Behind the World Bank’s projects in Iraq

 

More than ten years after the US-led invasion of Iraq, which resulted in some 120,000 civilian deaths and left a society deeply fractured and plagued by continuing violence, the World Bank has been quietly expanding support for the country’s reconstruction.

The Bank has signed a new Country Partnership Strategy with Iraq for 2013-2016 which is supposed to focus on rebuilding infrastructure, public services and social programmes. Managing water resources in this arid country with a population of 33 million people is one key theme of the new strategy, as is support for private sector development.

Given the legacy from the Saddam Hussein era of restricted workers’ rights, repression against independent trade unions, low wages and insufficient social protection, the World Bank is in a strategic position to use its significant influence in Iraq by setting an example of good labour practices in the projects that it funds.

However the Bank’s record in this regard is very much a mixed one. The examples presented below indicate that an important determinant of labour practice seems to be whether or not the loan is subject to labour standards requirements, as well as an active trade union presence.

 

Cementing the struggle

In 2010 the French multinational cement producer Lafarge applied for financing from the World Bank’s private-sector lending arm, the International Finance Corporation (IFC), for expansion of its operations in two cement plants located near Suleimaniya in Iraqi Kurdistan, and a third near Karbala, a city situated 100 km south of Baghdad.

All three are being operated jointly with local investors or businesses. The IFC granted a loan and equity investment package totalling 150 million US dollars for Lafarge’s Iraqi operations.

By the time the IFC offered its loan and investment to Lafarge-Iraq, regular employees at the company’s two Kurdistan locations received wages and benefits which workers’ representatives considered to be fair by Iraqi standards.

The union committees representing Lafarge workers enjoyed good relations with management, according to Othman Hama, President of the Suleimaniya Construction Union, whom the ITUC interviewed in Erbil, which is Iraq’s fourth biggest city, also in the Kurdistan region. However, he made clear that it had not always been that way.

In June 2009, workers at the Bazian cement plant took part in a sit-in strike before management accepted to negotiate seriously with the union.

Once it did, the two parties agreed on wage increases, reduced hours and shift premiums, and a schedule of regular union-management meetings to resolve differences, which led to subsequent further improvements in working conditions.

Relations had been worse at the other Kurdistan plant at Tasluja, where in July 2006 armed security guards fired on 500 striking workers who were protesting against mass dismissals, injuring 13 workers.

Management entered into negotiations after this incident and accepted to rescind most of the dismissals and meet other demands concerning pay and other issues. It also accepted to pay for the hospital care of the injured workers.

 

No right to social security

Wesam Chaseb, programme officer in Iraq for the American Federation of Labor and Congress of Industrial Organizations’ (AFL-CIO) Solidarity Center, believes that the International Framework Agreement (IFA) signed in 2005 between Lafarge and two Global Union Federations had played a positive role in getting Lafarge to respond to the unions’ concerns. Building and Woodworkers International (BWI) sent representatives to Iraqi Kurdistan after the dispute at Bazian and met with workers.

“Lafarge and the local management in Iraq seemed to understand that the IFA was something they had to take seriously,” said Chaseb, “but there remained unresolved issues that the IFC’s specific labour standards requirements were helpful in working out.”

What was not resolved before the IFC entered the picture was the condition of the more than 1000 sub-contracted workers who were dispersed among 11 companies providing services to Lafarge that ranged from maintenance and transport to food and security.

It is worth pointing out that the total directly-employed workforce – including management – numbers about 1300.

Contrary to the situation of Lafarge’s regular employees, many of the sub-contracted workers were not provided legally stipulated rest periods, annual leave or overtime bonuses, and were not registered by the companies for social security coverage or even provided written contracts.

While investigating the conditions of sub-contract employees, the union was informed by the sub-contractors that the workers had no right to social security since they were hired as day-labourers, but some of those workers told the union that they had been doing the same job for five years!

A few of the employees tried to create union sections with their fellow workers but were dismissed on various pretexts.

 

Towards the right to collective bargaining?

Attempts to correct the working conditions of the sub-contract employees through legal recourse led nowhere, even though many of the practices violated provisions of Iraqi labour law. Suleimaniya Construction Union President Othman Hama said:

“In 2011 Wesam Chaseb informed us that because it was borrowing from the IFC, Lafarge had to treat workers according to something called ‘IFC Performance Standard 2’. There were no major problems for the regular workers, but it was clear to us that Lafarge was not living up to its obligation to ensure that its sub-contractors were complying with PS 2.”

IFC Performance Standard 2 on Labour and Working Conditions stipulates that “the client [borrowing company] will establish policies and procedures for managing and monitoring the performance of such third party employers in relation to the requirements of this Performance Standard”.

These requirements include written documentation provided to workers on their rights and working conditions including those stipulated by national law, freedom of association and right to collective bargaining, non-discriminatory treatment, negotiated lay-off procedures, and occupational health and safety protection.

The Suleimaniya Construction Union wrote to Lafarge-Iraq to ask what it was doing to comply with PS 2. Lafarge responded by inviting the union to a meeting, where it accepted to work with it to bring the sub-contractors into compliance with PS 2.

