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3
Implementing International Standards at
the National Level
The second session of the workshop provided more concrete examples
of assessing compliance with international standards, expanding on relevant
issues at both the national and sectoral levels. The presenters, luan Amor
Palafox (University of the Philippines) and Lejo Sibbel (International
Labour Organization LILO]-Cambodia), provided the National Academies
Committee on Monitoring International Labor Standards (CMILS) with a
more indepth look at some of the critical factors affecting the coverage and
implementation of national laws in the Philippines as well as the lessons
learned from the unique role of the ILO in monitoring garment factories as
part of a U.S. trade agreement with Cambodia.
lean Amor Palafox
Dean, School of Labor and Industrial Relations,
University of the Philippines
Mr. Palafox began with a brief background of socioeconomic condi-
tions in the Philippines. He noted that the contextual data for the Philip-
pines (Box 3-1) are essential to understanding the country's experience with
core international labor standards. Especially significant is the Philippines'
high population growth rate, which tends to exacerbate socioeconomic
problems. In the transition from agriculture to services, the Philippines
seems to have skipped the development of manufacturing. "But even if the
service sector has captured most of the employment share, it's not lost on
17
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18
NATIONAL LEGAL FRAMEWORKS
our economists that it's a very poor kind of employment share" with mar-
ginal jobs in certain parts of the Philippines service sector, such as retail
trade, small transport, and personal services. Mr. Palafox added that an-
other important element of the economy of the Philippines is the large
number of overseas workers, approximately six million, who send more
than $6 billion home annually.
Labor Law and Implementation in the Philippines
After providing this contextual information on the labor market in the
Philippines, Mr. Palafox turned to the legal framework, which he described
as "the most strict, the most complete, most comprehensive set of social
labor legislation." All of the ILO's fundamental rights are addressed in the
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IMPLEMENTING INTERNATIONAL LABOR STANDARDS
19
Constitution and national laws of the Philippines. However, as Professor
Weiss discussed earlier, assessing the coverage and implementation of these
rights in practice requires a more thorough analysis than can be obtained
by simply looking at the content of the laws. For example, only 3.8 million
workers (or 12 percent of the labor force) are unionized, and even a smaller
number, less than half a million, are covered and protected by collective
bargaining agreements. Mr. Palafox said that monitoring whether a sector
is "organizable" or not may require examining larger enterprises in the for-
mal sector separately. He estimated, for example, that if one looks at enter-
prises of 200 or more employees in the Philippines, almost 80 percent of
these enterprises are organized. More types of data are needed to fully
understand the nature of workers' organizations and their activities in the
Philippines. For example, in many cases, Mr. Palafox contends that unions
are organized "not by expanding membership, but rather by raiding from
other federations," but data on certification elections and challenges are
lacking. Similarly, data on the causes rather than the mere occurrence-
of strikes are needed because it may be the case that there are "more strikes
arising out of inter-union conflicts than out of bargaining tissues]."
Turning to the problems of implementation, Mr. Palafox said that cer-
tain provisions of the law allow the Secretary of Labor to intervene in strikes
by assuming jurisdiction and mandating a settlement if the Secretary views
the industry involved in the strike as "vital to national security." Another
problem is the significant backlog of cases received by the National Labor
Relations Commission (NLRC). Each year the NLRC receives more than
20,000 cases, and the 150 adjudicators are able to dispose of only 60 per-
cent of those cases. Institutional capacity of the inspectorate is also an
issue, with only 183 inspectors covering 80,000 enterprises. Mr. Palafox
said that each year nearly half of these enterprises are cited for violations,
most often relating to wages. While the Philippines does have a minimum
wage, for the majority of non-union workers, the minimum wage most
often serves as a ceiling. The legality of providing "wages in kind" in the
form of lodging, meals, and products has also offered employers a method
of significantly reducing take-home wages. He added that employers have
also been known to withhold benefits simply because the workers are not
aware of what is due to them under the law.
