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Unilever and the trade union challenge

Lipton Tea and Ice Tea, Dove personal care products, Axe, Knorr soups and condiments: even without necessarily being aware of it, nearly everyone knows Unilevers products from personal experience. The company is second to none in worldwide coverage and volume of consumer goods production. Most products fabricated by this food conglomerate are disposable, designed for short term convenience rather than durability. But as well as disposable products and increasing profits, Unilevers other specialty is disposable jobs. Within the last decade, Unilever has reduced its workforce significantly, a process that also involves increased job insecurity and incidences of denial of core labour rights. This is all the more remarkable as Unilever prides itself explicitly on its high standards of corporate social responsibility. These developments form the background against which FNV Bondgenoten aims to continue its efforts to focus on Unilever by scrutinising the companys casualisation and labour relation policies and practices and the negative social impacts thereof. The following introduction and case studies aim to provide a coherent insight into the mechanisms behind, and impacts on, labour conditions and relations as well as the different forms of flexible work practices (e.g. outsourcing, subcontracting, casualisation, etc.) at Unilever and its suppliers, and its effect on trade union freedom. This is a FNV Bondgenoten/FNV Company Monitor report. Research and writing for this report was done by SOMO (Stichting Onderzoek Multinationale Ondernemingen) in 2009 - 2010, in cooperation with LIW (Landelijke India Werkgroep) and local research organizations and journalists in the case study countries.

This report is published in light of a campaign on trade union freedom. See also: http://tradeunionfreedom.fnvcompanymonitor.nl

FNV Company Monitor August 2010

Contents

The quest for focus and identity involving fewer and fewer employees ......................... 3 Better business results with fewer employees ................................................................ 4 Focus on emerging markets ............................................................................................. 5 Branding, not production ................................................................................................. 6 Casualisation and Labour relations .................................................................................. 7 CSR policies and practices ................................................................................................ 8 The effect of off shoring and outsourcing on labour relations ........................................ 14 Case study: Lipton Tea Packing Factory in Belgium ......................................................... 16 Case study: Tea Plantation in Kenya ................................................................................ 18 Case study: Tea plantations in India ................................................................................. 21 Case study: Margarine factory in The Netherlands.......................................................... 29 Case Study: Unilever in Brazil ........................................................................................... 37 Case study: Unilever in Indonesia .................................................................................... 44 Case study: Unilever in South Africa ................................................................................ 52

The quest for focus and identity involving fewer and fewer employees
Maintaining market share and profitability while reducing cost has been the key strategy of Unilever in the last decade. However, this narrow focus on economic performance, employing sonorous terms such as increasing capital efficiency, brand focus and increasing shareholder return has come at the cost of the quantity and quality of labour. Indeed worldwide the number of jobs at this company declined 45 percent from 295,000 in 2000 to 164,000 in 2009. This wholesale job destruction has created increasing job insecurity, low wages and denial of core workers rights, such as the right to join a union or bargain collectively. Over the last decades Unilever has seen many changes. It went from a diversified company involved in a range of activities (such as frozen foods, fish production, fish restaurants, transport, animal feed, chemicals and printing) with more than half of its profits coming from West African plantations, producing bulk vegetable oils for margarine, and washing powders mostly in/for western markets, to a company that is managing food and cleansing product brands that it sells all over the world. In what can be described as a quest for focus and identity, the company has undergone a number of strategic changes since the 1980s. Broadly speaking these are1:

From 1980-2000 A focus on the core-product groups: food and personal and home care. This meant the disposal of all (mostly European) activities that were no longer considered core anymore. Looking for growth in developing country markets and in North America. Thus Unilever diminished its high dependency on Europe (60% of sales and profits) and the saturated European market. From 2000 to 2004 Path to growth Focus on the strongest brands by reducing the number of brands from 1600 to 400. Restructuring production by reducing the number of production sites and concentrating production in approximately 150 key sites. Sourcing from fewer global suppliers instead of more local suppliers and increased outsourcing. From 2005 to early 2010 Stay/become global leader among major food and home and personal care companies (TSR reference group). Increased focus on return on invested capital and free cash flow. Restructuring of overhead and indirect functions and sourcing (warehousing). 2010 to? Vision: Double turnover (size) while improving the environmental footprint. Bring a broad portfolio (of brands) that appeals to consumers with different needs and budgets (playing the price piano). Increase brand appeal through among others innovation and marketing. Increase speed and exibility in the supply chain. Increase leverage through global network capabilities and scale. Increase return on advertising and promotional expenditure.

1 See also: P. Elshof, SOMO, Unilever Company Profile 2005, July 2005 < http://somo.nl/publications-nl/Publication_617nl/at_download/fullfile> (10 May 2010)

Better business results with fewer employees


Unilever has the long-term ambition to be in the top third of a reference group of 21 consumer goods companies for total shareholder return (TSR) on a 3-year basis.2 For the first time since 2005 Unilever reached this target when it placed 5th out of 21 in 2009. This total shareholder return (TSR) target is inherently and explicitly aimed at satisfying shareholders. Of course the TSR depends on the price of Unilever shares (and dividends) which in turn depends on stock market perception of the company performance. This perception is in turn influenced by a range of factors but among others things by business results.

Table 1: Development of key data (employment and financial) of Unilever over a five year period
2005 Western Europe 41,000 The Americas 47,000 Asia Africa CEE 118,000 Total 206,000 Turnover (EUR million) 38,401 Operating profit (EUR million) 5,074 Goods and services purchased (EUR million)* Basic earnings per share (EUR) TSR (app. in EUR, 2004=100)** 125 Profit/employee (in EUR) 24,631 30,212 30,144 41,190 30,798 TSR/employee 0.0006 0.0008 0.0010 0.0007 0.0010 Source: Unilever, Annual Report and Accounts 2009, *Calculations SOMO, **Estimates 135 170 130 165 25% 67% 5,408 5,245 29,545 1.35 7,167 32,091 1.79 5,020 -3% 1.29 1.65 28,759 1.21 -6% 32% 39,642 40,187 40,523 39,823 -1% 179,000 174,000 174,000 163,000 4% 98,000 97,000 102,000 95,000 -21% 45,000 43,000 42,000 40,000 -19% 36,000 34,000 30,000 28,000 -15% 2006 2007 2008 2009 Trend 20052009 -32%

One of the most important ways in which Unilever has been trying to improve these results is by reducing employment (cost) while sustaining profits and turnover. This can be seen clearly in the table above. Whereas the total headcount decreased by 21 percent over 5 years especially in Western Europe where many people (13,000) lost their job and staff cost dropped correspondingly by 25% over the decade3 turnover remained rather stable over the years and even increased by 4% if calculated over 5 years. Profits were more volatile over time with the sale of its frozen foods division in 2008 but when disregarding this year were also relatively stable. The result is that profit and TSR per employee ratios also increased more or less steadily. Compared to reference year 2005 they were even up by 25% and 67% respectively. These ratios clearly indicate that the company has been successful in getting better business results, especially expressed in terms of TSR, with fewer employees.

2 Unilever global website, Unilever Sustainable Development Report 2009 <http://www.unilever.com/images/sd_UnileverSDReport170310_tcm13-212972.pdf> (10 May 2010) 3 Unilever global website, Unilever Charts 2009, <http://www.unilever.com/images/ir-ara09-charts_tcm13-214356.pdf> (10 May 2010)

Over a longer period of time these trends are even more pronounced. For instance in 2000 Unilever employed 295,000 people. 4 This means that over a period of 10 years the number of people directly employed by Unilever was reduced by 45%. In 2000, operating profit was 3,130m and turnover 47,000m EUR respectively.5 This represented an increase of 60% in profits and 15% decrease in turnover. During the same period the profit per employee ratio even almost tripled (190% increase)! Compared to some of its competitors Unilever is the restructuring champion.6 For instance at Nestle, the worlds leading food company, employment and turnover grew by 21% and 32% respectively from 2000 to 2009.7 And at Kraft, the worlds second largest food company, employment increased by 22% with sales increasing by 88% in the period from 2000 to 2009.8 Up to 2007, the last year that figures were available before Kraft took over Cadbury (also a large company), employment was down by 12% and sales were up by 40%. It should be mentioned that while 1,320,000 jobs were lost at Unilever over the last decade the work did not disappear. According to Unilever, in 2009 this work was being done by 86,000 people that were outsourced and/or under temporary contract instead.9

Focus on emerging markets


Consumer spending is growing faster in developing and emerging markets than in developed markets. Over the next ten years, around one billion new consumers will emerge with disposable incomes commensurate with developed world lifestyles and consumption patterns. Unilever Chief Financial Officer Jim Lawrence, 2008 The above quote tells us that Unilever is seeing opportunities in the Global South. Indeed the company has a clear strategy to Increase the penetration and consumption of our categories by consumers at all income levels in developing and emerging markets. The strategy is not new in the quest for business opportunities. Unilever already strongly focused on developing countries in the 1990s. However, there is a clear trend that group turnover and employee base is increasingly tilting to these regions. This is clearly illustrated by company data. For instance, 49% of all group sales were from emerging markets10 in 2009 whereas this was only about 20% in 1981.11 Also in terms of employment the focus from Unilever is away from its European origins: 57%12 of all employees worked at the company in Europe in 1981 and this changed to 27% and 17% respectively in 2000 and

4 Unilever global website, Unilever Annual Report and Accounts 2004, <http://www.unilever.com/images/2004%20Five%20year%20record_tcm13-11945.pdf> (10 May 2010) 5 P. Elshof 6 Food World R&C, Powerpoint presentation, 25 jaar Unilever: De MVO discussie in zn context, 2008 7 Calculations SOMO based on company annual reports and other sources 8 Ibid. 9 Unilever global website, A Summary of Stakeholder Concerns & Our Response, 2009 < http://www.unilever.com/images/sdASummaryofStakeholderConcernsandOurResponse310709tcm13177580.pdf> (10 May 2010) 10 Unilever global website, Unilever Sustainable Development Report 2009, <http://www.unilever.com/images/sd_UnileverSDReport170310_tcm13-212972.pdf> (10 May 2010) 11 Food World R&C 12 Ibid.

2009. 13 Similarly, the EU share of total turnover went from 67% in 1981 to 40% in 2000 and 30% in 2009. The emerging markets share in Unilevers revenue is higher than many of its reference group peers.14 At Kraft this share was only 25% in 2007 and at Nestle it was 20%.15 Whereas the latter figure is likely to actually be lower because it includes sales in developed countries such as Australia and Japan.

Branding, not production


Were not a manufacturing company any more. Were a brand marketing group that happens to make some of its products. Niall FitzGerald (former Unilever Chairman and chief executive) Increased brand focus has been an important strategy for Unilever over the last decade. More and more Unilever is becoming a branding and product development company in line with the likes of sportswear and garment sector companies such as Nike, Adidas, H&M and C&A and electronics sector companies such as Apple and HP that have completely outsourced manufacturing. This is nicely illustrated by the above quote. A look at some company figures clearly illustrates this. As noted above the company has greatly reduced its brand portfolio. This has helped the company to invest more in the remaining brands some of which have become billion euro brands such as Knorr, Lipton and Lux.16 This becomes clear when looking at development of company budgets for research and development and marketing. While the advertising and promotion budget decreased 19% from 6.5 EUR billion in 2000 to 5.3 EUR billion in 2009, and the R&D budget by 25%, the number of brands decreased by about 75% during the same period.17 Next to cutting staff costs Unilever also cut its budget for property, plant and equipment by 18% during the same period. Moreover, when disregarding Unilevers one-off acquisition of Best Foods in 2000, the companys average yearly income (2001-2009) from disposals (1.3 EUR billion) is more than 6 times greater than the average acquisition costs (0.2 EUR billion). It is also interesting to note that in 2009 the company still had 31,000 people employed on its plantations. However in 2000 there were still 54,000 people employed, which represents a decrease of 43%. The trend that Unilever is rapidly evolving from a vertically integrated company involved in all that is necessary (from primary production to marketing, to selling the product in the market) to a branding and R&D company is not necessarily a bad thing of course. However, it is if it means that the employment that is increasingly created elsewhere (outsourced) or temporary is precarious. This is exactly what the trade union movement and NGOs are claiming. In the discussion on casualisation between Unilever and the CSOs the company defends itself by claiming that outsourcing and

13 Unilever global website, Unilever Annual Report and Accounts 2004, <http://www.unilever.com/images/2004%20Five%20year%20record_tcm13-11945.pdf> (10 May 2010) & Unilever global website, Unilever Annual Report and Accounts 2009, <http://www.unilever.nl/overons/publicaties/unileverwereldwijd/Unileverreportaccount2009/default.aspx> (10 May 2010) 14 Food World R&C 15 Calculations SOMO based on company annual reports and other sources. 16 Unilever global website, Introduction to Unilever, <http://www.unilever.com/aboutus/introductiontounilever/> (10 May 2010) 17 Unilever global website, Unilever Charts 2009, <http://www.unilever.com/images/ir-ara09-charts_tcm13-214356.pdf> (10 May 2010)

subcontracting non-core tasks are common in the industry.18 In a reaction to questions by NGOs on the definition of non-core tasks in the light of critical issues surrounding outsourcing of Lipton tea packing in Pakistan, CEO Polman commented during the 2009 AGM: a distinction must be made between core business and core tasks. Developing a brand like Lipton is core business for Unilever. Certain activities can however be outsourced.19 Time will tell which activities a company such as Unilever can manage to outsource. Or in other words, which activities will become non-core tasks in the future. It should be noted here, however, that the CEO is actually saying that tea packing is not a core business for a tea company, or for teapackers as companies like Unilever are also called. This casts an ominous light on those people still directly employed by Unilever to produce Unilever products in its factories.

Casualisation and Labour relations


Many multinational companies find agreements between unions and subsidiary management a local issue. Also, Unilever has a long tradition of keeping local labour issues from the international negotiation table.20 However, according to the international labour movement the basic rights of workers transcend national borders. This is because more and more companies operate on an international basis and increasingly outsource work.21 Early in 2010, after a number of campaigns and after formal complaints were filed with the OECD by the international trade union movement, Unilever finally gave in to allow high-level international dialogue on such issues with international trade union representation. While a similar dialogue is already taking place with similar companies, such Danone and Coca-cola, it is certainly not mainstream and as such it is an interesting and laudable development at Unilever. Moreover, there are indications that such a high-level dialogue is productive. Through OECD complaints and campaigning international trade union confederation IUF got a place at this negotiating table and booked positive results for Lipton tea factory workers in Pakistan in 2009. Impact of casualisation on labour relations In most of the countries that were the focus of the research done for this report, casualisation is clearly increasing. Often workers have such contracts many years in a row and in a number of cases the company stopped hiring permanent workers all together. On average 20% of the workforce in the Rotterdam margarine factory of Unilever is working without permanent contracts. In other Dutch Unilever factories the number of temporary workers is allegedly higher than in Rotterdam. For years no permanent contract has been given to any new factory worker in Rotterdam. This results among others in temporary workers having no perspective which is

18 FNV Mondiaal and FNV Bondgenoten, Erratum Annual Report and Accounts: Adding Insecurity to Life <http://www.indianet.nl/pdf/AddingInsecurityToLife.pdf> (10 May 2010) 19 Unilever global website, Minutes of AGM 2009, < http://www.unilever.com/images/ir_NVminutesofAGM2009_tcm13214230.pdf> (10 May 2010) 20 FNV Mondiaal and FNV Bondgenoten, Erratum Annual Report and Accounts: Adding Insecurity to Life <http://www.indianet.nl/pdf/AddingInsecurityToLife.pdf> (10 May 2010) 21 Een mensvriendelijke multinational, Unilever gaat met vakbonden de arbeidsomstandigheden van medewerkers verbeteren, De Volkrant, 26 March 2010, <http://www.uvt.nl/faculteiten/frw/onderzoek/reflect/nieuws/eenmensvriendelijkemultinational.pd>

not motivating and promotes a sense of insecurity. It also means permanent understaffing. Outsourced or contract workers might leave before their contract is finished because they can get better work elsewhere or because they are not motivated anymore. Permanent workers are under pressure because of high production targets despite having relatively inexperienced and temporary colleagues. Moreover, they also have to coach/instruct their new temporary colleagues time and time again. All of these and other factors lead to increased workload with stress and overtime. In Indonesia, new employment is created but labour conditions of core workers are under pressure and their relative proportion seems to be declining consistently. In Brazils biggest Unilever factory an estimated 40% of the personnel do not have a fixed contract with the company. Two of Unilevers South African factories even have higher casualisation ratios: 60% and 75% of the workers at these factories are temporary workers. In most countries studied trade unions are weakened by increased casualisation. Among others because of the decreasing population of permanent workers which constitutes their member base. The exception to this is the Unilever tea plantation in Kenya where temporary workers automatically become members of its only union. In general there is evidence that flexible work practices have a disturbing effect on relations between employer and employees and leads to problems for workers. In Brazil for example flexibilisation seems associated with an increase in health and safety issues and the Indonesian case shows that flexible and subcontracted workers have difficulties meeting general living costs. Indeed non-permanent or outsourced workers are discriminated against in terms of not having the same rights and benefits as their permanent counterparts. In comparison to these they tend to have lower wages (SA, Indonesia) and no or less benefits such a health insurance (Indonesia, India), medical aid, pension and bonuses (SA, India). On Indian and Kenyan tea plantations casuals are also worse off in terms of benefits such as housing and education or medical aid for their children. On a comparative note negative impacts of casualisation and bad labour relations can also be associated with many of Unilevers peers such as Nestle, Kraft and Coca-Cola.

