Improving Labor Standards Performance in the Middle East

The historic sweep of 2011’s “Arab Spring” has made the time ripe for driving improvement in working conditions in the Middle East. Business owners and managers saw the power of the people to force change.

Following the start of the revolution, there were a series of national labor strikes in Egypt as well as in Jordan. The workers were emboldened by the new feeling of possibility – by the sense that change was possible.

Labor standards and working conditions in the Middle East exhibit many of the same basic problems that occur globally. If we look at workers’ demands from the recent strikes in Egypt and Jordan, we will see issues that clearly violate the International Labour Organization’s core labor conventions – unfortunately, that will surprise no one. The demands of workers involved in the strikes focused on having their wages properly and fairly calculated, receiving at least the legal minimum wage, and not being forced to work overtime.

Labor rights in the Middle East are complicated by the presence of a large number of migrant workers in the region. There are some exceptions, like Egypt, where there is a large domestic workforce. But the migrant workforce and the use of agencies to supply contracted labor too often leads to forced labor. The revolution and the labor strikes created a receptive audience.

There are benefits of initiating a dialog between workers and managers: An Egyptian company we worked with in April of 2010 followed our advice. They established a social performance team in their company, which included freely elected worker representatives, whose purpose was to improve worker communication and labor standards in the company. The day before one of the national strikes, the worker representatives went to management and told them that they had surveyed the workers and decided not to join the national strike. Management was surprised, but very grateful. They asked “why?” The worker representatives explained that since the team had been formed, the workers had seen improvements and saw that management was making a sincere effort to create communication channels. Management estimated that they would have lost over $2 million had their workers joined the national strikes.

These are the kind of stories that build momentum. There is a long, long way to go, but stories like this show that the journey has begun. The time is ripe in the Middle East. The key is to share the successes and build momentum.

Businesses in the Middle East are starting to recognize that the pursuit of economic growth through employment creation and income generation should be balanced with protection of the basic rights of workers. For any business, the workforce is a valuable asset, and a sound worker-manager relationship is a key ingredient to the sustainability of the enterprise. But having management realize the need for change is only the beginning. Actually driving change and making improvements is the goal. Easy to say. Hard to do.
Companies in Egypt and the Middle East need a practical way to get started. We found they are eager to learn what tangible steps they can take to start to develop and implement systems to improve working conditions.

SAI’s Social Fingerprint® program provides a process-based approach to measure and improve system development and implementation. Social Fingerprint evaluates a company’s labor standards performance in nine categories. It creates a way to help companies measure where they are now and it provides practical steps to help them improve.

For Egypt and the Middle East, we focused on three of the nine processes as the fundamental building blocks:

• Management System – policies and procedures based on the chosen labor code
• Internal Social Performance Team – a multi-departmental team that includes worker representation
• Worker Involvement and Communication – the two-way communication channel in the company between workers and managers

It is essential for companies to understand that developing and implementing management systems are necessary for continual improvement in the labor standards performance of their companies and their supply chains. Over the past decade it has become clear, and widely accepted, that management systems are the key to improving labor standards performance.

Change is a constant in any company. It is the underlying management systems that create a framework for sustainability in the ever-changing business environment. A company is always balancing risk and control. It is the policies and procedures of the management system that provide continuity.

At the broadest level, a management system begins with policies and procedures – documents. But more important, it is also made up of trained people with specific functional responsibilities. Think of a management system in terms of its development and its implementation. The policies are the rules. They tell everyone what is allowed and what is not allowed. Procedures are the “how to” guide to following the rules.

But companies are made up of people – people organized into groups, people that follow established behavioral patterns at work. It is hard to get people to change. In every culture, in every language, there is a saying about how hard it can be to get people to change their behavior. We suggest breaking each person’s performance into three fundamental components – attitudes, skills, and knowledge. At every level in a company – managers, supervisors, workers – it is best to think about labor standards performance in terms of attitude, skills, and knowledge.

But who at the company is going to think about improving labor standards performance? How will they involve workers from all levels and functions in the company?

A company needs to build a team that takes responsibility for labor standards performance. We call this the Internal Social Performance Team. It is a multi-departmental team that includes freely elected worker representatives. The team becomes the champion for projects designed to improve labor standards performance. Being on the team is not a full-time job, but the team members must know how to speak the language of labor standards and communicate it effectively to all workers. The worker reps become a communication channel from the workers to management and from management to the workers. Their involvement and this communication channel will enhance what already exists in the company.

Involving workers and creating a dialog between workers and management can help avoid a lot of problems. Conflict in the workplace leads to unreliability. It may be extreme things like work slowdowns or strikes. But it may also lead to more subtle things that drive workers to leave the first chance they have to get a new job. But in addition to creating a release valve to minimize problems, there are real positive benefits from involving workers in the operations of a company. Workers offer a valuable perspective on production processes. Improving labor standards performance and worker involvement has been shown to lead to greater productivity and quality, higher worker retention rates, fewer accidents, and reduced absenteeism.
Every time a worker leaves, it costs money in recruitment, training, lower productivity, and a loss of corporate know-how.