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NORAD-supported companies on Sri Lanka: Trade unions banned

Trade unions are facing difficult conditions in Sri Lanka's export processing zones, their rights being undermined by the national Board of Investment (BOI). Out of four Norwegian companies NorWatch has visited, all of which are subject to the BOI's regulations, three practise a ban on trade unions. Two of the companies have received financial support from NORAD, whose guidelines have now been made stricter. The Norwegian Confederation of Trade Unions says that supporting companies NORAD should not support companies that refuse their workers to organise.
Artikkelen er mer enn to år gammel. Ting kan ha endret seg.
Trade unions are facing difficult conditions in Sri Lanka's export processing zones, their rights being undermined by the national Board of Investment (BOI). Out of four Norwegian companies NorWatch has visited, all of which are subject to the BOI's regulations, three practise a ban on trade unions. Two of the companies have received financial support from NORAD, whose guidelines have now been made stricter. The Norwegian Confederation of Trade Unions says that supporting companies NORAD should not support companies that refuse their workers to organise.


By Tarjei Leer-Salvesen
Norwatch

Alloy Fabricators International Ltd on Sri Lanka, a subsidiary of the Norwegian steel products manufacturer Einar Øgrey AS, has received support from NORAD several times from the mid-eighties until 1996. The support has been given as training allowance and loans. New Life Literature Ltd, a Norwegian missionary company running a printing works for the Bible and other Christian literature in the Katunayake export processing zone (EPZ), also received a loan from NORAD in its initial phase. Both of these companies have a ban on trade unionism for their workers. The same goes for the fishing equipment producer A.J. Fishing Industries, partly owned by the Norwegian Sandvik-family, which manufactures longlines for the Lofoten fisheries in Northern Norway. These companies (all of which are dealt with in separate articles in this newsletter) all refer to the regulations of the Board of Investment, claiming that it blocks the possibility of trade unionism. However, the fourth Norwegian company visited by NorWatch, also subject to the regulations of the Board of Investment, has a completely different view of the matter.

- The regulations provide no obstacles to or prohibition against trade unions. However, it is required that all companies have a 'joint consultative committee', in which the employees are represented by representatives elected for one year at a time, says Arne Svinningen, managing director of the horticulture company Green Farms Ltd.

Mr. Svinningen refers to the country's Constitution, which ensures the right to be organised to all workers. At Green Farms, about 95 per cent of the workers are organised.

Stricter routines
In the mid-90s, NORAD revised its loan agreements with Norwegian companies. It was established that the ILO conventions no. 87 on freedom of association and protection of the right to organise, no. 98 on the right to organise and collective bargaining and no. 111 on discrimination in respect of employment and occupation, should be adhered to by the companies regardless of what country they are operating in. In addition, they should also adhere to all other ILO conventions ratified by the country in question.

- The loan agreement with Alloy Fabricators International (AFI) has been made stricter, says Mr. Hallvard Lesteberg at the NORAD department of industrial co-operation. According to him, AFI has informed NORAD that the company's workers have organised.

- But does the company claim that regular trade unions are allowed, or does AFI simply refer to the 'joint consultative committee' required under the BOI guidelines for the management to have a dialogue with?

- As far as we know, there were no problems related to this. However, NORAD will contact Alloy Fabricators again and follow the case up with them.

Lesteberg is unable to comment on the ban on trade unions at New Life Literature and the fact that this company let all its hazardous waste simply flush down the drains. He points out that the case is very old, that the loan has been paid off and that the project file is unavailable due to NORAD being on the move to new offices. As NORAD has now made its loan agreements with private companies stricter, and demand that three ILO conventions be adhered to - what are your routines for following up these rules to ensure that they are implemented?

- We try to visit every company supported by NORAD, and produce reports on the workers' conditions. If we do not have the opportunity to go ourselves, we try to have someone sent from the embassies, says Hallvard Lesteberg.

