January 28, 2013

Dubious Awards Presented at Davos

Only a stone’s throw from the Davos World Economic Forum meeting, a group of non-governmental organisations presented the annual Public Eye Awards this week to Goldman Sachs and Royal Dutch Shell.

Every year in late January, a pilgrimage of a special kind can be observed in Grisons, Switzerland’s easternmost canton. Limousine after limousine, SUV after SUV and helicopter after helicopter head to Davos, the highest city of Europe. At the local congress centre, the preciously dressed pilgrims unite to renew their belief in unregulated, free market capitalism and to “improve the state of the world,” as the World Economic Forum (WEF) proclaims.

This year, ‘Resilient Dynamism’ is the motto of the global leaders’ gathering. Besides the official programme though, many participants will use the platform to hold informal meetings. Business and political interests mingle behind closed doors.

Only a ten-minute walk from the Davos congress centre, a few dozen people attended the presentation of the Public Eye Awards, a critical counterpoint to the WEF since 2000. “On the occasion of the WEF, we annually put the spotlight on corporations who cause problems, violate human rights, destroy the environment, act corruptly and push people into poverty and misery,” says Andreas Missbach on behalf of the organisers.

In order to take the wind out of the Public Eye sail and to slightly open up to the public, the WEF started in 2003 to organise its own counter event, the Open Forum. Nevertheless, the Public Eye has survived and this year once again presented two recipients for their ‘awards’.

As a result of an online voting process, the public award went to the Anglo-Dutch oil and gas company Royal Dutch Shell. Shell’s search for oil in the Arctic drew voters’ criticism. “There is no safe drilling under sea ice conditions, Shell gambles with the wildlife and beauty of one of the last unspoiled regions on our planet,” said jury member Andreas Missbach before handing the award over to Greenpeace executive director Kumi Naidoo.

Naidoo, whose organisation had nominated shell for the voting, said he didn’t want the award sitting in his office in Amsterdam. He promised to find Shell’s CEO Peter Voser at the World Economic Forum to present him the award.

Greenpeace is running a major campaign to prevent oil drilling in the Arctic. Naidoo addressed the Anglo-Dutch company directly: “We as Greenpeace will come after you peacefully, but aggressively until you get out of the Arctic.”

Christian Brütsch, an independent political analyst specialised on energy issues doubts that Shell can be pressured to disengage from the Arctic region soon. “The U.S. Geological Survey assumes one-fifth of the global undiscovered conventional oil and gas resources to be in the Arctic, and Shell has invested 4.5 billion dollars to prepare offshore drilling in Alaska so far.”

Brütsch said that if activists really wanted to prevent the exploitation of natural resources in the Arctic, they should target consumers. “Energy companies will only leave the region if the demand for oil sinks to a level where Arctic adventures would become unprofitable.”

However, as long as the current situation prevails, Brütsch prefers to see big energy companies in the Arctic. “Statoil, Exxon Mobil or Shell are much more capable of financing ‘same season relief wells’ (needed if leaks appear) than smaller corporations.”

Andreas Missbach stressed that Shell has been the only company so far to win the Public Eye Award twice. Back in 2005, the multinational was shamed for its activities in the tropics.

Missbach said that Shell’s investments in extremely damaging tar-sand extraction in Canada and the fact that the company had dropped renewable energy from its long-term strategy had further contributed to again nominate Shell for the prize.

The American investment bank Goldman Sachs received the jury award. The Public Eye jury argued that the company bears a large share of responsibility for the Euro-crisis.

“Goldman’s derivative deals, which fudged Greece’s way into the Eurozone, pawned the future of the Greek people,” said Missbach.

Former bank regulator and academic William K. Black, who attended the awards presentation, stressed that Goldman Sachs wasn’t just a singular rotten apple in a healthy bushel of banks. “Goldman Sachs is the norm of systemically dangerous institutions,” he said.

Black blamed the World Economic Forum for spreading the myth that fraud by corporate elite was rare. “They have pushed deregulation, de-supervision and de facto decriminalisation.”

Expert on business ethics Ulrich Thielemann said the dogma of profit maximisation itself leaves no room for moral integrity. “It’s the paramount cause for irresponsible corporate behaviour,” he said. “Ruthless competition that disregards human rights and environmental standards via non-regulation and the race to the bottom in standards of good corporate conduct must come to an end.”

Does naming and shaming companies have any use? Missbach admits that such an award by itself changes nothing. But within a campaign, he says, such a shame prize might be a useful tool. “Those organisations who nominated the award winners may use the prize to attract attention.”

Political analyst Christian Brütsch is far less convinced about naming and shaming campaigns. He points out that the names of the decried companies always remain the same. “Some corporations can afford to simply ignore criticism,” he says. Others would just increase their PR budgets, Brütsch argues.

Greenpeace’s Naidoo regards the awards as a means contributing to reduction of a company’s relational and reputational capital. He’s sure though that none of these powerful corporations will react to the criticism. “However, the failure to respond is a very loud confirmation that our accusations are true.”

This report was first published here by IPS Inter Press Service.

January 13, 2013

Wage Dumping Hits Switzerland

The Swiss parliament has decided to tackle wage dumping in the construction sector. With the introduction of chain liability, general contractors can soon be held accountable for labour agreement violations by their subcontractors.

