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June 2003

June 2003. APPLYING LABOUR STANDARDS IN THE WORKPLACE. “ Labour Standards in Development Finance ” Conference Washington DC, 18 April 2006. Content. Labour practices versus DFI policies Client discomfort/ unease Private sector “buy-in” DFI legal leverage over client.

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June 2003

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  1. June 2003

  2. APPLYING LABOUR STANDARDS IN THE WORKPLACE “Labour Standards in Development Finance” Conference Washington DC, 18 April 2006

  3. Content • Labour practices versus DFI policies • Client discomfort/ unease • Private sector “buy-in” • DFI legal leverage over client

  4. I. Labour practices vs DFI policies • Sector: e.g. plantation sector in Africa • historical background (bonded labour) • current working conditions (H&S, wages, migrant labour) • translation of int´l standards into local practice (labour contracts, PPE) • Country: e.g. China • legal limitations to freedom of association • legal limitations to migrant workers rights • Vulnerable Groups: • migrant workers, seasonal workers • workers in export processing zones

  5. II. Client Discomfort/ Unease • International HR standards and the local context • translation of international standards into practice • cultural sensitivity/ respect for diversity versus “this-is-our-culture” excuse • Examples • women in garment sector in Bangladesh • Sikhs in the construction sector in Nigeria • private sector client in Afghanistan • culturally ingrained discrimination practices - “Gender Apartheid” • client to commit to proactive recruitment of women • client to commit to proactive local (out) sourcing of goods and services • focus on women led business

  6. III. Private Sector “Buy-In” • Greenfield in backwaters of Nigeria • Category A including it’s “Associated Facilities” • Main risks • Impact on natural resource base (erosion, water sources) • Community relations (influx management, health impacts) • Labour conditions at Contractors (migratory labour from India) • Sponsor strengths & weaknesses • State-of-the-art industrial equipment • 100% Nigerian owned • No clue about impacts outside plant walls • No clue about contractor management

  7. Private Sector “Buy-In” (cont´d) • Intensive E&S coaching trajectory by lead DFIs • CSR training of top management • Repeated visits before and after contracting/ disbursement • Upgrading EIA with adequate SIA • Creation of E&S unit • Development of ESMS • Local youth went for training visits in Niger Delta! • DFI focus on Social-License-to-Operate • Sponsor volunteers recognition and appreciation • buy-in to social management system, including management of labour risk

  8. IV. DFI Legal Leverage over Client • FMO SLD Project • English Law/ New York Law • E&S building blocks • E&S Specialist´s Understanding of Legal Documentation • Default/ material adverse effect • Non-compliance on non-core elements • Conditions Precedent to Disbursement (CPs)

  9. DFI Legal Leverage over Client (cont´d) • Nature of Financial Product • Loan, equity • Convertible loan (loan  shareholders agreement) • Guarantee (recourse agreement) • Risk participation (willingness of lender) • Project finance (finance doc´s - CTA/ project doc´s - EPC) • Position of DFI in the Deal • % of total product • B-loan behind other DFI • Syndicate (voting mechanism on waiving CPs in Intercreditor Agt) • Lead in environmental and social due diligence

  10. DFI Legal Leverage over Client (cont´d) • Legal Instruments critical, but not the “end-all and be-all” • Alignment of Sponsor vision with that of DFI • Green, yellow and red apples

  11. www.fmo.nl

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