Mr. Palafox discussed several issues relating to specific worker catego-
ries that often fall outside the coverage of national labor law. First he de-
scribed the "grim picture" (see Box 3-2) of child labor in the Philippines,
citing poverty as the primary cause. He then turned to protections in the
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20
NATIONAL LEGAL FRAMEWORKS
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IMPLEMENTING INTERNATIONAL LABOR STANDARDS
21
Philippine labor code that result from the high rate of overseas workers.
These are primarily in the form of regulating recruitment agencies, includ-
ing the requirement that contracts must be filed with the government. In
practice, however, overseas workers still face many violations of their rights,
such as "contract switching," underpayment or nonpayment of wages, lack
of rest days or vacation leave, unsafe working conditions, and physical and
sexual harassment.
Mr. Palafox concluded by listing several issues to consider for an im-
proved understanding of national compliance with international labor stan-
dards, based on the experience of the Philippines:
· Population growth, levels of poverty, unemployment, and economic
development should always be the context for a deeper understanding of
compliance with international labor standards.
.
The effectiveness of implementation of social legislation hinges on
the development of the formal sector. With a large informal sector, em-
ployment becomes a matter of survival, rather than job quality.
· The Philippines social and labor legislation is geared primarily to-
ward the wage and salaried sector, yet more than half of the country's
workforce are in agriculture or small or micro-enterprises or are own-ac-
count workers. ~ The government needs to be aggressive in its campaign to
include these workers in its social protection.
· The inspectorate arm of the government is considered too small
and ineffective to be taken seriously. The funds allocated toward imple-
mentation of standards would probably be an excellent measure of a
country's commitment to enforcing labor standards.
· Another measure would be developmental (education, awareness
programs, and campaign) strategies in core areas.
· Recognizing the role of the informal sector in the economic devel-
opment of the country would provide more incentives for regulation and,
at the same time, encourage people involved in this sector to comply with
minimum standards.
According to the International Classification of Status in Employment (ICSE), "Own-
account workers are those workers who, working on their own account or with one or more
partners, hold the type of job defined as a 'self-employment job,' and have not engaged on a
continuous basis any 'employees' to work for them during the reference period. (The part-
ners may or may not be members of the same family or household.)" Further information on
the ICSE is available at wWw.ilo.org/public/english/bureau/stat/class/icse.htm.
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NATIONAL LEGAL FRAMEWORKS
· Poverty is the root of child labor. Until poverty is reduced to mini-
mal levels, no amount of program funds can totally eliminate child labor.
· There must be more guarantees of protection for overseas workers.
There are rampant violations of standards that are supposedly protected in
the Philippines, but once abroad, the Filipino worker is at the mercy of the
employer. Recipient countries must recognize parallel rights among for-
eign workers and their local counterparts.
Lejo SilDIDel
Chief Technical Advisor ILO Garment Sector Working Conditions
Improvement Project in CamIDodLia
Mr. Sibbel began his presentation by providing some background in-
formation on the U.S.-Cambodia Bilateral Textile Agreement of 1999. As
part of this agreement, the ILO was asked to assist in ensuring the availabil-
ity of information on Cambodia's compliance with international labor stan-
dards. The agreement set export quotas from Cambodia to the United
States for 13 categories of textiles and allowed a 14 percent annual bonus
increase in that quota as long as Cambodia supported "the implementation
of a programme to improve working conditions in the textile sector, in-
cluding recognised core labour standards, through the application of Cam-
bodian labour law." The original three-year agreement was extended for an
additional three years at the end of 2001, and the possible annual bonus
was increased to 18 percent.
