Ictsi's Global Expansion: a Risky Proposition?

ICTSI’S GLOBAL EXPANSION: A RISKY PROPOSITION? October 2017

| 1 | EXECUTIVE SUMMARY

Philippine-based International Container of these violations are in breach of domestic Terminal Services Inc. (ICTSI) is one of the fastest law in the countries where ICTSI operates and growing and most profitable terminal operators contravene international conventions. They also in the world. Established in 1987, ICTSI has contravene ICTSI’s own internal policies, calling ambitiously expanded its global operations and into question ICTSI’s ability to effectively manage now operates 29 container terminals globally. The their global network and ensure the same ITF, and unions in ICTSI terminals, have observed standards across all terminals. an emerging pattern of labour rights violations across the ICTSI network. These violations include: The ITF is committed to: standing with unions paying poverty wages; a failure to respect the in ICTSI terminals to bring an end to labour right to freedom of association; poor safety violations across the company’s global business; standards; and illegal outsourcing of labour. Many and ensuring decent working conditions for

ICTSI OPERATIONS

Port of Tuxpan Port of Manzanillo Puerto Cortes

Port of Buenaventura

Port of Guayaquil Port of Port of Matadi Suape

Port of Buenos Aires

| 2 | all dock workers. Just as the ITF has stood with The ITF has stood in solidarity workers in Indonesia and Madagascar in their campaigns to ensure that ICTSI respects national with dock workers at ICTSI labour laws and international labour conventions. terminals in Indonesia and Despite the ongoing risk of volatility at these terminals, and the impacts on multiple port Madagascar who have been stakeholders (including government officials and fighting for better wages and major global brands), the company has failed to act to resolve these disputes. conditions. Wherever ICTSI intends to expand, the ITF will The protracted disputes in Madagascar and be there, working side by side Indonesia are not a new or isolated phenomenon. ICTSI has a history of unresolved labour disputes with local unions to ensure stretching back to the first years of their global decent working conditions for expansion. In 2000, ongoing disputes at the Port of Rosario, Argentina, ultimately resulted in ICTSI all dock workers. terminating their concession agreement. Paddy Crumlin - President of ITF

Port of Gdynia Port of Rijeka

Port of Port of Yantai Batumi Philippines Port of Basra Port of Manilla Port of Karachi Port of Subic Port of General Santos Port of Davao City Port of Tagum City Port of Mindanano Port of Batangas Port of Laguna

Port of Toamasina

Indonesia Port of Jakarta Port of Makassar Port of Melbourne

| 3 | The repeated failure of ICTSI to resolve industrial jobs and industrial relations practices in their disputes in a timely manner, should stand as a ports. Together, we are committed to ensuring warning to investors, lenders and governments that ICTSI does not extend its pattern of labour regarding the company’s future expansion. violations into new terminals. ICTSI’s failure to engage with unions to ensure decent work, and to enforce a culture of safety If ICTSI fails to address the pattern of labour that meets global standards, across its network violations emerging in their network and does is of grave concern to ITF affiliated unions in not commit to working with the ITF to ensuring countries targeted for ICTSI expansion. These the rights and dignity of all workers in its current unions have expressed concerns about the and future terminals, then there is a risk that the company’s potential expansion into their ports. disputes in Madagascar and Indonesia will be They do not want to see the practices observed in replicated. This will increase volatility, political current ICTSI terminals extended into their ports. and economic risk across their network, and should be of significant concern to governments, The ITF, and our union affiliates, are committed investors and financiers supporting ICTSI’s to supporting port operators who provide good expansion.

Emerging patterns in the ICTSI network

Paying poverty wages • Failure to recognise Endangering workers • Underpayment of unions as the with unacceptable safety wages below regional or legitimate organisation standards national statutory wages. representing workers. • Cases of employees • Underpayment of • Punitive actions working at heights wages below union against union without fall protection or agreements. members including: safety equipment. • Standard wages set refusal of overtime; • Poor maintenance of below the living wage. sackings; cancellation equipment approaching • Excessive overtime of promotions; and negligence. in contravention of differential treatment • Casual workers given domestic legislation and of union and non-union no or insufficient safety international standards. members. equipment. • Workers standing under Discrimination against Outsourcing suspended loads. unions and their responsibility for • Failures to properly members working conditions manage access into and • Denial of workers’ • Illegal out-sourcing of within terminals. rights to freedom workers in contravention of association and of domestic law Unless ICTSI commits to collective bargaining. and international reaching agreements with • Refusing to negotiate conventions the ITF and with local unions with workers and • Use of out-sourced to provide decent work for all their representatives workers to undercut workers at ICTSI terminals, regarding wages and wages and conditions. ICTSI’s expansion will working conditions. become an increasingly risky proposition.

| 4 | CONTENTS

EXECUTIVE SUMMARY 2

INTRODUCTION 6

PAYING POVERTY WAGES ACROSS ITS NETWORK 8 Jakarta, Indonesia: illegal rates of overtime to earn a living wage 9 Jakarta, Indonesia: illegal non-payment of overtime 11 Makassar, Indonesia: wages reduced below a living wage 12 Toamasina, Madagascar: casual workers struggling to survive 14

OUT-SOURCING RESPONSIBILITY FOR WORKING CONDITIONS? 15 Toamasina, Madagascar: out-sourced workers struggle to survive 17 Jakarta, Indonesia: illegal use of out-sourced labour 18

ILO VIOLATIONS: DISCRIMINATION AGAINST UNIONS AND THEIR MEMBERS 19 Toamasina, Madagascar: workers intimidated and dismissed for joining their union 20 Toamasina, Madagascar: dismissed workers missing meals and struggling to survive 21 Makassar, Indonesia: punitive action against union members during bargaining 22 Batumi, Georgia: unfair dismissal of union members participating in industrial action 22

ENDANGERING WORKERS WITH UNACCEPTABLE SAFETY STANDARDS 23 Poor maintenance of equipment approaching negligence 25 Working at heights without fall protection 26 Failure to properly manage access into and within terminal 26 Failure to provide workers with suitable safety equipment 27 Personnel working under suspended loads 28

ICTSI’S GLOBAL EXPANSION: A RISKY PROPOSITION? 29

PORT OF TANJUNG PRIOK, INDONESIA 29 Management refusing to negotiate with Indonesian workers 29 Indonesian Minister drawn into union struggle by Australian activists 29

PORT OF TOAMASINA, MADAGASCAR 30 Government of Madagascar drawn into fight 30 Global brands stand with workers 31

CONCLUSION 33

END NOTES 34

| 5 | Not only were we concerned for the dock workers themselves, we were also concerned that action against legitimate union activity would deter investor confidence in Madagascar as a future sourcing market. Ethical Trading Initiative

