Agreement Between IKEA and the International Federation of Building and Wood
Workers (IFBWW), May 25, 1998, Geneva, Switzerland
At the International Federation of Building and Wood Workers' (IFBWW) Wood and Forestry Committee meeting in Geneva on Monday 25 May 1998, IKEA, one of the world's largest retail chains within the furniture sector and IFBWW signed a cooperation agreement on matters concerning working conditions, the natural environment and health and safety for workers at enterprises throughout the world that manufacture and supply goods for IKEA.
Under the terms of this agreement IKEA will demand of its suppliers that their workers enjoy working conditions which at least comply with national legislation or national agreements. Suppliers must, furthermore, respect any relevant ILO Conventions and Recommendations relating to their operations. This means, for example, that no child labour can be tolerated and that workers have unrestricted rights to join trade unions and to free collective bargaining. These rules already apply at manufacturing companies owned by IKEA.
The Agreement was signed by Mr Stig Holmqvist, International Procurement Strategies Director of IKEA and Mr Gunnar A Karlsson, Chair of the IFBWW Wood and Forestry Committee and President of the Swedish Wood Workers Union. The Agreement was subsequently endorsed by the IFBWW Executive Committee on 28 May 1998. The final Agreement was preceded by an earlier round of negotiations between IKEA nad Nordic Federation of Building and Wood Workers which culminated in a Joint Declaration signed on 13 March 1998 (see FaxNews no. 118).
The Agreement covers almost 1,000,000 workers.
IKEA is one of the world's leading home furnishing companies, with procurement in some 70 countries, and retailing in approximately 30 countries. The company is faced every day with cultural differences and diverse economic and social conditions.
IKEA's development confirms the growing globalisation and trade in manufactured goods. For a number of years the company has operated an internal Code of Conduct on ethical and social conditions in its relations with contractors all over the world.
The IFBWW and IKEA have each built up international experience over the years and are agreed on the advantages of long-term, stable rules of conduct for all parties in both producer and purchaser countries, which may also provide standards for industries other than the wood industry.
The Code of Conduct which is attached in Appendix 1, signifies that IKEA is demanding of its contractors that their employees have conditions of employment which do at least fulfil the requirements of their national legislation. The suppliers must respect those ILO Conventions and Recommendations which apply to their business. It means that child labour is not acceptable and that the workers are free to join trade unions and take part in free collective bargaining.
A similar Code of Conduct also applies to manufacturing companies owned by IKEA. The Code of Conduct in Appendix 1 will be available at all work-places in the appropriate languages.
A Monitoring Group will be appointed with two members from IKEA and two members from the IFBWW. The Monitoring Group will meet at least twice a year, and the parties shall provide relevant information in order to carry out its mandate. The group shall aim to hold its meetings at suppliers' premises.
If suppliers do not observe the Code of Conduct as in Appendix 1, the Monitoring Group will review the matter and propose appropriate measures. However, it is always IKEA's responsibility to regulate conditions of collaboration with its suppliers.
Geneva, Switzerland, 25 May 1998
No coercion may be used, including forced labour, slavery or non-voluntary work in prisons (ILO Conventions nos. 29 and 105). Nor must workers be asked to make "deposits" or leave their ID as pledges with their employers.
There will be equal opportunities and equal treatment regardless of race, colour, gender, creed, political views, nationality, social background or any other special characteristics (ILO Conventions nos. 100 and 111).
Child labour must not occur. Only workers aged 15 and over, or over the age of compulsory education if higher, may be employed (ILO Convention no. 138). Exceptions to this rule may only be made if national legislation provides otherwise.
The right of all workers to form and belong to trade unions shall be recognised (ILO Conventions nos. 87 and 98). Workers' representatives may not be discriminated against and must have access to all the work-places necessary to exercise their functions as trade unions representatives (ILO Convention 135 and Recommendation 143). Employers shall adopt positive views of the activities of trade unions and an open attitude to their organising activities.
Wages and conditions of work must fulfil at least the requirements laid down in national agreements or national legislation. Unless wage deductions are permitted by national legislation they may not be made without express permission of the workers concerned. All workers must be given written, understandable information in their own language about wages before taking up their work, and the details of their wages in writing on each occasion that wages are paid.
Working time should follow the appropriate legislation or national agreements for each trade.
Working environments must be safe, hygienic and the best health and safety conditions must be promoted considering current knowledge of the trade and any special hazards. Physical abuse, the threat of physical abuse, unusual penalties or punishments, sexual or other forms of harassment and threats by the employer shall be strictly forbidden.
Employers' obligations to workers according to national labour legislation and regulations on social protection based on permanent employment must be respected. Apprenticeships that do not truly aim to provide knowledge must not be permitted. The parties shall work towards creating permanent employment.
The following communique was issued by the Monitoring Group on 26 February 1999:
IFBWW and IKEA have worked out a joint agreement focusing on working conditions at suppliers to IKEA within the sector of wooden products. This covers both independent suppliers and factories owned by IKEA, the Swedwood group. This agreement was signed in Geneva, Switzerland on 25 May 1998.
