2008 REPORT TO CONGRESS ON LABOR 

ISSUES AND THE INTERNATIONAL FINANCIAL 

INSTITUTIONS 

UNITED STATES DEPARTMENT OF THE TREASURY 

 

 

 

 

 

 

 

 

 

 

 

 

OFFICE OF THE 

UNDER SECRETARY 

FOR INTERNATIONAL 

AFFAIRS

November 21, 2008 
TABLE OF CONTENTS 

 

EXECUTIVE SUMMARY................................................................................................. 1 

I. Introduction........................................................................................................... 2 

II. Treasury Department Policies and Practices........................................................ 3 

III. IFI Policies and Practices ..................................................................................... 5 

 A. World Bank Group............................................................................................ 5 

 B. Asian Development Bank................................................................................. 6 

 C. Inter-American Development Bank .................................................................. 8 

 D. African Development Bank............................................................................... 9 

 E. European Bank for Reconstruction and Development ..................................... 9 

 F. International Monetary Fund........................................................................... 11 

Textbox 1: Better relations between ILO and the World Bank Group lead to 

knowledge transfer and project replication...................................................................... 6 

Textbox 2: Mainstreaming CLS into the ADB’s broader agenda ..................................... 7 

Textbox 3: Beyond the project: EBRD intervention at the sector level .......................... 10 

Text of Law..................................................................................................... . Appendix 1 

Core Labor Standards...................................................................................... Appendix 2 
2008 REPORT TO CONGRESS ON LABOR ISSUES AND THE 

INTERNATIONAL FINANCIAL INSTITUTIONS 

EXECUTIVE SUMMARY 

The Treasury Department presents this report in compliance with section 526(e) of the 

Foreign Operations, Export Financing, and Related Programs Appropriations Act, 1995 

(Pub. L. No. 103-306), which directs Treasury to urge the establishment of a process 

within the International Financial Institutions (IFIs) to evaluate borrowing member 

countries’ recognition of internationally recognized worker rights, and to include the 

status of such rights as an integral part of the IFIs’ policy dialogue with each borrowing 

country. The Act requires that Treasury report annually to Congress on the IFIs’ 

progress toward these two goals, as well as on efforts to establish formal procedures to 

screen projects and programs funded by the IFIs for any negative impact on 

internationally recognized worker rights. 

The Treasury Department’s strategy is to maintain the forward momentum in the IFIs’ 

recognition of core labor standards1

 (CLS) as an important issue to be integrated into 

their development agenda. To this end, Treasury encourages enhanced cooperation 

among the IFIs and the International Labor Organization (ILO), uses opportunities such 

as multilateral development bank (MDB) replenishment negotiations to establish best 

practices on CLS policies, and monitors and takes appropriate action on individual 

lending and non-lending programs that come before the respective Boards of Directors 

for decision. 

Highlights of Recent Activities: 

• Labor issues are an integral part of IFI due diligence for projects and country 

strategies. Operation manuals have been revised to clarify and expand the 

requirements with respect to CLS. 

• All of the IFIs have been working closely with the ILO. The Asian Development 

Bank (AsDB) jointly developed with the ILO a Core Labor Standards Handbook. 

The African Development Bank (AfDB) signed a new Cooperation Agreement 

with the ILO in 2004. 

• Many MDBs now include CLS requirements in their standard bidding documents 

and the rest are working to adopt similar requirements. 

 

1

 For the purposes of this report, the terms “internationally recognized workers’ rights” and “core labor standards” 

are used interchangeably and refer to the International Labor Organization (ILO) Conventions 29, 87, 98, 100, 105, 

111, 128, and 182. 