INTRODUCTION

International Container Terminal Services Inc. with the local union has led to ongoing (ICTSI) is a Philippine based container terminal industrial action, the targeting of the Indonesian operator, which operates 29 container terminals Infrastructure Minister by Australian unionists globally. Established in 1987, it has engaged and labour activists, and solidarity actions by ITF in an ambitious international and domestic affiliates globally. expansion program since 1994, doubling the number of terminals in its networks since 2011. These protracted industrial disputes are not an ICTSI’s portfolio is concentrated in medium-sized isolated phenomenon. ICTSI has repeatedly failed facilities with total annual throughputs ranging to resolve labour issues with unions in its terminals from 50,000 to 2,500,000 twenty-foot equivalent from the first years of its global expansion. In units (TEUs). Growth has been targeted in ports 2000, ICTSI terminated its concession agreement that areprivatised from government control, with at the Port of Rosario, following an ongoing a focus on emerging markets. dispute that led to a loss in confidence in the terminal by port users, and a 50 per cent The company has a history of moving into reduction in volume through the port.2 countries that are some of “the worst countries in the world to work in”, in which workers are The ITF, and our union affiliates, are committed to routinely exposed to labour rights violations with supporting port operators who provide good jobs no guarantee of rights.1 and industrial relations practices in their ports. ITF affiliate unions in countries targeted for ICTSI The ITF, and our union affiliates, have observed an expansion have expressed concerns about the emerging pattern of labour violations in the ICTSI company’s potential expansion into their ports. network: a failure to respect the right to freedom They do not want to see the practices observed in of association; poor safety standards; and illegal current ICTSI terminals extended into their ports. outsourcing of labour. Many of these violations are Their concern should be shared by governments in breach of domestic law in the countries where and port authorities assessing ICTSI terminal bids, ICTSI operates and contravene international labour and by the investors and financiers who fund the conventions. They also contravene ICTSI’s own company’s expansion. policies and statements, and call into question the company’s ability to effectively manage their If ICTSI fails to address labour violations in their global business and ensure the same standards network, and does not commit to working with and performance across all their terminals. the ITF to ensuring the rights and dignity of all workers in its terminals, then there is a risk that Long-term, unresolved labour issues at the Port of the disputes in Madagascar and Indonesia will Toamasina, Madagascar, have recently resulted in be replicated. This will increase volatility and global pressure against ICTSI and the Government economic risk across their network, and should be of Madagascar, including a submission to the of significant concern to governments, investors International Labour Organisation (ILO) and and financiers supporting ICTSI’s expansion. pressure from clothing brands using the port. At The following are just some of the major issues the same time, the failure of ICTSI management that are seen across the ICTSI network: at the Port of Jakarta to conclude negotiations

| 6 | Paying poverty wages across its network • Failure to properly manage access into and • Jakarta, Indonesia: workers earn only 15 per cent within terminal. to wages of workers at a neighbouring terminal • Failure to provide workers with suitable safety at the Port of Tanjung Priok. Workers’ base wage equipment. is set below a living wage and they must work • Personnel working under suspended loads. excessive overtime to meet basic living costs. • Makassar, Indonesia: ICTSI management This report discusses examples from the cut wages, forcing workers to work excessive following ICTSI terminals: overtime to earn a living wage. • Olah Jasa Andal (OJA), Port of Tanjung Priok, Outsourcing responsibility for working Indonesia conditions ICTSI start date: May 2012 • Toamasina, Madagascar: Significant use of Contract end date: 2028 outsourced labour at the Port of Toamasina, Union: Federasi Buruh Transportasi Pelabuhan these workers do not earn a living wage and are Indonesia (FBTPI) not provided with safety equipment. ICTSI has a revenue sharing agreement with • Jakarta, Indonesia: In contravention of Indonesia SOE Pelindo II. Indonesian law, 20 workers at ICTSI’s terminal have been employed by labour-hire company • Makassar Terminal Services (MTS), Port of Persada to work at the terminal. Makassar, Indonesia ICTSI start date: May 2006 ILO Violations: Discrimination against unions and Contract end date: 2022 their members Union: Serikat Pekerja MTS (SPMTS • Toamasina, Madagascar: Denial of the right ICTSI has a revenue sharing agreement with to freedom of association and the right to Indonesia SOE Pelindo IV. collectively bargain, 43 workers fired for union activity. • Madagascar International Container Terminal • Makassar, Indonesia: Attempt to co-opt union Services Ltd. (MICTSL), Port of Toamasina, leader through promotion, which was cancelled Madagascar after he refused to leave the union. Management ICTSI start date: May 2005 used threats and intimidation to prevent union Contract end date: 2025 members from exercising their right to bargain. Union: Syndicat Général Maritime de • Batumi, Georgia: Following a strike in 2015, ICTSI Madagascar (SYGMMA) fired all union members who had participated in the industrial action. • Batumi International Container Terminal Ltd. (BICTL), Port of Batumi, Georgia Endangering workers with unacceptable safety ICTSI start date: September 2007 standards Contract end date: 2055 • Poor maintenance approaching negligence Union: Batumi Seaport Workers Union • Working at heights without fall protection.

| 7 | Wage violations across the ICTSI PAYING POVERTY network include: • the underpayment of wages WAGES ACROSS below regional or national statutory wages ITS NETWORK • the underpayment of wages below union agreements • standard wages set below the living wage • excessive overtime in contravention of domestic legislation and international standards

Everyone who works has the right to just and favourable remuneration ensuring for himself and his family an existence worthy of human dignity, and supplemented, if necessary, by other means of social protection. Article 23, Universal Declaration of Human Rights

In terminals throughout the ICTSI network, The ITF acknowledges that due to the variable workers are paid poverty wages. They cannot nature of stevedoring work, some overtime can be meet essential living costs – food, housing, excepted. However, dock workers should not be clothing, transport, medical costs and schooling compelled to work excessive amounts of overtime for their children – without undertaking excessive just to meet essential living costs, as is the case at overtime. a number of ICTSI terminals. As the stories below demonstrate, ICTSI workers regularly complete The right to an adequate wage or to a living hours that contravene national laws and violate wage is a human right, enshrined in the international labour standards. Universal Declaration of Human Rights and the International Covenant on Economic, Social and This excessive overtime greatly diminishes the Cultural Rights.3 It is also enshrined in the ILO workers’ family time, quality of life, and ability to Minimum Wage Fixing Convention (1970) and participate in community and religious life.5 It the ILO Protection of Wages Convention (1949). also has significant impacts on workplace safety, The objective of these conventions “is to ensure with increases in accidents linked to an increase to workers a minimum wage that will provide a in working hours.6 satisfactory standard of living to them and their families”.4

| 8 | Jakarta, Indonesia: illegal rates of overtime to earn a living wage Workers at ICTSI’s OJA terminal are paid as Overtime can be no more than little as 15 per cent of the equivalent wages for workers at other terminals at the Port of 3 hours in 1 day and fourteen Jakarta. OJA workers receive a base wage of hours in 1 week. just US$250 per month, compared to the approximately US$1500 per month received Article 78, Legislation No. 13, 2003 by dock workers at the neighbouring JICT (“Manpower Act”) terminal. The low pay offered by ICTSI at the Port of Jakarta means that workers are forced Non-union members who agreed to move to the to accept illegal, and dangerously long shifts, to new shift structure were given work in multiple earn a living wage. gangs, and are still working hours of overtime in excess of Indonesian law. By contrast, union In Indonesia, state regulation stipulates workers members who refused to move to the new shift can work only three additional hours per day, structure were only allocated shifts in a single and a maximum of 14 hours per week. OJA gang, and received no overtime shifts between workers report working hours in excess of the April and October 2017. This punitive action by law. Up to 250 hours in overtime in a single management has occurred in the context of month (an average of 62 hours overtime a ongoing negotiations for a collective agreement, week). Without this overtime, workers struggle and has had severe impacts on workers’ lives and to cover basic household expenses, including financial stability. schooling for their children. These dock workers are all experiencing financial Workers at the OJA terminal had been stress. 90 per cent of OJA dock workers have organised into three gangs working a rotating families. For these dock workers, a typical month’s shift structure of 2 x 12 hour shifts per day. expenditure is approximately US $415. This The Indonesia government ordered that this includes rent, food, electricity, water motorbike be changed. In response, ICTSI introduced a loans, transport for children to school, and school system of four gangs working a rotating shift fees. This exceeds their base wage of US $310. structure of 3 x 8 hour shifts per day. The union The lack of overtime shifts has resulted in dock had refused to move to the new shift structure workers drawing on bank credit, using credit until their demands for a living wage were met. cards and borrowing from loan sharks (who They argued that workers would be unable to charge a 30 per cent monthly interest rate). meet basic living costs without the excessive – and illegal – overtime that they are currently Due to severe hardship, eventually the union was compelled to work. forced to accept the new shift structure before settling a fair collective agreement.

