© Helvetas

Here’s Why Private Sector Enterprises Adopt or Not Adopt the Decent Work Agenda

FROM: Samar Jubran , Zenebe B. Uraguchi – 06. July 2022
© Helvetas

Let’s paint you a picture of some of the challenges that workers across the globe are facing:  Unsafe workplaces. Sexual assault. Forced labor. Wage theft…

With the risk of simplification, the decent work agenda is all about the aspirations of people in their working lives. When we say the decent work agenda, we’re referring to four pillars – employment creation, rights at work, social protection, and social dialogue.

Everyone deserves the opportunity for decent work and a regular income. Can you imagine how fantastic that feels?

Yet, quite often, it’s easier said than done – significant constraints persist in addressing the constraints of the decent work agenda sustainably and at scale. Despite the challenges, we acknowledge the progress. These include enhanced awareness, improved legal frameworks, and emerging business cases.

Private sector enterprises are at the heart of driving or impeding the achievement of the decent work agenda. In this blog post, we look into what stimulates or inhibits private sector enterprises from adopting the decent work agenda.

No one-size-fits-all approach to adopting the decent work agenda

To state the obvious, the adoption of the decent work agenda is important. The Sustainable Development Goals (SDGs), mainly Goal 8, offer a unique opportunity to strengthen efforts toward the decent work agenda. The SDGs have possibly moved sustainable development to the center of the global development agenda and established broad multi-stakeholder consultations.

Let’s face it. The adoption of decent work agenda isn’t straightforward. Indeed, private sector enterprises make commitments toward SDG8. Yet, the process and scope of their adoption have been unclear.

That’s just the tip of the iceberg. There’re also different reasons for private sector enterprises to adopt the decent work agenda differently – from using it as SDG-washing, carrying it out as part of corporate social responsibilities, and genuinely integrating it into their business models or being forced by legal instruments.

Here’s the real kicker. A practical way of knowing if and why private sector enterprises adopt the decent work agenda is to check their strategy, value, or mission and point out how they adopt the decent work agenda. It’s about improving, evolving, or changing a private sector’s policies, structures, norms, practices, and patterns in its relations with other institutions in the broader economic, social, and political sphere.

You may be surprised or disappointed but SDG8 isn’t legally binding. However, many private sector enterprises see SDG8 as an opportunity to leverage and build new markets and increase profit.

According to the 2018 survey conducted by the World Business Council for Sustainable Development, private sector enterprises view SDG8 as a strategic opportunity to enhance their license to operate, innovate and grow. Specifically, private sector actors surveyed reported that they had already undertaken efforts to identify priority SDG8 for their firms, while the level of integration of SDG8 into actual business plans varies.

Then, what drives the actions of private sector enterprises?

A good starting point for explaining the different commitments and actions of private sector enterprises toward the decent work agenda is the role of institutions.

What we mean by this is that the institutional environment in which private sector enterprises work shapes and affects their actions.  The practices or actions of private sector enterprises are shaped by their institutional landscape. This’s because they’re naturally embedded in an institutional environment.

But how do we make sense of this?

Let’s start with the regulatory factor. What we mean by this is the formal and informal pressures on private sector enterprises by other stakeholders. The pressures take the form of rules and regulations, as well as cultural expectations in a society within which private sector enterprises function.

That isn’t all. Another factor is the moral obligation that drives the operations of private sector enterprises. Enterprises aren’t just for-profit maximization, but they’re also part of a social contract – societies create the legal and moral framework necessary for businesses to exist as an “organ of society”.

Aside from that, one thing is certain. Private sector enterprises also think about their actions and positions in terms of adopting certain measures like the decent work agenda. This becomes the identity of the private sector which is commonly shared by stakeholders (e.g., employees and managers). In other words, adopting the decent work agenda is critically linked to their business model.

We cannot stress this enough: many private sector enterprises are still struggling to get it right in terms of adopting the decent work agenda. This, for example, includes defining their next steps to align their strategies with the decent work agenda and to measure and manage their impacts. Challenges could be capacity (e.g., skills, tools), economic (cost, scale), technology and

data (e.g., large-scale collection of data and monitoring of trends), and cultural or sociological (e.g., legitimacy, willingness to accept new ideas and development). Furthermore, the notion of “decent work” remains unclear, in terms of both meaning and practice.

A deep dive into the financial and garment sectors in Jordan

Let’s take the cases of banks from the financial sector and factories from the textile and apparel sector in Jordan.