1
2008 REPORT TO CONGRESS ON LABOR ISSUES AND THE 

INTERNATIONAL FINANCIAL INSTITUTIONS 

I. INTRODUCTION 

This report is presented in compliance with section 526(e) of the Foreign Operations, 

Export Financing, and Related Programs Appropriations Act, 1995 (Pub. L. No. 103-

306) (hereinafter referred to as the Act).2

 The Act requires the Department of Treasury, 

in conjunction with the U.S. Executive Directors (USEDs) of the International Financial 

Institutions (IFIs), to urge the IFIs to: adopt policies encouraging borrowing countries to 

guarantee internationally recognized worker rights and include the status of such rights 

as an integral part of the policy dialogue with borrowing countries; use the relevant 

conventions of the International Labor Organization (ILO) in the development of these 

policies; and establish formal procedures to screen projects and programs for any 

negative impact in a borrowing country on internationally recognized worker rights. The 

Act requires that Treasury report annually to Congress on the IFIs’ progress toward 

these goals, as well as the extent to which each borrowing country guarantees 

internationally recognized worker rights. 

The objectives of this report are to: (a) outline the procedures that the Treasury 

Department follows to promote the systematic integration of internationally recognized 

worker rights into IFI operations and analytical work and (b) discuss developments in IFI 

policies and practices toward this end. 

The report covers the period from October 1, 2002 through September 30, 2007. 

 

Interpretation of the Legislation 

The Act requires that Treasury urge the respective institutions to use the relevant ILO 

conventions on internationally recognized worker rights in developing their policies.3

 

These conventions are: the right of association; the right to organize and bargain 

collectively; a prohibition on the use of any form of forced or compulsory labor; and 

certain minimum labor standards that take into account differences in development 

levels among nations, including a minimum age for the employment of children, 

 

2 For the text of the law, see Appendix 1. 3 In the legislation mandating this report, the International Financial Institutions (IFIs) are defined as the 

International Monetary Fund (IMF), the International Bank for Reconstruction and Development (IBRD - 

the World Bank Group), the Inter-American Development Bank Group (IDB), the Asian Development 

Bank Group (AsDB), and the African Development Bank Group (AfDB). The IMF is broadly responsible 

for macroeconomic policy recommendations and short-term balance of payments financing, while the 

multilateral development banks (MDBs) promote economic development through sector specific project 

and program loans and technical assistance. While not specifically identified in the legislation, the 

European Bank for Reconstruction and Development (EBRD) is also included as an IFI for purposes of 

this report.

2
acceptable conditions of work with respect to minimum wages, hours of work, and 

occupational safety and health. 

The ILO's Declaration on Fundamental Principles and Rights at Work lists the standards 

covered by the ILO’s conventions (see Appendix 2), usually referred to in the United 

States as core labor standards (CLS). This is the most widely recognized international 

definition of labor standards. These CLS have received widespread international 

recognition and have been used in multilateral discussions in such fora as the United 

Nations, the Organization for Economic Cooperation and Development (OECD), and the 

World Trade Organization (WTO). CLS include: the right of association; the right to 

organize and bargain collectively; a prohibition on the use of any form of compulsory or 

forced labor; nondiscrimination in employment; and the elimination of exploitative child 

labor. 

In developing policies and engaging on labor issues at the IFIs, Treasury focuses 

primarily on CLS, but also includes those minimum labor standards specifically outlined 

in the legislation and other labor issues often associated with IFI programs. This report 

also includes information on efforts by the IFIs on social safety net issues, workplace 

health and safety, and certain other minimum standards related to labor. 

The Act also requires a report on the extent to which each borrowing country 

guarantees internationally recognized worker rights. The State Department’s Country 

Reports on Human Rights Practices, which is issued annually, fulfills this requirement. 

That report evaluates human rights and worker rights conditions in all countries 

receiving foreign assistance from the United States; in all countries that are members of 

the United Nations; and in any other countries or territories that the Department of State 

considers merit inclusion in the report. 

II. TREASURY DEPARTMENT POLICIES AND PRACTICES 

At the heart of Treasury’s strategy to promote the CLS is enhanced cooperation among 

the IFIs and the ILO. Treasury has been working with the IFIs to establish best 

practices on CLS while monitoring and taking appropriate action on individual lending 

and non-lending programs. 

