The past ten years have brought rapid changes, with economic liberalism forced upon everyone. Not long ago, the majority of electricity companies were national or regional; today, they are becoming multinationals as they develop abroad, buying up entire companies here and there, and diversifying their own operations.
In fact, deregulation of the electricity industry has resulted in entire corporations being bought and sold on an almost daily basis.
To start with, this raises the problem of what each groups long-term industrial strategy should be. But with businesses being bought and sold like hotcakes, the wheeling and dealing make an industrial strategy impossible, since profitability is the overriding rule, often under persistent pressure from international pension funds.
Keep in mind that for these funds, a business that offers shareholders only 10% in annual profits is a very ordinary, in fact even a poor, prospect.
For example, in 1998 the London Electricity utility was for sale to the highest bidder. EDF was one of them, and become the owner.
The former owner was ENTERGY, a U.S. company that had acquired London Electricity late in 1996, when it paid 1.3 billion pounds sterling for the utility. Two years later, in 1998, it sold the company for approximately 2 billion pounds, a financial gain of 50% in two years. Not bad, eh?
What makes us shudder is the thought of what kind of industrial policy ENTERGY pursued at London Electricity during these two years. What kind of investment policy could be developed in such a short span of time? No long-term policy was implemented, and investments were curbed. The only policy ENTERGY carried out was to downsize staff, thereby increasing the value of the company. A public utility is managed like a widget factory: The goal is to make money fast. The first to be affected by such financial policies are the employees who lose their jobs. It is something we all need to realize: so far, all the deregulation of public services has had an extremely destructive effect on jobs.
For example, various experts estimate the deregulation of telecommunications has eliminated 500,000 jobs! The catastrophic consequences for employees of deregulation in the airline industry at both the European and international levels could also be cited. In the electricity and gas industries, the British experience resulted in half the jobs being lost. In the power industry alone, more than 500,000 jobs have been eliminated even before full deregulation, which means that job losses are continuing and will continue in the future.
In France, the recent deregulation of the power industry has social consequences that can already be felt:
- steady downsizing, although the agreement on a weekly 35-hour work week provided momentary relief;
- calling into question of the pay policy;
- calling into question of our pension and benefit plans;
- calling into question of our special status aimed at converting it into an ordinary collective agreement.
- calling into question of the right to organize, etc
It is definitely a push to impose the lowest common denominator, and even an attempt at social dumping.
While this may be good for the financiers, it isnt good for members of society like us. This is what we in the CGT-FORCE OUVRIRE energy and mining federation is trying to denounce and oppose through the broadest possible unity at the national and even European and international levels.
- Deregulation has enabled power utilities to become multinational companies by buying up businesses around the world. There are already some serious questions that should be raised about the behaviour of these multinationals in certain countries. Unions should be thinking about what actions they could take to compel multinationals to adopt decent social policies.
Just recently, the OECD negotiated and published a set of 10 guidelines for multinational corporations. In our opinion, it is particularly worthwhile considering these principles in the framework of yesterdays and todays conference here in Qub0065c City.
- First of all, what is the OECD, the Organization for Economic Co-operation and Development?
The OECD was created in 1960 by 18 European countries plus Canada and the United States, with the stated objective of achieving the greatest possible growth of the economy and jobs and improving the standard of living in member countries, while preserving financial stability and contributing to sound economic expansion in both member countries and non-member developing countries and the expansion of international trade on a multilateral, non-discriminatory basis.
Since then, the OECDs membership has grown, first with the addition of Japan, Australia and New Zealand, and then more recently with some Eastern European countries; it now has some thirty member states. Unions have a consultative role through the Trade Union Advisory Committee (TUAC), with 55 affiliated national union federations; employers sit on the Business and Industry Advisory Committee (BIAC).
The OECD is not a supranational organization; rather, it is a think tank where governments compare and contrast their experiences and try to develop joint positions. It is becoming a real government forum on globalization issues and for the development of codes of conduct for multinationals.
- Problems generated by economic globalization and the growth of multinational corporations:
The development of trade and globalization has made industrial groups much more international. There has been a strong growth in both the size and number of multinational corporations.
At the same time, multinationals face more stringent requirements regarding financial transparency, respect for the environment and compliance with fiscal and sometimes social legislation.
Multinational corporations have therefore begun to draft codes of conduct defining their commitments in these various areas. The corporations see these codes as voluntary commitments that cannot be imposed by public authorities or negotiated with unions.
The labour movements goal, reiterated at the last convention of the ICFTU in Durban, is to be able to negotiate these codes of conduct.
In this vein, the OECD has begun multilateral talks among OECD countries on the one hand, and consultations with representatives of business, unions and NGOs (non-government organizations) on the other.