The union was able to sign up almost all the employees working for the larger sub-contractors, who enthusiastically joined now that they were no longer dismissed for doing so, and in a matter of a few months enterprise-level union committees were formed and collective bargaining agreements concluded with those sub-contractors where unions had legal representation.

The agreements corrected the discriminatory treatment to which employees had been subjected, at least among the larger sub-contractors.

Iraq’s trade union law, which has still not been updated from the Saddam Hussein era, allows union representation only in firms of more than 50 employees, and not at all among public sector employees.

Iraqi unions have been pressuring parliament to adopt a revised law that extends the right to unionise all workers.

Union President Hama stated: “We still have a long way to go in Iraq to make labour laws just for all workers, but in the meantime the international instruments and support have been crucial for us, and we are pleased that we were able to use IFC’s PS 2 to correct the unfair treatment of many of the sub-contracted workers at Lafarge.”

 

Exploitation of water workers

A very different situation prevailed in a World Bank-funded Emergency Water Supply project in the southeastern Iraqi province of Wassit, where the Bank provided 109.5 million US dollars in 2008 for the construction of a water treatment plant and replacement of 60 km of pipes that are intended to serve 250,000 residents.

Work on the project, built to be handed over to Iraq’s Ministry of Municipalities and Public Works, was carried out by the Anwar Soura Contracting Company, a large Iraqi construction firm with projects throughout the Middle East.

Construction of the project was in its last phases in November and December 2012 when the Solidarity Center’s Wesam Chaseb and a research assistant, Haider Jabbar, undertook a thorough investigation of working conditions in the project at the request of the Wassit provincial federation of the General Federation of Iraqi Workers, which is an associate organisation of the ITUC.

The union had heard of deplorable working conditions on the site but the results of the investigation reads like a list of violations of almost every international and Iraqi labour standard imaginable:

  • No written contracts or explanation of working conditions and benefits were provided to workers
  • In order to avoid providing legally stipulated benefits such as rest time and leave and social security, workers were hired on a day-to-day basis
  • Some workers worked seven days per week, despite Iraqi law requiring at least one rest-day per week
  • Despite their supposed status as day-labourers, workers were only paid twice a month, if at all; wage arrears of up to four months were owed to some workers
  • No overtime premiums were paid, again violating Iraqi labour law
  • Workers on the project from other regions in Iraq were given inferior benefits to some of those hired locally, who received paid holidays and overtime premiums
  • Workers had not been registered for social security and were therefore not eligible for pension and health care coverage
  • Workers as young as 15 years were found to be working in the project, some engaged in what appeared to be hazardous work
  • Premises for eating and living were filthy and over-crowded
  • No instruction or information was given about occupational health and safety hazards, no signs about these hazards were posted, no basic protective equipment such as safety boots and helmets were worn by workers, no first aid kits were available and no barriers were built on scaffolds or hazardous walkways

 

Injured workers forced back to work

At a seminar held in late May in Erbil with trade union officials from all over Iraq, Chaseb illustrated his presentation on working conditions at the World Bank-funded project in Wassit province with photographs of rickety scaffolds, other hazardous working conditions and child labourers.

He also showed a photograph of a young worker who had badly injured his hand on the job and had been obliged to seek medical care on his own because none was provided by the employer.

Nor would the company allow him to take any paid time off, such that he was back on the job despite his serious injury.

Chaseb said that the refusal of the Wassit contractor to pay wages in a timely manner could be qualified as bonded labour: “We had the impression that some of the workers were staying on the job despite the terrible conditions because they were afraid that they would never receive the three or four months’ pay owed to them if they left.”

Bonded labour is recognized by the ILO as a form of forced labour and is in violation of one of the four fundamental rights at work with which all ILO member countries must comply. The other three are prohibition of workplace discrimination, elimination of child labour, and freedom of association and right to collective bargaining.

Since the contractor also claimed that the workers could not unionise or bargain collectively, asserting that they did not have this right because it was public-sector project, this World Bank-funded project in Iraq managed to win the trifecta of violating all four of the ILO’s core labour standards.

 

A licence to abuse

The Iraqi union leaders gathered in Erbil in May were astounded that the World Bank would tolerate such working conditions in one of its projects, even though private-sector investments funded through the Bank’s IFC must comply with the core standards and several other basic conditions of employment.

At the Erbil seminar, I explained that the World Bank had not yet completed its long-delayed social and environmental safeguards review, for which the ITUC and Global Union Federations have proposed the adoption of a comprehensive labour standards safeguard to cover all Bank-funded activities.

Participants were also pleased to learn of one positive result from the work carried out by the labour researchers.

When the Wassit Trade Union Federation confronted managers of the World Bank-financed project with their findings, the latter reversed course and recognised a union committee elected by the remaining workers. In a negotiating meeting, they finally accepted to pay all of the wage arrears.

A small part of the Bank’s 109.5 million US dollars allocated for the project will therefore end up in the pockets of the Iraqi workers who built it. Base pay at the now completed Wassit water treatment plant project was 10,000 Iraqi dinar, or 8 US dollars, per day.