Monitoring Working Conditions in Cambodia
While the initial ILO project was to include three components ca-
pacity building, monitoring of working conditions, and legislation and edu-
cation Mr. Sibbel's primary focus has been on the monitoring compo-
nent. The ILO has recruited and trained eight Cambodian monitors, and
there are currently 195 factories registered for the project. Participation of
factories in this "voluntary" program has been increased by the requirement
instituted by the Cambodian Ministry of Commerce that factories must be
registered before they can export items to the United States. But the ILO
monitors do not have any enforcement powers. They "can advise on what
the law is, what the law says, and how improvements can be made, but they
cannot hand out fines or slap employers on the wrist." Monitors are trained
to look for violations of the following: minimum age; forced labor; free-
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IMPLEMENTING INTERNATIONAL LABOR STANDARDS
23
dom of association; collective bargaining; wages; hours of work; leave; and
hygiene, sanitation, safety, and health. Monitoring activities are generally
carried out through half-day or one-day visits to the factories. The factory
size, which ranges from 35 employees to 7,000, dictates the amount of time
required for the visit. Each monitor uses a checklist of 156 questions (not
including subquestions) to interview managers, worker representatives, and
the workers themselves, both on and off the premises as necessary to pro-
vide confidentiality. Monitors also perform a physical inspection of the
enterprise. Visits are unannounced.
Mr. Sibbel said that the task of monitoring the application of both
Cambodian law and core ILO standards is simplified by the fact that the
Cambodian law was drafted with assistance from the ILO (in particular
Arturo Bronstein, a speaker in the first session of the workshop). This has
led to an assumption that the relevant international standards are incorpo-
rated into the national law, but there are still cases in which there are gaps
or the national legislation is unclear. To overcome this, the ILO has used a
tripartite Project Advisory Committee (PAC) to review all of the 156 items
from the monitoring checklist. This protects the project from criticism
about the standards applied in its work. Complaining factory owners are
told that the Garment Manufacturers Association of Cambodia, through
the PAC, has endorsed the checklist.
After a review of the information provided by the monitors, a report is
drafted and sent to the management of the factory. As Mr. Sibbel said, "At
face value we believe more or less what the workers tell us." But providing
a copy of the report to factory management gives management the oppor-
tunity to dispute or disprove any allegations with additional documenta-
tion. The final report, which is sent to the parties of the trade agreement
and posted on the ILO website, describes problems, makes recommenda-
tions for improvements, and notes whether the factory management has
agreed with the ILO's findings.2 Four synthesis reports were produced
between November 2001 and September 2002. The third report contained
information for 30 factories, gathered after a three- to four-month "grace
period" and follow-up monitoring visits to the factories. Box 3-3 contains
samples of the implementation status by subject and by factory from that
report. Table 3-1 contains key findings from the first three ILO reports.
2The synthesis reports are available at ww~v.ilo.org/public/english/dialogue/ifpdial/
publ/cambodia.htm.
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24
NATIONAL LEGAL FRAMEWORKS
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IMPLEMENTING INTERNATIONAL LABOR STANDARDS
TABLE 3-1 Key Findings from ILO Monitoring Reports on Textile
Sector in Cambodia
25
November 2001 April 2002 June 2002
1. No evidence of child
labour
2. No evidence of forced
1. No evidence of child
labour, except one
minor incident
2. No evidence of
labour forced labour
3. No evidence of sexual 3. No evidence of
harassment discrimination, except
three incidents of
sexual harassment
4. Incorrect payment of
1. No evidence of child
labour
2. No evidence of forced
labour
3. No evidence of
,. . . . . . ..
olscrlmlnatlon, 1nclualng
sexual harassment
4. Incorrect payment of
wages occur with some
frequency frequently wages
5. Nonvoluntary overtime 5. Nonvoluntary overtime 5. Improvement with regard to
4. Improvement with regard to
wages occurs the incorrect payment of
work occurs in a work occurs in a ensuring that overtime work
substantial number of substantial number is undertaken voluntarily
factories of factories
6. Overtime hours beyond 6. Overtime hours beyond 6. Improvement with regard to
legal limit occurs in a legal limit occurs in a ensuring that overtime
substantial number of substantial number hours are within legal limits
factories of factories
7. Freedom of association 7. Freedom of association 7. Improvement with regard to
is a problem in some is a problem in some ensuring freedom of
factories factories association
8. Strikes not organized 8. Strikes not organized in line
in line with the law with the law
8. Strikes not organized
in line with the law
According to Mr. Sibbel, when his project team provides suggestions
for improvement, the team tries to find practical solutions, often looking at
whether the intent of the law has been satisfied, rather than applying for-
malistic requirements. Mr. Sibbel admitted that he was a bit surprised at
the level of improvements that have occurred thus far. He attributed this
success in part to the ILO project but also acknowledged that there are
other nongovernmental organizations working on these issues. He con-
cluded that the combined effort of all of these actors, along with the --car-
rot" (increased quotas) and the "stick" (publication of factory names), has
promoted positive change in Cambodia's garment industry.