This has resulted in the drafting of a charter called OECD guidelines for multinational corporations, consisting in a series of recommendations that governments are supposed to make to multinational corporations. The charter was adopted on June 26-27, 2000 at the OECD council meeting of ministers of the 29 member countries, plus the governments of Argentina, Brazil, Chile and the Republic of Slovakia.
Now that they have been adopted, the guidelines should help regulate competition between multinational corporations by setting standards with which they are all invited to comply; the main problem that remains is to get the principles accepted and implemented by all parties.
For the labour movement, these guidelines should become a basic reference point for the various European and international committees. FORCE OUVRIRE considers that the charter can provide a basis of discussion in the framework of the international powerworkers forum to which our Canadian friends at Hydro-Qub0065c have invited us. We thank them for it, and the entire FNEM-FO sends fraternal greetings from France.
- Content of the guidelines, divided into ten chapters:
- Concepts: the OECD guidelines are supposed to apply to all public and private corporations established in more than one country and operating around the world. Multinational corporations are called upon to apply these guidelines in all countries in which they operate, including those outside the OECD. Another important point to note is that these principles apply to both the parent corporations and subsidiaries. OECD member countries undertake to promote them and ensure that compliance with them does not lead to protectionism or differential treatment for competing corporations.
- General principles: corporations are urged to contribute to economic, social and environmental progress with a view to achieving sustainable development; promote respect for human rights; encourage local capacity-building; develop jobs and training for local employees; abide by legal and regulatory provisions on the environment, health, safety, work and taxation; encourage their suppliers and sub-contractors to do the same; and refrain from any undue interference in local politics.
- Publication of information: corporations are invited to provide regular reliable and relevant information about their structure, financial situation and profits and losses, by industry and by area, as well as about environmental and social aspects. Corporations are also urged to make public their statements of principle or rules of conduct, and statements concerning their social, ethical and environmental policies.
- Employment and labour relations: corporations are called upon to respect union rights and freedoms; to develop collective bargaining; to contribute to the effective abolition of work by children and to eradicate all forms of forced or compulsory labour; not to practise any form of discrimination; to facilitate the negotiation of effective collective agreements; and to inform employees representatives of the status of the businesss operations and results, as well as changes that could have a significant impact on their employees.
- Environment: corporations are encouraged to abide by international standards and the laws and regulations in force in the countries where they operate, so as to take into account the need to protect the environment and operate in a way that is compatible with the broader objective of sustainable development.
To this end, they are supposed to establish and implement an environmental management system adapted to the corporation (compilation and assessment of data, setting of quantifiable objectives, regular monitoring and follow-up); provide the public with timely information about the potential impact of their operations on the environment, health and safety; offer possibilities for communications and consultations to the communities most directly concerned by the policies; carry out impact studies for their operations; and establish risk prevention policies. Anti-corruption struggle: corporations are urged to refuse to offer, promise, grant or solicit unlawful payments or other undue advantages directly or indirectly; to make their operations more transparent in the struggle against corruption; and to adopt management control systems that will discourage and prevent it (fiscal and cost accounting, audits).
- Consumer interests: corporations are called upon to abide by fair practices in all their business transactions and advertising and to take all reasonable steps to ensure the safety and quality of the goods and services they provide (compliance with safety standards, consumer information and instructions, labelling, open and effective means of recourse).
- Science and technology: corporations are invited to contribute to the development of the innovative capacity of the countries in which they operate; to adopt practices that make possible the rapid transfer and circulation of technology and know-how; to carry out scientific and technological development work so as to meet the needs of local markets; to employ and train employees from host countries; and to participate in research projects in co-operation with local businesses or professional associations.
- Competition: corporations must operate legally and in accordance with the policy on competition of the countries in which they operate, and refrain from concluding or implementing agreements restraining competition through price-setting, production quotas or restrictions, or market-sharing through a division of customers, suppliers, geographic zones or branches of industry.
- Taxation: corporations are supposed to contribute to the public finances of host countries by paying taxes. They are encouraged to provide national tax authorities with the full and accurate information required to calculated taxes and must refrain from using methods aimed at illegally reducing their proper tax base.
This charter was adopted in June by the OECD ministerial-level council meeting of the member countries plus four non-member countries.
It may look like a list of pious wishes, but if everyone finally agrees to force multinationals to abide by all these guidelines, it will be a tremendous improvement for trade-unionism and a great leap forward for social progress.
The E7 is composed of the eight largest international power utilities located in seven countries, all OECD members. This is why FORCE OUVRIRE believes that one of the first tasks of the international forum of powerworkers unions that has just been founded should be to force the eight electricity corporations in the E7 to recognize and implement fully and wholeheartedly the guidelines of the OECD charter.
We think this is a concrete objective within the scope of the union forum for formal exchanges with the E7 that was founded in Qub0065c City on October 12 13, 2000.