As a partner for the sustainable and inclusive economic growth of Latin America and the Caribbean, the IDB recognizes that the pursuit of economic recovery through employment creation and income generation should be accompanied by the protection of natural resources and communities, including protections for the fundamental rights of workers. As the region focuses on recovery, it becomes even more important to ensure that our projects promote good working environments. Creating the conditions for a sound worker-employer relationship is a key ingredient in the sustainability of any endeavor and fundamental to our mission of improving lives.
Over the last decades, labor risks and impacts, such as harassment at the workplace, poor working conditions for migrants, child and forced labor, and occupational health and safety have been brought to the forefront of development cooperation. The COVID-19 pandemic has further exposed these risk factors throughout global supply chains. The IDB’s new Environmental and Social Policy Framework (ESPF) directly addresses labor and working conditions for the workforce engaged in IDB projects, including full-time, part-time, temporary, seasonal, and migrant workers.
The Environmental and Social Performance Standard 2 (ESPS 2) promotes fair treatment, nondiscrimination and equal opportunity for all, and supports IDB clients in their commitments to eradicate child and forced labor, promote safe and healthy working conditions and protect workers’ health. ESPS 2 supports the principles of freedom of association and collective bargaining and provides guidance on establishing, maintaining and improving worker-employment relationships in IDB-financed projects.
Here are three things that you should know about how the IDB manages labor risks and impacts, based on its Environmental and Social Performance Standard 2 (ESPS 2).
1. We respect national legislation and uphold international labor rights
Of all the standards in the ESPF, this one is the most closely aligned with our member countries’ national legal frameworks and obligations under international law. ESPS 2 is informed by several of the International Labor Organization (ILO) and United Nations (UN) conventions and embraces their internationally adopted definitions.
Many of the principles and requirements set out in these international conventions and standards have already been incorporated into the national law of countries in our region, so compliance with national law will often result in alignment with many aspects of ESPS 2. For example, in many IDB member countries, workforce grievance mechanisms are already a requirement set by national labor laws. ESPS 2 additionally requires that these allow for safe and confidential reporting and redress of grievances related to sexual and gender-based violence.
2. We are committed to preventing child and forced labor
ESPS 2 sets the minimum age for employment in an IDB project at 15 years, or older if specified by national law. Children over the minimum age may not be employed or engaged in any manner that is economically exploitative, likely to be hazardous, interferes with the child’s education, or is harmful to the child’s health or development. ESPS 2 requires borrowers to take proactive and continuous measures to prevent the use of child labor in direct and contracted work on the project and in its primary supply chain.
Similarly, ESPS 2 requires borrowers to take swift action to avoid instances of forced labor, including human trafficking and other components of modern slavery, such as bonded labor. Imagine you visit a project site and speak to a security guard who is employed by a private security company that directly provides services to the project on a continuous basis. The security guard tells you that he came to the location via a broker and had to hand over his passport for safe storage. He doesn’t know how to get it back and has been told not to leave the workers’ accommodations until he has paid off his debts with the recruiter.
ESPS 2 provides protection to workers to avoid these situations. The borrower must take action to ensure that, even if documents are being kept in a secure place, all workers have free access to them. There must also be a process in place to ensure that third parties engaged in recruitment are not creating situations that may lead to forced labor, including document retention, charging recruitment fees and imposing debts on workers.
3. We rely on Labor Management Procedures to mitigate labor risks in our projects
Finally, how do we incorporate measures to manage labor risks in our projects? A project’s Environmental and Social Management System will include Labor Management Procedures (LMP). The LMPs usually consist of:
- an overview of the anticipated project workforce
- the anticipated labor issues or risks that have been identified in relation to the workforce in the project
- the key controls that are put in place to deal with the risks
- a brief overview of applicable labor legislation and any gaps with respect to IDB policies
- the roles and responsibilities within the project’s executing structure, including how to manage contractors
- a description of the workforce grievance mechanisms and the key terms of employment, like the code of conduct and the working hours.
In essence, ESPS 2 promotes constructive worker-employer relationships, fair treatment of workers, and safe and healthy working conditions. These requirements and guidelines will lead to tangible benefits, such as enhancing the efficiency and productivity of our projects.
Do you want to learn more about ESPS 2 and how to manage labor risks in IDB-financed projects? Take the course on ESPS 2 .