As part of the agreement a Monitoring Group is appointed with two members from IKEA and two members from IFBWW. The group meets twice a year, including visits to suppliers premises.
The Monitoring Group visited Swedwood factories in Slovakia and Hungary in October 1998. In February 1999 the group visited the IKEA Trading Office in Malaysia and paid visits to several independent suppliers of wooden furniture.
The Monitoring Group is of the opinion that the Swedwood factories in Slovakia and Hungary have achieved not only good working conditions but also an acceptable environmental standard as well, both internally and externally.
The suppliers, the Monitoring Group visited in Malaysia, generally have reasonable working conditions. Production planning and working conditions tend to be somewhat better at suppliers where IKEA has a bigger share of the total production.
The opinion of the Monitoring Group is that IKEA has worked out a good system to implement changes and to monitor suppliers' performance, when it comes to working conditions and environmental standards.
The following communique was issued by the Monitoring Group in Drajna, Romania, 10 September 1999
IFBWW and IKEA have worked out a joint agreement focusing on working conditions at suppliers to IKEA within the sector of wooden products. This agreement covers independent suppliers as well as factories owned by IKEA via the Swedwood Group. This agreement was signed in Geneva, Switzerland, on 25 May 1998.
As a part of this cooperation agreement a monitoring group has been set up with IKEA and IFBWW providing two members each. So far the group has been to Slovakia, Hungary, Malaysia and, most recently, Romania.
Romania, as a country, has long traditions in the woodworking industry and extensive forest resources. The country has a population of 23 million people and an area of approximately 223,000 km2. The inflation rate in 1998 was 70% and estimates suggest that it will be 50% for 1999. The average gross salary was USD 160 per month in 1998 and is 124 in 1999 (USD 80 in the woodworking industry). The unemployment rate is 11,5%.
The monitoring group selected Romania for its visit, as, in recent years, attention has been drawn to the working conditions in some factories there, and IKEA has been the object of a certain amount of criticism in this context.
Today Romania is faced with many changes. One of these is the transition from state-owned companies to private ones. At present 58 of a total of 60 IKEA suppliers, some of them with relationships with IKEA that go back a long time, are privately owned.
The Swedwood Group (itself part of the IKEA Group) will soon be opening its own new factory in Siret, in northern Romania, which will provide employment for 200 people. In building this new plant IKEA has placed great emphasis on efficiency and consideration for the environment and hopes that the Siret factory will serve as a good example for independent suppliers as well.
IKEA implements a staircase model for working conditions, a step-by-step approach where certain minimum demands have to be met by all suppliers within a certain time after they have been assessed. The monitoring group is able to report significant improvements in working conditions at all the suppliers visited.
The monitoring group was also informed that the Romanian confederation of employers and the trade union for the wood and forestry industry concluded a national collective agreement on 1 September 1999. All the companies that the monitoring group visited observe this new national agreement.
The local president of the IFBWW affiliated union , Mr. Vasile Badica, who accompanied the monitoring group on their trip, says: "I have changed my view about IKEA and its operations in Romania. I will now inform my people about the work IKEA is doing and the investments the company is making. Now I understand how much IKEA influences the development in Romania."
The following communique was issued by the Monitoring Group in Goleniów, Poland, 3 March 2000:
IFBWW (the International Federation of Building and Wood Workers) and the IKEA Group have worked out a joint agreement focusing on working conditions at suppliers to IKEA within the sector of wooden products. This agreement covers independent suppliers as well as factories owned by IKEA via the Swedwood Group. This agreement was signed in Geneva, Switzerland, on 25 May 1998.
As part of this cooperation agreement a monitoring group has been set up with IKEA and IFBWW providing two members each. So far, the group has been to Slovakia, Hungary, Malaysia, Romania and, most recently, to Poland.
Poland has a population of 39 million people. Poland today stands out as one of the most successful and open transition economies. The privatization of small and medium-sized state owned companies and a liberal law on establishing new firms marked the rapid development of a private sector that is now responsible for 70 % of the country's commercial activity.
The monitoring group selected Poland for its visit, as it is one of IKEA's most important purchasing markets, with 135 suppliers and a volume of 3 billion SEK. Poland was also IKEA's first purchasing market outside Sweden. IKEA bought its first Polish furniture as long ago as in 1961.
The Swedwood Group (itself part of the IKEA Group) has 14 factories and sawmills in Poland, with a turnover of 1.3 billion SEK. Investments in Poland so far have totalled 700 million SEK. In all the Swedwood Group has 30 production units in 10 countries, with more than 7,000 employees. The factories and sawmills place great emphasis on efficiency as well as consideration for the natural environment and working conditions. The intention is that, within their respective countries, they should also serve as good examples for independent suppliers to IKEA.
IKEA in Poland stimulates the suppliers to invest in better working conditions, sometimes also providing financial support for this.
The monitoring group found working conditions to be generally good, although there is still room for minor improvements at some suppliers. With one minor exception, Swedwood stands out as a good example for other factories. By and large, all the units visited were in good order, and all the factories comply in full with the demands of Polish legislation.
Only two factories have trade unions. In other factories there are workers' councils.
Goleniów, Poland, 3 March 2000.