IDENTIFYING SOCIALLY RESPONSIBLE BUSINESS
(World of Work n. 18 - 1996)
Can we identify labour and employment practices and out comes which could be regarded as exemplary? If so, how could governments, employers' organizations and others encourage more firms to adopt those practices? Over the past few years an ILO project has been investigating these issues by means of surveys of industrial firms in countries around the world and has come to the conclusion that, yes, good business practice can be identified and encouraged. The ILO has codified these measures in a "Human Development Enterprise (HDE) Index" which it presented at the Enterprise Forum.
The surveys have so far collected information from senior managers and employers in over 15,000 enterprises in 18 countries through "Enterprise Labour Flexibility Surveys (ELFS)". With these data, the ILO has developed several HDE Indices.
A high score on an HDE Index depends on the firm's hiring and training practices, wage and benefit levels and structures, working conditions, bargaining arrangements and safeguards, and worker representation. What is included in the index can be modified and be subject to negotiation between employers, government authorities and workers.
The process of constructing the index is illustrated in Box 1: one starts with identification of the training and skill-formation environment. The HDEl is defined in terms of availability of entry-level training for workers, retraining to improve job performance or to transfer workers to other jobs with similar skills, and retraining for upgrading or for promotion. It also takes into account of the type of training, the funding of training and availability of fa cilities.
The HDE2 index is defined, first, by adding indicators to HDE1 which measure the extent to which the firm has non-discriminatory recruiting and training practices, particularly relating to women and racial minorities, and, second, by inclusion of measures of occupational safety and health. Next, HDE3 is defined by incorporating economic equity indicators, in which the Rawlsian Difference Principle is applied. Finally, HDE4 incorporates indicators of economic democracy. This may be the most controversial part of the procedure, the creators of the HDE point out. Appropriate measures would depend on national institutional practices and policies. Yet to score high on the HDE index a firm should have mechanisms to enable workers to influence decisions on employment and labour practices constructively, should have collective bargaining and should allow employees to share the benefits as well as the risks. This is why the HDE4 gives weight to voice mechanisms and benefit-sharing mechanisms.
More detail on the process of developing and using the EFLS and the HDE can be found in the ILO report on the subject.
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