CSR policies and practices


Like many of its large multinational competitors in the food and cleansing (Home and Personal Care) sectors Unilever practices CSR. This is manifested in the company having adopted a range of CSR policies both in-company as well as supply chain level policies, its reporting on sustainability issues and targets (e.g. annual Sustainable Development Overviews) and stakeholder dialogue (e.g. international trade union dialogue and roundtables). In this section we will expand on these policies, the strategies behind them and offer a glimpse of their impacts. CSR good for profit What we are learning is that operating in this way is bringing us hard business benefits. Our quest to run the company more sustainably is fuelling our innovation pipeline, delivering cost savings and helping us to win with our retail and food service customers who have sustainability programmes of their own and who want to work jointly with us. Above all, it is winning the hearts (and wallets) of the growing numbers of consumers who want to be reassured that companies from whom they are buying their products are sourcing, manufacturing and marketing them in a responsible and ethical fashion. (Paul Polman, CEO, Unilever, 2009) As the above quote from Unilever CEO Polman nicely illustrates, the business case is, not surprisingly, a big driver of CSR at Unilever. Of course the company also mentions many other good reasons for CSR. However, it is, undoubtedly among other things, this business case that strongly propels the company to increasingly invest in CSR which manifested in the growing number of CSR initiatives and

efforts the company has initiated or has been involved in over the last 15 years. The chart below, which is based on the Unilever Sustainability timeline, clearly illustrates this accelerating trend. 22 Figure 1: Number of key events on Unilevers Sustainability timeline
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0 1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

Source: SOMO based on Unilever <http://www.unilever.com/sustainability/strategy/timeline>

This first key CSR event in the chart refers to the launch of Unilevers Sustainable Agriculture Initiative in 1995.23 Examples of other self proclaimed highlights over the years include Unilevers first Social report in 2000, the Business Partner Code (BPC) in 2003, the Round Table on Sustainable Palm Oil established in 2002, the Round Table on Responsible Soy Association in 2006, and having been named food industry sector leader in the Dow Jones Sustainability World Indexes for the 11th year running in 2009 the only company ever to have achieved this. In November 2009 the company launched a new vision to double the size of its business while reducing the overall environmental impact across its entire value chain24 in this vision it can be read: We are starting to consider how we make Unilever's corporate commitments and activities more visible and relevant to our consumers. 25 This last quote neatly illustrates that claiming sustainability is one of the new key elements in Unilevers CSR business case. The boxed text shows that the company has not idled for long.

22 Unilever global website, Timeline , <http://www.unilever.com/sustainability/strategy/timeline>(10 May 2010) 23 According to Unilever, the first CSR milestone for the company can be found in the 1890s in the form of its first Sunlight soap mission: to make cleanliness commonplace; to lessen the work for women; to foster health and contribute to personal attractiveness that life may be more enjoyable and rewarding for the people who use our products. However, as in the chart, the company also seems to endorse the view that CSR more seriously started in 1995 for on its worldwide website it can be read that: In the 1990s we formally integrated sustainability factors into our strategy. 24 Unilever global website, Vision, http://www.unilever.com/sustainability/strategy/vision/index.aspx 25 Ibid. (10 May 2010)

Claiming sustainability Visitors accessing Unilevers international website in April 2010 for example are confronted with the message Fully Fairtrade (about Ben & Jerrys commitment to go fully Fairtrade across its entire global flavour portfolio) in tabloid headline font size. A virtual world tour of Unilevers national websites entry pages in the same month shows that CSR figures prominently on many of these. Certified organic Unox pumpkin soup is for example the eye catcher on Unilevers Dutch website and Green and Powerful dishwasher Sun is filling the screen of its Belgium website. A thirst for sustainability or similar messages concerning Rainforest Alliance (RA) certified Lipton tea is the headline of its UK, Irish, Danish, Swedish and USA websites while customers in New Zealand and Australia are welcomed with messages concerning Unilever sourcing sustainable palm oil. The list goes on and on. Interestingly CSR is not only prominent on Unilever websites in the Global North but also in the Global South. To illustrate, Lipton tea is promoted to quench the thirst for sustainability of its Middle Eastern consumers, whereas Indian and Pakistan customers are informed of Unilevers involvement in water conservation and world food programme respectively. Different CSR policy domains

CSR at the general level As can be seen in the graph below, two broad levels of CSR at Unilever can be discerned: a general level and a specific level. The former deals mostly with CSR for the company as a whole and the latter is specific to certain commodities or products. At the general level the most important policy standard systems are the Code of Business Principles (CBP)26 and the Business Partner Code (BPC).27 The business principles set ethical (social, integrity, corporate governance) standards for Unilever employees. The business partner code on the other hand sets CSR standards for first tier suppliers. Both have in common that they apply across the world and that they are standard systems in the sense that there are mechanisms for standard implementation and monitoring of compliance with standards.

26 Unilever global website, Our Principles, <http://www.unilever.com/aboutus/purposeandprinciples/ourprinciples/> (10 May 2010) 27 Unilever global website, Business partner code, <http http://www.unilever.com/sustainability/customers-suppliers/suppliers/partnercode/index.aspx> (10 May 2010)

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Figure 2: Examples of important Unilever CSR policies

Source: SOMO

For the CPB for instance, there is board level responsibility for its implementation and compliance is monitored internally and through (anonymous) complaints mechanisms. Similarly responsibility for implementing the BPC resides with the procurement departments28 and monitoring is done through the Supplier Ethical Data Exchange (SEDEX) by supplier self-assessments and third party audits. 29 For suppliers of agricultural products the Unilever Sustainable Agriculture Code (SAC) applies, which is implemented in very similar way to the BPC. 30 Interestingly stricter monitoring (e.g. third party audits) of the BPC has been in effect since 2008 only. Also the development and implementation of SAC is very recent. Before 2009 it was not a code but a guideline and was called Unilever's Good Agricultural Practice Guidelines; the cradle of Unilever CSR as we have seen above. This seems to be the manifestation of a strategy to increase control over the supply chain (also see next section). CSR at the specific level The specific company CSR standards all have in common that they do not apply generically but focus on specific sectors or products only. For instance, Unilever is committed to the Roundtable for Sustainable Palm Oil which is a multi-stakeholder body that has set standards for sustainable palm oil production and very recently supports certified production of this important commodity for Unilever. Another example is that Unilever is sourcing tea from Rainforest Alliance certified farms for its Lipton and PG Tips brands. Other examples are Organic standards for certain Unox soup products and organic and fair-trade standards for Ben and Jerrys ice-cream products. Many of these standards have been adopted by Unilever in the last couple of years only, hence investments in these specific CSR instruments are clearly a new trend. While they sometimes overlap functionally with general standards (e.g. Rainforest Alliance standards in tea apply also to tea workers on Unilevers tea plantations but not to its tea factory workers on these estates and elsewhere) there can be many reasons for companies to adopt such specific

28 Unilever global website, Suppliers, <http://www.unilever.com/sustainability/customers-suppliers/suppliers/> (10 May 2010) 29 Ibid. 30 bid.

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instruments. Specific standards are usually more effective because they are more specifically tuned to dealing with sustainability issues in a certain sector. Moreover, as for example with the RSPO, sectoral instruments can be more effective because they involve the most important companies in a sector and as such can have a big impact when CSR standards are applied across the sector. Also, at least in theory, global standard systems such as RSPO, RA, FT and Organic can also increase the control of the company on these issues because of their more elaborate management systems with among others independent verification as an important asset. The (theoretically) increased effectiveness can have a competitive edge for companies because it may prevent negative publicity and make it easier to ward off concerns raised. And, also as a result, a perceived (increase in) effectiveness can inflate brand credibility. Next to these being external standards that are not developed by a single company such as Unilever they have in common that they allow for product labelling. This additional branding through the use of consumer logos of global standard systems on their products is attractive to business because these independent labels can further bolster consumer confidence in the brand or product. The above examples show that this is now apparently seen by Unilever as an added value. Hitherto only the MSC standard system, of which Unilever is also the co-founder, allowed for such business to consumer sustainability communication on Unilever products.

CSR policy changes Central to the new company vision introduced in 2009 (see above) is the notion of increased scarcity of natural resources on which Unilever products depend through among others rising demand (population growth) and climate change. This self-interest again makes a clear business case for CSR of Unilever. The vision the company even somewhat dramatically puts it this way: We fully recognise that we will need to develop a new model for business growth. While the vision does not enlighten us explicitly about the direction this will take the website page that presents the new vision discusses some elements that are likely to be telling in the new approach and are in any case worth mentioning here. For example there is the strategy element of embedding sustainability in brands: With individual product brands taking a stronger stance on social and environmental issues, consumers will look at the corporate brand for its values and approach. Lipton tea seems to be the first and best example of this approach (also see boxed text below). While the company sought and received attention for its RA certified tea policy and continues to do so (e.g. see websites) the marketing campaign slogan for Lipton tea in recent years was Lipton tea can do that which deliberately has a broader focus.31 Another interesting element that Unilever calls attention to in the context of the new vision is the increased focus on smallholders as suppliers of agricultural commodities. The company describes this policy as exploring opportunities to increase sourcing from smallholder farmers to ensure security of supply. As a result of this quest the company claims to have involved 10,500 smallholders in an Allanblackia project in Africa and 38,000 smallholder farmers that have achieved Rainforest Alliance certification in Kenya over 2007-2009. For tea sourcing it makes good business sense to involve smallholders, because as a model smallholder production is becoming increasingly important,

31 S. Horlings (IDH & Wonderwings), Marketing sustainability: Bridging the gap between branding, sustainability and consumer demands, < http://www.acceleratingsustainabletrade.com/cms/getfile.php?id=2> (23 April 2010)

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however, smallholder participation in export oriented supply chains is also widely considered important to reduce rural poverty. 32 The last important characteristic of the companys ambition to reduce its impacts put down in its vision mentioned here is the companys ambition to purchase all their key crops from sustainable sources. This entails not only environmental but also social sustainability. These key crops are not mentioned specifically but the company refers to a number of them in various publications. For instance the company mentions the share of the total global supply of agricultural raw materials it sources. These are: black tea (12%), rapeseed oil (2%), tomatoes (6%), sunflower oil (2%), onions and garlic (5%), soy (1%) and palm oil (3%). For a number of these the company has developed sustainability strategies in the form of external standards (e.g. tea, palm oil, soy). It is not unlikely that the company will develop similar strategies for the remaining key commodities it sources. Factors contributing to CSR policy changes From the above it is clear that Unilever is stepping up its ambitions in terms of sustainability. While this is not signalled by the company as such, external sustainability standards seem to play an important role in this new ambition. At least three external factors have contributed to this particular change: growing availability of mainstream global standard systems, more mainstream companies in the food sector adopting global standards and (increased) pressure by civil society organisations (CSOs). Global standard systems that explicitly target mainstream clients, such as RA and Utz Certified, have been offering their services for a confined number of crops or agricultural commodities such as coffee and tropical fruit such as banana and pineapple. Recently, however, these initiatives are offering their services for a wider range of agricultural commodities such as tea and cocoa. This has offered a bigger window of opportunity for companies such as Unilever whose options before were limited to FT and/or Organic. Also, and maybe correspondingly, the number of food TNC that adopts such stricter standards is rising. For instance one of Unilevers tea competitors, Sara Lee (Pickwick), announced that a third of its tea will be Utz certified this year. Also Mars has embraced Utz certified for its chocolate production aiming to have all its cocoa supplies certified to that scheme by 2025 and Verkade now sources only FT cocoa. It is also likely that external pressure by CSOs has had an effect on company CSR strategies. In its sustainable development overview Unilever confirms that pressure by Greenpeace that accused Unilever suppliers of fuelling climate change by clearing forests and draining peat lands has led the company to stop sourcing from a particular palm oil supplier.33 Such public acknowledgement of CSO pressure impacts on policies is unusual. However, it is evident that this occurs more often, e.g. international campaigns (CasualTea34 and Annual Shareholders Erratum35) and OECD cases by trade

32 S. van der Wal, SOMO, Sustainability Issues In The Tea Sector, June 2008 <http://somo.nl/html/paginas/pdf/Sustainability_Issues_in_the_Tea_Sector_EN.pdf> (10 May 2010) 33 Unilever global website, Unilever Sustainable Development Report 2009, <http://www.unilever.com/images/sd_UnileverSDReport170310_tcm13-212972.pdf> (10 May 2010) 34 IUF website, Unilever, IUF Settlement Resolves Conflict over Precarious Work at Lipton Pakistan <http://www.iuf.org/casualtea/> (10 May 2010) 35 FNV mondiaal website, FNV: Unilever heeft boter op zijn hoofd, < http://www.fnv.nl/helpjezelf/mondiaal/nieuws/boter_unilver.asp> (10 May 2010)

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union federations (e.g. IUF and FNV) have led/contributed to settlement of labour conflicts in India and Pakistan and a high-level international dialogue with the same unions in 2010.36

The effect of off shoring and outsourcing on labour relations


The following case studies and articles offer an interesting view on working conditions and labour relations at Unilever. Of course, local circumstances, national regulations and legal systems heavily influence labour practices per specific country or region. In absolute terms, the position of trade unions and the levels of salaries appear, on first sight, to be impossible to compare, between the Netherlands and Indonesia for example. It is, then, even more striking how many similarities can be drawn from the different accounts. This might be less surprising when realising that modern day multinationals, while expanding globally and organised in complex structures, often incorporate a high level of vertical as well as horizontal integration. The most important decisions are made on a central management level, not only with regard to investors decisions and managerial payment systems, but also regarding employment policies.

Decline in overall employment The decline in overall employment at Unilever has been the subject of a thorough debate between the FNV and Unilever. Of course there are several explanations for the reduced numbers of workers. Technological innovation is one of them. But outsourcing and subcontracting non-core tasks are also important contributing factors. Unilever states that outsourcing practices are a common custom in the industry, that it upholds high labour standards in its supplier contracts and that outsourcing leads to a healthier economic company at the end, benefiting not only shareholders but also employees (more benefits for fewer people). FNV responds that outsourced workers have to do the same work but under the worse conditions, often with temporary contracts, and they are not properly represented by trade unions (more people that have less benefits). Figure 3 Employment trends Unilever 2004-2008 (thousands of employees)
Western Europe

250 200 150 100 50 0

2004

2005

2006

2007

2008

It seems indisputable that outsourcing trends and the production shift from the West (characterised by strong and legally embedded trade unionism) to the East and South (weaker and sometimes oppressed trade union movements) do affect the position of workers and trade unions. In general, outsourcing weakens the capacity of trade unions to organise and represent workers. As a result of

36 Een mensvriendelijke multinational, Unilever gaat met vakbonden de arbeidsomstandigheden van medewerkers verbeteren

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these changes, a new definition of the traditional (often national and local) forms of union organisation and representation is required to halt the external effects of the global scattering of employees and the differentiation of labour conditions between workers.

Flexible labour practices Outsourcing and off shoring practices have had a negative impact on job security, another overall theme of the four articles. Next to the inherently less formal and more temporary nature of casual labour this can be attributed to the weakening position of collective bargaining as a result of these developments. Concerns of unions include lower wages, stripped workers rights and deferred, if present at all, structures of workers representation in outsourced or subcontracted companies. Apart from outsourcing, it appears that the group of permanent employees is being constantly reduced, as is clearly apparent in the Dutch case. At the same time, the number of workers that have temporary contracts, often many years in a row, increases. However, in some countries, for example Indonesia, new employment is created but labour conditions of core workers are under pressure and their relative proportion seems to be consistently declining. Competition in the global economy and increasing profits demand flexibilisation and constant adaptation of the business operations, this is the reasoning of Unilever. All in all, it seems that the costs are passed on to the workers through less secure contracts and an increase in precarious labour conditions. Automatically, this has a disturbing effect on relations between employer and employee, which are increasingly subject to conflict and consent. In Brazil, it seems that flexibilisation has a high correlation with an increase in health and safety issues and the Indonesian case shows that flexible and subcontracted workers have difficulties meeting general living costs. In general, employers appear to favour flexible work practices and less employment protection legislation. However, flexible employment relations not only have a negative impact on workers, but can be detrimental to employers as well. This is because flexible labour practices can be linked to lower productivity and product quality, reduced competence of staff and higher levels of sickness absence. Employees not sufficiently covered by CSR policies It takes several hours to plough your way through the pages of Unilevers website on corporate social responsibility. The fundamental textbook rules on CSR reporting all seem to be properly integrated: transparency, formulation of future targets, stakeholder involvement, external verification, etc. CSR is undeniably a prominent facet of this multinational giants business operations. Unilevers CSR policy, especially its so-called Code of Business Principles, states that the company respects the dignity of the individual and the right of employees to freedom of association. However, there is no explicit reference to the ILO conventions, and the right to collective bargaining is not included in the code. Interestingly, by means of the Business Partner Code Unilever appears to have put more effort in formally guaranteeing labour rights at its suppliers level than in its own employee policies. But apart from that, a central question regarding these labour rights remains, whether the adoption of CSR policies and the inclusion of labour rights within them actually have positive effects on the labour conditions of Unilever employees and other workers involved in the production process of Unilever products.