For the banks and factories in Jordan, actions to adopt the decent work agenda are shaped by the setting in which they occur. They adopt the decent work agenda differently using different drivers, instruments, reasonings, and means of legitimization. Our discussions with many stakeholders showed that the banks and factories have used different structures and practices to achieve legitimacy.

The structure of the sectors in the banks and factories is different. Many migrant workers are in the garment sector in Jordan. This means that compared to the banking sector, there’re language differences. Within the hierarchical structure of banks, different departments had clear roles in decision-making processes. In contrast in the factories, there’re buyers and workers with language and cultural diversity. The business owners are also involved with the management of quality assurance and human resources.

The banks have mainly internalized values of change as the driver for adopting the decent work agenda. Look at it this way: values, beliefs, and assumptions were elaborated as part of detailed internal processes (human resources, code of conduct). These processes were to a higher extent function-based like frontline employees and management team. These were also reviewed periodically. All these provided the frames that influenced what was meaningful for internal legitimization.

What we’re trying to say is that the strong competition of business in the domestic market has driven banks to adopt the decent work agenda. The Jordanian financial sector, mainly the banking sector, is highly concentrated. This means that competition is high among the few dominant banks. Banks were highly interested in improving the work conditions of their employees.

Overall, the financial sector in Jordan has been performing well in terms of promoting the decent work agenda. Regulations from the government to some extent played a role in ensuring compliance.

However, the adoption of decent work agenda was mainly driven by internalized values of change. Make no mistake about it. Banks wanted to remain competitive (by incentivizing their employees) and projecting a good image toward external stakeholders (through mainly corporate social responsibility). The banks had a highly educated and aware workforce. Contracts were agreed upon from the time of employment.

From the above, we think that the main driving force for the adoption of the decent work agenda by factories seemed to be the legal obligation of complying with the Jordanian labor law. Because of the uncertainty and risk, the factories appeared to respond to regulatory pressures in the form of passive conformity or actively resisting depending on their interest and power. When certainty and interconnectedness were higher, the level of resistance and manipulation was higher.

We found out that there were many stakeholders involved in the textile and apparel sector – ranging from factories and their associations, investors, buyers, recruiting agencies, embassies, public sector ministries and agencies, and workers’ unions. It was the workers’ unions and the Ministry of Labor that has been at the forefront of pushing for the decent work agenda. Better Work, a project of the International Finance Corporation and the International Labor Organization of the UN, played a facilitative role.

It’s also important to stress that the textile and apparel sector is globally linked with buyers coming from abroad. The language barrier in addition to cultural differences among migrant workers in the factors seemed to affect their ability to defend and address grievances.

If you think it’s nothing, think again. In such a complex process, the main initiators, and drivers for adopting the decent work agenda have been Better Work with the political willingness of the workers’ unions and the government of Jordan. Other players like buyers also cared because they wanted to ensure their legitimacy and protect their businesses.  Collective bargaining agreements existed between employers’ associations and the garment union.

Our key takeaways

What does all this mean to all of us? We highlight two main points.

First, the decent work agenda is an important driver of increased labor force participation, productivity, and economic performance. There’s growing evidence supporting this to encourage private sector enterprises and governments to provide a better understanding of the decent work agenda as presented in SDG8 and its effective adoption.

Second, structural unemployment and underemployment often lead to social instability. The decent work agenda is critical not only for the economic development of Jordan and other regional countries but also for their social and political stability. With the aftereffects of the Arab Spring still fresh in people’s memories, the failure to tackle decent work deficits by private sector enterprises will be costly in the long term.

 

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Samar Jubran has extensive experience in managing different partners' portfolios/stakeholders, ranging from government institutions to civil society organizations and the private sector. She has also a proven record of supporting individuals and institutions at the strategic level. Samar brings high cultural sensitivity and diverse teamwork experience across different countries. Her expertise includes managing complex project lifecycle across many countries, including designing, planning, managing risk, contracts/grants, as well as monitoring and results measurement. Samar has applied adaptive management to steer projects and contribute to sustainable and scalable results by facilitating management, strategic, and technical support to projects. Samar is interested in the role of technology in social changes. In addition to a previous graduate degree in Gender and Development, Samar recently completed her Master of Business and Economics from Vrije University Amsterdam and wrote her thesis on the adoption of the decent work agenda by private sector enterprises. Using her expertise and education, Samar seeks to bridge the gap between the private sector and development cooperation.
Programme Manager, East Europe, South Caucuses & Western Balkans; Senior Advisor, Sustainable & Inclusive Economies