With regard to individual lending and non-lending programs, the Treasury Department 

has internal guidelines for engaging CLS issues at the MDBs and the International 

Monetary Fund (IMF). These guide the development of internal Treasury positions on 

CLS issues and inform U.S. Executive Directors (USEDs) for their interventions at the 

Executive Board and staff levels. Projects are screened to ensure that CLS are not 

violated, labor standards are adequate and the participation of civil society, including 

labor unions, is promoted. 

Working with the respective USED office, the Treasury Department reviews all MDB 

loans and grants to ensure that proposed projects and programs address CLS where 

appropriate. In addition, Treasury and the USED offices review all MDB Country 

3
Assistance Strategies (CASs) to ensure that CLS are addressed. The CASs are the 

primary documents used to express the institutions’ policy approach to individual 

borrowing member countries. In addition, the Treasury Department reviews IMF Article 

IV surveillance reports, program proposals, and program reviews, for consistency with 

core labor standards and related labor issues. These collaborative efforts guide the 

development of internal Treasury positions on CLS issues and serve as the basis for 

USED interventions at the Boards of Directors. 

In accordance with these guidelines, the United States has abstained on two textile 

projects in Uzbekistan. In 2005, the United States abstained on an European Bank for 

Reconstruction and Development (EBRD) loan to a textile company in Uzbekistan 

because the client planned to use cotton cultivated under labor practices that violated 

core labor standards. A briefing note provided by the EBRD said that child labor and 

forced labor were endemic during cultivation and harvest of cotton. In 2006, the United 

States abstained on another EBRD investment in a textile plant in Uzbekistan for the 

same reason. 

Trafficking in persons presents another serious labor issue. The “Victims of Trafficking 

and Violence Protection Act of 2000”, requires the United States to vote against 

assistance to countries that do not meet the minimum standards for elimination of 

trafficking. "Severe forms of trafficking in persons" is defined as: "(a) sex trafficking in 

which a commercial sex act is induced by force, fraud, or coercion, or in which the 

person induced to perform such act has not attained 18 years of age; or (b) the 

recruitment, harboring, transportation, provision, or obtaining of a person for labor or 

services, through the use of force, fraud or coercion for the purpose of subjection to 

involuntary servitude, peonage, debt bondage, or slavery." Reducing trafficking in 

persons addresses the CLS relating to forced labor and child labor 

Treasury has voted no on over twenty projects in countries that do not comply with the 

minimum standards for the elimination of trafficking in persons and are not making 

significant efforts to become compliant. For example, between 2003 and 2006 the 

United States voted no on three IFI projects in Cambodia, citing Cambodia’s failure to 

comply with U.S. policy on trafficking in persons. Cambodia’s policies subsequently 

improved to the point that, in June 2006, the State Department determined that 

Cambodia no longer should be sanctioned. While the role of Treasury votes in 

motivating the Government of Cambodia to make these changes is impossible to 

determine, the situation on the ground for Cambodian laborers is better. 

Treasury will continue to emphasize the importance of CLS in its reviews of country 

strategies and projects. We will make a special point of doing so in the AfDB, because 

the AfDB’s progress in recent years on these important issues has lagged behind that of 

its peers. 

4
III. IFI POLICIES AND PRACTICES 

We describe below each international financial institution’s cooperation with the ILO, as 

well as details on actions being taken to incorporate CLS into that IFI’s policies and 

programs: 

A. World Bank Group 

The World Bank’s development policies and operations are screened for issues relating 

to CLS. Three key mainstreaming actions include: 

1. In February 2006, the World Bank Group’s private sector lending arm, the 

International Financial Corporation (the IFC), adopted a new set of project 

preparation standards that included a labor performance standard that requires 

IFC’s private sector clients to comply with all core labor standards and certain 

other workplace practices. 

