Manufacturing Insecurity: Precarious Work as Corporate Strategy

"Our biggest social responsibility on a global basis is job creation." - Nestlé CEO Peter Brabeck-Letmathe

Nestlé Corporate Business Principles proclaim the company's commitment to respecting workers' freedom of association (of course they also proclaim the right of employees to freely exercise their right NOT to join a union, a familiar entry point for union-busting). However, while the CSR and public relations hacks make their presentations, Nestlé corporate management has another presentation, a presentation which is restricted to training managers.

This presentation carefully describes the types of employment relations within the Nestlé system, and their implications for union organization and collective bargaining. When implemented, as Nestlé has been doing on a global scale, it is a blueprint for weakening union membership and bargaining power through the erosion and destruction of direct employment contracts.

The presentation carefully distinguishes between 3 main types of "employee arrangements": regular (full time/part time), "temporary" (direct hire/Third Party Agency), and outsourced (in-premise/out-premise). "Regulars" are directly hired by Nestlé. The presentation asks "Can the workers join the union?", and the answer is yes, direct hires can join or organize (in principle) a union, and have the right to negotiate collective bargaining agreements with Nestlé.

Temporary workers, on the other hand, even if directly hired by Nestlé, can join a union…but not "as member or part of Nestlé's bargaining unit." Agency temps can likewise join a union, but only as part of the Agency's bargaining unit. Outsourced workers are of course free to join a union…but not one which bargains with Nestlé.

To see how this works in practice, let's take a look at Nestlé's operations in Indonesia. When the IUF investigated the situation of precarious workers in 3 factories and one warehouse in Indonesia, we found that of a total of 2,300 employees, only 1,006 were directly employed by Nestlé. There were 1,034 agency workers, 170 workers on daily contracts, and 90 contract workers. For Nestlé management, that still left too many direct hires eligible for union membership. So a large number of these were hastily reclassified as "supervisors". Even though they do exactly the same work as union members, they are legally excluded from union membership - which is eligible to only 30% of the Nestlé workforce!

The non-permanent workers are employed on inferior terms and conditions to the dwindling number of direct employees, and are excluded as well from most benefit schemes.

Systemic exclusion two-thirds of it's Indonesian workforce from union membership, however, doesn't stop Nestlé from trumpeting it's commitment to job creation and full compliance with ILO Conventions, the Global Compact and national legislation. It goes down well in CSR fora whose preferred activity is comparing paper (Nestlé's Corporate Business Principles) with other pieces of paper (global Compact, or take your pick). For Nestlé workers trying to defend their living standards and working conditions through collective bargaining with the company, it's a different story.

Similar schemes to the Indonesian system abound throughout Asia, Africa and Latin America. But dilution of union membership through the destruction of direct employment is by no means limited to developing countries. Nestlé workers - an endangered species - are under assault everywhere.

In Germany, for example - one of Nestlé's biggest markets - there are 564 permanent workers at the Herten factory, and 65 agency workers - most of whom have been there over 2 years! They are not covered by the collective agreement, and they work for considerably less than the permanent workforce (though after 2 years they can hardly be described as "temporary"!). Agency work is on the rise in a number of other Nestlé operations in Germany.

At Nestlé's chocolate factory in Miskolc, Hungary, nearly a quarter of the workers are supplied by labour hire agencies. These workers can't join a union. At the Nestlé plant in Szerencs, it's 98 agency "temps" to 255 permanent workers. They can't join the union no matter how many times their contracts are renewed. They produce for Nestlé…but don't work for Nestlé.