Development banks’ CLS requirement for construction now posted

The World Bank and the regional development banks (ADB, AfDB, EBRD, IDB), collectively know as the multilateral development bank (MDBs), have agreed on harmonized mandatory labour standards requirements for construction projects they finance above a certain value. The specific language that the MDBs adopted is based on proposals made by BWI and the ITUC and was negotiated with the  Geneva-based International Federation of Consulting Engineers (FIDIC). The final version of “Conditions of Contract for Construction, Multilateral Development Bank Harmonised Edition” was posted yesterday on FIDIC’s web site: http://www1.fidic.org/downloads/cons_mdb_gc_jun10_unprotected.pdf

The chapter on labour requirements is on pages 24-28. The specific clauses that correspond to CLS requirements are 6.20 (Forced Labour), 6.21 (Child Labour), 6.23 (Workers’ Organisations) and 6.24 (Non-Discrimination and Equal Opportunity). Article 6.23 states in part that, whether national law fully recognizes freedom of association or not, “the Contractor shall not discourage the  contractor’s Personnel from forming or joining workers’ organisations of their choosing or from bargaining collectively, and shall not discriminate or retaliate against the Contractor’s Personnel who participate, or seek to participate, in such organisations and bargain collectively.”

In a meeting held today with the World Bank to discuss implementation of the requirements, the Bank informed us that the new language will be incorporated into its Standard Bidding Document for Procurement of Works as “General Conditions” in about two months. Similar processes will take place at the other MDBs. According to the Bank, the new standards will be obligatory for all MDB-financed construction works that are subject to International Competitive Bidding (ICB), for which the threshold varies from country to country (larger countries generally have higher ICB thresholds) and can be as high as $25 million. It replaces a former general threshold of $10 million to which standard contract conditions applied.

It may be noted that the importance of obtaining CLS compliance requirements in MDB-financed construction projects has grown as infrastructure has taken up in an increasing portion of the MDBs’ financial support. In fiscal year 2009-2010, infrastructure projects made up 37 per cent of the World Bank’s total financial commitments.

In discussions today with Global Unions’ Washington office, the World Bank expressed interest in collaborating with Global Unions for the  development of a guidance note for implementation and surveillance of the new standards, and invited unions to monitor WB-funded projects and communicate cases of non-compliance to the Bank. Further meetings on implementation and complaints procedures will take place with the WB’s infrastructures department.

The CLS requirement is applicable to MDB-financed public infrastructures, which in the case of the World Bank refers to projects financed by the IBRD and IDA. The Bank had added CLS clauses to an earlier MDB harmonized contract in 2007, but as a non-mandatory WB-specific provision. Since May 2006, compliance with CLS has been a standard requirement in all projects financed by the Bank’s private-sector lending division, the IFC.