2. In 2007, the World Bank revised its “Standard Bidding Document for 

Procurement of Works” to require that all contractors on bank projects respect 

core labor standards. 

3. Since 2003, all World Bank departments have strengthened their staffing with 

regard to labor issues. For example: 

• The regional departments have more staff focused on labor market analysis. 

• In 2005, the Poverty Reduction and Economic Management network (PREM) 

built a unit dedicated to employment and introduced a new working group on 

migration. 

• The Research department (DECRG), to provide deeper analysis on labor 

issues, hired a Senior Labor Economist. 

The Bank regularly engages with the ILO. For example, the World Bank holds quarterly 

meetings with ILO technical staff to share relevant research findings in the area of 

employment, growth, and poverty reduction. The World Bank and the ILO jointly host 

an annual seminar series on these issues with a number of development agencies. The 

World Bank Group also participates in the following specific initiatives with the ILO: 

• The World Bank, ILO and the United Nations created in 2000 the Youth Employment 

Network (YEN). The YEN focuses on four global priority policy areas to improve 

youth employment: Employability, Equal opportunities, Entrepreneurship, and 

Employment creation. YEN has trained over 1,500 youth employment 

advocates, and has helped 45 countries prepare National Action Plans on youth 

employment. 

5
• In 2004, the World Bank Group partnered with the ILO, bilateral donors and African 

countries to create the Partnership on Job Creation, Core Labor Standards, and 

Poverty Reduction in Africa. Objectives of the project are to (a) improve 

understanding of the poor labor market outcomes in the region; (b) build analytical 

capacity of the governments and social partners in this field; and (c) test promising 

approaches in selected countries (Burkina Faso, Ghana, and Ethiopia). 

Textbox 1: Better relations between ILO and the World Bank Group 

lead to knowledge transfer and project replication 

Better Work, a partnership between the IFC and the ILO, aims at 

improving labor practices and competitiveness in global supply chains. 

The Better Work Program has developed models have that have shaped 

IFC investments in the apparel industry and agribusiness. 

B. Asian Development Bank 

AsDB addresses labor issues, including CLS, in projects as part of the social analysis 

required for loan projects. For example: 

1. In April 2007, the AsDB approved a new section in its Operations Manual

“Incorporation of Social Dimensions” requiring that all AsDB operations take into 

account key social dimensions including (i) participation; (ii) gender and 

development; (iii) social safeguards; and (iv) management of social risks, especially 

among vulnerable groups. 

2. In December 2006, AsDB and the ILO launched a Core Labor Standards Handbook 

to support AsDB staff in ensuring compliance with the CLS. It provides practical 

knowledge on how to consider CLS in project level interventions, and in planning 

and design of country strategies and programs. 

3. The AsDB completed a Handbook of Social Analysis to assist AsDB staff in 

effectively addressing the social dimensions, including CLS and other labor issues, 

in AsDB operations. 

4. The AsDB requires an initial poverty and social analysis (IPSA) for all loan and 

grant-based investment projects and programs. The analysis includes labor, 

gender, and involuntary resettlement concerns. The AsDB requires that these 

issues be addressed during project implementation. 

5. In 2007, the AsDB adopted an important improvement in the documents it generally 

requires borrowers to use for procurement of public works. The documents now 

require compliance with all the relevant labor laws applicable to the contractor’s 

personnel, including laws relating to their employment, health, safety, welfare, 

immigration and emigration. For national competitive bidding, loan covenants on 

labor issues are now required. 

6
The AsDB also has taken a major step forward in reinforcing its formal relationship with 

the ILO. The AsDB held a first consultation meeting was held with the ILO on April 4, 

2006 in accordance with a 2002 memorandum of understanding between the two 

institutions. They identified specific steps for strengthening collaboration and 

coordination during the meeting. The follow-up included: 

1. A workshop on “Labor Issues on Enterprise Restructuring and Infrastructure 

Reforms”, held in March 2006 with AsDB staff and members of trade unions. 