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Case study: Lipton Tea Packing Factory in Belgium


Lipton tea is one of Unilevers strongest brands and best selling products with sales of almost 3 billion EUR.37 The Lipton tea factory located in Vorst near Brussels in Belgium is one of Unilevers largest tea packing facilities. It is the only production facility remaining in Belgium. In 2003 the last other production facility, producing Mora snacks, was closed. The number of jobs in Belgium decreased sharply over the years from 3,000 in 2000 to 556 in 2009. Sales diminished much less markedly from about 780m EUR in 2002 to 616m in 2009. The lion share of the jobs now remaining in Belgium is at this tea factory. The Lipton factory in Vorst is an important global tea hub for Unilever, exporting to more than 50 countries including many EU countries. The factory produces more than 100 different tea products among which Liptons relatively new line of pyramid shaped tea bags. The factory is subject to constant pressure to raise production, for example through technical innovation, to stay ahead of competing factories both within and outside the Unilever group. This pressure is also the consequence of the fact that 96% of its total production is exported, which does not make it a logical decision to pack tea in Belgium. Unilever from a Belgium trade union perspective Interview with Guy Tissen - Secretary Belgian union LBC-NVK Guy Tissen is the secretary of the Belgian trade union trade union for white collar, professional, and managerial employees in Flanders, LBC-NVK. In recent years his work focused mostly on the level of the regional office of Unilever in Brussels and not on the Lipton factory in Vorst Belgium in particular. However, based on ample experience with trade union work with Unilever in Belgium he says that the company makes its employees 'powerless'. Once upon a time, Unilever dared to invest in staff, both in the factories and offices, but now it has lost interest in its employees. The appointment of temporary employees and contract agency workers is only making matters worse because it creates tension on the work floor. For example, in the Brussels headquarters an ever decreasing group of permanent employees and a steadily growing group of temporary employees has created a social divide. This is directly related to the recent major restructuring in Unilever Belgium says Tissen. The 2007 merger of the Belgian consumer division with the Benelux office based in Rotterdam has left large scars. Just before this reorganisation there were 800 employees in Belgium (including the Lipton plant) of which 250 at the regional office in Brussels. Through the 2007 reorganisation another 188 jobs disappeared from the regional office. The office is now desolate and everybody is left in the dark about Unilevers plans regarding the rest of the office and staff in Brussels. Unilever is a top-down businesses says Tissen, there is little to negotiate because the concern management does not give its negotiators much room to manoeuvre or seek compromise. Also according to Tissen, and perhaps in contrast to the situation in Rotterdam, there is no social dialogue or consultation in Belgium. The headquarters management in Rotterdam is only interested in the financial benefits of the restructuring and has no consideration for the pain that this restructuring is causing in Belgium. Tissen is very pessimistic about the future for Unilever in Belgium. Deep in his heart he has actually already thrown in the towel. Of course he will continue to work towards a good collective bargaining agreement for current employees but he has little real hope that Unilever will invest in Belgium

37 Includes Lipton Ice Tea sales Unilever website, Brands, Foodbrands, Lipton, <http://www.unilever.com/brands/foodbrands/lipton/index.aspx> (10 May 2010)

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again. The same is true for the Lipton factory. While it is very productive, he fears it will be closed nevertheless. Why would Unilever spare this factory? Experience shows that Unilever is pulling back from Belgium and that it is increasingly moving factory production out of Western Europe. It has been the same story for years: eventually this plant will also be subjected to unrealistic targets to cut costs. According to Tissen, Unilever factories in the Netherlands have the advantage that Unilever is a Dutch company. He thinks that Unilever will try to the very end to keep at least a few production locations open in addition to its headquarters in the Netherlands, but for Belgium there is no such future. Increasing productivity without salary increase, that's what counts. And where can you find that? Especially in Eastern Europe.

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Case study: Tea Plantation in Kenya


Tea in Kenya Tea was first introduced to Kenya in 1903 from India by a European settler, GWL Caine. The British Colonial Administration started exporting it to London by 1933. The cultivation of tea in the colonial period was basically the preserve of the British settlers. After independence in 1963, the cultivation of tea was desegregated to both small-scale and large-scale African farmers who had bought land from British settlers. The planting and production of tea has rapidly increased since independence. Tea production rose from 18,000 tonnes in 1963 to 310,607 tonnes in 2006. The tea sector contributes directly and indirectly to an estimated 3 million jobs, a figure which is equivalent to about 10% of the total population. Increased tea production has meant that Kenya shares third place in the global tea producer list with Sri Lanka, after China and India. Kenya is responsible for 20% of all tea exported in the world, making it the second biggest exporter after Sri Lanka, and for 9% of the global tea production in 2006. Pakistan is the biggest importer of Kenyan tea, Egypt the second biggest and the UK ranks third.38 Unilever in Kenya Founded in 1924, Unilever Tea Kenya grows, processes and packages tea on 13,000 ha which includes eight tea manufacturing factories and with 32,370 tonnes39 of tea produced annually is the largest the plantation company in this country. The company employs over 18,000 workers and is the largest private sector employer in Kenya.40 Methodology Field research for this study was conducted in January 2010 at the Unilever Tea Kenya plantations in Kericho, Kenya41. An opened ended questionnaire was used for 32 in-depth interviews with both casual and permanent workers from Unilever. A Focus Group Discussion (FDG) and case studies were also conducted. For the in-depth interview, 23 women and 9 men were interviewed. 22 Respondents were casual and 10 were permanent workers. 20 Respondents worked as tea pickers and 12 worked in the tea factory. For the interviewees to be able to speak freely and without fear of repercussions all interviews were conducted without the interference or consent of estate management and the identities of the respondents are not disclosed without permission. As a result, aspects of the identities of the plantation workers have been changed, as have their names, to protect them.

38 S. van der Wal, SOMO, Sustainability Issues In The Tea Sector, June 2008 <http://somo.nl/html/paginas/pdf/Sustainability_Issues_in_the_Tea_Sector_EN.pdf> (10 May 2010) 39 2002 figure: S. van der Wal 40 http://www.gbcimpact.org/files/awards/2009-GBC-Awards-Unilever%20Tea%20Kenya.pdf 41 Kenyan Human Rights Commission (KHRC) conducted the field research for this chapter. The research was coordinated by Louiza Kabiru.

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Casualisation and its impacts The number of years the casual workers interviewed had worked as temporary workers ranged from 2 to 9 years and was 3.4 years on average. All noted that they have contracts for a 2-month period and that they are reinstated to their positions after a period of one month upon which they are issued with new payroll numbers. Previously casuals at Unilever would get contracts of 6 and 3 months, however the trend had moved to issuing contracts of 2 months a trend that started about 2 years ago. The change in the contractual period can be attributed to the new Employment Act, 2007 which makes new provisions for the conversion of casual employment to term contract (permanent employment). Apart from having no job security, conditions for casual workers at the Kericho estate differ from those with a permanent status in that they have fewer benefits. For one, casual workers are not given maternity or paternity leave. This practice violates both the Kenyan labour law and the Collective Bargaining Agreement CBA negotiated between the management and the Kenya Plantation and Agricultural Workers Union (KPAWU), the only union that is active in the plantation. Both casual and permanent workers have access to the companys hospital and health centres within the tea estates. However, whereas the company provides free health care to the children of permanent workers this benefit does not accrue to the children of casual workers. Casual workers noted that they were forced to take their children to either private clinics or to the government run hospital. Unlike permanent workers, casual employees who are not married or living with a partner are required to share estate houses. One of the respondents noted that in some cases 5 casual workers shared a 2-room house. No effort was made to provide single housing units for casual workers who were living with their children. Another respondent noted that due to the sharing of houses, workers were subjected to living with people they did not know and who in some cases were generally unkempt, due to this most of the houses of casual workers were infested with bed-bugs. Permanent workers do not have to share houses. The respondents, especially those working in the tea estates that neighbour small towns, noted that not all casuals live on the estates. They noted that due to the issue of sharing houses and shortages in housing, casual workers were compelled to live in the towns. The respondents noted that the management did not provide any housing allowance to those workers renting houses in the towns. This practice is illegal. The majority of the respondents claim that the management of the tea estate requires that casual workers who have completed their contractual period should vacate the houses that are assigned to them. However, a minority noted that they were not required to vacate their houses. Only one of the respondents noted that they live with their husband who is a permanent worker and who had been assigned a house and thus had no reason to vacate from the tea estates during completion of her contractual period. Labour relations The majority of the people interviewed (including the casual workers) noted that they were members of the trade union. A minority noted that they had been approached by trade union officials to join the union. Regardless of their union membership all casual employees need to pay a fee to the union. This situation was first introduced by the Labour Relations Act, 2007. Most respondents noted that despite dues to the union being deducted from their wages, disputes between casual employees and the management were not resolved by the union. One respondent
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noted that, even though we are paying dues to the union, we are not represented by the union and we feel that we are paying for services which we are not getting. Indeed most casual workers interviewed claimed that they did not know why they were paying the dues. One of respondents candidly noted that he has never been informed why the deductions were being made. According to another worker, they were informed by the estate management that deductions to the union would be made and this was to ensure that casual workers enjoyed the benefits given to permanent workers. When asked who raised the concerns of the casual workers the majority of the respondents indicated that casual workers raised their own concerns to the management or to the supervisors. Only one respondent noted that workers could raise their concerns with the Village Elders. This clearly indicates that casuals feel that the union does not represent them and that they have no formal avenue to register their complaints. Moreover, a number of casual workers claimed that they would get sacked in case of a dispute and as a result casuals mostly do not complain. Only one casual worker interviewed indicated that the union also represented casuals. In the focus group discussions it was noted that workers who were members of the union face harassment from the management when they attempt to push any agenda that the management did not agree with. This harassment was usually in the form of false accusations of impropriety, false quality judgements by the quality inspectors or the reassignment to heavy tea picking duty where one was assigned lighter duties. Moreover, a number of workers claimed that they knew of permanent workers eventually getting sacked because of complaints. In recent years there have been a number of disputes with the management over a number of issues including injuries, the introduction of tea plucking machines and wage increments. In a few case these disputes have led to strikes. A number of respondents say that the union successfully intervened for higher wages in one of these strikes whereas others were not aware of union involvement. One worker also claimed to have heard of successful union interference in a case in which workers were wrongfully fired. However, FGDs also highlighted the ineffectiveness of the union. Workers noted that this was most evident in the negotiations of the CBA because they felt that it did not capture their concerns. The CBA does not include provisions to protect against sexual harassment, for example. More worryingly even was that it was found that it did include the following provision: overtime shall be at the discretion of the Management and every employee shall be expected to work overtime when called upon to do so by the Management. While there were no indications of the actual implementation of this policy, it is clearly not in the interest of the workers but to the management only and is tantamount to bonded labour. Conclusion The study clearly indicates that casualisation is affecting working conditions on Unilevers Kenyan tea estates. Labour relations are far from ideal, while many casuals are unionised and they are obliged legally to pay union fees they are not represented adequately by the union. While there are occasions that the only union active on the plantation interfered successfully in one of the many labour conflicts, such as strikes, there are clear indications that it is weak and not very professional, to which the Collective Bargaining Agreement agreed between the union and the management that includes illegal elements such as involuntary overtime is a silent testimony. Not in the last place there is fear among workers and casuals especially, to raise their voice in case of conflict because of the real risk of getting fired.

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Case study: Tea plantations in India


Tea in India The tea industry in India is more than 150 years old. It occupies an important place in the national economy. India is second to China42 only as the world's leading producer, producing 944 million kilograms of tea in 2007. In 2008 82% of a total production of 981 million kilograms of tea went to domestic consumption. As a result India is also the world's largest consumer of tea. In 2009 India exported around 192 million kilograms of tea.43 The biggest buyers of Indian tea in the first half of that year were in descending order of importance CIS countries, UAE, Iraq and the United Kingdom.44 In terms of export, Indias major competitors are Sri Lanka, Kenya, China and Indonesia. Tea plantations in India are mainly located in rural hills and backward areas of North-eastern and Southern States. Major tea growing areas of the country are concentrated in Assam, West Bengal, Tamil Nadu and Kerala. The Indian tea industry is the second largest employment provider in the organised manufacturing sector, giving direct employment to more than a million families on the estates. Almost the same numbers of people again work as casual workers or on the smallholdings, and the sector indirectly generates employment for another ten million people.45 80% of Indias tea is produced on larger estates.46 The Indian tea industry has witnessed many structural changes over the years. The emergence of small tea growers and Bought Leaf Factories, crises in the tea industry and the closure / abandonment of tea estates. In early 2005, the industry witnessed major companies such as Tata and Hindustan Unilever Limited (HUL) in India withdrawing from production and concentrating on the more profitable business of tea packaging. In North India the HUL tea gardens were acquired by McLeod Russel and then proceeded to become the largest global plantation company. Ever since the onset of the tea crisis at the end of the 1990s, many tea estates in India have been closed or abandoned because they were found to be unprofitable or not profitable enough. The ensuing restructuring of the tea sector caused great misery in the plantation community. Heartbreaking reports of hundreds of people dying of hunger on tea estates that had been abandoned or closed continued to surface up to 2007.47 The crisis was caused by a sharp drop in producer prices, a lack of investment in and general mismanagement of plantation estates, and rising labour costs.48 Even as late as 2009 the IUF launched a campaign to support tea workers that were

42 World Tea News website, ITC Bulletin: Tea Brands, Quality Growing Worldwide <http://www.worldteanews.com/index.php/Features/ITC-Bulletin-Tea-Brands-Quality-Growing-Worldwide.html> 43 India misses 200 mn kg tea-export target in 2009, The Economic Times, The Economic Times, 25 Feb 2010, < http://economictimes.indiatimes.com/markets/commodities/India-misses-200-mn-kg-tea-export-target-in2009/articleshow/5613409.cms> (22 March 2010) 44 India Tea Website, www.indiantea.org, visited period jan-sept 2009 45 Sanne van der Wal, SOMO, Sustainability Issues in the Tea Sector: A Comparative Analysis of Six Leading Producing Countries, June 2008 <http://somo.nl/html/paginas/pdf/Sustainability_Issues_in_the_Tea_Sector_NL.pdf> (22 March 2010) 46 Report of the committee on legislation plantation sector, 17 September 2007 <http://commerce.nic.in/publications/Committee_Legislation_Plantations.pdf?id=13> (22 March 2010) 47 India's malnourished tea workers, BBC News, 2 October 2007 <http://news.bbc.co.uk/2/hi/south_asia/7022794.stm> (10 June 2008) 48 Action Aid, Tea break, a crisis brewing in India, May 2005, <http://www.actionaid.org.uk/wps/content_document.asp?doc_id=884> (10 June 2008)

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starving in West-Bengal. They were locked out and not paid their wages as a punishment by the management for a worker protest sparked by the abusive treatment of a 22-year-old tea garden worker who was denied maternity leave and forced to continue work as a tea picker despite being 8 months pregnant.49 The tea industry in Assam and the Nilgiris This research focuses on tea production in two regions: Assam and the Nilgiris in Tamil Nadu. The Northern state of Assam is the most important production region accounting for more than half of its total tea production. Across more than 850 tea estates in Assam, most of which are situated in the upper parts of the state, adivasis (tribal communities in India), brought in as indentured slave-labour from Central India by the British, form the vast majority of the workers. Today, the tea plantation workers who form the single largest organised sector workforce in Assam and the entire Northeast region, number anywhere between 800,000 to a million depending on the season. Approximately 17% of workers in Assam are engaged in tea industry and about half of the total tea plantation workforce in Assam consists of women. The district of Nilgiri falls within the Southern State of Tamil Nadu. It is located in the western part of the State bordering Karnataka and Kerala. Most of the tea estates, numbering around 180, are located in Gudalur and in the high altitudes of Ooty, Coonoor and Kotagiri. With an average tea plantation workforce of 200,000, Nilgiris produce 15 million kg of tea on average over 66,156 ha of land.50 Most of the tea workers are historically migrants coming in from various districts of Tamil Nadu and the neighbouring states of Kerala and Karnataka. Methodology and estates visited For this study 7 tea estates in India, one in Assam and the other 6 in the Nilgiris, were visited between the last week of November 2009 and third week of January 2010. All the estates are certified by the Rainforest Alliance. In Assam, the field study was conducted on the Behora Tea Estate of the Golaghat district, owned by the McLeod Russel India Limited. In the Nilgiris, the research team51 visited 6 estates Glenmorgan, Dunsandle, Glendale, The Coonoor Tea Estates, Havukal and Warwick and Kairbetta. In all, on the Behora tea estate, 21 workers and senior trade union representatives from two trade unions, the Assam Cha Mazdoor Sangha (ACMS) and the Akhom Sangrami Cha Shramik Sangha (ASCSS) and one social organisation of the tea plantation community, the All Assam Tea Tribes Students Association (AATTSA), were interviewed. In all, on the six tea estates of the Nilgiris, the research team met around 50 tea workers. The team met four trade union leaders belonging to the Nilgiri District Estate Workers Union (NDEWU), the Nilgiri Estate Workers Union (NEWU) and the Plantation Labour Association (PLA); garden level staff of the Tamil Nadu Plantation Progressive Labour Front (PLF) and a former manager of one of the RA certified tea estates. The team also met a group of small growers who supply leaf to some of these tea estates.

49 IUF website, Ethical? Tetleys Tata Tea Starving Indian Tea Workers into Submission <http://www.iuf.org/cgibin/dbman/db.cgi?db=default&uid=default&ID=6316&view_records=1&en=1> (10 may 2010) 50 Tea Board, India 51 The research team in India was led by Mr Souparna Lahiri the research was guided and supervised from the Netherlands by the India Committee Netherlands in collaboration with SOMO.

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For the interviewees to be able to speak freely and without fear of repercussions all interviews were conducted without the interference or consent of estate management and the identities of the respondents are not disclosed without permission. As a result, aspects of the identities of the plantation workers have been changed, as have their names, to protect them. In order to put the findings of the research in proper perspective it should be stressed that in general the estates visited are considered to be fairly good tea gardens from a social, environmental and management perspective. Behora is known as one of the better tea gardens in Assam in terms of labour standards and fringe benefits accruing to workers, for example. It has an airstrip and is frequented by big shots from the tea industry both from India and abroad. Unilever in India Unilever has been active in India since 1931.52 In 1956 its subsidiary Hindustan Vanaspati Manufacturing Company merged with Lever Brothers India Limited and United Traders Limited to form Hindustan Unilever Limited (HUL). Unilever now holds a 52% share in the company and the rest of the shareholding is distributed among financial institutions and about 360,675 individual shareholders.53 HULs tea activities in India currently focus on tea packing and branding and not on production anymore as mentioned above. HUL is the Indian market leader, with its Brands Brooke bond and Lipton, in terms of value. In terms of sales volume HUL is second to Tata Tea. HUL is (of course) active on the India market as a tea buyer as well. It is clear that Unilever is sourcing from the tea estates in South India that were selected for this research.54 However, the research was unable to prove that Unilever is actually sourcing from the estate studied in North India. A number of factors make it, however, very likely that Unilever is their client. As the single biggest tea packer in the world Unilever sources 12 percent of the world black tea supply.55 While, as mentioned above, Unilever does not own any tea plantations in India, the company sources tea in this country for both its domestic and international tea products. Whereas most branded tea bags constitute of a blend of different teas from different countries, tea from India is traditionally an element of English tea blends such as Unilevers brands Lipton and PG Tips offer. The fact that the Northern estate is Rainforest Alliance (RA) certified makes it very likely that Unilever is also sourcing from them56.