.. . ^ - ~ .. ~ . . .. . ..
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NATIONAL LEGAL FRAMEWORKS
Mr. Sibbel attributed the success of the ILO project to several factors.
The first is the independence and credibility of the ILO, which he believes
has led to greater access for ILO monitors than provided to others under-
taking unannounced visits. Second, because the project covers the entire
garment sector, the ILO has created a "level playing field.'' Each factory is
held to the same standard, rather than having wide variations when differ-
ent codes of conduct are applied to individual factories. Limiting applica-
tion of the standard to a sector that is "relatively small" has also facilitated
consistency and contributed to a successful start.
The monitoring program has encountered some problems, however.
First, it had to confront disparate expectations of various stakeholders. The
unions thought that the ILO would serve as an intermediary in industrial
disputes, and the employers "thought that we would nail them to the cross."
Mr. Sibbel explained that the perceived lack of transparency in the process
of determining bonus allocations by the United States can continue to frus-
trate factory managers and call into question their incentives to participate
in the monitoring program. The Cambodian government has taken the
view that ILO monitors can replace the ineffective national labor inspec-
tors and has ceased inspections in participating factories. Inspectorate in-
stitutions have been weak for a variety reasons, one of them being the ab-
sence of political will. The fact that factories can be managed and owned
by government officials significantly complicates enforcement. For ex-
ample, one factory is owned entirely by the military, and "No labor inspec-
tor dares go inside that factory."
Mr. Sibbel referred to monitoring as a means to an end. "You use that
information to identify problems and then build capacity so that the people
directly involved management, workers, government can fix those prob-
lems by themselves." He concluded by noting that the ILO is not necessar-
ily a better monitor than any other institution performing these functions.
As noted above, the relative success of this ILO project seems to derive
from the existence and leverage of the trade agreement and the small size of
the sector being monitored. Therefore, while some aspects of this program
may be replicable in other countries, "each country requires its own model."
DISCUSSION
The discussion period was led by Mo Raj an. He asked the presenters
to elaborate on the issues of political will and the motivations of employers
to participate in the quota program, particularly in light of the upcoming
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IMPLEMENTING INTERNATIONAL LABOR STANDARDS
27
abolishment (in 2005) of all existing textile quotas under the Multi-Fiber
Agreement (MFA) of the World Trade Organization (WTO). Mr. Sibbel
responded that the motivation for factory managers stems from the desire
to create a positive image in the hope of securing a share of the market
before 2005 "when people expect big sucking sounds from China." Em-
ployers are starting to put pressure on the Cambodian government to en-
force the laws because they realize that several bad actors could reflect badly
on the sector as a whole when future sourcing decisions are made. Mr.
Sibbel added that the majority of employers "are not necessarily of ill will
but they simply don't know what the law is, and without knowing the law,
they don't necessarily know how they can make sure that their procedures
and practices are in line with what the law wants." Once they understand
the law, he said, often the assistance required to ensure compliance is mini-
mal, and there is no resistance on the part of the managers. Employers are
also hoping, Mr. Sibbel said, that improved conditions would lead to fewer
strikes, which are planned during the "high season" to impose the greatest
cost on the businesses.
Mr. Palafox, referring to greater resistance to compliance in the Philip-
pines, said, "It is a common belief among Philippine employers, at least in
small and medium enterprises, that compliance costs money. And, there-
fore, there's no motivation toward voluntary monitoring, inspection, or
compliance." In the Philippines, greater productivity has not accompanied
increases in nominal or real wages, so employers have not been encouraged
to improve their compliance in that regard. Nor have they embraced vol-
untary monitoring. Mr. Palafox reported that he knows of only six interna-
tional companies with codes of conduct and third-party monitoring, while
no local enterprises have engaged in similar programs.
