FAQ Social Dialogue

Social dialogue is a consultation between trade unions, employers and the government about both, economic and social issues. The formal definition of the International Labour Organisation (ILO) is as follows: “all types of negotiation, consultation or simply exchange of information between, or among, representatives of governments, employers and employees, on issues of common interest relating to economic and social policy” (ILO, 2018). It is based on the right to collective bargaining agreement and on freedom of association. Social dialogue incorporates each country’s historical, cultural, economic and political setting. Therefore, social dialogue is adopted based on the local circumstances, being diverse in legal framework, practices, and traditions, the process might vary from country to country.

Although the accepted definition of social dialogue mentioned before is very broad, there are various characteristics that indicate what cannot be considered as a social dialogue:

1. Social dialogue does not include general information sharing on working conditions between employers and their employees. For example, annual employee contract negotiations are considered standard business practice.
2. Social dialogue requires a two-way interaction between parties involved. For example, if an employer proposes a new policy which requires employees to work a certain number of hours and they do not have the opportunity to respond to this request, there is no social dialogue.

Typology of social dialogue 

Social dialogue has many dimensions that vary depending on context. It is necessary to make a typology of a social dialogue to identify further actions to achieve a desired outcome. Figure 1 presents main dimensions: type of parties involved; a degree of institutionalization and degree of engagement. It is important to know these characteristics to understand which type of social dialogue would be successful in your specific context.

There can be several forms of a social dialogue. First, it can be either bipartite or tripartite. Bipartite dialogue involves labour and management or trade unions or companies. It also includes discussions, consultations and negotiations between employers and employees (or their representatives). Tripartite social dialogue includes the participation of the government officials and possibly other social parties, for example, to discuss policy area e.g. social protection, employment, or taxes. Second, social dialogue can have a different degree of initialization, by being institutionalized, incorporating policies and structures, or being informal, taking place based on a specific situation. Third, other characteristics of the social dialogue define the degree to which parties are engaged. They can either be directly engaged, for example, one-on-one dialogue or indirectly when an organization or person represents the interest of the involved parties.

Social dialogue can happen at the local, regional, national and multi-national levels. In addition, it can be at the enterprise, inter-sectoral, or sectoral levels. The nature of the outcome of a social dialogue can also vary, for example, be either binding or non-binding. There are several usual activities of social dialogue including consultations, negotiations and sharing of the information.

Different forms of social dialogue 

Various types of social dialogue mentioned before can take different forms, therefore, achieve different outcomes. It is important to know different forms of Social Dialogue to achieve the desired outcome by taking relevant steps. Table 2 provides an overview of bipartite and tripartite dialogues and its typical respective parties involved; forms of governance; social dialogue; and outcomes. However, these forms depend on a business context, to determine which ones are more successful. Please note that these are examples of forms and thus non-exhaustive.

Before starting a social dialogue, it is important to define the desired outcome(s) and to recognize steps to undertake to achieve it. However, as mentioned before, the steps depend on a business context. To learn more about social dialogue please refer to ILO.

Closely linked to this is the right to Collective Bargaining (CB), which allows workers to freely negotiate their working conditions with their employers. These rights apply to all workers, regardless of their race, religion, gender, occupation, nationality, or political opinion.

CB is the process of all negotiations between an employer or an employers’ organization and one or more trade unions with the aim of developing a Collective Bargaining Agreement (CBA). CBAs outline work conditions at factory/workplace, regional, national, or sectoral level. These are written, legally binding contracts requiring employer and company compliance.