52 Wikipedia, Hindustan Unilever, <http://en.wikipedia.org/wiki/Hindustan_Unilever_Limited> (10 May 2010) 53 Hindustan Lever Limited website, Our history, <http://www.hul.co.in/aboutus/ourhistory/> (10 May 2010) 54 On the Unilever website it can be found that eight RA certified tea estates in the Nilgiri Hills in South India supply tea for Lipton of which 6 were visited for this research: Unilever Global website, A thirst for sustainability <http://search.unilever.com/exit?Search=nilgiris&dest=http://www.unilever.com/sustainability/news/news/thirst-forsustainability.aspx> (10 May 2010) 55 Unilever website, Sustainable Tea, <http://www.unilever.com/sustainability/environment/agriculture/tea/index.aspx.> (10 May 2010) 56 This is because RA certification already covers 50 percent of Unilevers supply to EU markets which represents a lot of tea because Unilever is market leader in the EU with its brand Lipton and PG Tips (in UK) whereas the volume of RA certified tea on the (Indian) market is still relatively limited. Moreover, the owner of the estate, the McLeod Russel group, is a known supplier of Unilever. AME info, Lipton introduces new co-friendlyinitiative <http://freshpakcorp.com/pdf/lipton-Tea.pdf> (10 May 2010)

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Casualisation and its social impacts on the tea estates under research The casualisation process accelerated during the last 10 years in Assam (North-East India) but there are no precise figures to prove this. According to many insiders and analysts, however, almost 50% of the workforce in tea plantations today is temporary and casual. Casual labour is cheaper for employers because they avoid paying service benefits due to the workers such as pension, gratuity and provident fund. Hence it was one of the main pillars of the restructuring of this industry since the tea crisis during 2000-2002. The permanent workforce of Behora now stands at 1200, the number has decreased by at least 500 over the last few years. Today, the estate employs on an average 600 temporary workers throughout the year. Fresh recruitment has stopped; every permanent worker who retires, dies or is dismissed is replaced by a temporary worker, the workers said without exception. A trade union leader in the estate pointed out that, the company is increasing its area of plantation but the number of workers remains the same. In effect, going by the Plantation Labour Rules, Behora with 699 ha of crop area should have at least 1745 permanent workers (5 workers to be employed for every 2 ha of tea planted). Statutory and fringe benefits for a temporary worker in Behora are severely limited compared to that of permanent workers: no housing, no medical care, no maternity benefits for women workers, no bonus, no gratuity57, no subsidised food grains or social security. National regulation provides that a person can be employed as a casual labourer for a maximum period of six months, after which his or her employment has to be confirmed. But, in the tea gardens, the management circumvents and violates this law by breaking the temporary workers period of service before completion of six months. According to Jiten Tanti, the general secretary of AATTSA, the temporary workers are appointed for a stretch of four months in Behora, and then reappointed after a break. Mariamma (50), a mother of five sons and four daughters for example, has been working in Behora for the last 27 years. While her husband is a permanent worker, she is still working in the garden as a temporary worker. In India women workers are the backbone of the tea industry today. Most of the temporary women workers (in Behora) come from the nearby settlement, many male permanent workers are transferring their job to their wives or daughters and going out of the gardens to work as agricultural labour or in road and construction work. The wages are higher than in the tea gardens, says Jiten Tanti (AATTSA).

Shanti (48) a permanent women tea worker of Behora Since we are born and brought up in the tea gardens, we are conditioned from our very childhood to deal with the demands of the tea gardens. Women like me, mothers, daughters and wives, wake up very early in the morning, prepare food, tend to our children and husbands and report to duty by 8.00 a.m. After coming back from work around 5 pm we dont get any rest have to prepare food for dinner and fetch firewood or fuel. Sometimes we go to the market to buy essential items. Today our work has become back-breaking with numbers of workers dwindling and demand for production increasing. The work affects my health so I am not able to work for more than 20 days a month. So, I have to pluck more tealeaves to compensate for my lost earnings. It is becoming difficult for me to run our household with our meagre earnings and expenses running up to more than Rs.500 in a week.

57 Gratuity is part of social security paid to workers after retirement or after leaving job voluntarily.

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Casualisation is also affecting tea plantations in the Nilgiris (South India). Official statistics do not allow a precise picture of the extent of the phenomenon, either on estate or regional level. The statistics do indicate that the total number of people working in the Nilgiris tea industry decreased by about a fifth to roughly 200,000 from 2002 to 2010. Currently there are two types of casual workers on the estates studied in the Nilgiris: those that are paid weekly and are non-resident and those that are paid monthly and live on the estate. The first category of temporary workers consists mostly of locals tribals such as Irulas, Panias and Sri Lankan repatriates. Other than their daily minimum wages, paid weekly, they do not get any other benefits. Not even provident fund. The second category of temporary workers besides locals also includes workers from other parts of India as far away as Jharkhand, Orissa, Bihar and West Bengal. These workers are provided with all the benefits permanent workers are entitled to, e.g. housing, medical care, leave and provident fund, but are not provided with pension and gratuity. This category of temporary check roll workers have been brought in by the tea industry managements in the wake of severe labour crisis and increasing absenteeism that the Nilgiris tea industry is facing for the last few years, said Armugum of the PLF. In both categories people can be found working as temporary workers for more than six months on end, in one case even four years (see boxed text), in violation of the contract labour law.

Vijaya (35), a temporary worker in the Havukal & Warwick tea estate I am working as a temporary plucker in the estate for the last 4 years. I come from a family of Sri Lankan repatriates. My husband is a daily wage labourer. We have two sons and two daughters. They study in the Kairbetta government school. We live in the neighbouring village of Kairbetta. I receive a daily wage of Rs.120. And no other benefits no provident fund, no house, no medical care, school for children and provision for gratuity and pension. Sixty women work with me in this division. They are also temporary workers. We work from morning 8 am to evening 5 pm with a break of one hour for lunch. We work for all the 12 months in a year. Though now we can harvest more using the katri (semi-mechanised scissors used to harvest tea leaves), it also creates health problems. Many of us suffer from chest and back pain. We cannot work throughout the month. At the most, I work for a maximum of 20 days a month. On an average 15 to 18 days. We have to spend for our own medicine and medical care. Since my children are still young, I cannot go anywhere else for a more remunerative work. I have to tend to them and to my family. Because their number is increasing and they form the majority in both Assam and Tamil Nadu (Nilgiris) the restructuring of the Indian tea industry affects female tea women workers the most. It has resulted among others in an increasing work load for both permanent and temporary women workers who are engaged in plucking; and the temporary women workers are deprived of their statutory benefits, maternity and sickness benefits being the most important among them. To compensate for male labour that is exiting the plantation sector some of the male workers that used do plucking only are now doing other tasks as well. According to a permanent worker: Now, we have to do all kinds of work; from spraying of pesticide, to pruning and cleaning even. Our work load has increased. Spraying and pruning are considered male tasks and as such this flexibility allows plantations to remain operational with an increasing number of women workers.

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Labour Relations: Collective Bargaining and Freedom of Association Irrespective of the estate visited for this research it was found that both freedom of association and collective bargaining are hampered. However, the obstacles to these rights in Assam and the Nilgiris differ to some extent. The Assam tea industry only recognizes one trade union, the Assam Cha Mazdoor Sangha (ACMS) affiliated to the Indian National Trade Union Congress (INTUC), which is the trade union wing of the Indian National Congress Party (heading the central government in India). As a consequence the ACMS has the exclusive right to negotiate with the industry. This also means that the other trade unions that are active in this industry such as the Akhil Bharatiya Cha Mazdoor Sangha (ABCMS), affiliated to Centre of Indian Trade Unions (CITU), and Assam Sangrami Cha Shramik Sangha (ASCSS), affiliated to All India Coordination Centre of Trade Unions (AICCTU), are marginalised. They are ineffective in terms of collective bargaining and as a result less attractive to tea workers. The freedom of association of the tea workers is further impinged by the check-off system whereby an ACMS union subscription of Rs.3 per month per worker is deducted from their monthly salary. If a worker does not want to join the ACMS he/she has to first avoid this check off system and give a plausible reason why he/she does not want the amount to be deducted. This also forms a serious obstacle for Assam tea gardens workers. ACMS claims to have a membership base of over 700,000 in Assam; that is 70 to 87 percent of the total Assam workforce. Moreover, the functioning of the ACMS is problematic. The workers claimed that they do not have any say in the decision making process of ACMS. Neither are they involved in the collective bargaining which takes place on the industry, not the plantation, level. According to general secretary Maniram Tanti: In terms of certain problems related to our own garden we negotiate with our own management; but these are mostly related to statutory benefits like house repair, drinking water, festival benefits, recreation etc.. He also said that he is not being permitted by the management to perform union responsibilities and related sundry works during office hours, which is in violation of the Industrial Disputes Act. As the dominance of ACMS emerges following the patronage of the tea industry of Assam, it is also being felt by the tea workers that this has, over the years, weakened the collective bargaining position of ACMS. The agreements reflect more the interest of the tea industry than the workers, emphasised Subhas Sen, the secretary of ASCSS. There is, therefore, a general disenchantment among the workers but they are not able to break out of the shackles. While there are five different unions in the Nilgiris, negotiations are dominated by the INTUC affiliated NDEWU. Next in line come the PLF and ATP, both affiliated to the ruling political parties in the State. Both the Nilgiris District Workers Union (NEWU)58 and the PLA leaders told how in tea estates like Glenmorgan and Dunsandle, they are not allowed to do any union work and their members are driven out of the estates. The same story is narrated by the garden level union leaders of PLF and ATP in The Coonoor and Glendale Tea estates. These selective and restrictive practices of collective bargaining force the common tea workers to join the NDEWU for better gains and to avoid harassment, further marginalising the other unions. In Coonor and Glendale there have been instances of strained labour relations and tensions brewing as

58 Another trade union affiliated to CITU

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a result. With regard to garden level daily problems and negotiations, the management mostly discusses these with the members of NDEWU and a decision is taken accordingly. The right to freedom of association in the Nilgiris tea industry virtually does not exist. The facilitators of that right, the unions, are in disarray. The workers have to follow the writ of the managements for their own survival, said a PLF representative. According to Shri S. Balan, General Secretary of NDEWU, their membership has dipped by 50% since 2000. Mostly as the result of the exodus of male permanent workers from the tea industry in the Nilgiris, which also affects the other unions.

Maniram Tanti (54), General Secretary, ACMS, Mikirchang Division, Behora Tea Estate I am a fourth generation tea worker in Assam. My great grandfather migrated from Kalahandi, Orissa during the last decade of the 19th century. The migrants came by river via Calcutta to Tejpur. My father, Binod Tanti, was born in Assam, in a tea garden and started working in Meleng tea estate. Later shifted to Behora, as a line security (chowkidar) where I was born. Though there was an LP school in the garden, my father sent me to Behora Bazaar Private School outside the estate. I finished my 9th standard there and started working in Behora as an adolescent worker in 1970. My salary was Rs.3.50. I was employed as a temporary worker and engaged in spraying pesticide, hoeing etc. When I was 17 years, I left the garden work and went away for 6 months. I was a vagabond at that time, could not stable myself in tea garden work. This on and off the tea gardens in my life went on for almost seven or eight years. I went around Assam and West Bengal. Finally I was made a permanent worker in 1980. I married my wife Rajabati 25 years back and settled in the Behora tea estate. My father had a kutcha (not of brick, mortar, cement, sort of temporary shelter) house. When my parents died, I requested the garden management to allow me to build my own house on a piece of land here. Though it is rare, they have allowed me. I have built my own house with brick, mortar and cement. I also got some help from the management in procuring raw materials. But that was 10 years back. Since then, the management have sometimes supported me in repairing my house and sometimes not. I have been asking them to whitewash my house for the last two years. They are yet to respond. My house needs urgent repair. I am not able to do it. My wife is still a temporary worker. And I get salary for around 18-20 days since I became the general secretary of the union. The management does not recognize my union related work in the garden during working hours and make me absent from work. I have complained both to the management and our ACMS leaders but no positive action has been taken so far. Our weekly expenses are around Rs.500 and it is difficult for us to survive. I collect firewood from the nearby forests and sell in the local market. I try to do some business to add on to our family income. We are not happy with the present minimum wage or benefits. The tea companies are reducing benefits every day, not taking care of our houses, the labour lines. See the state of sanitation in the labour lines. The drains are choked, the tube wells have gone dry, there is only one water tap for almost 7/8 houses, still no toilet. But, they are increasing their planting area every year. They have recently demolished a labour line of 40 houses and planted new tea plants. I am a union leader in my division but what can I do? I have no power. Even the head clerk here is much more powerful. He knows the union leaders and gets to know news on negotiations, wages, and benefits well before us.
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Conclusion The study clearly indicates that casualisation is affecting working conditions on Indian tea estates supplying Unilever as well as creating serious difficulties in the realm of labour relations.

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Case study: Margarine factory in The Netherlands59


The worlds biggest margarine factory is the Unilever factory in Rotterdam, better known as the SU Nassaukade. It produces 135 different margarine products as well as liquid cooking fats (measured in Stock Keeping Units) for the European market. Famous brands like Blue Band, Becel and Croma (Netherlands), Flora (United Kingdom) and Rama (Germany) are produced in this factory. It is the only European margarine factory that can produce pro-biotic margarine products and margarines that contain fish oils. There has been a margarine factory at this location, next to the Nieuwe Maas River in the RhineMeuse delta, since 1896. Although some parts of the old factory are still visible, the production of margarine is a high tech business these days, with six highly automated tub lines and two bottle lines. In one eight-hour shift, a tub line operator produces 50 tonnes of margarine in 500-gram tubs or 35 tonnes margarine in 250 gram tubs. In 2009 the total margarine production volume was nearly 200 kilo tonnes.60 (See box 1.)

Some facts about the SU Nassaukade in the year 2009 207 kt total production volume 198 kt margarine and cooking fats products 9 kt peanut butter and sat sauce 6 tub lines for the production of margarine bottle lines for the production of liquid cooking fats wrapper lines 1 Peanut butter and sat sauce line Packaging line 225 employees 146 for production 30 as technicians 19 in the warehouse 10 for planning and finance 10 for management and operations 10 for innovation

A sharp decrease in employees One of the tub line operators is Ronald.61 He has worked in the factory for thirty-two years and has seen big changes in the production and working conditions. We used to work forty hours a week, but it gradually has been reduced to thirty-six hours. One week of five working days and one week of three working days, he says. The timetables are very complicated these days, since we changed from three shift work teams to five shift work teams and recently back to four shift work teams. I can hardly remember which days and times I have to work next week.

59 This text was written by Evert-Jan Quack 60 During the last reorganisation wave of 2007 the Calv peanut butter and sat sauce factory in Delft closed and is now integrated in the factory in Rotterdam, but operates fully separate from the margarine lines to avoid any transmission of peanuts to the margarine. This production line works with 15 ftes. Because of the separation this investigation will focus only on the margarine production. 61 Because of protection and privacy reasons this interviewee will be referred to in this research as Ronald.