“Our pay is so low that we have to accept as much overtime as we can get. Sometimes you get so tired, but have to keep going if you want to take home a decent pay. Worst of all, they use overtime as a kind ‘special favour’ to workers who side with management. Sooner or later there is going to be a serious accident.” Worker who operates heavy machinery at OJA

| 9 | Worker stories

Ridwan Murmin | 40 Hendri Nurbantoro, ‘Toro’

Ridwan has been employed as a Quay Toro started work as a crane operator at Crane Operator on the OJA terminal since the PT Olah Jasa Andal terminal in 2012. 2006. He supports a wife and four children He supports a wife and three children on his wage. Prior to the ‘refuse-overtime’ on his wage. Without overtime, Toro only work stoppages initiated by the union earns US$308 per month. Toro has been in March 2017, Ridwan worked a total of unable to pay his rent since being denial 400 hours per month (150 hours standard, overtime shifts, and was recently evicted plus an additional 250 in overtime). from his house. He is unable to remove his With overtime, Ridwan was able to bring possessions from his previous house, as home a living wage for his family, about he doesn’t have enough money to cover US $740 per month. However, since the the transport costs. Toro has had to take cancellation of overtime by management, his children out of school, as he can no Ridwan has been reduced to the base longer afford school fees. The children wage US $310 per month. This has put him are ashamed that they have to stay home and his family under substantial financial while all their friends are going to school. stress. His base wage is not enough to Their friends ask them every day “why meet the living costs of his family, and its aren’t you going to school?”. putting him under a lot of pressure. He has had to take out a credit card from the bank, just to meet basic needs. He does not know how he going to pay this back.

| 10 | Jakarta, Indonesia: illegal non-payment of overtime In addition to already low wages at the terminal, In February 2015, the union took the case to the between 2011 and 2015, OJA management failed North Jakarta District Manpower Office. On 1 to pay proper overtime entitlements as required March 2015, OJA management stopped paying under Indonesian law. This practice was initiated the US$88 “fixed overtime wage” and instead by the previous owner, but continued when ICTSI began paying overtime in accordance with the took over OJA in 2012. law. But, ICTSI did not pay back pay for overtime worked between 2011 and 1 March 2015, so the Under both the previous owner and ICTSI, crane union did not withdraw their case. operators and ARMGC operators (approximately 30 workers) received a base wage plus “fixed The case continued through the North Jakarta overtime wage” of US$88 per month. Under District Manpower Office for two years. In May Indonesian law, workers cannot be paid a fixed 2017, the North Jakarta District Manpower Office overtime bonus irrespective of hours worked. published notice No. 239/2017 stating that the They must be paid for each hour work. In 2013, company has been illegally underpaying workers the union raised the issue of the non-payment of for overtime between 2011 and 2015, and must overtime hours with management. Between 2013 pay the entitlements. Due to the company’s and February 2015 the union held 10 meetings refusal to act, in 2017 the workers were forced to with management, however they were unable to escalate the issue to the relevant government reach a satisfactory decision. authority, in an attempt to compel ICTSI to meet its responsibilities and pay the workers the overtime that they are due under Indonesian law.

“For almost four years I had to work four hours overtime every shift. Rather than being paid for this time, I was given a ‘bonus’ at the end of each month. It is totally unfair and illegal. Even the government told the company I had to be paid, but I have still received nothing for all those hours.” OJA worker

| 11 | Makassar, Indonesia: wages reduced to below a living wage

In Indonesia, the minimum wage is set by sector the workers’ wages inclusive of allowances was at a regional level. Individual enterprises may then reduced to the minimum wage. establish a formula for payments or allowances above the minimum wage. Until 2015, MTS This new wage does not meet basic, essential workers received the regional minimum wage living expenses and dock workers must work plus additional allowances that were calculated excessive overtime to earn a living wage. Some on the basis of their role within the company. dock workers report working 70 hours of overtime Following a change in MTS management in 2015, per week, over and above their base hours.

Worker stories “On this salary, I struggle to get enough money to live. Only recently – after five years at the terminal – have I been able to rent a house for me and my family. Before this, I had to live with my family, and my wife and children lived with her family in a different home. This was terrible. It’s not right for us to have to live like this.

“Because of the very long hours I must work to support my family, I sacrifice so much time with my children and my wife. This is no way to live. I have missed almost all my children’s birthdays. When my wife went into labour Rhyno Reyhan Djawas | 22 with my first son I was in Makassar for work. I couldn’t get there in time. By the time I got to her, my son was already here. Rhyno has been employed as a truck driver inside the MTS terminal since 2012. He is “Despite these struggles, me, my wife and married with two children, aged two and family are strong and healthy. I’ve been three years old. Even though his standard supporting my wife to study at university – work hours are one, eight-hour shift per and just last week she completed a degree in day, six shifts per week, he often works accounting. A great achievement. significantly more hours just to earn a living wage. He typically works an additional “I am a committed union member because eight-hour shift back to back with his first I think if we don’t struggle, we must work shift, three times a week. In an average extremely long hours simply to survive. I have week, he works three 16-hour shifts and a dream that we can work only eight hours three eight hour shifts. Without overtime per day and have enough for me and my his monthly wage is US$188. With overtime family. I can save time for my kids for my wife, he can earn US$338 per month. In addition we can go outside the city, go to the beach. to working at ICTSI, he and his brother sell Now we cannot do that.” food at a street stall to earn extra money for his family.

| 12 | Worker stories

Haji Muh Ilyas Nurdin | 45

Ilyas is an RTG operator on the MTS “It’s about 50/50 that management cares about terminal. He has been employed by MTS the workers and our lives. We still get work but for 10 years. Prior to becoming a RTG management won’t increase our wages. operator, he worked as a tally man and a truck driver at the terminal. Due to surgery “Previously, I could go to the doctor and the for a medical condition, Ilyas is no longer company would pay. Now I must pay first and able to work overtime and only earns get reimbursed. This is quite difficult for us. Also, US$180 per month. we used to be entitled to regular health check- ups, not anymore. “In the past, management treated us well. It wasn’t just the salary, but health “The conditions are becoming worse – we have insurance and other benefits too. From about 70 per cent of what we used to. 2007 to 2015, the situation was good. However, from 2015 when management “Being in the union is important. Through the changed, they reduced our wages. union I know about regulations, about the collective agreement and cannot be fooled “This has been a problem for me and my by management. I’m not in the union to ruin family. It’s quite difficult: daily needs are the company. I want the company to become increasing – the kids are starting school – better. I want to be able to fulfil my family’s but our wages have gone down. needs.”

“It’s about 50/50 that management cares about the workers and our life. We still get work but management won’t increase our wages.”

| 13 | Toamasina, Madagascar: casual workers struggling to survive

The majority of workers employed by MICTSL are “I use my wage to pay for food for my family, but employed on permanent contracts. However, I cannot afford to pay rent. My wife pays the rent there are still handful of workers who are paid from money she earns from selling food at the by the hour, employed on an hourly rate that market. I cannot afford to send my two children is significantly lower than their permanent to school. I don’t have enough money to send counterparts. These workers work 55 hours per them to the doctor when they are sick. The last week, three weeks a month, and earn US$45 time my child was sick, I had to borrow money per month. In addition to the work that they to send my child to the doctor and to pay for perform at the container terminal, these workers medicine.” Dock worker report that they are regularly required to perform general maintenance tasks at the homes of ICTSI “I cannot live on my current wage. My wage management. They are not paid additional wages is only enough to pay for rent. My mother for work performed outside their normal hours of helps me to pay for food. I don’t have a wife or work. These workers are struggling to survive and children. I cannot even pay for my own food – cannot meet basic living costs. how would I support a family?” Dock worker

Worker stories Fahmi | 33

Fahmi has been employed as a tally man at “If I could change anything, it would the MTS terminal for six years. He is married, definitely be the minimum wage. This is but does have any children yet. He often because sometimes I would like to have a works 70-hours overtime per month. In an vacation and spend time with my family. If average week, he works three 16-hour shifts, I could work less but still keep the wage, I and three eight-hour shifts. He worked these would not have to take overtime. hours since starting work at MTS six years ago. With overtime, he can earn almost “I hoped when I joined the union that the US$520 per month. company would give workers a better wage. That we would receive justice. Before the “I’m not happy working this many hours company would pay for healthcare, but now but I need additional money for my family. no longer. Now the company takes money The standard wage is too small. Without from the basic wage for health insurance. the additional hours, I would not be able to meet the basic needs of the family. “I think that the company is following the basic rules, but nothing more. There is “If you add up electricity, water, rent, food nothing more than that. Management does and transport the cost is more than the not appreciate us as workers and what we standard wage. This is just for the absolute do. The previous management paid bonuses basics. How could we survive without to the best workers at the end of the year, overtime? now that has stopped.”

| 14 | At terminals ICTSI: OUT-SOURCING • Illegally out-sources workers in contravention of domestic law RESPONSIBILITY and international conventions • Uses out-sourced workers to FOR WORKING undercut wages and conditions CONDITIONS?

