The European Commission issued a consultation paper in 2002 on
Corporate Social Responsibility, or CSR, a concept whereby
companies integrate social and environmental concerns in their
business operations.
Among its proposals, the Commission was looking at ways to
ensure that redundancies would be viewed as a last resort, that all
other solutions should be exhausted first. "Downsizing," explained
the Commission, "must include the involvement and participation of
those workers affected, to safeguard their rights and enable them
to undergo retraining where necessary."
It went further. If an operation is profitable, outsourcing
should not be an option, reasoned the Commission. "That there must
be immediate, real and serious economic grounds to justify job
losses which are only envisaged after consideration of other less
damaging options is widely acknowledged and observed in the Member
States of the European Union," wrote the Commission in a 2002 paper
on corporate restructuring. "A clear explanation of the serious
nature of the economic grounds underlying the need for job losses
is essential."
These proposals are almost two years old, but they have not been
forgotten. Irish Prime Minister Bertie Ahern said in December 2003
that his country's EU Presidency (which began in January) will make
CSR a priority policy across Europe.
At present, CSR is nothing more than a voluntary concept.
Antonia Mochan, the Commission's spokesperson for employment and
social affairs, explained that CSR "does include telling businesses
that if they pack up and move offshore it will affect more than
just their profits." But she adds: "CSR is not a legislative
framework. There is no right to fine companies for failing to
observe CSR principles."
Mochan said that a forum of stakeholders in CSR has been
"thrashing out the issues" over the last two years. It will report
to the Commission in the summer. She admits that it may decide that
legislation is necessary. "The problem is that trade unions want us
to be more prescriptive and employers want us to be less
prescriptive," she said. One issue in this conflict is how to
legislate to limit the migration of jobs in a way that does not
contradict either the duty of company directors to maximise returns
for their shareholders or the basic principles of a free
market.
Mochan points out that if legislation is introduced to
toughen the principles of CSR, it will be at least two years away
from implementation in Member States. Ultimately, she says, the
offshoring concern may end up being characterised as a national
issue. "What can you usefully legislate for?," she asks.
The answer from Labour's Stephen Hughes MEP is that you can
legislate to make offshoring less attractive. A member of the
European Parliament's Employment and Social Affairs Committee,
Hughes told OUT-LAW that he thinks the Commission is getting it
wrong.
He said its proposals on CSR do not go far enough. "This is
where there is tension between the Commission and Parliament," he
said. "We don't think it's all about returns to shareholders. We
call for social and environmental issues to be reported to
shareholders."
He believes this can be written into law: "The Commission says
this should be voluntary. We disagree because good companies will
continue to do the right thing; but other companies will continue
their bad practices."
Hughes continued, "We don't need a draconian Directive but we do
need more than a voluntary scheme. Unless we see progress, we want
to require mandatory CSR reporting – on jobs, sustainable
development etc."
He adds that "penalties must be proportionate." We asked whether
he meant penalties for failure to report or for failure to follow
CSR. "Failure to report is an indication in itself that something
may be wrong," he replied. "There should be a financial penalty
against companies that fail to respect CSR."
Amicus and UNIFI recently approached Hughes to express their
concerns about the increase in offshoring. "The unions were not
being protectionist," he said. "They were mature in their approach,
saying, 'look, we need to think about what's happening.' They
estimate that two million jobs will be lost in the EU."
Hughes agreed with the unions to have a hearing in the European
Parliament and said the Directorate-General for Enterprise and the
Directorate-General for Employment have been invited. "I expect one
unholy battle between DG Enterprise and DG Employment," he
warned.
The most positive indication that some companies will
voluntarily protect domestic workers when offshoring came in
January, with the announcement of a deal between Barclays and
UNIFI. The bank undertook, wherever possible, to redeploy domestic
staff hit by offshoring projects, supplemented if necessary by
internal and external career support. It also promised early
consultation and to create a voluntary redundancy register, coupled
with voluntary job-matching.
Nigel Fretwell, Barclays' Employee Relations Director said: "If
globalisation is an inevitability we cannot and should not ignore
the responsibilities that are attached."
This may be good news for Barclays' workers, but Stephen Hughes'
point is that, for as long as these are voluntary responsibilities,
many companies can and will ignore them.