Brands might recognize the following barriers when working on FoA and CB:

• Little understanding of how unions operate and how a unionized workforce can benefit the suppliers’ business. Hence brands can feel insufficiently equipped to explain to their suppliers why it is so important and how their business could benefit.
• A lack of knowledge about the labour issues in general, and the specific situation in the brands’ sourcing country. For example, a lack of understanding about the situation of existing (often splintered) unions and worker participation at suppliers level (e.g. due to lack of insight provided by audits).
• Apprehension about stimulating union activity as unions have the reputation of organizing strikes or causing unrest. Also, apprehension to promote a union because they do not know their political affiliations.
• Your suppliers’ factory owners/senior management might have negative mind sets about FoA and CB.
• Lack of power at supplier level to be able to put issues on the agenda.
• Not feeling mandated to discuss the issue, thinking that it is between supplier and their workers, none of my business.
• Fear of extra workload, intensive engagement would require time.
• Fear of increased costs to promote FoA/facilitate SD.
• Fear of increased costs as an outcome of a CBA.
• Not seeing the benefits of a functioning union and social dialogue at suppliers.
• Believing consumers are not interested in the topic, not something we can communicate on as PR for brand (no PR value).

Trade unions are independent, membership-based organizations of workers, constituted for the purpose of furthering and defending the interests of workers (ILO). They represent and negotiate on behalf of working people. Unions provide advice to workers who are often unaware of their rights, and they can also negotiate with employers to improve wages and working conditions.

Trade union rights are defined as workers’ freedom of association and the right to collective bargaining. These rights form the foundation of social dialogue and industrial relations to manage conflicts in the workplace.

Differences between a trade union and other forms of organisation

Independent trade unions represent the ideal model for worker representation. Trade unions have legal protection, access to resources, the support of wider trade union networks, and are free from influence from the employer and the government.

• Restriction of FoA: Where FoA is restricted by law and/ or (independent, democratically elected) trade unions cannot be formed because of (impossible) conditions for registration as a union, the next best available form of independent worker representation should be pursued. Alternative forms of representation can help build dialogue and develop worker and employer industrial relations skills.
• Other committees: In many countries you will find workers participation committees, health and safety committees, or anti-harassment committees. These types of committees, sometimes required by law, can certainly be useful, although they are not an alternative to a trade union, mainly because they do not offer workers the same kind of legal protection and they do not have the right to participate in the collective bargaining process. Some exceptions exist, like in Myanmar, where these committees do have the legal right to participate. Further, these committees lack support beyond the enterprise level, meaning they are not supported by district and national trade unions.
• Yellow unions: More subtle forms of interference include paternalism, where structures are created that may resemble unions, but are actually controlled by management in some form. For example, workers may be selected to be the representatives on workers’ committees rather than being democratically elected, or company management may pay union fees, making the union less independent. You can also encounter alternatives for independent, representative trade unions, such as employee councils or unions that only act in management’s interests (‘paper’ or ‘yellow’ unions).

Garment workers are predominantly women (in Asian countries an average of 70-80% of workers is female), often in low-paying positions with little power. However, they are under-represented in social dialogue structures. Ensuring the right to FoA and CB is vital in order to allow workers’ voices to be heard and support their bargaining power. Women often have lower rates of unionization and union leadership tends to be male; therefore, women’s rights issues may not be well represented or considered to be important priorities.

Barriers to women’s access to unions/ worker representation:

• Women are commonly in atypical forms of work, such as temporary or part-time work, or home-based work. Workers in such precarious positions tend to unionize less.
• In addition to working at their jobs, women often do the majority of unpaid care work (at home), including housework, childcare, and elder care. Therefore, they have less time than men to dedicate to trade union activities.
• Religious and cultural norms and constraints around women in leadership and decision-making roles are prevalent.
• Trade unions have historically been male-dominated, which has often created an unwelcoming environment for women to break in to.
• Women may face restrictions on their movement or access to spaces where negotiations may occur due to gender-based security problems.
• Female trade unionists may face a higher risk of sexual violence or harassment.
• Fair Wear has developed Gender fact sheets for 11 garment producing countries, which present overviews of relevant gender issues per country.

Why should women be included?