Eight euros per hour instead of 27.5 euros guaranteed by the collective labour agreement is what some technicians of a Slovenian company working at Messe Basel have declared they earn. A new exhibition hall is being built there at a cost of nearly 360 million euros.

Time pressure is extreme, delays are considered a catastrophe. Up to a thousand labourers work day and night with the new hall due to open its doors at the end of April when Messe Basel hosts ‘Baselword’, the globally leading exhibition in the watch and jewellery sector.

The Slovenian technicians working on the façade are at the bottom of a chain of several subcontractors. Swiss general contractor HRS Real Estate has been charged with the work. But HRS denies accountability for the wage abuse, claiming it can’t control the payroll of its subcontractors. The owner of the building, MCH Messe Basel, holds HRS, responsible as its prime contractor.

The buck is passed around, and there are several victims: The workers don’t earn what they deserve, correctly employed labourers face pressure on their wages, and properly operating companies are confronted with unfair competition.

In Switzerland, that phenomena is called ‘wage dumping’. Labour unions say it has drastically increased over the past few years. It’s a result of the opening of the Swiss labour market to EU citizens which started in 2002 when the Agreement on the Free Movement of Persons came into force.

The agreement allows EU citizens to reside and work in Switzerland. Employees and self-employed persons working in Switzerland for less than 90 days don’t need permission, but they have to register with cantonal authorities. Since 2002 immigration from EU countries is on the rise.

In 2004 the Swiss government introduced ‘accompanying measures’ to protect employees from violations of labour and wage agreements. These include observation of the labour market and on-site controls of work conditions. However, several legal gaps remained.

This summer the Swiss parliament cracked down on fake self-employment. For the labour unions that wasn’t enough, as the problem of wage dumping by subcontractors remained.

Swiss minister for economic affairs and former entrepreneur Johann Schneider-Amman admits that the problem is getting bigger and bigger. “Interventions in the liberal principles of the free labour market are only permissible in cases of massive malpractice,” he says. “Unfortunately that’s the case.”

Swiss labour unions have demanded laws making general contractors legally accountable for misconduct by its subcontractors, so-called ‘chain liability’. General contractors are only freed from responsibility if they can show to have ensured that their subcontractors abide by the law.

The neo-liberal lobby along with the Swiss Employers’ Association has launched a much weaker counter-proposal. They want general contractors to be freed of any legal responsibility if their direct subcontractor simply signs a contract pledging to respect Swiss wage and labour conditions.

Last summer, Switzerland’s Council of States adopted chain liability. Then, it was the National Council’s turn. In the debate, advocates of chain liability could not only count on support from the Federal Council, but also from a number of liberal entrepreneurs.

One of these was Hans Grunder, a Bern representative of the Conservative Democratic Party (BDP). He explained that not quality, but prices had become the most important criteria in bidding procedures. “As a result, subcontracting assignments often go to foreign companies, leaving our enterprises at unfair competition,” he said.

Grunder was supported by the Green Party’s Alec von Graffenried, who works for a major construction company. He argued that since general contractors are already accountable for prices, schedules, quality, safety and environment protection, it was only logical that they would also assume responsibility for their subcontractors’ conduct.

Corrado Pardini, Social Democrat and unionist, said that strengthening instruments against wage dumping would ensure public support for free movement and residence of EU citizens, which is crucial for Switzerland’s economic prosperity. “Continuing abuses of wage and labour conditions will increase xenophobia,” he warned.

The right-wing Swiss People’s Party (SVP) again played an ambivalent role. Its representatives rejected chain liability. The strategy is well-known: public outrage against foreign workers is exactly what the SVP utilises to draw support for their populist policy and their latest popular initiative ‘Stop mass immigration’.

Finally, the National Council adopted chain liability. Labour unions applauded. Nico Lutz, responsible for the construction sector at Switzerland’s largest inter-professional trade union Unia said that companies as well as workers would profit. “It’s important however, that chain liability won’t be watered down during implementation.”

His opponents at the Swiss Association of Builders (SBV) hope for limited additional bureaucracy and promised to play a constructive role in the implementation process, even though they still doubt the practicability of chain liability. “It remains unclear how prime contractors can check the payrolls of their subcontractors’ subcontractors,” SBV media officer Matthias Engel says.

Engel also thinks that chain liability could lead to less law-abiding subcontractors because they know that for any violation the general contractor would be held responsible. “Chain liability will be like the sword of Damocles hanging over the general contractors,” he said.

Both employers as well as labour unions call for better controls on construction sites. On behalf of the builders, Matthias Engel calls for a badge system for workers which would regulate access to construction sites and in addition tackle problems such as fake self-employment and black labour. Unia’s Nico Lutz demands that sanctions should be aggravated and that in case of well-grounded evidence of wage dumping, entire construction sites could be halted.

In Basel, chain liability seems to find premature appliance. For the Slovenian façade technicians, the story may end well. In order to polish their image and avoid any delays of construction, MCH Messe Basel and its general contractor HRS promised in late December to step in over the outstanding salaries their subcontractor is supposed to pay.

This report was first published here by IPS Inter Press Service.