, regardless of level of economic development, cultural values, or number of ILO Conventions ratified, have an obligation to respect, promote, and realize the following fundamental principles and rights:
The Declaration does not cover two other areas regarding minimum wage, and safety and health standards of workplaces. The exclusion of these areas was a compromise between developed and developing countries.
The Declaration is significant because countries which have not ratified or acceded to all eight ILO Conventions [2] have agreed to comply with the principles contained in these instruments. Although these countries will not be sanctioned for non-compliance, they are duty-bound to make the effort to comply through technical cooperation from the ILO. The Declaration seeks to promote the observance of the core labor principles with a "soft approach."
Not all developing countries in Asia voted for the adoption of the Declaration, but since it has been adopted, it cannot be ignored. Private companies are obligated to subscribe to the provisions of the Declaration as one of the three voting-members of ILO governments, labor, and employers. ILO provides a system where responsibility arises not only from the governments but also from labor and employers.
Ratification by a country of an international treaty gives rise, as a matter of course, to the responsibility of bringing its domestic laws in line with the provisions of the ratified instrument. There are countries, however, which fail to do so. Indonesia and Cambodia, for example, have ratified all eight ILO Conventions. Compared with Japan’s ratification of only six ILO Conventions, the two countries seem to be model countries regarding subscription to international labor standards. And yet, it is questionable whether both countries have taken steps to comply with the provisions of the conventions. Indonesia, still beset by the problem of slow democratization process after the fall of the Soeharto regime, is still deliberating on a bill on labor law. Strong conflicting interests seem to be delaying the enactment of the law. Cambodia, on the other hand, has enacted a labor law but is not implementing it rigorously. It seems that Cambodia ratified the ILO Conventions because it hoped to receive financial and technical assistance from ILO.
Asian countries under the so-called "development authoritarianism" often limit freedom of association. The policy of discouraging the establishment of labor unions within "development zones" as a means of attracting foreign investment is an example of this restriction. The governments in these countries would consider labor unions established against the policy as illegal entities. And foreign companies are likely to be punished if they recognize these labor unions.
ILO views freedom of association as one of the most important labor standards of universal value. ILO Conventions No. 87 and No. 98 (both on freedom of association), are given special place in its system. Even if a country has not ratified the two Conventions, complaints of violations of its provisions could be brought before the ILO Committee on Freedom of Association. Japan has used this system in the past, while developing countries in the region are doing so now. The ILO Committee, however, can only make recommendations to governments, and whether or not governmental policies will be revised is discretionary on their part. In some cases, governments refuse to adopt the recommendations on the ground that they constitute an interference in their domestic affairs. The ILO Declaration does not have the authority to force governments to comply.
Japanese companies operating outside Japan face the issue of applying local labor laws. Whether they set up 100% owned subsidiaries or joint venture companies with local capital, and whether or not local employees are given the task of dealing with local labor issues, Japanese companies are not exempt from the responsibilities arising from local labor laws.
In following local labor laws to acquire quality labor for the local subsidiaries, Japanese employees assigned from their head offices are bound to face some problems.
When domestic legislation infringes the provisions of the eight ILO Conventions, problems arise. Japanese companies are bound to comply with the laws of the countries where they operate. But they face the dilemma of deciding which laws to follow in case local laws do not subscribe to the ILO Conventions. In general, treaty laws take precedence over domestic laws. Thus the companies have to follow the provisions of the treaties as long as the countries have ratified them.
What happens if the countries where the companies operate have not ratified the ILO Conventions, or bound only by declarations, which have lesser binding force? Do these companies have no alternative but to follow a government policy that violates freedom of association?
Foreign companies that have corporate codes of conduct, which include respect for the freedom of association, would be placed in a difficult position.
Employees sent from the Japanese head offices to the related companies in developing countries in Asia, would find themselves likewise in a difficult position. Many of them are probably labor union members themselves. Their overseas assignment may put them into managerial positions. Some Japanese unions let them retain their union membership despite the change in their employment position. Larger unions have various measures to alleviate the anxiety of members working abroad who find themselves in this situation. Does the promotion of union members to management position in their overseas assignment make them lose their conscience and dismiss local employees for setting up labor unions? Can attitudes change according to the situation at hand regarding respect for universal labor principles? How would the international community assess Japan with such conduct of the companies? These companies would not be facing this difficult choice, of course, if Asian developing countries adopt policies that respect universal labor principles.
Japanese labor unions should play a big role in resolving this problem. This is especially true for labor unions that have adopted a policy of respecting universal labor principles. Japanese companies likewise have the role of promoting the observance universal labor principles.
Kozo Kagawa is a professor in Kobe University teaching labor law.
For further information, please contact: Professor Kozo Kagawa, Graduate School of International Cooperation Studies, Kobe University, Kobe 657-8501 Japan, ph/fax: (8178) 803 7125, e-mail: kagawa@kobe-u.ac.jp
1. See www.ilo.org/public/english/standards/decl/declaration/index.htm
2. Following are the eight ILO Conventions (all have entered into force):