ICTSI regularly employs workers through labour- “We need accountability and hire companies at their terminals. These workers are employed on fix-term contracts and are governance, particularly from the typically paid on a piece rate or hourly basis. ‘economic employer’, the lead These workers work alongside permanently firm in the supply chain. We need employed workers, often in the same or similar roles. But unlike their permanently employed standards that apply wherever counterparts, they do not receive holiday pay the supply chain reaches. There or sick pay. Many are denied sufficient safety can be no excuses, no exemptions, equipment, and are charged an access fee to enter the port at the start of each shift, just to be no blaming abuses on the local able to work. management just because it’s a subcontractor or far from the The widespread use of labour-hire and casual workers is associated with increased home country.” vulnerability to accidents, injuries and ill-health.8 Steve Cotton, ITF General Secretary.7 It also has impacts on productivity.9

In out-sourcing work to labour-hire companies, purpose of these Guiding Principles a business ICTSI believes it can out-source responsibility enterprise’s “activities” are understood to for the wages and conditions of these casual include both actions and omissions; and its workers at its terminals. The company has “business relationships” are understood to explicitly denied responsibility for the conditions include relationships with business partners, that they work under and the labour violations entities in its value chain, and any other non- that these workers are subject to.10 State or State entity directly linked to its business operations, products or services.11 The ITF disagrees. As the “economic” or “lead” employer at their terminals, ICTSI is responsible ICTSI’s responsibility for these out-sourced for the rights and conditions of all workers workers is also upheld in the investment policies who work at their terminals. It must uphold of ICTSI shareholder, Norwegian Pension Fund: the rights and conditions of all workers on its terminals, irrespective of whether they are Companies’ operations have impact on directly employed by the company or indirectly employees, as well as contract workers, workers employed through a labour-hire company. Their in supply chains, customers, communities and responsibility is clearly upheld in Principle 13 of the environment around operations. End-users the UN Guiding Principles: of products or services may also be affected by companies. It is broadly accepted that The responsibility to respect human rights companies have a responsibility to respect requires that business enterprises: […] (b) human rights, including in supply chains Seek to prevent or mitigate adverse human and other business relationships. Respecting rights impacts that are directly linked to human rights is, more generally, part of good their operations, products or services by their business practice and risk management.12 business relationships, even if they have not contributed to those impacts. […] For the

| 15 | As the UN Guiding Principles and the Codes and conditions of all workers at ICTSI terminals. of Conduct of a number of institutional The ITF intends to hold the company to its own shareholders investing in ICTSI clearly standards regarding the use of contractual establish, ICTSI is responsible to provide labour: remedy for any violations of human rights (including workers’ rights) that occur at its … generally does not hire contractual terminals. They are unable to out-source their employees as the Group believes that it can responsibility to labour-hire companies, and achieve greater efficiency with a dedicated must ensure that minimum conditions are staff of employees who are familiar with the met and that these workers are rights at work Group’s internal systems.13 are protected. As the examples below demonstrate, ICSTI is The ITF is looking to work with ICTSI to reduce not currently meeting its own internal policies the number of labour-hire and casual workers regarding the use of contractual or labour-hire across its terminals – and ensure the rights workers on its terminals.

| 16 | “I worked for the company for 20 years without a contract. I worked for 20 years without a pay increase. It has been difficult to support my wife and six children. I have an obligation to feed them.” Zafisona

Toamasina, Madagascar: out-sourced workers struggle to survive

There is significant use of casual work on However, these workers often earn significantly the ICTSI terminal at the Port of Toamasina. less and may even return home from a shift Permanent workers are typically the more highly without being paid if a ship is delayed or fails skilled on the docks and perform roles such as to arrive. Casual dock workers report that they vessel planners, gate checkers and engineers. are frequently rostered to work when there are These workers start on a base rate of US$112 per no ships to unload, and they must wait around month. The more dangerous and dirty work – until the ship arrives to begin unloading. If the like lashing – is undertaken by casual workers. ship does not arrive before the next shift is All but a handful of these casual workers are rostered on to start workers return home without employed on a piece rate basis through labour- payment. hire company Société de Manutention des Marchandises Conventionnelles (SMMC) The Some out-sourced workers report only being rate per 20-foot container is US$0.50, which paid for four shifts a month, taking home less is split between the 24 workers working on a than US$40 a month. Although they struggle to shift. The maximum number of containers that meet basic living costs on this salary, their ability can be moved in a single eight-hour shift is to supplement their income is curtailed by the 440. In other words, the maximum that each requirement that they wait at the docks until the dock worker can earn in a single shift is US$9.15, ship arrives to be unloaded. Dock workers report before deductions. that it is not uncommon for them to stay at the terminal overnight, sleeping at the edges of the dock waiting for the next ship to arrive.

| 17 | Jakarta, Indonesia: illegal use of out-sourced labour Indonesian law strictly regulates the use of sub- With outsourcing, you can be contracted and out-sourced labour. Companies are only permitted to outsource “non-core made redundant at any time, work”, that is, “those activities without which the there is no security. company would still be able to undertake its Out-sourced, Persada worker ‘production process’”.14 Furthermore, Article 59 of Law No. 13/2003 specifies that: Doank, the former Secretary General of the If the fixed term employment agreement FBTPI: does not meet the requirements as provided in Law No. 13/2003 and its implementation In March 2017, the [outsourced] workers regulation, or violates Law No. 13/2003 and its were called by the company. They were told implementation regulation, the employee will to resign from the union, or their contracts be considered as a permanent employee of the would not be extended. Of the eight workers company.15 who refused to resign from the union, only three have had their contracts extended. 100 20 workers at the OJA terminal were employed per cent of those who resigned their union by labour-hire company Persada to work at the membership retained their jobs. OJA terminal. These workers were employed to perform core work on the terminal, in On 15 May 2017, the North Jakarta District contravention of Indonesian law. A number of Manpower Office issued notice No. 1944/-1.838 these workers have been employed since 2013, stating that OJA must directly employ the which contravenes a second law, which states eight workers. As the company refused to take that workers cannot be employed on fixed term action, the District Manpower Office issued contracts for more than two years. notice No 2193/-1.836 reiterating the points of the first letter, giving the company three days The FBPTI took a case to the North Jakarta District to respond. Manpower Office on behalf of union members arguing that their employment breached At the time of writing, local ICTSI management Indonesian labour law. Due to threats from the has still not followed the direction of the North company, only 8 of the 20 outsourced workers Jakarta District Manpower Office and the 8 elected to take their case to the North Jakarta workers are still waiting to be employed by the District Manpower Office. According to Didik company.

