Safe and secure jobs, regulated working hours, compensation for overtime and rights for employees to be organised. Those are some of the core conventions established by the International Labour organisation ILO. The concept of Decent Work also includes the elimination of child labour, a minimum age for work, demands for gender equality and prevention of discrimination.
Safe transport to and from work and help with childcare are some of the important issues for female-dominated industries. Laws and regulations for decent working conditions must be followed if an investment is to contribute to the development of a sustainable society.
“Even though many countries have ratified the core conventions, in many cases the authorities are not checking that companies comply with them. So we have to work extra hard on these issues,” says Kristin Sjöblom, Senior Manager ESG Affairs at Swedfund.
One example is the survey Swedfund made in Ethiopia to compare the level of wages in some portfolio companies with the wage structure in their sectors. The survey showed that wages in one of the portfolio companies was significantly lower than average. The result was a pay review and then higher wages for employees.
“There are an incredible number of creative ways to calculate remuneration. The information we collect in our annual survey comes from management. A salary might look good on paper, but when commissions, gratuities, or food allowances are stripped away the basic wage may be far lower than it should be,” says Kristin Sjöblom.
The example also shows how important both internal and external audits are. When Swedfund’s staff visit the companies they review payslips and time records to check how many hours employees are working and what compensation they receive.
“We talk to employees and union representatives to get our own view of the real situation.”
Long working days with a lot of overtime is common. Because of the generally low wages in developing countries there is often a desire to work overtime. Even when employees work statutory working hours they often take additional jobs to make ends meet.
“The ability to be organised in a trade union often looks better on paper than in reality, even if employers never say they will prevent trade union activity. Despite the challenges, we can do a lot more here with our advocacy work,” says Kristin Sjöblom.
This is how Swedfund works with decent employment terms
To determine whether a portfolio company complies with the ILO core conventions and the ILO’s basic terms and conditions of employment, we perform surveys and site visits each year to verify and audit activities. This is how we ensure that portfolio companies comply with the key areas in the ILO core conventions and the ILO’s basic terms and conditions of employment. Areas for improvement will be identified and we can perform advocacy in order to achieve the objectives.