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Ronald has seen the workforce at the factory shrink, year after year. The factory is currently working with 225 employees of whom almost 150 are directly involved with the production. But in 1996 a higher number of employees 100 more produced 50% of the production volume of 2009. If you compare this to the number of employees in the 1980s the decline is even more dramatic. The Unilever factory in Rotterdam used to work with 1200 employees in the early 1980s. The decline started with the first outsourcing wave for clothes laundering, security, catering and general cleaning in the mid 1980s. At the same time positions of toilet guards and timekeepers were made redundant. During the 1990s there was a second outsourcing wave with a strong focus on the technical positions. Automation projects eliminated a lot of jobs during those years. In 1994 the refinery at the margarine factory was closed because of reorganisations. Unilever closed or sold many of its so-called not-core-businesses. After 2000, a third outsourcing wave occurred. IT and administrative tasks like Human Resource administration and invoice administration were first centralised for all of the Netherlands and then outsourced. (See box 2.) The stirring history of Unilever in Europe Before 1980, Unilevers focus was on the European market. In 1980, 75% of the global turnover in food products came from activities in West Germany, the United Kingdom and the Netherlands. Meanwhile, the turnover in washing and soap products was distributed more globally. All the activities of Unilever in Europe contributed to 60% of the total (worldwide) turnover in 1980 and another 60% of the workforce was based in Europe. In 1980 Unilever employed 292,000 workers worldwide. In 1982 Unilever harboured ambitions to be a global player. The goals changed, Unilever strived to be the number one worldwide in food and washing products. They purchased new companies and brands abroad and sold divisions outside the focus activities. For example, between 1982 and 1985 Unilever sold her cattle-fodder, transport and Chemistry divisions. Refineries and plantations were sold in the 1990s and after 2000 this process continued. On the other hand Unilever bought brands for many billions of Euros. Their best-known and biggest acquisition was Best Food based in the United States for 24.3 billion US dollars in 2000. In 1986, internal reorganising started. For instance, the production of Dove soap was concentrated only in the Mannheim factory in Germany. Many margarine factories were closed: now only five big margarine factories and two smaller ones remain in Europe. Outside Europe the production is concentrated in certain countries or a certain country per continent: Indonesia, India (soap and tea) and China for Asia, South Africa for Africa and Brazil for Latin America. The European food market is not a growing business anymore. Most of Unilevers growth comes from outside Europe. The problems in Europe are due to a saturated market, unsuccessful innovations of new products and an aggressive competition with supermarkets entering the grocery market with their own brands. The increasing bulk purchasing power of supermarkets does not help either, not does the rise of discount supermarkets like Lidl and Aldi. Increased competition, reorganisation, outsourcing, casualisation and automation resulted in the elimination of 135,000 jobs in Europe in just 25 years, from 170,000 in 1980 to 35,000 nowadays. Less sympathy with employees Ronald started his career as a tubs and lids operator in 1978, as a young man of twenty-four years. His previous job was working as an electrician for the Dutch Railways. Travel time between Rotterdam and Haarlem was the main reason for him to look for another job closer to home.
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Working for Unilever at that time had an extra advantage because the weekends were free, they worked with three shift work teams and the salary and secondary conditions were very good, as Ronald explains. After a two-month trial he was offered a permanent contract. His first impression of the factory work was negative. I thought it wouldnt last long, because it was boring and without challenges, he says. But that changed when he worked himself up to an operator on the production line of Becel margarine. I remember very well that we were stimulated to learn new skills, he says. So he started a vocational study in Chemistry, which he finished in 1980. By doing this course I could leave the factory floor and started working in the laboratory of the quality control department of the factory. During the 1980s Unilever changed as a company, emphasises Ronald. Reorganisation was followed by a new drive to bring down costs. In one reorganisation the quality control department was closed. Ronald had worked there for eight years. I was lucky I could be transferred back to the factory floor as a tub line operator. But I remember it as a turning point. Unilever became a company with less and less sympathy for their employees. They turned down the secondary working conditions and learning new skills wasnt stimulated anymore. In 1995 Unilever introduced the Total Productive Maintenance (TPM), a new working model imported from Japan. The tub line operators had to work with more autonomy. Technical tasks shifted from the technical department to the tub line operators. From that moment they were responsible for maintenance, checks and small repairs of the machines. Fifty technicians became redundant as a consequence. The factory changed completely. I can understand we need to compete and thanks to automation processes we are now one of the most productive margarine factories in the world, Ronald says proudly. Each operator is now responsible for one production line. One extra operator is always available to relieve the other operators on three production lines for changeovers and for breaks. One expedition operator delivers packaging material to all the lines. And one tubs and lids operator feeds two production lines. This means that on average 1.9 persons are involved in the whole production of margarine on one tub line. The increase of productivity is good to compete with other factories, but Ronald doesnt agree with the way Unilever is reducing secondary work conditions or with how Unilever in general treats the factory workers. Its sad, but Ive seen so many young guys leaving the factory during the years. A factory like the SU Nassaukade needs motivated employees. I do not think the managers understand that. They only think in numbers and statistics. As employees we are nothing more than a cost number which they have to reduce, instead of a valuable production factor in which you have to invest. That is not fair. Organisation structure of Unilever Unilever has two headquarters, one in London and one in Rotterdam. Beneath the headquarters there are three pillars: 1. Supply chain (with the factories); 2. Sales and marketing; 3. Innovation and research & development. The factories are divided per continent. In Europe Unilever owns 65 factories. All European factories in the Spreads & Cooking Category, Europe (SCCE) are controlled by the office in Switzerland. They decide which products are made in which European factory and in which volumes they have to produce it. Bulk purchasing of ingredients and oils for the factories are also done to lower the price using economies of scale, increasingly on a global level. Most factories are still working with their

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own contracted transporters but Unilever is looking how they can reduce transport costs, for example by outsourcing it to one big company. The next step in centralised coordination will be bringing the manufacturing and marketing of world brands like Lipton (tea) and Ola (ice cream) into the hands of one manager. The directors of Unilevers factories are responsible for a cluster of factories. The SU Nassaukade is in a cluster with the factory in Kleve in Germany and Hellendoorn in the Netherlands. Since January 2008 the director of this cluster is Cees van der Star. Sales and marketing are divided regionally. In the past, most countries had their own marketing and sales head offices, but this has recently been regionalised. For example, the Netherlands, Belgium and Luxemburg are now Unilever Benelux with their main office in Rotterdam above the SU Nassaukade factory. Ireland is now part of the marketing and sales cluster with the United Kingdom, and Germany partners with Switzerland and Austria in another cluster. Innovation, research & development are concentrated at one location in Vlaardingen, the Netherlands. New employees rarely get permanent contracts Since the late 1990s there has been a trend towards flexible work and contracting. These days, workers hardly ever get a permanent contract and have to work with year contracts. A career such as Ronald described above, is not possible now. After a two-month trial, a new employee gets a year contract followed by another year contract, etc. Furthermore, temporary employees who work for employment agencies occupy more and more positions on the factory floor. Its a shame that for years no permanent contract has been given to any new factory worker, says Patrick van Klink, secretary of the works council. They have to work with temporary contracts, till they leave. During a normal working week there are between 15 and 25 contracted workers on the factory floor but highly concentrated on some tasks. For example, all the tubs and lids operators are contracted from employment agencies except for one who has a Unilever contract. I understand that there is some flexible work needed in jobs like tubs and lids operators, but with too many temporary jobs on such an important place on the production line, the basic staffing is in threat, Van Klink says. Also, expedition and the job of putting stickers on the tubs for special promotions at the supermarkets are primarily done by employees who are contracted from employment agencies. The works council wants a stop on subcontracted employees because all the reserve workers are working for employment agencies. On average, twenty percent of the workforce in the factory works without permanent contracts. This is also described as casualisation and focuses on the number of subcontracted employees as well as employees with a temporary contract. Twenty percent is too much, Van Klink explains. We have to scale down the number of subcontracted employees and good and motivated temporary employees have to be rewarded with a permanent contract. That will be our focus for the next years, he says. All the tub line operators work with a Unilever contract although the new ones only have year contracts. As a consequence, employees work for several years (in some cases seven years) in the factory without the opportunity of a permanent contract. That is frustrating for many of them who are motivated, good employees, explains Van Klink. And of course there is a tipping point for most of them, from when they choose to work somewhere else. We have lost many good workers in the factory just because they couldnt get a permanent contract. The result is that we are understaffed and that our experienced staff has to make free lots of time to train the new ones, of whom actually

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many will leave the factory soon because they cannot get a permanent contract. It is a negative spiral.

The right to organise Three unions are active in the factory in Rotterdam: FNV, CNV and De Unie. Eighty percent of the employees are members of these unions. They are free to decide which union they prefer. Besides, there is an active works council of nine persons in the factory who are elected by the employees and who work independent of the management. Unilever itself does not encourage the workers to organise but the works council is very active in stimulating employees to be organised. Even contracted workers and temporary workers are getting information about the benefits of being organised. Union leaders have free access to the factory. Only during times of strikes or other actions they can be refused. In 2007 was the latest strike in the factory. For nearly three weeks the factory was closed. The strike resulted in a good collective agreement, following the recommendations of the works council. The problem with three unions which make decisions independent from each other is, however, that Unilever can drive a wedge between them during negotiations. The ongoing negotiations about a new collective agreement are tough because a lot of the results of the former agreement are put under pressure. Unilever itself has learned from the strike as well. They do not want to be vulnerable to such strikes anymore and have reorganised the European factories in a way that now a back-up factory elsewhere can take over the production of other factories in times of a strike. This makes strikes a less efficient threat for unions. Moreover, Unilever can put pressure on employees by saying that the strike of 2007 had cost a lot and was not good for the name of the factory with respect to negotiating future volumes at the Spreads & Cooking Category, Europe (SCCE) office in Switzerland. Unilever is the champion of casualisation Michael (23) entered the factory in December 2008 after a career as a sales person.62 He went to a recruitment day organised by Randstad Uitzendbureau, a leading employment agency in the Netherlands, which was recruiting for the Unilever factory in Rotterdam. I didnt want to work more in the sales business and was always interested in production work, so I gave it a try. I have to say that it was a big surprise that I could start working in the factory. He got a two months trial and after that a year contract and started working as a tub line operator. Now he got his second year contract. The management told me that after passing my VAPRO *an officially recognised operator diploma+ they would give me a permanent contract. Of course Michael hopes he will pass his examination and get a permanent contract at Unilever because it has advantages. I have the feeling after working in several small businesses that working for a multinational like Unilever will give me more opportunities to grow to other positions. But to apply for internal vacancies you first have to have a permanent contract, he says.

62 Because of protection and privacy reasons this interviewee will be referred to in this research as Michael.

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Michael has one complaint. After working a year in the factory I needed some feedback from the management to hear if they were happy with me. I felt insecure that there was no staff appraisal. But now Ive a second year contract, I feel much better and Im confident. From now on Im going to concentrate on improving my skills and passing for my diploma. He is not worried that he is easily replaceable. Yes, I am working just one year in the factory, but I finally got positive feedback that Im doing well and everyone knows they need young, motivated staff. The employees who work for employment agencies have different contracts. The increase in subcontracted employees is due to reducing the conversion costs. Contracted workers dont get a fixed shift allowance or overtime allowance and only work with minimum guaranteed working hours which makes them flexible to work more when the market needs more margarine and work less when the market asks for less margarine. Even when one of the subcontracted employees who worked for years in the factory was asked to work for Unilever, she refused. That says a lot about how employees value working for Unilever nowadays, says Patrick van Klink. Sometimes they feel more secure with a contract from an employment agency than working for Unilever itself. It is because lots of secondary work conditions have been dialled back during the years and Unilever can offer them only a year contract. The end of a generation Tub line operator Ronald has different views on flexible work than his colleague Michael. According to Ronald it is not only the contract but the work itself which is much more flexible these days. There is an increase in changeovers between different products due to a focus on market demand, he says. The machines have to be updated, cleaned and ready for new ingredients and tubs before we can start producing another margarine product. That is stressful work. In fact, when the machine isnt working, there is no productivity. But with the increase of temporary employees, changeovers are not always going smoothly. Its something you have to learn and someone who works here for just a year doesnt have the experience and isnt that fast. The employees have to respond flexibly to the changes in demand. When the client wants more margarine, we have to make extra hours, says Ronald. He continues: Because of understaffing the consequence is frictions between workers, especially when things dont go as planned. Work pressure has increased significantly and productivity targets are increasingly pressed by the management. Ronald does not blame the temporary workers for the increase in work pressure, but it is a fact that issues start easier when too many experienced employees are replaced by new inexperienced employees. We already feel the pressure to train new employees. And working with less experienced colleagues doesnt make it easier to secure production targets. And we all feel the consequences in our pocket at the end of the year in our bonuses. But the work pressure is increasing even more substantially because the workforce is getting older and has more physical problems. The average age of the workforce in the factory is 49 years and in the near future the older generation will retire. This creates a new set of problems. Absence because of illness is higher at the SU Nassaukade than in any other factory of Unilever in Europe, at ten percent. The older generation of employees are not sick more frequently than younger generations, but if they are sick, they need more time to recover. Patrick van Klink: The management is complaining about the high absence rates caused by illness. But it is their own fault. They set productivity targets without looking at the circumstances we have to work with. We are working with full capacity, are understaffed, have to train a lot new employees because they dont want to give permanent contracts to them and as a consequence the average age is rising.

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No fear for closure in near future Thanks to reorganisations of Unilever in Western Europe the SU Nassaukade was able to increase production volumes after 2000 because of closures elsewhere. That, in contrast with the 1990s when the production volumes of the SU Nassaukade were going down. As a consequence, prior to 2000, the works council agreed with the management that without an increase in volume it would be hard to give new employees permanent contracts but as soon as volumes would increase permanent jobs would be created. The last never happened, despite a sharp increase in production volumes after 2000. The factory is now working on full capacity. Im disappointed that the management didnt keep their word. We are engaged in tough negotiations now to finally give some of our experienced temporary employees a permanent contract. Our target is to provide fifteen of them with a permanent contract in the coming year, says Patrick van Klink. The works council is campaigning permanently to keep experienced employees and to reward them with a permanent contract not only for solidarity but also to counter the ageing of the workforce, to relieve the older generation and to combat sickness absence. They have the feeling that the new director who started in January 2009 understands the problems better, but this has not yet resulted in a satisfying agreement. The employees themselves are not concerned that the factory might be closed, like so many other Unilever factories in Europe. The SU Nassaukade is the biggest margarine factory in the world and it would not be easy to relocate the whole volume of production elsewhere or to outsource it to a subcontractor. Whats more, the new management has plans to invest heavily in the factory, for example in new machinery and a new roof which is a positive signal to the employees. Furthermore, there is the belief that the new management is more active in lobbying to guarantee future volumes with Spreads & Cooking Category, Europe (SCCE) office in Switzerland. And finally, a complete new office of the new regional head office of Unilever Benelux was established on the factory site in Rotterdam and the factory remains one of the key margarine factories of Unilever in Europe. Summary There is a decrease in the number of employees working for Unilever in Europe after 1980: from 170,000 in 1980 to 35,000 employees nowadays. The SU Nassaukade margarine factory had 1,200 employees in 1980. As a result of reorganisations, automation, outsourcing, casualisation since the 1980s there are now 225 employees. Productivity increased after 1980 due to the introduction in the mid 1990s of the new production model Total Productive Maintenance (TPM), further automation, the outsourcing of standard work and by reducing conversion costs. The total production volume of SU Nassaukade doubled between 1996 and 2009 and accounts for 200 kilotons of margarine in 2009. Twenty percent of the workforce does not have a permanent Unilever contract. They have to work with temporary contracts, mainly year contracts, or are subcontracted employees, mostly working for employment agencies. To keep payroll costs low and to make employees less critical (80% of the employees in the factory are organised in trade unions) Unilever strives to achieve less permanent contracts. New employees can hardly get one. No permanent contract has been issued in the last five years at the SU Nassaukade. As a consequence there is a continuous stream of temporary employees and subcontracted employees as they do not stay for many years in the factory when there is no prospect of a permanent contract. The training of these new temporary employees has to be done by the more experienced staff, and is not in line with securing productivity targets.
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New and motivated employees lack the prospect of a permanent contract and leave the factory when they have other opportunities somewhere else. As a consequence of the average age in the SU Nassaukade margarine factory is 49 years. Related to a high average age and rising work pressure, the factory has a high absence rate due to illness (ten percent). Competition is not felt only by rival food corporations or supermarkets. Unilever is pressuring its own factories to be more productive through continuous internal benchmarking. With all the closures of Unilever factories in Western Europe of the past years, the internal competition is felt by the employees to be tougher than external competition. The SU Nassaukade had the advantage of closures elsewhere. And because of the concentration of margarine production in Rotterdam and new investments in the factory the employees are confident that the factory will not close in the coming years.

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Case Study: Unilever in Brazil63


Introduction According to Marcos Tebom of the Food and Beverage Industry Workers Union that represents 12,000 workers, the Dutch multinational has never been open to negotiations. Tembos was an employee at the unit located in Jundia (So Paulo state), closed due to the merger with Bestfoods and because of the companys constant restructuring policy He feels the frequent changes, which resulted in lines being transferred and in the workforce being pared down, did not help much. This opinion is shared by Felipe Saboya, researcher at the Social Observatory Institute charged with developing comprehensive studies on Unilevers operation in the country. The companys constant restructuring leads to major staff turnover. This by itself already demonstrates that it doesnt talk to its workers, he says. Saboya adds that in Brazil, Unilever makes the most of the fact that the legislation stipulates unicity, i.e. a single union per sector, per territorial base. When different local unions represent workers from the same company but affiliate to different labour congresses, this tends to atomize their strength and favour the employer. From 2002, when the merger took place, Unilever used every possible means to achieve its bold productivity targets and to restructure itself on the basis of the hygiene & beauty and food pillars. According to the Social Observatory Institute, it reduced the number of workers by 10% over 4 years the\\sv-gmd-001.greenmonday.local\algemeen$\Klanten\02 FNV Bondgenoten\0201 FNV Company Monitor\Multinationals en vakbondsvrijheid\engelse versie\RteFrame_15.1.3028.1103.html?pf=pf - _msocom_1re used to be over 12,000 employees all over Brazil concentrated production, transferred lines and invested in replacing old machinery, an ongoing process with numerous impacts on employees Unilevers largest production unit, in Goinia (Gois state), for instance, still faces problems linked to tomato production. These include child labour and forced labour the last documented occurrence of which was some two years ago according to the Social Observatory as well as outsourcing, still significant at the plant at around 40% of the workforce. Workers there have not yet achieved a level of union organisation that truly represents them. Flexibilisation or precarious work? In Brazil, the discussion on the so-called flexibilisation of labour legislation is taking its course among the federal government, Congress, the Judiciary and experts from various fields. The debate is actually about changes to the Consolidation of Labour Laws (CLT) enacted in 1943 during the Getlio Vargas presidency. It is said that the legislation has fascist origins and has not kept up with the technical/scientific revolution, whilst being ill-equipped to deal with the preponderance of intellectual work and the dissemination of outsourcing. Flexibilisation has been put forward mainly by business interests in such a way that tends to rid them of their responsibilities towards workers. This is the opinion of the Minister of Labour and Employment Carlos Lupi (PDT- Democratic Labour Party), expressed in a special section of Valor Econmico, Brazils main daily newspaper on economic matters, published in November 2009. He advocates an expansion in workers rights, with the maximum working week shortening from 44 to 40 hours, for example. For his part, the president of the National Association of Labour Court Judges (Anamatra), Luciano Athayde, states that flexibilisation could mean more precarious rights.