Mr. Rajan also asked a question concerning the availability and quality
of information relating to compliance with labor standards. Mr. Palafox
responded that the Department of Labor in the Philippines gathers a great
deal of information but focuses solely on the formal sector, which com-
prises perhaps only 10 percent of the workforce in the Philippines.
Responding to a question from Theodore Moran, a professor at
Georgetown University and chair of the CMILS, Mr. Palafox discussed the
relationship between unions and labor-management councils (LMCs) in
the Philippines. He noted that almost all American companies, particu-
larly in the electronics sector, are using "positive HRM Human resources
management], which means they mimic unions, they offer competitive
wages, they offer participatory mechanisms for decision-making, good
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NATIONAL LEGAL FRAMEWORKS
working conditions, benefits, so I think consciously there have been efforts
to prevent unions." Regulation of LMCs is included in national labor laws,
but there have been conflicting government policies in promoting them.
The Philippines Department of Labor encourages LMCs only in organized
or unionized sectors, where the law stipulates that the unions will auto-
matically be represented on the LMC. However, the Philippines Depart-
ment of Trade and Industry promotes LMC formation in nonunionized
sectors. Mr. Palafox added that there is "spotty information" on the effect
of LMCs. Both Mr. Palafox and Mr. Sibbel pointed out that the evidence
presented on this issue, perhaps not surprisingly, has been contradictory.
According to Mr. Palafox, organized labor, which has "always looked at
LMCs as conflicting, contradictory forms of mechanisms," provided evi-
dence this year that LMCs have not improved conditions. On the other
hand, Mr. Sibbel, who attended an annual conference of LMCs in the
Philippines, said that the evidence presented at that meeting showed that
LMCs "were functioning in some way or another, including improving
. .. ..
won ung cons citrons.
Professor Srinivasan asked about the costs associated with the monitor-
ing program in Cambodia. Mr. Sibbel responded that the program has a
budget of $1.4 million for three years of monitoring. The funding comes
from three different sources $1 million from the U.S. government and
$200,000 each from the Cambodian government and the Garment Manu-
facturers Association of Cambodia. The number of workers employed in
the factories is approximately 190,000, so the cost per worker of the pro-
gram is less than $2.50 per year.
Participants addressed the question of whether there have been efforts
in Cambodia to share the information and expertise of the ILO project
with inspectors and other monitors. Mr. Sibbel said that when the ILO
monitors are investigating child labor cases, they have occasionally brought
government inspectors with them to the villages. However, he reminded
participants of his earlier point: The government's initial perception was
that ILO monitors may replace inspectors. And he added that they have
tried to distinguish the information-gathering role of monitors from the
enforcement function of inspectors. On the question of sharing informa-
tion with other monitors, Mr. Sibbel said that there is a "distinct monitor-
· r · '' . 1
ng tatlgue as numerous monitors repeat tne same questions covering an
array of codes. However, the ILO signs a memorandum of agreement with
factories, agreeing not to share any information except that contained in
the public synthesis reports.
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IMPLEMENTING INTERNATIONAL LABOR STANDARDS
29
The discussion then focused on the distinction between compulsory
overtime and forced labor; the summary of findings from the reports (Table
3-1) showed that compulsory overtime was a problem in a substantial num-
ber of factories, but there was no evidence of forced labor. According to
Mr. Sibbel, the basic distinction was that employees were free to refuse the
overtime, even though the result might be that they lost the job. Forced
labor cases involved a "menace of a penalty" beyond unemployment, such
as penal sanctions or other losses of rights and privileges. "The economic
reality is that a lot of workers do not have that freedom because they need
that job, but from a legal ILO point of view, there is a difference between
forced labor and forced overtime," Mr. Sibbel said.
Representative terms from entire chapter:
international labor
