Freedom of association, grievance mechanisms and purchasing practices – The power of integrated supply-chain industrial relations
The Global Deal partner, ACT on Living Wages, brings together global trade unions and international brands in a joint commitment to transform the garment and textile industry. This case study describes how cooperation between ACT and its partners led to the creation of an effective grievance mechanism at industry level to handle the settlement of disputes on freedom of association and collective bargaining rights.
Effective grievance mechanisms on workers’ rights – especially freedom of association – require ownership of workers’ and employers’ organisations as the relevant stakeholders in industrial relations.
To help prevent and address industrial disputes , factories producing for ACT signatory brands negotiated and agreed with IndustriALL- affiliated Industrial Workers’ Federation of Myanmar (IWFM) upon the Myanmar Freedom of Association Guideline (FOA Guideline) in 2019. This agreement clarified key rights and responsibilities for workers and employers in terms of freedom of association on the basis of both national law and international labour standards.
ACT member brands adopted measures to ensure compliance with the FOA Guideline and the associated dispute resolution mechanism as a business requirement. Non-compliance ultimately resulted in the termination of the business relationship with the ACT member brands. As such, the FOA Guideline became a binding standard, accounting for an estimated 80% of the Myanmar garment export industry at the time.
Having a FOA Guideline and dispute resolution mechanism can allow for [the] organisation of workers in a trade union, which is a reliable partner for social dialogue at [the] factory level.
The Guideline is a framework that every factory can use to have a clear and predictable way of engaging with trade unions.
To address grievances concerning the implementation of the FOA Guideline, the employer and trade union partners in Myanmar agreed to jointly develop a Framework Dispute Resolution Mechanism (DRM) complementing the role of national institutions.
The role of ACT member brands was to guarantee its effective implementation by all suppliers in the country. At the same time, within ACT, brand members have committed to defining wages as itemised costs in purchasing prices so as to take wages – which may rise as a result of collective bargaining – out of bidding competition.
At the end of 2020, the Framework DRM on the FOA Guideline was piloted, followed by an evaluation against the effectiveness criteria of the United Nations Guiding Principles on Business and Human Rights (UNGP):
- The Myanmar Framework DRM had legitimacy as it was developed by affected stakeholders through negotiation and minimised the risk of conflicts of interest by delegating dispute resolution to jointly agreed independent experts in appropriate cases.
- The grievance mechanisms was made accessible by publishing the Framework DRM on all factory notice boards and developing plans to raise greater awareness after the pilot.
- The Myanmar DRM ensured predictability by establishing clear steps with flexible time frames at each stage of the process.
- The Myanmar Framework DRM provided employers and trade unions with technical advisors and expertise as necessary to ensure an equitable grievance process.
- Confidence was also built by being transparent and informing local parties at each stage of the process.
- To ensure that outcomes and remedies accord with internationally recognised human rights, the Myanmar Framework DRM envisaged escalation steps, including ultimately the ceasing of business relationships, in case remedial outcomes were not implemented.
- To help prevent future grievances, the negotiation of the Myanmar Framework DRM was a source of continuous learning and relationship-building for employers and trade unions.
- Finally, the Myanmar Framework DRM was dialogue-based as the negotiation process itself was based on ownership of the stakeholders through dialogue.
It was planned to develop a long-term integrated mechanism in 2021 based on the learnings from the piloting phase, but following the coup in Myanmar in February 2021, ACT made the difficult decision to cease operations in the country. However, the Myanmar process does provide important lessons for companies and organisations looking to support the development of effective supply chain grievance mechanisms.
Higher levels of trust: An integrated supply-chain grievance mechanism developed by the industrial relations stakeholders themselves – not just in consultation with them – can enable higher levels of trust.
Prevention of harm: By establishing and reinforcing social dialogue structures, a locally embedded and globally supported grievance mechanism can help prevent harm and settle labour disputes.
Reliable information: A locally integrated grievance mechanism can provide reliable information for brands on what is going on in their supply chains.
Maximising efficiency through collaboration: The ownership of local employer and trade union representatives and a coordinated support by brands maximises efficiency by ensuring collaboration between all relevant stakeholders.
Read the full report
Download the Global Deal Flagship Report 2022 for the full version of this case study, plus 12 others examining the work carried out by Global Deal partners and the voluntary commitments made to promote social dialogue in addressing global-labour market challenges.