| 18 | Anti-union tactics across the ICTSI ILO VIOLATIONS: network include: • Refusing to negotiate with workers DISCRIMINATION and their representatives regarding wages and working conditions AGAINST • Failure to recognise unions as the legitimate organisation UNIONS AND representing workers • Punitive actions against union THEIR MEMBERS members including: • refusal of overtime • sackings • cancellation of promotions • differential treatment of union and non-union members

Since November 2016, ICTSI has been the This anti-union behaviour has led to protracted subject of a campaign regarding the unfair industrial disputes in the ICTSI network, with dismissal of union members at its Toamasina active labour disputes in a number of terminal terminal in Madagascar. This is just one sites. As detailed in the final section of this instance of ICTSI discriminating against unions report, these industrial disputes have had flow- and their members. In terminals across their on effects for domestic governments and their global network, the ITF has seen evidence of economies. Terminal clients – including shipping behaviour which violates ILO Conventions 87 lines and major global brands – have also and 98, regarding Freedom of Association, been implicated in these disputes, resulting in Protection of the Right to Organise and the reputational and financial damage to the ports, Right to Collectively Bargain, and UN Guiding cities and countries that are home to ICTSI’s Principles No. 3 and No. 6 regarding Freedom terminals. of Association, Collective Bargaining and Elimination of Discrimination in Respect of Employment and Occupation.16

| 19 | Toamasina, Madagascar: workers intimidated and dismissed for joining their union

Workers at the Port of Toamasina are denied the SMMC. This contravenes workers’ rights to right to join their union and collectively organise freedom of association as enshrined in the for better wages and conditions. Madagascan Labour code (LOI N° 2003-044), and ILO Convention No. 87 and 98 (to which the In March 2012, SYGMMA appointed three Madagascan government is a signatory). delegates to represent workers employed by the SMMC at the Port of Toamasina. Two weeks later, The failure of SMMC to reinstate the fired dock SMMC management ordered the delegates’ workers not only contravenes ILO conventions representatives to sign a letter stating that they 87 and 98, it also represents a failure of the would resign from the union and agree not to hold company to comply with a 2014 court ruling union meetings. They refused and were sacked. In recognising the right of SYGMMA to organise July 2012, SYGMMA held a strike in support of the at the Port of Toamasina. Multiple efforts by the dismissed dock workers. Following the strike, 36 labour inspectorate to enforce this judgement workers were dismissed. Three workers were also have failed, as have attempts by the union to denied shifts for union activity in May 2012. resolve the matter directly with the Government of Madagascar. In July 2013, the Arbitration Board of the Court of First Instance ruled that SMMC’s “I joined the union to protect my rights. Because failure to recognise the union amounted to I have the right to be free, to join the union and an unconstitutional act in contravention of have the same conditions as the permanent the principles of freedom of association. This workers. I have worked on the docks since 1990 judgement was confirmed by the National with no wage increase. Since I lost my job, I sell Chamber of Enforcement Agents in July 2014. vegetables to survive. I earn US $0.80 a day. It’s None of these 43 workers, who were dismissed tough, but I survive.” for union activity, have been reinstated, Tai Roger and SYGMMA has not been recognised by

Although Madagascar has ratified both ILO Conventions protecting freedom of association and the right to collective bargaining, the fundamental trade union rights pertaining to these conventions are not applied in practice. […] The right to strike is guaranteed by law, but is not respected in practice.17

| 20 | Toamasina, Madagascar: Dismissed workers missing meals and struggling to survive

The unfair dismissal of these workers has without for whole days. They will often resort significantly impacted their families, particularly to borrowing money from friends to buy food, their wives who have had to intensify their and there is no way of paying this money back own work to make up for their husbands’ lost unless she works longer, more intensive days, income. The majority of women in Madagascar washing additional clothes to meet the costs are employed in the informal economy – selling of their debt. Wherever possible her husband food at the markets, washing clothes and supplements her income, taking odd jobs as a cleaning houses – and earn substantially below gardener or helping her to wash clothes, but the legal minimum wage. this work is not consistent, and they struggle to get by. The wife of one of the sacked dock workers must wash clothes every day to support her The lack of secure income has meant that the family. Despite back-breaking labour that couple are not able to support their young leaves her body aching every night, sometimes children. These children have been adopted she and her husband do not have money by a relative, who is able to provide them with to buy food, skipping meals or even going food, shelter and schooling.

“I work every day. Every single day. Each night, when I sleep, I feel very tired. I ache all over my body … Some days, we don’t have anything to eat. No lunch, no dinner. We don’t have enough money, even though I wash clothes every day.”

| 21 | Makassar, Indonesia: punitive action against union members during bargaining

The SPMTS initiated bargaining in January • they have made it extremely difficult for people 2017, when they sent a letter to local ICTSI to take personal leave; management asking for negotiations regarding • they declared a cap on promotions for the a new collective agreement. One of the key entire workforce; and demands of the union was to participate in the • they temporarily refused overtime to union renegotiation of the wage formula to above members. the minimum wage with allowances. ICTSI has refused this demand. In addition to tactics that targeted union members as whole, local ICTSI management During the collective agreement negotiations, have actively tried to convince the General management threatened the members of the Secretary of the SPMTS to resign his position worker committee. They told the workers that as leader of the union. Following the if the union was successful in increasing worker commencement of bargaining, management wages at the terminal, then management promoted the General Secretary to a would resign. However, if the union was supervisory role within the company. His letter unsuccessful, then all members of the worker of appointment contained a clause that stated committee must resign. Management has that the company expected that following his further tried to intimidate workers and prevent promotion, he would be expected to resign from them from exercising their right to bargain: his role at the union. When he refused to resign from the union, his promotion was cancelled.18

Batumi, Georgia: unfair dismissal of union members participating in industrial action

The union had a strong relationship with strike, all workers at the terminal received a pay the prior management of BICTL. However, increase. The company committed to continuing since taking over the terminal, local ICTSI negotiations with the union and sending a management has consistently refused to meet representative from the Philippines to negotiate with the union and has sought to drive down the agreement. The negotiations stalled when wages and conditions. this representative returned to the Philippines.

In 2015, the union went on strike to protest At the time of the strike there were 170 workers against the company’s failure to provide them at the port. 150 of these were union members. with new safety equipment, the absence of A further 200 casual workers were employed to holiday and sick leave in their agreements, work at the terminal. Of those 200, only 20 are and to demand an increase in wages and still employed. They were replaced with non- meal allowance payments. As a result of this unionised workers.

| 22 | Examples of port safety on ICTSI ENDANGERING terminals: • working at heights without fall WORKERS WITH protection or safety equipment, • poor maintenance of equipment UNACCEPTABLE approaching negligence, and • casual workers given no or SAFETY insufficient safety equipment • workers standing under suspended STANDARDS loads • failure to properly manage access into and within terminal

Dock work is dangerous work. “Despite new It is critical to workers, to ensure they go home and sophisticated innovations, port work is safely each day. It is critical for cargo, which can still considered an occupation with very high be damaged or destroyed by haphazard safety accident rates.”19 practices. And it is critical for investors, who are legitimately concerned about reliability of That is why it is critical, in all terminal terminal operators and the risk of prosecution, operations, to establish a safety management regulatory entanglements or insurance blowouts system that eliminates and manages risk as far due to recurring safety issues. as is reasonably practicable.