63 This text was written by Maria Freire

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Unilever in Brazil With 12 factories throughout Brazil, Unilever celebrated its 80th anniversary in the country in 2009, when it began putting into practice the strategic plan Lets build a company that is greater than great, due to run until 2012. Last year it also established the catchphrase From ambition to action Lets create a new Company! as the starting point. With 11,288 employees, the company intends to conduct its actions on the basis of five pillars: accelerating growth, by increasing market share at a faster rate than the growth of the Brazilian market; making profits by means of scale and with higher added-value products; promoting sustainable transformation in society; increasing efficiency through long-term capabilities; and integrating the development of the business with a cultural transformation. With nine brands in personal care, nine in nutrition and seven in hygiene, the company is not publicly traded and, for this reason, informs us in its latest annual report that it does not provide financial details. The 2008 annual report which can be found on the website states: that Unilever leads ten of the seventeen categories in which it operates. In spite of a 27% rise in production over the last four years, it claims to have reduced its carbon emissions by 56% and its water consumption by 32%, per tonne produced. With respect to staffing, it assures us that no more than 5% of employees are temporary. These are summer hires for ice-cream production in the plants of Southeast and Northeast Brazil, and tomato-pickers hired at harvest time in the state of Gois. Furthermore, the figures show a staff turnover rate of 2.1%, which is low, considering the geographic distribution of our employees. There are also those who espouse the idea that before any flexibilisation, a reform of trade union legislation has to take place. The aim would be to change the fragmented landscape made up of 8,000 mostly small, weak and localised organisations, based on the unicity rule, which have very little room to manoeuvre when it comes to collective bargaining. Furthermore, they have to rely on the union tax money and the resulting State interference in their affairs and in labour relations. Experts on the subject think the reforms must above all introduce the practice of direct negotiation between the representatives of capital and labour, thus getting around one of the main inheritances of the CLT, which provides for conflict-resolution through the labour justice system. In an interview with Valor Econmico, sociologist Jos Pastore, one of the most respected analysts in the field, reminds us that the way the legislation was formulated leaves only two points to be bargained over: pay and participation in company profits. Unilever scenario In fact, the unions representing Unilevers 12 production units in the country have little or no room to manoeuvre when bargaining. They tended to belong to Brazils two largest labour congresses CUT and Fora Sindical but lately some have joined other congresses, such as Intersindical or CGTB. What is left is each factorys performance to determine the PPR (Programa de Participao nos Resultados Programme for Participation in Results, a unilateral bonus programme), a programme that defines the share of the profit workers get, and the wage floor, which is regional. Always present on the bargaining agenda is the hours bank 64which the unions try to eliminate every year. This year we have managed to vote on the hours bank separately and get rid of it after 6 months of negotiating, states Daniel Constantino Pedro, the president of the Mogi Mirim and Region Food

64 A mechanism created in the 1990s as a last resort to avoid dismissals. When production is down, the working week is shortened and pay is maintained, but the hours not worked are banked. When production picks up again, workers have to pay back the hours that were banked. (In other words, they do overtime for their normal pay.)

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Workers Union (So Paulo state), which covers 12 towns. He is responsible for Unilevers Mogi Guau unit, which has only 50 employees and manufactures Maizena. Constantino says he has a mammoth task on his hands. Next year he will probably have to deal with the issue again in the hope of no longer seeing his people working on their days off without this involving remuneration of any sort. In Vinhedo (So Paulo state), at the unit that makes shampoo and fabric softener, with 600 employees, the struggle is equally tough. Management have made it very clear they dont negotiate anything beyond what was defined with the So Paulo State Federation of Industry, says Alessandro Ferrarezi, member of the 10-member board of the Vinhedo Unified Chemical Workers Union. One of the most combative in So Paulo state, the union gained certain fame among its peers in April 2008, when it won a lawsuit against the company. The judgement eliminated the 0800 telephone service created by management to encourage workers to cease paying subs to the union through the payroll. The same suit alluded to nine other instances of disrespect to trade union activity. The company was fined 39,100 *18/12/2009 exchange rate+ and was forced to sign a Conduct Adjustment Document (TAC). Ferrarezi is sure Unilever considers the confrontation with the union almost personal. There is a history of struggles for the re-hiring of sacked union members, harassment lawsuits and numerous protests at the factory gates. The toughest time faced by the union was in 2006. A heavy police presence was put in place to disperse a 24-hour stoppage for better pay and conditions, and on the following week a mass meeting was undermined when the company gave the whole workforce a day off. PLR vs. PPR Constantino from Mogi Guau questions the PPR, since it does not have the unions seal of approval and is based on virtual targets and indicators that workers hardly know about. Furthermore, it is not in line with PLR Law (Law N 10,101) passed in 2000, which stipulates participation in profits and results (Participao nos Lucros e Resultados PLR, normally bargained between employers and unions) and not just results. Once, we hit 120% worth of participation, but we have no way of knowing, since the employee committees chosen by management in the plants come to us with everything all packaged and ready, says Ferrarezi. In his view, the biggest problem is the lack of understanding of the criteria that determine the PPR and other bonuses. For example, on one occasion in the past, Vinhedo workers each received a prize of 196 because of the Total Perfection in Manufacturing project. The factory achieved a level of excellence according to Unilevers own annual reports, but the workers never again received a cash bonus. Occupational disease: a common symptom of precarious work The unions complain that relations worsened after the human resources department was outsourced and local management started being replaced every two years. The president of the Pouso Alegre and Region Food and Beverage Industry Workers Union (Stiapar), Willian Vilela de Souza, is an exception. He does not complain about the current management. He says that what is scariest is that management gives the impression of being democratic, since it does not make itself very much present. The factory is over 34 years old and has 800 employees at the moment, a third of who are unionised; it produces Ades soy milk and Knorr soups and broths. According to Vilela, the company does not seem to worry about waste or the fall in production in 2009 (20-30%, he estimates).

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Vilela has presided his union for eight years. He is often sought by other union leaders to tell the story of how he managed to retire 200 workers who had injuries caused by the aggressive noise they were obliged to deal with at the production lines. He explains that the whole process took 10 years, but the previous management was decent and obtained honest medical reports. Mogi Guau and Vinhedo find themselves in the same situation but have not had the same luck. Constantino dreams of the day when the local newspaper will carry headlines celebrating the retirement of 100 former employees who have occupational diseases. Moreover, out of 50 current employees, almost all unionised, over 20% have some kind of repetitive strain injury and are compelled to tolerate this under all kinds of pressure. (Read the testimony of a worker from this unit in the box.) The problem there is caused by old machinery, loud noise, starch powder in the air and heat in the production area. The company does not recognise that this work environment is unhealthy and wont issue reports on this. We have cases dating back to 1992, he reveals.

A worker speaks Mogi Guau unit, So Paulo state Over the last 20 days, I have undergone more pressure than usual, from management, from colleagues. Theyre trying to exclude me. They are treating me very badly, making fun of me, saying Ive gone lazy, that I dont want any heavy-lifting, but I can hardly cope. I cant keep my arm raised for more than 30 seconds without it tingling and then feeling dormant. The pain has been worsening. It starts in my arm and makes its way up, to my shoulder. It is not by chance. The work is rough, repetitive. I work at the end of lines and have never gone beyond the post of helper. I have worked here for 13 years. After 4 years at the company I started getting this pain that runs up my neck and that I cant get rid of now. Ive taken lots of medication, undergone physiotherapy. Now tests are showing I have grade 2 carpal tunnel on my wrist. The doctor says that if it gets to grade 3 Ill have to have it operated on, but I dont want that. Im afraid of losing my job. I have a small child; my wife is a metalworker; what will happen to my life? I only finished secondary school; I dont even know if I can work in an office with these problems I have. And they keep insisting I work the heaviest machine. We have three types of machine here. When I started, all I did was package products with the 1kg machine. (I am 1m67 tall and quite well-built.) When I started getting these pains and undergoing treatment, they put me on the 500g machine and then on the 200g machine. Two years ago, the problems on my leg first appeared. I had to take leave because constantly pulling boxes full of merchandise demanded a kind of repetitive leg movement that damaged a meniscus and cruciate ligament on one of my knees. I had to undergo surgery. I spent 10 months on leave recovering after a 3-year-long treatment. Now there is a new supervisor and a new doctor at the factory who say theres nothing wrong with me. And they keep putting pressure on me to go back to the heavy machines. I have asked to trade places with an employee who puts adhesive tape on the boxes, but my coordinator says that his supervisor wants me to go back to the heavy machines; the supervisor, in turn, says that it is his manager ordering this. Im nervous, I dont know what to do anymore, thats why Ive come to the union for some guidance. The worst part is that the medical tests that can prove Im no longer fit to work can only be done upon a request made by the company, and they dont want to authorise it. I look around and all I see are people like me. There are people going deaf, theres this guy whos been working for 2 weeks with a severe backbone condition. I think the only reason why they havent yet sacked me is because I am the elected deputy-chair of the Internal Accident Prevention Committee (CIPA). Just for that. The situation is identical in Vinhedo. The union is not able to prove any type of illness brought about by the various manufacturing activities, although it calculates that many have injuries, as do two
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union board members. Ferrarezi is suspicious of and is investigating a particular medical specialist who provides services to several companies in the region and always fails to detect diseases related with activities on the production line. In the past, he stresses, there was a similar problem with a professional employed by Unilever itself. On the other hand, the Vinhedo union is celebrating the fact that a collective suit it initiated has cleared its first legal hurdle. The suit aims to compensate 600 employees for health issues owed to the handling of alcohol as a raw material. It has led, for the first time ever, to a high-level Unilever director from national HQ in So Paulo opening up a round of negotiations with the union. We are going to the wire, if for no other reason, because theyve offered only 30% of the total amount were asking for, informs Ferrarezi. He adds that this precedent may serve as a stimulus for another suit, which seeks to ascribe the label hazardous to 28 functions in the factory. This suit is worth an estimated 3.9 million and will benefit 700 employees if successful. In Valinhos, also in So Paulo state, where Doriana margarine and Kibon ice cream are manufactured, the areas with the biggest health risk are the cold chambers. Union board member Jos Masiero, 50, had to retire early due to this. His union, linked to Fora Sindical, considers its negotiations with Unilever normally first class. There is also a very good environment between the leadership and the rank-and-file, made up of 800 direct employees, 80% of whom union members. He admits, though, that many workers have faced injustices and slowness in the process of obtaining retirement pensions resulting from unhealthy work environments. But Masiero makes a point of stressing: this is a personal opinion and not the opinion of a unionist that maintains a respectful relationship with the company. Unity means strength For their part, some 200 employees from the Igarassu plant in Pernambuco state, one of the hottest in the northeast of the country, have been awarded circa 39,000 worth of compensation by the Judiciary for having worked in heat 20% above the legal limit for seven years (1999-2006). Only after this decision did the washing powder factory become air-conditioned. However, the reality of precarious work in this part of Brazil is among the most dismal. But this is not all. Pernambuco state has two other units, in Garanhuns and Jaboato dos Guararapes, each with a different wage floor. For this and other reasons, there is a lack of dialogue between the various unions representing Unilever workers in Brazil. Unity among the diverse unions is pivotal to make the company take seriously at least one of its ten main global guidelines, which is precisely to prioritise relations with trade unions.

Hlia Ales de Oliveira - Former employee I was 21 when I started working for Unilever, in 1989. I am now 43 and was dismissed 2 years ago. I began in the shampoo-bottling line and 3 years later became a line mechanical operator. I learned this trade a short while before having my first child. But I used to play two roles: technical maintenance and product bottling. One day in 2000, I had intense hand pain. I reported it immediately to my supervisor and left to take some medication, but he asked me to come back. I worked in pain for a month. When I couldnt take any longer, I underwent surgery for an infected carpal tunnel. My hand got worse and I became depressed, as I could no longer do the job I really liked. First, I was humiliated because I did a mans job. Then, I got called lazy when I couldnt do it any longer. All of this affected me psychologically. I started getting panic attacks and had to go on leave about 4 times. I saw psychologists, a psychiatrist, took many strong medicines. At one point, I was spending almost
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235 a month on medication, which was just under half my pay at the time my husband and I were building a house at the time, and he used to administer our finances. At the factory, I tried to continue working with some plastic on my arm to warm it up, because my arm was always very cold. The company doctor was always encouraging me to give up my job and open up a trinket shop. He and others from the health department kept telling me that I was going to end up without a husband, which turned out to actually happen. My husband also worked at the factory and was sacked because he sent a red load to the white Close-up toothpaste line. I ended up without a husband, without a job and with two kids to bring up, Bruno, now aged 15, and Giovana, aged 12. And my ex-husband doesnt help me at all at the moment. He went off to Foz do Iguau [Paran state] to work with his brother in a car park. I started frequenting an evangelical church, which helped me stop taking prescription drugs. I had to cure my soul because depression is an illness of the soul. I stopped trembling and having nightmares. I finished building my house with my severance check; I live on the first floor and rent out the ground floor for 196 a month. When my hand allows it, I also do sewing jobs with my neighbour; some months this earns me another 275 or so. Im on my own now, and have to pay for everything. I have not managed to get a sickness report from the company showing that I developed tendonitis and bursitis at work. I have the help of a lawyer but am unable to request an invalidity pension because I cant prove that what I have was due to my work at the company. As well as the bad hand, I have a very painful shoulder. Theres a small bone in my shoulder that is worn, and I may have to undergo surgery. But I cant even think about that for now because I no longer have health insurance. Goinia a case apart With some 3,300 employees, Unilevers largest factory in Brazil is located in Goinia (Gois state, central Brazil), produces tomato products, mayonnaise and dressings. It has not yet managed to get organised in trade union terms. Over 40% of the workforce is outsourced and the remaining workers have seen the dream of being able to count on true representation end up in the courts and disappear, as if by magic. This is what happened at the start of the second half of 2009, after a stalemate between the preexisting union, linked to Fora Sindical, and a new union, linked to Conlutas and massively supported by the regions food industry workers. Workers had to swallow the following verdict from the labour justice system: given that it was an ideological and not a trade union matter, the Public Prosecution Service did not have anyone to appoint to chair the electoral committee that would promote the first contested union election in nearly 30 years. During this time, the Fora Sindical-linked union was accused of numerous irregularities, the least serious of which is its perfect harmony with companies in the region. Going against its own precepts, the Public Prosecution Service withdrew the injunction it had previously requested and obtained, and that had allowed the new union Sindialimentos to exist for almost a year. During this period, Sindialimentos fought hard for a fair election and became embroiled in endless judicial manoeuvrings. The Service alleged it didnt have the attribution of appointing someone to chair the electoral committee, since a stalemate had been reached with regard to this person, which meant the incumbent slate remaining in power, explains labour lawyer Rubens Donizeeti Pires. Pires, who provided legal support to the new unions creation and is the sole voice of the profession in favour of workers in the whole region, explains that one of the manoeuvres of the incumbent slate
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went beyond all reasonable limits. When the elections were formally called, only a five-day period was granted for opposition slates to register. Registration was opened late in the day and on the eve of a long weekend. So the day itself passed, then came the long weekend and after that no new registrations were accepted. The opposition was thus unable to contest the election. While it remained open, Sindialimentos managed the feat of reaching a collective agreement for 1,200 workers of the Goinia unit. And, whats more, in under a month it signed up 200 new members; in 6 months, it surpassed the number of members the old union had ever had. Furthermore, it made gains such as a pay rise above inflation, a 35% nightshift bonus and an increase in supermarket vouchers, among others. It was workers response to a policy of persecution and dismissal against anybody who got involved with trade unionism, summarises Pires. Outsourcing and other misdemeanors Like other production units in the country, the Goinia plant has sub-contractors in non-core activities, but in large numbers due to the factorys size. They total some 1,500 workers in reception, cleaning, engineering, IT, distribution, etc. The outsourcing issue, incidentally, is among the reforms proposed for Brazilian labour legislation. The aim is to safeguard workers, extending to them the rights of direct employees. As well as outsourcing, workers at the Goinia plant suffer from various repetitive strain injuries. Pires says that lately he has been involved in a series of lawsuits in the name of workers given the sack after developing RSIs or having workplace accidents. In both kinds of case, the company has avoided reporting the incidents in question. The stratagem is to grant the employee sick leave, provide the proper treatment and as soon as medical tests show signs of recovery, time his/her dismissal for three months down the line to avoid it being noticeable.

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Case study: Unilever in Indonesia6566


Unilever Indonesia Tbk was established on 5 December 1933 in Batavia (now Jakarta) as Zeepfabrieken N.V. Lever. In 1941, Unilever Indonesia acquired a cosmetics plant, Colibri NV Surabaya. The current production of Unilever Indonesia is centralised in two locations: the Rungkut Industrial Area, Surabaya, East Java, and the Jababeka Industrial Area, Cikarang, West Java, with its head office being located in Gatot Subroto, Jakarta. On 22 July 1980, the company changed its name into Unilever Indonesia. With this latest change, PT Unilever became a public company whose shares are owned by the public, necessitating the publication of its financial reports to the public through the mass media. Unilever Indonesia currently operates in several fields. The Cikarang plants production range includes tea (Sari Wangi), margarine (Blue Band), NSD (Rinso), Liquid (Sunlight shampoo), skin care (cosmetics) and many brands of sauce (Bango, Parkiet and Sakura). The Cikarang compound also houses a marketing office and a Research & Development department. The Surabaya plant produces perfume (Axe, Rexona), soap (Lifebuoy, Lux), snack (Taro), toothpaste (Pepsodent), and more.

Big Benefits The business condition of Unilever Indonesia Tbk continues to improve, as stated in the publication on the Unilever Indonesia homepage: Our total sales, exceeding Rp 12.5 trillion (932,835,820) in 2007 and reaching 15.6 trillion (1,164,179,104) in 2008, show the continuation of our success in obtaining two-digit growth within the past 15 years. The Home & Personal Care division contributed 76.2% of the 2008 sales, with a growth of 21.1% within the same year. Meanwhile, sales growth from the Foods & Ice Cream division reached 35.1% in the year 2008 the highest growth level that we have achieved within the past four years. Since 1982, we are listed in the Indonesian Stock Exchange. Unilever Indonesia is in the top three companies of Indonesia with a market capital of Rp 59.5 trillion ( 4.440.298.507). Our share prices also continue to strengthen, showing a 136.4% increase since 2004. In early 2008, we acquired the brand Buavita from PT Ultrajaya, and in the same year we relocated our skin-care and liquid soap plant from Rungkut to Cikarang, in order to anticipate continuing increase of market demands and in order to increase cost efficiency.