- A human right
Contrary to the company Green Farms Ltd, the other Norwegian companies referred to by NorWatch in the present newsletter, are of the opinion that if the BOI puts the Working Regulations Act aside and opposes trade unionism, then the right thing to do is to follow the BOI. However, Sri Lanka has ratified the ILO convention no. 87 concerning freedom of association and protection of the right to organise. The ILO is a three-party co-operation between the authorities, the employers and the employees, working to incorporate and implement human rights in the relations between employers and employees. Convention 87 is one of ILO's seven core conventions.

One problem to the ILO, has been that companies in so-called export processing zones have in many countries been exempted from the country's other law and regulations on labour.

- The entire international labour movement, including the Norwegian Confederation of Trade Unions, has been sceptical of the establishment of these so-called EPZs. They exist to provide an attractive investment environment for multinational companies. This often implies a ban on trade unions, or at leas that unionism is worked against. There are financial arguments in favour of establishing such zones, but in many cases things have gone way out of hand, says Mr. Leif Lauvsund of the International department of the Norwegian Confederation of Trade Unions.

The labour movement tries to work against such zones whenever they imply an infringement of workers' rights.

- Norwegian authorities should also adopt a critical attitude to such free zones, on the same grounds as us, that is, because workers' rights are often downplayed in such areas.

Mr. Lauvsund is clearly disappointed when he hears about the conditions described at Norwegian companies on Sri Lanka.

- When development aid is granted, this should be linked to requirements that workers' rights are secured. Obviously, NORAD needs to look into these Sri Lankan cases. It is not very wise of NORAD to support companies that refuse their workers to organise.

- Our opinion is that guidelines need to be made in this area, using the seven core conventions of the ILO as a basis. There is no reason to support organisations or companies that infringe on workers' rights and violate human rights, Lauvsund concludes.

Difficult conditions
Working conditions in the EPZs on Sri Lanka are difficult, and trade unions have had little freedom to act in these areas. A study by the National Workers' Congress (NWC) trade union in 1997 disclosed a number of serious instances, especially in the textile industry, but also in other types of light industry in the zones. The NWC, which is affiliated with the World Confederation of Labour, has initiated training programmes, and offer recreational opportunities in so-called 'friendship houses' just outside the EPZs. The goal is to establish contact with the workers inside the zone, in spite of the ban on trade unions there. On its own initiative, the NWC has organised a group of five workers from each of the three zones. This group has monthly meetings to discuss developments in working conditions. They have also established trade unions in three factories inside the Katunayake EPZ itself.

- No-one has the right to block the establishment of trade unions, not even in the EPZs. There is no official ban on unions, says director of the NWC, Anthon Lodwick.

- Our trade union will get in touch with workers at the mentioned Norwegian companies, to find out if they want to organise through the NWC, Lodwick promises.

Also, the Community Aid Abroad (Oxfam Australia) has taken an interest in questions relating to working conditions in the Sri Lankan free zones. 86 % of the workers are young, unmarried women. The reasons for the Community Aid Abroad, which works through a local women's centre, to take such an interest is the lack of written employment contracts, low salaries, long hours, bad health being given as a common reason for being dismissed from one's job, and extensive sexual harassment against the workers.

Activists from the women's groups around the Katunayake free zone explain to NorWatch that because of the lack of trade unions, many women have organised in various welfare organisations. These are no substitute for the trade unions' role in wage negotiations and the like, but they have become important meeting places, where the women workers may exchange experience and get support when their working conditions get too hard. 

Board of Investment
The Board of Investment of Sri Lanka answers directly to the Sri Lankan President. Its goal is attraction of foreign investment in the country. One of the means for achieving this, is the establishment of free zones. There are three free zones on Sri Lanka: Katunayake, Biyagama and Koggala. At the end of 1997, there were more than 150 companies present in the zones. An additional 536 companies located outside of the free zones were also subject to the BOI regulations. 

Foreign investments tied to the BOI have to a large degree been given tax relief and been excempt from export and import taxes. The judicial rights of the companies have to some degree been secured by the Sri Lankan constitution. The 'liberal' investment regulations of the country also free the companies from environmental protection obligations, and workers' rights are also largely ignored

Norwatch Newsletter 9/99