An analysis of safety practices at ICTSI ports has identified serious and widespread safety shortcomings.

| 23 | Some of the most serious safety hazards any In fact, according to ICTSI’s 2016 Annual Report, worker can face, responsible for the deaths of only three terminals have received OHSAS thousands of dock workers worldwide every year, 18001:2007 for Occupational Health and Safety are crush injuries, death from heavy vehicles and certification: Contecon Guayaquil S. A. (CGSA), containers, falls from heights, working under Ecuador; South Cotabato Integrated Ports Services, suspended loads, and exposure to hazardous Inc. (SCIPSI), Philippines; and Contecon Manzanillo chemicals. These hazards are evidenced S.A. (CMSA), Mexico. throughout the ICTSI network. It is the ITF’s view that conditions in ICTSI terminals fall short of These safety breaches are not just a threat to global minimum standards, including the ILO workers, these breaches threaten the integrity Code of Practice Safety and Health in Ports, and of cargo. There are significant costs and time the global benchmark BSI standard Occupational implications for terminal clients from dropped Health and Safety Management System OHSAS and damaged containers during handling. 18001:2007.

| 24 | Poor maintenance of equipment approaching negligence

The ITF has seen a number of severe examples of formal procedures for the maintenance poor maintenance at ICTSI terminals, which has and inspection of equipment that follow caused severe injuries to workers and damage to international guidelines or manufacturers’ expensive equipment. recommendations. Formal corporate policies are implemented to address maintenance of These examples are significant breaches of the critical items such as hoisting mechanisms, ILO Code of Practice Safety and Health in Ports: twistlocks and load path crane components. Audits are performed to ensure compliance 4.1.14.1 All lifting appliances and loose gear with policy, and the Company provides should be maintained in good working order, specialised training to the staff members that and in efficient condition and good repair. are responsible for critical components such as wire ropes and lifting accessories. From 4.1.14.2 Maintenance, including lubrication, time to time, the Company commissions should be carried out on a regular scheduled consultants to conduct testing of equipment basis, in accordance with the manufacturer’s such as crane structures.20 recommendations and operational experience. The ITF has seen examples that clearly breach ICTSI’s August 2015 Securities Prospectus states the ILO Code of Practice Safety and Health that: in Ports, and which call into question ICTSI’s own claims about their policies and ability to … the company conducts regular maintenance enforce minimum safety standards across their of its equipment and facilities. It has established network.

Toamasina, Madagascar

In July 2017, a crane cable snapped hitting a dock worker, and hospitalising him. Photographic evidence showed serious rust due to lack of basic maintenance.

Cranes and other capital equipment in container terminals require specific maintenance according to manufacturer specifications in order to be operated safety and reliably without risk to workers or cargo. Due to the waterfront setting of a container terminal, rust and deterioration from the be orange, indicating severe rust. The cost of natural elements are a constant issue that proper crane cable maintenance is minimal. A must be managed. basic issue like this can be detected by visual inspection. Crane cables, for example, require regular servicing, lubrication, testing and The bigger question arising from this recent maintenance according to a manufacturer incident is: what does this say about the overall schedule. This is essential to avoid deaths all state of maintenance in the facility? If even and injury in an environment where workers something as basic to a container terminal as inevitably interact with suspected loads. crane cables are rusty and poorly maintained, then there are serious problems. A major It goes without saying that crane cables crane collapse in those circumstances is just a should be black, lubricated sufficiently, matter of time, with the potential to severely inspected regularly, and replaced according damage or destroy a vessel, and the possibility to the servicing regime. They should never of severe injury to or even death of workers.

| 25 | Working at heights without fall protection

The ITF has seen evidence of dock workers barriers, personnel cages or – as a last resort when working at heights without fall protection while better options are unavailable – harnesses. undertaking routine tasks in ICTSI terminals. Working at heights represents one of the greatest The ILO Code of Practice Safety and Health risks to workers. As the following case studies in Ports mandates that where possible dock indicate, workers are at risk of death and severe workers must carry out work at heights from injury in falling from heights without protection. a mobile elevating work platform or an access cage. Where this is not possible, workers should The tragic reality is that these workers are facing wear a full body harness and be connected to a risks that could be easily avoided with the use of secure anchorage point by lanyards, safety lines simple and inexpensive measures such as fences, or inertia reel fall arrest equipment.

Failure to properly manage access into and within terminal

The ITF has seen evidence of a failure to maintain 3.8.2.5. The need for the vehicles of hauliers a proper separation between workers and to enter container-stacking areas should be machinery on ICTSI terminals. avoided as far as is practicable. This may be done by the provision of exchange grids where Collisions between heavy vehicles with other vehicles are loaded or unloaded, for example vehicles, and humans being crushed by by straddle carriers. machines, are one of the most common causes of death and injury in a container facility. 3.8.2.6. Suitable clearly signed and marked parking areas should be provided if vehicles The ILO Code of Practice Safety and Health in can be expected to have to wait for significant Ports recognises that heavy machinery represents times. If a parking area is situated at the side a significant risk to workers, with a number of of a roadway, it should be sited so as to ensure clauses mandating the separation of pedestrians that parked vehicles will not obstruct or restrict and machinery, and the careful management of vision from vehicles on the adjacent roadway. traffic flows to avoid collision: 6.3.1.1.9. Access to container-handling areas by 3.2.1.2. Wherever where practicable, vehicles and pedestrians should be prohibited so far as is pedestrians should be separated. practicable. Any access that is permitted should be restricted to clearly designated walkways or 3.8.2.1. Container terminals should be laid out under specific supervision. and organized in such a way as to separate persons on foot from vehicles, so far as is practicable.

| 26 | Jakarta, Indonesia ICTSI’s MICT: Terminal Safety Guide clearly states that “sleeping inside the port is prohibited, especially underneath any vehicle On the 24th March 2016, a truck driver or equipment”. 21 crashed his truck against a parked reach stacker. The driver had parked overnight in The fact that the driver was allowed to sleep area 305 of the OJA container terminal. At inside the wharf apron, in an unregulated 6:00am, terminal staff woke up the driver, manner, demonstrates that ICTSI does not as the area was to be used as a stacking hold its global terminals to the same standards yard. The driver, still partially asleep, drove as its Philippine operations. This raises serious the truck in a zig zag pattern before hitting questions about security and management of the reach stacker. access to the terminal.

Failure to provide workers with suitable safety equipment

The ITF has seen evidence of dock workers which could produce pungent and foul smell. working without sufficient or suitable safety To ensure that employees wear their protective equipment, including working without boots equipment, ICTSI crafted a policy on the proper and helmets, and working at heights without wearing of uniforms and protective equipment. a harness. This is particularly the case for out- The Company policy provides for disciplinary sourced or labour-hire workers. action for those caught not wearing the same. The policy is strictly implemented to avoid The failure to provide workers with sufficient or accidents or at the very least to lessen injuries in suitable safety equipment is in breach of the case of any unforeseen events while on duty.22 ILO Code of Practice Safety and Health in Ports sections 3.15.1.3 - 3.15.1.5. It is also in breach of And in ICTSI’s MICT: Terminal Safety Guide: ICTSI’s Code of Conduct: In all operational areas, contractors must wear … every employee is annually provided with Personal Protective Equipment or PPE (i.e. proper Personal Protective Equipment while hard hat, safety shoes, high visibility vest) at all on duty. These include hard hats, safety vests times. Wearing of sandals, slippers, short pants, and safety shoes. Gas masks are also provided sandals is strictly prohibited.23 to employees assigned to handle hazardous cargoes i.e. toxic cargoes and perishable goods

| 27 | A pair of boots is equal to a month’s wages

Toamasina, Madagascar Jakarta, Indonesia Casual workers on the Port of Toamasina Casual workers at the Port of Jakarta, also container terminal report insufficient safety report that they are not provided with safety equipment, and boots that are in disrepair, equipment and are expected to purchase with many purchasing their own boots to their own. Workers work 160 hours per month avoid injury. A new pair of boots costs MGA (40 hours per week), and earn IDR 3,350,000. 160,000 (US$50) in Madagascar. This can The cost of safety equipment is a significant be more than 1-months wages for a casual burden for these out-sourced workers, docker. and many elect not to purchase personal protective equipment.

