Dutch OECD to look into labour complaint against IKEA parent company


The Dutch Organisation for Economic Cooperation and Development (OECD) today announced that the labour issues raised by an international labour coalition against the Netherlands-based IKEA Holding BV are "material and  prima facie substantiated."

The Dutch OECD released its initial report on the matter,  saying that "there is a link between the enterprise’s activities and the issues raised in the specific instance." The submission was made by the Building and Woodworkers’ International (BWI), the International Association of Machinists and Aerospace Workers (IAM) and the Swedish Union of Forestry, Wood and Graphical Workers (GS) in December 2020 based on the OECD Guidelines for Multinational Enterprises.

BWI and its affiliates, the IAM and GS-Facket, were surprised by a 10 July 2019 announcement that IKEA would close its U.S. production facility in Danville, Virginia and lay off 300 workers. The announcement was made without any prior negotiations, discussions or consultations with IAM, the union representing the workers.

Before the closure, the union was able to negotiate an agreement to cushion its possible negative impact on workers. However, the closure itself was already a done deal. The union and its members were told that the costs of raw materials were too high, so production would be shifted to Europe.

Possible alternative sites in the U.S. were not considered because the company was unwilling to have discussions. The labour coalition believes that appropriate and timely discussions with unions would have allowed a quality examination of all factors and circumstances related to the closure, including the effects on the workers. Discussions could have led to jobs remaining in the U.S.

The unions signed an International Framework Agreement (IFA) with IKEA in 2003. It was later renegotiated in 2013 and 2014, but the latter was never signed. The IFA provides a structure and a process to resolve conflicts, including arrangements to take responsibility for associated human rights risks or impacts of its operations, which are in line with human rights and due diligence requirements in the guidelines. However, Inter IKEA did not recognize the IFA, particularly in the 18 months between July 2019 and the filing of the case last December 2020. Inter IKEA’s responses proved neither meaningful nor effective.

BWI General Secretary Ambet Yuson expressed satisfaction with the OECD’s initial assessment and welcomed its offer of mediation. 

“With the abrupt and unilateral decision to close the Danville plant, workers were robbed of their voices,” said BWI General Secretary Ambet Yuson. “It is especially painful because after IKEA opened the plant in Danville, IAM and BWI affiliates launched a three-year global campaign to persuade IKEA to allow its workers to choose to be represented by the IAM. Despite the fact that there had been a collective bargaining agreement, management has chosen to remain silent about the closure, not informing workers until the very last minute.”

“Many companies assume that with their adoption of the United Nations Guiding Principles on Business and Human Rights, and the corresponding changes in the OECD Guidelines for Multinational Companies, they are not breaking laws. They put the blame to ‘other legal entities,’ or distant companies that simply supply to them. Yet, their ‘we cannot help the workers’ mantra can no longer shield them from their real responsibility,” continued Yuson. “Everyday, in many regions around the world, we are facing complex corporate structures that are not transparent. Companies have deployed additional complications to global supply chains, and some quite creatively, but irresponsibly, used schemes to avoid employment relationships.”

“Transparency and communication are the two biggest items lacking in the international labour coalition-IKEA relationship,” IAM International President Robert Martinez Jr. said. “We must create a culture of honest communication between all parties and agree that all workers should be represented without fear or intimidation. This is the exact reason why neutrality cannot be lip service but a genuine agreement that recognizes the workers’ rights. Our union and this strong coalition are committed to moving forward to find solutions to the social, economic and environmental challenges facing IKEA and its dedicated workforce.

For his part, GS President Per-Olof Sjoo said that they are looking forward to have a serious dialogue with IKEA on how to ensure that all production employees, at the global level, are enjoying good working conditions. 

“We want to sign a global framework agreement with IKEA to clarify how different changes in production can be resolved collectively by both parties, in the same way as many other Swedish multinational companies have done already. A global agreement also strengthens our commitment against child and/or slave labour. In addition to guaranteeing the reasonable and decent working conditions of IKEA's employees, we believe that consumers also have the right to know how their products have been produced.”