Including women in unions and allowing their voices to be heard when developing union policies and strategies and CBAs can have a significant impact on women garment workers. Women (might) have different needs, and in a male dominated industry, it is important for them to be able to work in a safe and secure environment and get the same opportunities and remuneration as men. Unions with adequate female representation will think more about childcare facilities, clean toilets, hygienic conditions, maternity benefits, anti-violence, and grievance and remediation mechanisms into your suppliers’ company’s labour strategies and collective bargaining agreements.

1. Reduces inequality / Improves working conditions: Through social dialogue, structural improvement of working conditions can be achieved. For example, by abolishing wage disparity based on sex, within the company, sector or even in a whole country. Another example is an introduction of minimum wage in a certain sector. Moreover, agreements reached through social dialogue are sustainable because of their negotiated nature and legitimacy.
2. Enhances participatory democracy: Bipartite dialogue (between employer and employee– often through a labour union) and tripartite dialogue (also including the government) are particularly effective means to give employees a voice in decision-making on their labor conditions. For example, through collective bargaining employees get to choose their own representative of the union and/or health and safety standards.
3. Provides legitimacy and ownership to public policies: A possible outcome of a tripartite dialogue are existing laws or policies to be changed, or new ones to be made. This is not only a benefit for the employees that were involved, but also for employees of other companies in the country of the same sector. Namely, in the future, strikes will not be needed because laws against these matters are adopted.
4. Offers protection: It is a workers’ right to express their problems, concerns, and demands without fear of oppression or discrimination. Joining trade unions or other organizations, if the right to FoA is respected, offers workers protection against discrimination, interference, and harassment.
5. Workers are recognized as an equal partner in the process: It empowers workers as represented by a trade union, they are recognized as an equal partner in the production process and not viewed as a powerless production factor. It empowers workers to determine their own needs and priorities and to participate in decision making with management. It promotes the emancipation of the workers and self-respect.

It provides the possibility to negotiate and act collectively to realize an equal and fair power balance.

• Harmonious relations

Better Working Conditions:

The potential of social dialogue to contribute to better working conditions has been demonstrated in both OECD countries and globally. This is because the preferences of employees are better taken into account and because they can better identify with the eventual solution. In turn, improved working conditions caused by social dialogue lead to an increase in employee satisfaction and motivation.

An increased motivation reduces both absenteeism and employee turnover since motivated employees are more likely to come to work and less likely to quit. An increased motivation directly leads to a better productivity, since it makes employees work harder, and indirectly, due to the effects on absenteeism and employee turnover. Reduced absenteeism decreases lost working hours. Companies need to pay less to sick workers (if they offer sick leave) and operational efficiency is higher. A reduced turnover leads to a more experienced and thus more productive workforce.

Improved Conflict Management

A second way in which social dialogue contributes to harmonious working relations: through improving conflict management. Minor conflicts are bound to exist in any workplace. Social dialogue has a potential to resolve these in a way that employees perceive as more fair, even when they do not get their desired outcome. This prevents grudges and latent conflicts from taking hold.

Consequently, many studies find that employee motivation is improved by perceived managerial responsiveness to employees’ issues, good or harmonious working relations after conflicts and the collective voice that unions provide for employees to manage conflicts. Such increased motivation has the same effects as with the improved working conditions: decreasing absenteeism and turnover finally leading to increased productivity.

• Improved Policy

Social dialogue also increases the productivity of companies by improving company policy. This takes effect both through improved policy design and improved policy implementation. Firstly, policy design improves because social dialogue provides managers with more information, which leads to better policies and increased innovativeness. Specific policy areas benefited by this include operations, human resources, health and safety, and product design. Secondly, social dialogue improves policy implementation by creating trust within the company. This results in increased cooperation from employees and more effective reforms. Taken together, the improvements in policy design and implementation result in improved productivity as well as in increased resilience to shocks.

• Absence of conflicts

Another value driver through which social dialogue can affect financial capital is through the avoidance of conflicts and their resolution. Social dialogue provides employees with a way to address conflicts in a constructive manner. This removes the perceived need to resort to destructive means, i.e., overt or covert conflict.