Personnel working under Suspended Loads

The ITF has seen evidence of dock workers working under suspended loads, placing them at grave risk of severe injury and death. Every crane experiences falls and failures from time to time. This could be due to maintenance, overweight cargo or load issues, crane driver error, or mechanical failure. For this reason, the ILO Code of Practice Safety and Health in Ports clearly states that no person or body part should ever be under a suspended load in a container terminal.24

In professionally run container terminals the This is not the case at terminals throughout the world over, risks due to suspended loads are ICTSI global network. The ITF has witnessed the managed with a combination of cheap but hazardous interaction of humans and suspended effective hard barriers such as concrete fences, loads in numerous terminals. The failure to exclusion zones, and well-designed work properly manage access is a systemic issue in the practices that remove the need for workers to ICTSI network, indicative of deep problems and operate in the fall zone. gaps in ICTSI’s safety management systems.

| 28 | ICTSI’S GLOBAL EXPANSION: A RISKY PROPOSITION?

The issues described in this report have led to global fashion brands – have been affected by protracted industrial disputes at ICTSI terminals. these disputes. If ICTSI fails to resolve these Disputes with flow-on effects for domestic disputes, and does not commit to working governments and economies. with unions and the ITF to ensuring that similar violations will not occur in other ICTSI ICTSI terminals in Toamasina and Jakarta have terminals, then there is a risk that the disputes been engaged in ongoing industrial disputes in Indonesia and Madagascar spreading to since November 2016 and February 2017 other terminals in the ICTSI network. respectively. Terminal clients – including major

PORT OF TANJUNG PRIOK, INDONESIA

Management refusing to negotiate with Indonesian workers In February 2017, the union requested bipartite The active negotiations at the Port of Jakarta negotiations with management to discuss the are not discussed in ICTSI’s latest annual report, problem of outsourcing. Two times bipartite published in April 2017, which states: negotiations were held, but no agreement was reached. On 17 February 2017, the union and There are no current or known threats from management agreed to begin discussions on employees to engage in any work stoppage a draft Collective Bargaining Agreement (CBA). across all terminals. Management and the union agreed on three months for negotiation of the agreement, This statement clearly misrepresents the status with the final agreement to be signed on 17 of bargaining at the Port of Tanjung Priok April 2017. Management and the union could given the company is still negotiating with not reach agreement on several articles in the union representing OJA workers. ICTSI’s the draft agreement. Negotiations regarding misrepresentation of the status of bargaining the collective agreement were due to be should be of concern to ICTSI investors, who concluded in May 2017, however, at the time of must ask themselves, why the company felt the writing, management had failed to come to an need to hide union negotiations for an enterprise agreement with the union. agreement, and what else the company is hiding.

Indonesian Minister drawn into union struggle by Australian activists Under the concession agreement, ICTSI Jasa H.E. Prof Bambang Brodjonegoro, was in Prima and its subsidiaries have a profit sharing Australia for a series of breakfast meetings arrangement with Tanjung Priok’s state-owned organised by the Australia-Indonesia Business operator PELINDO II. This makes the Indonesian Council to discuss opportunities for private Government a direct stakeholder in OJA. investment in infrastructure development, including a number of proposed port In June 2017, the Indonesian Government came developments. At each of the five events, under pressure to intervene in the industrial Australian unions protested and delivered a joint dispute and the union at the OJA terminal. The letter to the minister as part of the meeting. Minister of National Development Planning,

| 29 | PORT OF TOAMASINA, MADAGASCAR

The fight to have the 43 dock workers reinstated has been ongoing for five years. SYGMMA has exhausted all domestic avenues to have the union recognised at the Port of Toamasina, and the workers reinstated. SMMC has repeatedly refused to meet with the union and the regional Labour Inspectorate to discuss their case. This has led the union no option but to escalate the dispute to an international level.

Government of Madagascar drawn into fight On the 3rd April 2017, SYGMMA, the ITF and the ITUC submitted a complaint to the International Labour Organisation (ILO) regarding the case of 43 dock workers who were unfairly dismissed from the Port of Toamasina for union activity. SYGMMA, the ITF and the ITUC are calling on the Government of Madagascar to respect its commitment to the ILO Conventions by ensuring that these workers are reinstated immediately and that SYGMMA is allowed to organise workers at the Port of Toamasina.

In June 2017, SYGMMA took the dock workers fight to parliament. Union members protested outside the Ministry of Transport, while leaders from the ITF and SYGMMA met with various politicians including: the Minister of Labour, Director for Transport, Senate Deputy President, and Senate President.

| 30 | Global brands stand with workers

Major international garment brands using joined by the Ethical Trading Initiative (ETI) who the Port of Toamasina in Madagascar faced contacted the Government of Madagascar on pressure from the ITF and SYGMMA to help end behalf of four UK brands. Category Leader of the exploitation of Madagascan dock workers. Apparel and Textiles at ETI, Martin Buttle, said: Global brands produce clothing in Madagascar, and export their products through the Port of Not only were we concerned for the dock Toamasina. Their clothes are then loaded by workers themselves, we were also concerned dock workers at the ICTSI terminal, onto ships that action against legitimate union bound for ports around the world. activity would deter investor confidence in Madagascar as a future sourcing market. In ITF affiliates staged demonstrations at Esprit the letter to the government, we confirmed and Levi’s stores around the world, which was that our members wanted to continue accompanied by a social media campaign, sourcing from Madagascar but equally calling on these and other brands to recognise had to consider obligations to comply with the crucial role that dock workers play in international standards. With the full support fashion supply chains. These brands responded of our members, we therefore asked that to ITF’s call, and called on the Government of the government of Madagascar take steps Madagascar to enforce their own labour laws, to enforce its labour laws, ensure that the 43 to reinstate the 43 dock workers, and allow the dock workers were reinstated and allow the union to organise at the port. They were then union to organise at the port.

Levi Strauss & Co. encourages the Government of Madagascar to enforce its labor laws providing freedom of association and the right to collective bargaining and ensure treatment of the 43 dock workers complies with Madagascar’s Constitution and ILO Conventions 87 and 98. Levi’s letter to the Government of Madagascar

| 31 | Like most apparel brands, Esprit supports worker’s right to Freedom of Association as set out in the ILO conventions. Although SYGMMA workers are not workers of Esprit, the fact that we ship our products through Toamasina port, means that these workers are considered part of our supply chain. Esprit’s letter to the Government of Madagascar

The garment industry is the largest employer When those privileges were suspended in of workers in Madagascar, employing 105,000 2010 following the 2009 coup, a number of workers or 30 per cent of the formal economy companies – including Levi’s – stopped sourcing in 2015. Global brands were attracted to apparel from the country. The dock workers Madagascar by the country’s AGOA privileges, dispute could not have come at a worse time which gave manufacturers preferential access for the struggling nation. With AGOA privileges to US markets. Prior to the coup in 2009, it was re-established in 2014 following democratic estimated that more than half the industry’s elections, apparel manufacturing is again on income was drawn from exports to the United the rise, and the Government of Madagascar States, with AGOA exports providing over a has said that it is trying to triple the number quarter of jobs in the country’s formal economy.25 of jobs in the sector over the next four years. However, recent cases – such as that of the 43 dock workers dismissed for union activity at the Port of Toamasina – call into question whether the country continues to be in violation of AGOA standards regarding minimum labour standards and rights.