In view of the above description, it can be seen that Unilevers business in Indonesia is very profitable. Another striking aspect of Unilevers business can be seen when we open the Unilever Indonesia home page. The page does not mention the exact number of people employed at Unilever presently, as a company profile generally should. Unilever Indonesia insidiously only mentioned the results of the studies it executed in cooperation with Oxfam (England) and Novib (Oxfam Netherlands), which state that about 300,000 people earn their living from the business chain PT

65 This text was written by Endang Rokani 66 Sources used: The Unilever Indonesia homepage, accessed on December 2009; Interviews with permanent employees and outsourced employees, as well as officials of the trade union; Law of the Republic of Indonesia no. 13 year 2003 concerning Labour; Collective Labor Agreement of PT Unilever Indonesia for the 1975-1976 period; Collective Labor Agreement of PT Unilever Indonesia for the 2009-2010 period; HR Transformation Leaflet of PT Unilever Indonesia; Magazine Sekitar Unilever Indonesia (All About Unilever Indonesia) 1st edition, year 2007

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Unilever. This information must be criticised, because it gives the impression that by giving benefits to many people outside of the company, it can neglect its responsibility towards the job safety and security of the labourers who directly support the success and development of the company. Labour relations The trade union official tells us that the Cikarang plant of Unilever Indonesia currently has two broad categories of workers: workers who are directly employed by Unilever, approximately 2,700, and outsourced labour, also around 2,700. The first category can be divided into subcategories of workers with either permanent contracts or temporary contracts. Unfortunately, it was impossible to obtain data on specific numbers of each category. Since 1981 each new worker signs a contract for a two-year labour period. If they do not make any fatal errors, and there are no specific health reasons, after two years they are formally inducted as permanent employees. No certainty For one interviewed former labourer, who had a two-year contract that was extended for another year, there was never any certainty that she would be inducted as a permanent employee after the two years. She mentioned a friend who similarly has just completed the second contract (third year working for Unilever Indonesia) and was not inducted as a permanent employee either the friend lost her job just like that. According to the female labourer, who is currently employed elsewhere, labourers, throughout the year 2006 and up to now, are no longer being inducted as permanent employees). The trade union official said that certain types of temporary labour and outsourced labour are not regulated in the Collective Labour Agreement, although this labour exists in practice. It means the trade union did not negotiate labour conditions regarding the temporary labour and outsourced labour and therefore that the temporary and outsourced labourers do not benefit from the CLA. Job security About job security the trade union official tells us So far, Unilever Indonesia has not replaced permanent labour with certain period agreement labour or outsourced labour to an extreme extent. Most permanent labour is maintained until retirement. However, he admits that there are certain departments, such as HR (human resources) and accounting, wherein retired employees are not being replaced; their positions remain vacant. He claims, I do not know why, nor what will happen to that department. He thinks that the HR department will be eliminated, because a new system called HR Transformation (HRT) has been introduced. In HRT, there is a program called People Link that supplies another way of communication about HR. Using this system, the employee identification number is applicable internationally. Using the abovementioned work relations system, the redundancy figures at Unilever seem very low. This is because the termination of work relations due to expiration of contract is not reported to either trade unions or the government. Keep On Guard Against It appears that within the past three years at least in the NSD division PT Unilever has no longer been inducting permanent labour. All production labour in this section is outsourced, especially in the case of female workers, while some male labour is bound by certain period work agreements. The female workers mostly work on the packaging section. According to trustworthy sources, permanent labour only exists at the supervisor level and in a small number of production sections such as operating machine production. The operating machine position is only open to men.

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Article 66 Section 1 Labour Law No. 13 year 2003 states that employees/labourers from companies which supply the services of employees/labourers may not be used by the employer to execute the main works or activities that are related to the production process, only for supporting services or activities that are not directly related to the production process. This is why the trade union tries to refuse the Managements desire to have the management of these sections be executed by other companies, or by the outsourcing system. One hotly contended labour issue in Indonesia today is the outsourcing system and many efforts are being made to avoid this system. One of the methods used is to limit employment of outsourced labour in many sections in the work place. Some trade unions at the unit level succeed with this method. But this method can be only effective if the trade union really works well and takes a strong position and, even then, it does not change the national labour system or policy. However, more divisions of Unilever Indonesia are being wholly managed by other companies, even though they are still located in the business area of Unilever Indonesia, such as the production warehouse (where the products are stored) and the transport department, from storage to the distributors. Nevertheless, we have not found any previously permanent labour that has changed status into either contract labour or outsourced labour. On hearing the stories from the labourers, it is hard not to conclude the trade union is being outwitted in its working relations with Unilever Indonesia, because even though management records still show requests to the trade union to discuss certain parts to be executed by outsourced labour, in fact many essential production processed already are being executed by outsourced labour. One example is the NSD production section, specially the packaging section, wherein all of the female labourers are outsourced labour. Wages Wages are regulated in the Collective Labour Agreement. Wages are regulated based on the wage scale of job classes, which are from scales 4-16, scale 4 being the lowest. In the Collective Labour Agreement (Perjanjian Kerja Bersama PKB), the minimum wage received for job class 4 per January 2009 was Rp.1,266,811 (95) and the maximum was Rp.1,867,532 (139) a month. Wages for January 2010 will increase in accordance with the stipulations already agreed on in the CLA. For job class 16, the minimum wage is Rp.3,239,350 (241.75) and the maximum is Rp.6,900,418 (514.95) per month.
Wages Comparison for 2009 Function operator supervisor Unilever 95-139 241.75- 514.95 Kao Chemica Indonesia 65-99 169- 187

Work Hours and Overtime Pay Work hours in the production section are generally divided into three shifts. The first shift starts at 6.00 a.m. and ends at 2.00 p.m., including a 30-minute break and a 30-minute overtime. The 30minute overtime is called the automatic overtime. This overtime is mandatory for each labourer every day. The second shift is 2.00 p.m. -10.00 p.m., and the third shift is 10.00 p.m. - 6.00 a.m. Overtime pay calculations stated in the Mutual Work Agreement are as follows: Overtime pay on regular working days: The first four hours : 200% x a days pay
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The fifth to seventh hour : 300% x a days pay Eighth hour etc. : 400% x a days pay Overtime pay on official holidays, weekends, or off-shift days are as follows: The first seven hours : 200% x a days pay Eighth hour : 300% x a days pay Ninth hour etc. : 400% x a days pay Trade unionism in Indonesia: a short history Discussing the trade union history of Unilever Indonesia is telling a long tale. The trade union of Unilever Indonesia has existed since the 1970s. Even though the activists were various affiliates from the political parties of the day, the trade union of Unilever Indonesia signed the first Labour Agreement in Indonesia in 1973, valid for a year until 1974. The second Labour Agreement, i.e. for the 1975-1976 period, was still signed by many organisations such as SARBUMUSI, KBIR/KBM, KESPEKRI, KUBU PANCASILA, PERKABI, and MKGR67. It was only in 1977 that Pharmacies and Chemists joined in the Pharmacies and Chemists trade union (Serikat Pekerja Farmasi and Kimia - SP FK). The condition remained the same both in Surabaya and Jakarta (now Cikarang). Along with changes in national labour politics, as well as changes in the name of the trade union at the national level, name changes also occurred at a plant level such as the name change of the trade union of Unilever Indonesia. In 1985, the trade union of Unilever Indonesia changed into the All-Indonesia Trade Union (Serikat Pekerja Seluruh Indonesia - SPSI). Likewise in 1993 the pharmacy unions name changed again into the Federation of the Trade Unions of Chemistry, Energy and Mining of SPSI (Federasi Serikat Pekerja Kimia Energi and Pertambangan - FSP KEP SPSI) of Unilever Indonesia, which is part of the All-Indonesia Trade Union Confederation (Konfederasi Serikat Pekerja Seluruh Indonesia - KSPSI) the national level trade union, but it does not affiliate with internationallevel trade unions. Unilever Indonesia has only one trade union throughout for the permanent contract workers. Membership In the Soeharto era, only one union was acknowledged by the government and that was SPSI. In this time, the government drafted rules that obligate companies to facilitate the interests of SPSI, such as membership dues issues, whereby the company must directly cut the wages received by the labourer for this purpose using the Check Of System process (COS the dues of trade union members will be deducted automatically from wages by management). This influences the recruitment patterns of SPSI membership: all labourers entering any company will automatically become a member of SPSI. This still happens in PT Unilever Indonesia today. However, the source explained that if the labourer is unwilling to become a member, he/she can state his/her unwillingness in writing. This written statement is necessary for reporting to the accounting department, so this persons wages need not be cut for the union dues. Unilever Indonesia-Cikarang currently records 1,860 union members. Mutual negotiations Since 1973, the trade union of Unilever Indonesia has had a mutual agreement with the company, currently called the Collective Labour Agreement (Perjanjian Kerja Bersama PKB). The latest and 18th PKB is the one for the 2009-2010 period. CLAs are made between the Cikarang trade union and the Surabaya trade union. The mechanism here is: the trade unions of both locales make their own drafts. These two drafts are then merged, resulting in the national draft. It is this national draft that

67 The names of the trade unions/labour groups affiliated with political parties, before finally all these trade unions are merged into the All-Indonesia trade union (Serikat Pekerja Seluruh Indonesia SPSI) by Soehartos militaristic government in 1985.: See below

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will be taken to the negotiation table with the management. The management also presents its own draft here. The negotiating team comes from both the Surabaya and Cikarang Unilever trade unions. Throughout the negotiations, there is never any pressure from the management to members of the Negotiating Team. The official of the trade union told us that there have never been any deadlocks in the PKB negotiations, because throughout the negotiating process, all members of the negotiating teams both the representatives of the management and those of the trade unions only concentrate on the negotiations, leaving all production activities alone. Trade union management Even though the Cikarang plant has five production units, it has only one trade union work unit. The trade unions, united in the All-Indonesia Trade Union (Serikat Pekerja Seluruh Indonesia SPSI), have 11 official members. To manage the members dispersed in all five production units, as well as those in the central office, an official is also taken from each production unit and from the central office. For the smoothness of the execution of the organisation, each production unit has their individual representative members, generally called Commissioner Boards (Badan Komisaris -Commissioner Board), whose duty is to assist the officials in executing the programmes of the organisation. Each production unit generally has 36 Commissioner Boards. Conditions of outsourced labour These outsourced labourers are placed in the warehouse, both in the business location of Unilever Indonesia and in other spots where Unilever Indonesia work is carried out, i.e., the production warehouse and the delivery warehouse. There are many labour suppliers at Unilever Indonesia. In this study we found two labour suppliers. One of the two is an Australian enterprise. One of the labourers, a 31-year-old man, has been working for the company for eight years. He previously worked as a salesman of daily necessities. From that work, he would get his basic salary and a sales bonus when his sales exceeded the target. Of course, his income was inadequate, because all expenses e.g. transport and meals were taken from his already low wages. He currently works for the production warehouse of Unilever Indonesia as a checker. In his workplace, 39 outsourced labourers are handling the production warehouse of PT Unilever. Today, having worked there for eight years, he earns a basic wage of Rp.1,288,000 (96.11) plus positional support of Rp.93,000 (6.90)/month, Employment Length Support of Rp.70,000 ( 5.20)/month, Transport Support of Rp.7,500 (0.55)/day, plus meals at the office canteen worth Rp.9,000 (0.67) a day. They are also included in the Labour Social Insurance (Jaminan Sosial Tenaga Kerja Jamsostek) for old age insurance, work accidents insurance, and death insurance. They have a separate health insurance. This father of one says that he cannot save from his income. For that reason, he tries to add to his income by selling cell phone connection credit in his free time, but it is still inadequate because he has to make the monthly payments for his house at Rp.537,000 (40.00)/month. As an outsourced labourer, he lives in constant fear of losing his job any time, seeing that the company that employs him is bound by contract to Unilever once every five years. This is the fifth year for him, and he is still not informed whether Unilever Indonesia is going to extend the contract with the company that placed him there or not. Even though he is a permanent labourer of the outsourcing company, he is still concerned if the contract of the outsource company (who sources him at Unilever Indonesia) with Unilever Indonesia is not extended, because it will be quite difficult for him to continue to have work then. Another story comes from a 28-year-old outsourced labourer, another father of one. He says that as an outsourced labourer, he cannot save money, because he does not have a house of his own and has to pay a monthly house rent of Rp.320,000 (23.80). For this purpose, he has to manage his money very carefully. He has to be very selective in spending he cannot afford to go for recreation and he is not free to visit his parents, who live back in the kampong far away from him.
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Since June 2008, the outsourced labourers established their own trade union. By mutual agreement, they joined the All-Indonesian Trade Union Confederation. Current union members number 400 people, which is 90% of all of the labourers employed by the outsourcing company. Members pay monthly dues of Rp.10,000 (0.75). This trade union is currently preparing itself for its first Collective Labour Agreement negotiations. The Outsource Trade Union does not connect with Unilever Indonesia management, but with the labour supplier enterprise. The trouble faced by outsourced labour when negotiating with the management is that the management always says that they want to consult Unilever Indonesia first. This is inconvenient for the trade union, because it seems as if negotiations are useless because they must wait for comments from the employing company. What pushed the warehouse outsourced labourers to organise themselves into a union is the number of injustices perpetrated by the company, one example being that any labourer who makes a mistake will be terminated directly without any compensation. Pay raises also have vague and subjective standards, which causes a feeling of being treated unfairly. Unfair wage conditions can be viewed as follows: Wages Received:
Employment Period 8 years 5 years 8 years 5 years Basic Salary (/month) 96.11 102.76 108.20 114.62 Positional Support (/month) 6.94 13.13 13.13 13.13 Employment Period Support (/month) 5.22 40,000 5.22 5.22 Transport Support (/day) 0.55 0,55 0.55 0.55 Shift Support* (/day) 0.29

Source: outsourced labourers in the warehouse department (all males). *Only given to labourers who come in for the first shift (night time) The forming of the trade union encountered many obstacles from the company, but today the company accepts the presence of the union, and the management does not threaten or pressure labourers concerning the management or membership in the union.
Permanent Contract Worker basic salary Housing Support Paid Vacation equalling basic salary annual Holiday Pay saving lunch at the canteen Labour Social Insurance Transport support Positional support Employment Length Support 137.31/month 29.10/year 137.31/year 1.5 x the basic salary 37.31/month 1.19/day Yes Vehicle used to pick up employees Outsource Worker I (man) 96.11 No No No No 0.67 a day Yes 0.55 6.90/month 5.20/month Outsource Worker II (women) 3.54/day No No No 14.92 No No No No No

Conclusion Unilever is quite an old company here in Indonesia. Among labour observers, Unilever is known as the company with the best Mutual Work Agreement. We must admit that Unilever Indonesia continues to grow in Indonesia, it is true. Even in the year 2007, when the 17th PKB (CLA) was signed by the Minister of Labour of the Republic of Indonesia, Erman Suparno, he said that Unilever Indonesia is the best example of industrial relations in Indonesia. However, upon completion of these

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studies, we doubt if Unilever Indonesia is still worthy of this assessment, as so far the study has found the opposite conditions: the fates of the labourers will become more uncertain in the future, as the ongoing trend is for the labourers of Unilever to be slowly replaced by outsourced labour or a temporary work agreement system, which does not guarantee job security. Furthermore, the trade union remains unaware of these conditions and so judges that everything is all right. We can see this from the fact that the management still asks the trade union to talk about certain parts being turned over to outsourced labour while surreptitiously, the production warehouse, the delivery warehouse, and even production sections such as NSD (RINSO) and other production support areas, especially packing, already use outsourced labour for all of its female labour. The same goes for the accounting and HRD (Human Resources Development) departments these are never discussed with the union, yet slowly but surely permanent labour is being ousted in these two departments.

Life Story I (Outsourced Labourer) This woman in her twenties is a high school graduate who worked at Unilever as an outsourced labourer. She just lost her job recently. Actually, in the last work agreement that she signed 6 months ago, the job was supposed to last until December. She thought that she might still receive her final pay at the end of December, but she already lost the job at the start of the month. She does not know the reason why she was terminated from her work. She feels that she has been working her best and that she was disciplined with her time, but this has not been enough for her to maintain her job. All this time, the signing of work contracts was done once every 6 months. When she first signed the work contract, the length of time for the contract was a year, but the deal was changed suddenly and unilaterally into 6 months. However, she can do nothing about it, because she does not have any copies of the agreements each time she signed the work agreement, she was not given a copy. As an outsourced labourer, this young woman is recorded as a free daily labourer. This is why she is paid in accordance with the days she works there. She has a daily wage of Rp.47,500 (3.54) which is paid once every two weeks. She never obtains any support health, transport or whatever. She is rather lucky in that she still lives with her parents, who live not too far away from the Jababeka Industrial Area, Cikarang, West Java. This means that she doesnt have to pay for housing. She only needs to spend Rp.6,000 ( 0.44)/day on transport. As a single woman, she can save up to Rp.200,000 ( 14.92) a month. As an outsourced labourer of Unilever, her working hours are similar to that of the in-house labourers of Unilever, i.e. she starts working at 6.00a.m. and goes home at 2.00 p.m. on her morning shift. She also works a night shift, but she does not receive any additional pay for working nights. However, she is anxious about her present condition. Within the existing working relations system, she has very limited job opportunities: most companies will only accept labourers up to 23 years of age. After that, finding the chance to obtain work is very hard. She is also very concerned about her health. This is the second time she has been working in companies that use chemicals such as in Unilever. In her working space, the packing section, the aroma of perfumes is very strong. She still feels unsafe even though she uses a facemask at work. The problem with the outsourcing work relations is that not a single company is willing to take the responsibility to insure her health. Everyone knows that chemical-induced illnesses will not show up immediately it may take months or years to develop while as an outsourced labourer, she has no health insurance as not a single company is willing to shoulder the responsibility. She feels even more hurt when a female colleague becomes pregnant apart from the unhealthy working conditions, they are not given maternity leave either. So whenever a female worker becomes
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pregnant, she would rather resign. The girl cannot say anything because she does not know where to bring her problems to: she is not a member of any trade unions. Trade union memberships in her workplace are available only for permanent labourers. However, she continues to search for a new job. She hopes that she will have a better, healthier job if possible, no longer in an outsourcing company so that she can have a better future. She feels that it would be impossible for her to apply to Unilever, because production labour is so hard that women do not have a chance. Apart from that, Unilever only employs people whose education is at least diploma III.

