Nestl� Violates OECD Guidelines in Korea

Posted to the IUF website 26-Sep-2003

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The IUF, together with the Nestl� Korea Labour Union and the Korean Confederation of Trade Unions, today called on the Korean government to act to rectify a serious breach of the OECD Guidelines for Multinational Enterprises by Nestl� Korea, a wholly owned subsidiary of the Swiss-based Nestl� Corporation.

The IUF action involves a submission (full text in English in .pdf format) to the OECD's Korean National Contact Point. The OECD guidelines, whose provisions and implementation procedures have been accepted by all OECD and other adhering governments, set out clear standards governing the relationship between foreign direct investment by multinational companies and the social, political and human rights context in which they operate.

The unions took action under the Guidelines in response to Nestl� 's threats to close their Korean manufacturing operations in the course of an ongoing collective bargaining dispute leading to a strike by the Nestl� Korea Labour Union. Nestl�'s Korean subsidiary is profitable, and the strike is only the second such dispute in 23 years.

The union declared a strike on July 7 only after Nestl� Korea management repeatedly refused to engage in negotiations over staffing levels and subcontracting as part of the negotiations for a new collective bargaining agreement. In response, Nestl� shut its branch office in Seoul in August and then locked out workers at its only manufacturing facility and at warehouse and distribution centers across the country. Rather than negotiate on working conditions and employment levels, Nestl� is pressuring the workers � and the government and people of Korea - to submit to its unilateral restructuring plans by threatening to abandon manufacturing in Korea altogether.

Following the lockout, Nestl� Korea made well-publicized announcements to the Korean and international business press that it was considering shifting its production for the Korean market to other countries, in the first instance to China. And in a letter to all employees dated September 1, 2003, Nestl� Korea CEO Sam Lee referred to instructions from Nestl� headquarters to prepare a business plan after the withdrawal of production from Korea. He followed this up three days later in an internal memorandum to all employees stating in part that "It is the general practice of multinational companies that they relocate production lines to the neighboring countries offering favorable business conditions", and "it is absolutely an illusion to believe in permanent production facilities in Korea if the current situation persists."

These company statements threatening disinvestment from Korea and the closure of Nestl�'s only factory are designed to put severe pressure on the striking workers and on the public authorities to intervene on behalf of management. The pattern of intimidation against workers, their union, public opinion and the government of South Korea constitute an explicit breach of Section IV.7 of the OECD Guidelines, which states that enterprises should:

In the context of bona fide negotiations with representatives of employees on conditions of employment, or while employees are exercising a right to organise, not threaten to transfer the whole or part of an operating unit from the country concerned�in order to influence unfairly those negotiations or to hinder the exercise of a right to organise.

Because Nestl� Korea has repeatedly invoked the authority of Nestl� corporate headquarters in Vevey, Switzerland, the IUF has also sent the submission to the Korean OECD National Contact Point to the Swiss National Contact Point in Bern.

The worker representatives on the Nestl� European Works Council protested Nestl�'s conduct in Korea at its session in Geneva on September 5, 2003.