| 32 | CONCLUSION

ICTSI’s managers have ambitiously grown the and financers seek to partner with firms that company over the last decade. However, their can demonstrate competence, adherence with growth has not been accompanied by sufficient global norms and standards, and an ability managerial oversight and appropriate global to manage in complex environments. ICTSI’s governance structures to ensure productive governance failures suggest that the company’s industrial relations, compliance with local laws future expansion may be accompanied by and international labour conventions, and even increasing volatility and risk due to protracted fail to ensure compliance with ICTSI’s own industrial disputes and safety failures. internal policies and Codes of Conduct. The ITF, and our union affiliates, are committed This lack of oversight has led to the emerging to supporting port operators who provide good pattern of labour violations discussed in jobs and industrial relations practices in their this report. In many terminals, workers are ports. Together, we are committed to ensuring compelled to work unsafe and even illegal that ICTSI does not extend its pattern of labour amounts of overtime, just to earn a living wage. violations into new terminals. At the same time, critical safety incidents point to a broader failure of the company to If ICTSI is to become a truly global player, the consistently implement and enforce safety company must put in place mechanisms for protocols and procedures that meet global global oversight of local operations which ensure standards. When workers have come together to adherence to local laws, international standards fight for improved working conditions on ICTSI and conventions. These governance structures terminals, they have been met with punititive must ensure that ICTSI’s policies and codes are actions from management, violating their enforced throughout their entire network. Unless rights to freedom of association and the right to the company takes these steps, there is a risk organise. that the protracted disputes seen most recently in ICTSI’s Jakarta and Toamasina terminals will In an increasingly competitive marketplace, be replicated, garnering increasing international ICTSI managers are distinguishing their attention and doing irreparable damage to the company as one with operational and company’s reputation, growth opportunities and governance problems. As governments, investors development.

| 33 | END NOTES

1. ITUC, (2017). The 2017 ITUC Global Rights Index: The World’s 14. Heath, J., (2014). Employment Differences in Indonesia, Worst Countries for Workers. Brussels, ITUC. https://www. Worth Labouring. http://www.corrs.com.au/thinking/ ituc-csi.org/IMG/pdf/survey_ra_2017_eng-1.pdf. insights/employment-in-indonesia-differences-worth- labouring/. 2. Reuters, (2000). “ICTSI Unit Signs Exit Agreement for Port”, Reuters News, July 21st. 15. Karim, M. (2016). Outsourcing: Indonesia overview. https://uk.practicallaw.thomsonreuters.com/6- 3. Article 7, International Covenant on Economic, Social and 623-3745?transitionType=Default&contextData=(sc. Cultural Rights states: “The States Parties to the present Default)&firstPage=true&bhcp=1 Covenant recognize the right of everyone to the enjoyment of just and favourable conditions of work which ensure, in 16. UN Global Compact, Principle 3: Businesses should particular: (a) Remuneration which provides all workers, as uphold the freedom of association and the effective a minimum, with: (i) Fair wages and equal remuneration recognition of the right to collective bargaining. Freedom for work of equal value without distinction of any kind, in of association refers to the right of all workers and all particular women being guaranteed conditions of work not employers to freely and voluntarily establish and join inferior to those enjoyed by men, with equal pay for equal organisations of their own choice. These organisations work; (ii) A decent living for themselves and their families in have the right to freely carry out their activities – including accordance with the provisions of the present Covenant. the promotion and defence of their occupational interests – without interference. Collective bargaining refers to a 4. The research on the impacts of overtime distinguishes voluntary process or activity through which employees and between ‘overtime’ and ‘excessive overtime’. For example, workers discuss and negotiate their relations, including the ILO’s Better Work Discussion Paper No. 2 states: “The terms and conditions at work. term ‘excessive overtime’ identifies not only the hours

exceeding those maximum hours defined by national Businesses should statutory regulations on working time or relevant UN Global Compact, Principle 6: uphold the elimination of discrimination in respect international standards, but also the hours of work that of employment and occupation. Discrimination in have negative consequences on workers. The issue of employment and occupation refers to treating people workers being exposed to potential health and safety differently or less favourably because of characteristics risks relating to long working hours is the key point that unrelated to merit or the inherent requirements of separates ‘excessive overtime’ from ‘overtime’.” Seo, J. (2011). the job (e.g. race, colour, sex, religion, political opinion, Excessive Overtime, Workers and Productivity: Evidence national extraction, social origin, age, disability, HIV/ and Implications for Better Work. Geneva, ILO. AIDS status, trade union membership and sexual 5. Ibid. orientation). Discrimination can arise in a range of 6. This research is summarised in the ILO’s report Excessive situations, such as recruitment, remuneration, hours of Overtime, Workers and Productivity: Evidence and work, security of tenure, job assignments, performance Implications for Better Work. See specifically: Kerin, assessment and promotion, maternity protection, training A., (2003). Financial Opportunities in Extended Hours and opportunities and OH&S matters. http://www. Operations: Managing Costs, Risks, and Liabilities. Geneva, unglobalcompact.org.au/about/principles ILO; Spurgeon, A., (2003). Working Time: Its Impact on 17. ITUC, (2008). Internationally Recognised Core Labour Safety and Health. Geneva, ILO, Korea OHS Agency, OHS Standards in Madagascar: Report for the WTO General Research Institute; White, M., (1987). Working Hours: Council Review of the Trade Policies of Madagascar. Assessing the Potential for Reduction. Geneva, ILO. Geneva, ITUC. http://www.ituc-csi.org/IMG/pdf/ 7. MH&L Staff, (2016). “Protecting Workers in the Supply MADAGASCAR_final.pdf Chain”, Industry Week. 14th Juen 2016. http://www. 18. Appointment letter from management industryweek.com/supply-chain/protecting-workers- 19. ILO, (2005). ILO Code of Practice: Safety and Health in supply-chain. Ports. http://www.ilo.org/global/publications/ilo-bookstore/ 8. Walters, D. and Wadsworth, E., (2017). Experiences of order-online/books/WCMS_PUBL_9221152871_EN/lang-- arrangements for health, safety and welfare in the global en/index.htm container terminal industry. London, IOSH. 20. ICTSI, (2015). Prospectus: Senior Guaranteed Perpetual 9. Ibid. Capital Securities. 10. Walters, W., (2017). “Clothing shippers join ICTSI Port of 21. ICTSI, (2016). MICT: Terminal Safety Guide, http://www. Toamasina dispute”, Lloyd’s List. 3rd August 2017, http:// mictweb.com/pdf/MICT%20Safety%20Brochure.pdf brazilmodal.com.br/2015/internacional/clothing-shippers- 22. ICTSI, Policies and Practices, p. 3. http://www.ictsi.com/ join-ictsi-port-of-toamasina-dispute/ admin/images/download/08052015082453Policy%20 11. UN, (2011). Guiding Principles on Business and Human and%20Guidelinesv2.pdf Rights: Implementing the United Nations ‘Protect, 23. ICTSI, (2016). MICT: Terminal Safety Guide, http://www. Respect, and Remedy’ Framework, p. 14 – 15. https://www. mictweb.com/pdf/MICT%20Safety%20Brochure.pdf unglobalcompact.org/library/2 24. ILO, (2005). ILO Code of Practice: Safety and Health in 12. Norwegian Pension Fund, https://www.nbim.no/en/ Ports. http://www.ilo.org/global/publications/ilo-bookstore/ responsibility/risk-management/human-rights/ order-online/books/WCMS_PUBL_9221152871_EN/lang-- 13. ICTSI, (2017). Annual Report, p12. http://www.ictsi.com/ en/index.htm admin/images/download/05112017041817ICTSI%20AR%20 25. Ploch, L. and Cook, N., (2012). “Madagascar’s Political Crisis”, 2016.pdf CRS Report for Congress, https://fas.org/sgp/crs/row/ R40448.pdf

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International Transport Workers Federation (ITF) The International Transport Workers Federation (ITF), a global union federation, represents over 700 labour unions and more than 4.5 million union members around the world. The ITF is allied with the International Trade Union Confederation (ITUC). The ITF represents the interests of transport workers’ unions in bodies such as the International Labour Organisation (ILO), the International Maritime Organisation (IMO), and the International Civil Aviation Organisation (ICAO). The ITF has a long history of promoting the employment and welfare of seafarers, stevedores and other transport workers around the world. The International Transport Federation has been supporting affiliates in ICTSI terminals globally in their negotiations to improve working conditions.

For additional information contact: International Transport Workers’ Federation Sydney Campaigns Office Level 2, 365 Sussex Street Sydney NSW 2000 [email protected]