Overt – or open – expressions of conflict, include large, visible expressions of conflict like strikes and walk-outs. They often receive a lot of attention, which gives the false impression that their absence means there are no conflicts in a company. However, some degree of conflict is unavoidable in companies. Not all expressions of labour conflict are clearly visible, but that does not mean they are not present. Next, to overt expressions of conflict, there are covert expressions. Examples include pilferage and sabotage, or – less extreme – inaction and non-cooperation.

By reducing the amount of overt conflict, social dialogue contributes to the avoidance of lost production, executive time and employee turnover. Reducing covert conflict leads to the avoidance of losses of product quality and production, which could otherwise result in the loss of product and company value. 

1. Democratization of economic and social policy-making: Social dialogue is an inclusive and democratic way of decision-making. Tripartism and social dialogue can benefit inclusive and democratic ways of decision-making through negotiation, information-sharing, and consultation. This way to address challenges has worked not just in more industrialized countries, but also in other situations, for example, Panama and South Africa.
2. Increased legitimacy and ownership: In a democratic society, any unilateral action by the state without the consent of employees’ and employers’ organisations often results in confrontation. By having a dialogue and listening to the representatives of the employees and employers, governments demonstrate its willingness to take former’s needs into account. Consequently, such actions empower employees and employers in the political process. The process increases the chances to ensure effective implementation and improves chances of buy-in (ownership) by both, the government and other social stakeholders.
3. Enhanced partnership and collaboration: Social dialogue can minimize confrontational relationships through collaboration and partnership. It can develop a shared understanding of problems, can facilitate discussion of policy alternatives and their implications, and the finding of compromises to achieve common responses. Mutual understanding and development of further action steps are important if multiple parties are involved in the process, especially if one of them is a governmental body.
4. Conflict and tension prevention, enhanced stability: Social dialogue can be a very effective means to ease economic and social tensions during economic crisis or transition. In addition, it also has a potential to resolve economic and social challenges, as well as advancing stability. Social dialogue can play a central role in mediating social conflicts and finding compromises amongst diverse economic and social interests. But to truly work during the difficult times, social dialogue must also be used during times of prosperity.

1. More stability: Suppliers that engage with unions find that they have fewer worker grievances to deal with, a more motivated workforce, as well as fewer strikes. Where there are strong trade unions with positive working relationships with management, they allow continuous resolution of problems as they occur, rather than letting them escalate and potentially become explosive media stories. Social dialogue is key to managing conflict in fair and stable workplaces.
2. Increase in productivity and firm performance: The presence of unions contributes to sustainable business growth. Unions help build high-trust workplaces where workers are healthier, better skilled, happier, and more able to resolve grievances – all of which lead to a more committed and productive workforce. This, in turn, leads to less absenteeism, lower turnover, on-time delivery, and retained/new clients/orders.
3. More efficiency: Unions provide a mechanism for dialogue between workers and employers, which helps build trust and commitment among the workforce and ensures that problems can be identified and resolved quickly and fairly. This brings significant productivity benefits for companies. Recognizing a union also means that negotiating terms and conditions for workers, becomes more efficient for the employer and fairer than dealing with numerous workers individually.
4. Improve staff retention: By giving employees a voice, supporting them when they are unhappy at work, and improving working conditions, unions significantly improve staff retention and reduce absenteeism. Social dialogue also provides access to learning and skills: helping members to access education and training is a key priority for unions. Having more highly skilled employees brings productivity benefits for employers.
5. Save money: Early identification of problems in the workplace can lead to significant savings, for example, by reducing the costs employers face as a result of ill health (including reduced productivity, sick pay, temporary staff cover, and compensation payments for accidents). It also reduces staff turnover. Unions also have a strong record of working with employers to identify efficiencies and cost savings – both employers and employees have a shared interest in business success.
6. Make better business decisions: Informing and consulting with experienced union representatives can also – with input from workers – help companies take better informed business decisions, for example, in relation to shift patterns or the type of equipment to invest in.