Three of the 11 global trade union federations merged in June to create a ‘super union’ for the industrial and manufacturing sector. IndustriALL represents 50 million workers in over 140 countries.

Unions have adjusted their tactics in recent years as the number of multinationals has grown, trade union membership has declined, and the use of casual and short-term labour contracts has increased. They now organise across national borders, so any company with different working conditions between countries should expect pressure on its stakeholders - investors, customers, consumers, suppliers, potential employees, public bodies and regulatory authorities - if it does not meet prescribed standards.

Outsourcing arrangements are a particular focus, if unions consider suppliers are paying low wages or provide poor working conditions. And pressure can be applied quickly. Using social media such as Twitter, global unions can raise awareness of a labour relations issue around the world, giving the impression of a large and well-resourced campaign that may in reality only be small scale.

Multinationals face the risk of severe reputational damage in markets far removed from the source of a problem, if local issues are elevated to a global level, and an increasing number of companies have been caught out as a result.

So, what might an employer face from a trade union flexing its muscles globally? We’ve seen unions gain campaign support from global union federations and equivalent regional bodies such as the European industry federations. They have even made formal complaints against companies, for example, under guidelines laid down by the Organisation for Economic Co-operation and Development  that can result in companies being formally pressed to change labour practices.

Unions have also encouraged workers in other countries to support them through industrial action where allowed. They can draw on the resources of better-funded unions and federations in other parts of the world to support local campaigning and set up global alliances to target specific multinationals.

And they have been successful at using ‘soft’ law tools. International framework agreements have proved popular, with almost 100 multinational companies signing agreements around the world since 2000 in both mature and emerging markets. Unions may seek employers’ agreement not to obstruct a campaign to secure recognition or bargaining rights. They may also ask for an employer’s commitment to respect labour standards such as the core conventions of the International Labour Organisation.

Many multinationals see international framework agreements (IFA) as a core element of their corporate social responsibility initiatives. But they should bear in mind that signing an IFA may dramatically increase costs in emerging markets and bargaining rights within an organisation. Just because an agreement is not legally binding, does not mean the consequences are minor.

Employers should not be complacent, whether their organisation is heavily unionised or not. They should:

• conduct a risk audit for trade union activity and find out how to mitigate those risks. They then need to inform board members about any business implications and have a confident strategy to deal with them
• find out which global federations the trade unions inside the company belong to, and what they have said about the company in the past. The should then appoint someone to keep tabs on global trade union activity and monitor the media for company mentions
• create a ‘no surprises’ culture: set up an early warning system of labour issues across all countries, and make sure local managers know what to look out for. They need to keep up to date with union developments in a supply chain
• have a communications plan in place in case the company is targeted by a campaign and decide what the company will say to employees, shareholders, customers and the media if it is.

 

Nick Squire is an employment partner at Freshfields Bruckhaus Deringer LLP