Life Story II (From Outsourced Labour to Permanent Labour) This 25-year-old man comes from Central Java. He has been working in the raw material warehouse at Unilever Indonesia for six years. His job is to supply the raw materials for Blue Band, Ice Tea etc. He first worked at Unilever Indonesia as a labourer from a labour-supply company. This means that at first, he did not receive wages from Unilever Indonesia, even though he works at and for Unilever Indonesia, but from that other company. He worked that way for 10 months. In 2003, Unilever gave the opportunity to labourers from other companies working at Unilever to submit their proposal to work as Unilever Indonesia employees, so he took it. After passing through the employment selection process of Unilever Indonesia, he was accepted as permanent labourer and has been working in the warehouse up to now. The vocational school graduate from Central Java is now married, and he is currently expecting the birth of his first child. With the current six years of working experience, he earns a basic salary of Rp.1,840,000 (137.31) every month. This is supplemented by Housing Support of Rp.390,000 (29.10)/year, Paid Vacation equalling his basic salary (Rp.1,840,000/137.31), and annual Holiday Pay of 1.5 x the basic salary. With his current income, he has purchased his own home and he can save up to Rp.500,000 ( 37.31)/month. Company cars are provided to pick up and drop off employees to and from work. Apart from that, the company also provides lunch at the canteen, at the value of Rp.16,000 ( 1.19)/day. However, he thinks that the menu that he gets has a much lower value than the budget provided by the company. This is usually due to the tricks of the canteen. When the menu gets too lousy, members usually report it to the trade union, who will tell the management, which usually results in the change of caterers. Apart from lunches, labourers coming in for the morning shift (starting at 06.00a.m.) are given a breakfast of coffee/milk/tea and pastries. For health, he has full insurance from the company. If he or a member of his family becomes ill, as long as they are in the hospital and using facilities in accordance with the prescribed class, all expenses are paid by the company. He also became an automatic member of the trade union when he was accepted as a permanent labourer of Unilever Indonesia, but he doesnt mind this system. He feels that the freedom to unite is the freedom to be or not to be officials of the union. As a member of the union, he pays monthly dues of Rp.15,000 ( 1.11). He feels that the trade union in his workplace is quite good already, because he can ask anything or talk directly to the union managers of his workplace. Regarding job security, he explains that even though he is a permanent labourer, he is still worried that he might sometime lose his job. This worry is not caused by the system existing in Unilever Indonesia, but more by his personal worry that he feels that he has no skills, so if anything should happen in his company he is concerned, despite the very good working system of Unilever Indonesia who takes very good care of the prosperity of its labourers all the way to retirement day.

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Case study: Unilever in South Africa68


This case study is based on a series of interviews conducted with workers and union leaders regarding the companys labour practice and the conditions under which workers at Unilever South Africa work. The research covers all Unilever sites in SA. All in all, 10 workers are interviewed, seven shop stewards and four regional and national leaders. Introduction Key concerns aired by most workers at Unilever South Africa centre around the salary gaps among workers falling under the same categories, the mushrooming of labour brokers and the continuing trend by the company to employ temporary workers. Although we could not establish the exact number of workers employed by Unilever South Africa, the information provided by the companys website, indicated that Unilever South Africa employs 3,142 workers on a permanent basis. Ironically, the website does not provide the number of temporary workers, which union representatives claim to constitute the majority of the total workforce. In the past few years, Unilever has adopted stringent cost saving measures, through the outsourcing of most of its functions, which resulted in an increase of casual labours. Unilever has also retrenched a number of its employees, as a cost-cutting measure in the past five years. In 2009, the company announced several cost-cutting measures, a move which it says prevented further retrenchments which would have occurred as a result of the global financial crisis. Instead, the new cost-saving measures brought more hardship, anxieties and uncertainties for most workers who have become temporary-permanent workers in the sense that they work for many years as temporary workers but do not get promoted to full-time employment status. A comment by one worker based at Durban site captures the situation aptly: the company always says a site gets paid according to its own capacity and the profit it makes. They always say it is not a sustainable business move to pay workers more or promote them to full-time positions. As we speak there is a dark cloud hanging over Maydon Wharf plant as it is benchmarked against its counterpart in Indonesia. Unilever Pietermaritzburg is also under constant threat and the bosses are continuously on the lookout for the best possible sources of tea. These are the kind of conditions we are working under, said the visibly dejected worker.

The 2006 report of Unilever South Africa lists some of the labour laws introduced by the post apartheid government as follows: The Labour Relations Act (LRA) aims to promote economic development, social justice, labour peace and the democratisation of the workplace. It reflects the standards of the ILO Conventions 87 and 98 on Freedom of Association the Right to Organize and Collective Bargaining. The act specifically protects the establishment of trade unions, collective bargaining and the right of collective bargaining. The Basic Conditions of Employment Act (BCEA) establishes minimum standards of employment. It covers working hours, minimum age, regulates overtime and overtime wage, leave, deductions, etc. The BCEA established the Employment Conditions Commission to further aims of the Act and to advise the Minister of Labour. Compliance is monitored by the Department of Labour.

68 This text was written by Matuma Letsoalo

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Business Description Unilever South Africa, a subsidiary of multinational Unilever Plc, has been in operation for more than 100 years. It first entered the South African market in 1890 with the introduction of Sunlight Soap. The company was first registered in 1904 and build its first factory in Durban in 1911. This marked the beginning of direct manufacturing investment by a multinational corporation in the country and with its establishment, mass production techniques became available. At the time, this factory was the companys largest in the world outside England, evidence of Levers confidence in the South African market place. In 1912, building had already started on a second factory in Cape Town, which was opened the following year. In 1947, the company persuaded the South African government to allow sale of margarine, therefore creating new markets. Now, with the annual turnover of over R10 billion, the company is counted amongst major players in the South African economy, with several factories located in various parts of the country. The headquarters of Unilever are located in La Lucia on the North Coast. The companys production sites are at Maydon Wharf, Durban (personal products), Prospecton (Robertsons spices and Knorr soups), Phoenix (deodorants) and Pietermaritzburg (tea and food). Last year, Unilever relocated its Foodsolutions factory from Phoenix outside Durban to Willowton in Pietermartzburg to cut costs. Eelco Camminga, vice president of Unilever Foodsolutions said: By moving the Foodsolutions factory to Pietermaritzburg, it is possible to optimise shared resources such as bulk services, management and infrastructure. The factorys proximity to the Unilever tea plant also provides the benefit of shared warehousing facilities and logistics infrastructure. According to its website, 83% of its employees are blacks. The company says that previously disadvantaged individuals hold 52% of its management positions. Unilevers business interests in South Africa mainly consist of home and personal care and foods. It is a market leader in a number of product ranges. The food division has a number of brands such as Knorr, Rama, Robertsons, Flora, Ola, Lipton, Joko, Glen tea, Mrs Balls, Rando. The chemical division hosts a range of brands including Sunlight, Omo, Surf, Handy Andy, Skip, Domestos, Axe, Dove, Shield, Sunsilk, Vaseline, Dawn, Ponds, Brut and Lifebuoy. Unilever products are made both in corporate owned factories and by a small number of co-packers. In 2007, the company appointed Barloworld Logistics Africa as distribution partner in a deal worth R900 million. According to a statement posted by Unilever South Africa, the appointment of logistics management and solutions company BLA coincided with the reorganisation of Unilever SA, the global One Unilever strategy to operationally unite the foods, home and personal care divisions. Unilever undertook a worldwide Path to Growth strategy in 1990. One of the main elements of this strategy was to significantly slim down the number of brands, focusing on major brands and to reduce the number of production sites. The company aimed to concentrate production for the international market in some 150 key sites for the world-class supply chain. A number of remaining sites would serve to produce local or national products. In Unilevers language, these are local heroes-factories that produce products with a leading or profitable position in local market. In South Africa, the path to growth strategy was implemented in the Pre-Zulu Project. The aim of the project was to reposition key manufacturing sites in Durban as regionally and globally competitive suppliers for a range of personal products, while the Boksburg soap powder factory would be benchmarked in line with globally competitive standards for soap powder production.

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Outsourcing: a new business mantra For Jacob Dlamini [not his real name], a shop steward employed at one of the companys Durban industries, it makes no sense that the company put much of its energy on marketing the company to maximise profit, while there is little investment on its human resource. We are One Unilever as the slogan says, but that is in as far as it suits the business. When it comes to the interest of workers, the One Unilever slogan does not apply, says Dlamini. If there is anything Unilever is keen on, it is outsourcing. At Pmb *one of Unilevers factories in Durban] the company first outsourced the tea department the herbal tea department to Dubai. It outsourced its outbound jobs (dispatching) in all its South African sites to Barloworld. It built Africas two biggest warehouses, one in PMB and the other in Boksburg. You would expect more jobs for people, but instead no worker is employed by Unilever, it is all outsourced jobs, run by Barloworld and the likes of DHL. On all sites, Unilever had since outsourced all its temporary employees [sic] to labour brokers. I might be wrong, but Im telling you in the years to come, Unilever will own no employees, but a brand. Every job and its workers will have been outsourced. Unilever is a cut-throat business where its all about the interest of the business and not the employees. Unilever can do whatever, as long as it will save cost and bring profit even if this is to the detriment of its employees. The word that is mostly preached is that of cutting costs. Its all about cutting costs. At virtually all Unilever sites, there is an involvement of labour brokers. All these temporary workers Im referring to here were Unilever temporary workers but were finally outsourced to labour brokers. Unilever does not believe in the theory of employing workers on a permanent basis because of their long service to the company. We have temporary employees who have been here for years without being permanently employed. The company simply renews their temporary contracts whenever they expire. Although unions try hard to protect the interests of temporary workers even though they are not members, the company has the tendency of taking advantage of their vulnerability especially when it [Unilever] is under pressure and needs more labour to do shift reshuffling. It is easy to use temps, knowing that they are under constant fear of being retrenched. They [temporary workers] know that if they resist any instruction from the company, they wont be called back the next time their contracts are up for renewal. Although the number provided by Dlamini does not necessarily correlate with the companys total workforce, it, however, shed some light on the extent of temporary employment at Unilever. For example, he says out of the 106 workers employed at Unilevers Pmb tea factory in Durban only 78 are permanent. Almost 60% of Unilevers Foodsolution workforce in Durban consists of temporary workers, while almost 75% of the workforce Prospection work on a temporary basis. More than 50 workers at the companys Maydonwharf factory, who were employed on a temporary basis, had their contracts terminated recently, as part of the companys cost-cutting strategy.

Active Labour Unions There are three major trade unions operating at Unilever sites. These are the Food Allied and Workers Union (Fawu); the Chemical, Energy, Paper, Printing, Wood and Allied Workers Union (Ceppwawu); and the National Food, Beverages, Wine, Spirits and Allied Workers Union (Nufbwsaw). The latter is based only at the Boksburg plant where it is dominant while the first two are concentrated mainly at the Durban sites. According to a Ceppwawu leader, the union only has 200 members. Yes workers are free to choose trade unions of their choice and we are very fortunate there is no competition among unions here in KwaZulu-Natal sites. The company does not discourage

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union membership. So far union delegates have been operating freely without hindrance and union leaders have access to members, says the Ceppwawu leader.

Mpho Sathekgi* (32) joined Unilever four years ago as a casual worker. Before I came here I used to work for a company that manufactures taps. I started working in the sealing department and sometimes in compound section. During peak seasons we do night shift starting to work from six in the evening to six the following morning. In these sections, we use a lot of powder and chemicals, which pose a serious danger to our health. As things stand, most of my colleagues are sick, clearly because of the adverse effects of chemical fumes. But because of our casual status we do not enjoy company benefits like medical aids, pension, bonus and other related perks. These are reserved for permanent workers. It means if I fall sick as a direct results of the chemicals to which we are exposed most of the time, I would have to pay for my medical expenses with no contribution whatsoever from the company at all, says Sathekgi. Together with some of his colleagues, Sathekgi has since lodged a formal complaint with relevant government department to force the company to extend medical aid facility to us as well and also provide us with protective gear to minimise the negative impact the chemical are having on our health. Hopefully this will elicit a positive response. Quite frankly, I do not enjoy myself here because I am not sure of my future. As a casual worker, I live under constant fear that the company can dispose of us anytime they feel like and they would not even bother to alert us. Since I worked here the sections were outsourced several times to different companies such as Quest and Givaudan, to mention but two. I am a family man with a wife and two children to take care of. I live in an RDP house [houses built by government for poor South Africans], west of Johannesburg. My wife used to work but has lost her job a while back. I earn R4,000.00 per month and this is not enough to cover all my basic family expenses. Out of my salary I have to pay for my transport to and from work, which works out to around R1,000 a month. I have to buy food, pay for electricity bills, school uniform for my first-born boy (7), transport to school and pampers for my baby who is just a few months old. There are times when the little one gets sick and I would struggle to raise money to take him to the clinic. But I believe if I was enjoying the full company benefits I could be having medical aid and I would not be facing this difficulty. What worries me sick is the fact that in the event that I get dismissed I know I would not get any compensation. And being the breadwinner, I shudder to think what would happen to my family, particularly my children, complained Sathekgi.

A Fawu official at a Durban plant said that on the whole, Unilever management allows the unions space to operate, adding I think its because they have no choice. He said relations between Fawu and Ceppwawu are cordial because they are affiliated to Cosatu, the largest trade union federation in South Africa, boasting over 1.9 million membership. Fawu negotiates as a site and has had negotiations with the company on a factory basis. Nufbwsaw has entered into a collective with Unilever at plant level as well as Agency Shop Agreement. In Boksburg Ceppwawu does not enjoy the same rights as Nufbwsaw and this has led to labour disputes the recent one being on January 30, which Ceppwawu referred to CCMA (Commission for Conciliation Mediation and Arbitration). The matter has since been postponed pending further investigations. The last time Ceppwawu members went on strike action was in 2007 and this was part
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of the unions National Strike Action about Annual Wage Increases. All in all Ceppwawu is treated as a junior partner at the Boksburg plant. Impact of Flexibilisation on Labour Relations That Unilevers flexibilisation programme has a huge negative effect on its workforce across all the plants is beyond dispute, since the company enforced a raft of cost-cutting measures that unsettled its employees. Since these measures were adopted, Unilever engages or employs only outsourced workers because their cumulative salary bill is comparatively low. As a result, the majority of workers no longer enjoy the benefits provided for in the countrys Labour Relations Act, Basic Conditions of Employment Act and the Occupational Health and Safety Act. According to trade union federation Cosatu: The replacement of normal jobs through labour broking arrangements or other equally insecure forms of atypical employment effectively displaces and destroys decent jobs, especially taking into account the substitution of insecure contractual relations and downgrading of wage and employment terms. Apart from undermining collective bargaining rights, labour broker agencies are also often called upon to provide scab labour as substitute workers for those on strike, with the aim of undermining the right to embark on industrial action. A Ceppwawu official comments that: The effects of being a worker who is sourced through an outsourcing agency (Capital Outsourcing) are that the salary of an outsourced worker is far lower than that paid by Unilever. In so far as job security is concerned, should redundancy occur the worker employed through an agency will be the first to lose his or her job. Lovemore Mugabe Unlike Sathekgi, Lovemore Mugabe was lucky to get permanent employment at Unilever South Africa. As a permanent employee here, I should, under normal circumstances, be excited because it means I enjoy a whole range of benefits that Unilever offers to its employees. I mean we do get bonuses at the end of every year, as workers from any company would. I started working here in Isipingo, 20 km south of Durban in KwaZulu-Natal, at the age of 24 in the late 1980s to date as a machine operator in the sealing section. Before that I used to work for a plastics company, which is also based here in Durban. I work shifts mostly from 6am-14h00 and 14h00-10am. After I joined a few years down the line, Unilever merged or bought Robertsons and this was later outsourced to a company called Pecton. My personal experience of being part of this company is pretty depressing when one looks at a bigger picture. I mean most of my friends have been working here for many years (some for 15 and 20 years) as casuals thanks to labour brokers that the company has engaged to source labour. These [labour brokers] are bad news for the workers not only here but nationally. It really breaks my heart because I live with these people and I know and understand their personal circumstances better. I mean most are parents with children and families to support. Seventy percent (70%) of the workers here are employed as casuals and to me this clearly sums up the company attitude that it values flexibilisation despite the hardships it causes to its employees. As casuals it means these employees are denied not only benefits but opportunities for them to move up are almost nil. They cannot even upgrade their skills through the various skills development initiatives offered here at the site because they do not have matric *school degree+ according to the company. Yet the company management forgets that even if these employees do not have qualifications, they have acquired immense operational or hands-on skills and experience. And as such they are the companys most valuable and vital assets and resource.
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Instead what is happening is that the company would give 18 months learnerships to people from outside and when they complete they are given preferences over the employees who have been here for long. I am yet to understand the reasoning behind this. Shouldnt priority be given to those who have been working for long, like most of my comrades are? I earn R7,000.00 a month and after deductions I get a thousand less. With this salary I must make sure that I transport, feed, clothe and educate my eight children all of whom attend school - both secondary and primary levels. The money is enough just for one to get by, really, but given the amount of work we put in and the huge profits Unilever makes, I feel we should be getting more.

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Colophon
This is a FNV Bondgenoten/ FNV Company Monitor publication. Research and writing: Stichting Onderzoek Multinationale Ondernemingen (SOMO) www.somo.nl; Landelijke India Werkgroep (LIW) www.indianet.nl. Project management: greenmonday www.greenmonday.nl For more information please visit www.fnvcompanymonitor.nl or contact us at: FNV Bondgenoten International Affairs T: +31 (0)30 2738746 E: info-IZ@bg.fnv.nl

August 2010

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