2. During the 40th AsDB Annual Meeting in Kyoto, Japan in May 2007, the AsDB 

held a Panel Discussion on Supporting the Core Labor Standards with panelists 

from trade unions, ILO and AsDB staff. The panel discussion explored how 

governmental and inter-governmental organizations can strengthen the 

application of CLS in development projects. 

In addition to its relationship with the ILO, AsDB regularly interacts with a broad range of 

NGOs and other civil society organizations (CSOs), including groups representing 

workers. The AsDB organized regular dialogues with CSOs like Public Services 

International–Asia Pacific Regional Organization (PSI-APRO), International 

Confederation of Free Trade Unions (ICFTU-APRO), and the Asian Labor Network on 

IFIs (ALNI). These CSOs promote the integration of CLS in all loans and projects 

funded by AsDB and campaign to improve the accountability of IFIs to ensure the 

protection of displaced workers. 

Textbox 2: Mainstreaming CLS into the AsDB’s broader agenda 

The AsDB has made important progress in addressing risks related to 

trafficking in persons by requiring that staff analyze as part of project 

preparation whether the project has trafficking vulnerabilities, especially 

when the project is designed to improve rural-urban and/or cross-border 

connectivity. When such vulnerabilities are high, the AsDB supports 

efforts to control these risks. A typical counter-trafficking component may 

include: (i) awareness-raising of trafficking risks and safe migration among 

the high risk communities, construction laborers and others; and 

(ii) socioeconomic empowerment and/or social protection targeted at the 

groups with high vulnerability to human trafficking. 

The AsDB recently completed a regional technical assistance program in 

the Greater Mekong Subregion (GMS) that supported ministerial level 

policy dialogue on trafficking, a regional anti-trafficking action plan 

implementation support, conducted research to determine key factors that 

contribute to trafficking, and developed recommendations on how to 

develop community-based monitoring and referral systems. The program 

also produced an operational guide for the GMS to integrate human 

trafficking concerns into AsDB's cross-border regional investments. 

7
C. Inter-American Development Bank 

The IDB has taken steps to ensure that IDB projects and policies incorporate CLS 

issues and an analysis of CLS vulnerabilities at both the project and sector levels. Such 

efforts include: 

• In July 2007, IDB Management issued a note to clarify that project sponsors must 

analyze compliance with labor standards as a part of project due diligence. 

• IDB public sector operations focus efforts on providing tools to strengthen 

government capacity and incentives to bring about improved labor conditions and 

enforce labor standards, consistent with the ILO approach. 

• In 2006, the IDB published Guidelines on Labor Issues in Infrastructure Projects

to assist project teams in their due diligence work. The Guidelines require clients 

to observe 152 requirements in seven thematic categories. 

• The Inter-American Investment Corporation (IIC), the IDB Group’s small and 

medium enterprise lending arm, addresses environmental and labor impacts in 

its Procedure for Environmental and Labor Review (1999), which prohibits 

harmful child labor practices and forced labor. The IIC’s updated Operating 

Policy (2006) calls for compliance with national labor laws and regulations. 

The IDB has also sponsored a number of conferences and issue-oriented seminars that 

advance CLS-related actions and concepts. These have addressed trade, labor conflict 

and social discrimination. Details of such engagement include: 

• In 2004, the IDB sponsored a meeting for the ministers responsible for trade and 

labor in the Central America and the Dominican Republic involved in the CAFTADR free trade agreement. At the conclusion of the meeting, Ministers issued a 

joint statement establishing a working group to make further recommendations to 

enhance the implementation and enforcement of labor standards and strengthen 

labor institutions in the countries of the region. Prior to this meeting, the 

governments of Central America and Dominican Republic invited the ILO to 

prepare studies of the conformity of the labor laws in each country with respect to 

the obligation enshrined in the ILO’s 1998 Declaration on Fundamental Principles 

and Rights at Work.4

 

• The Bank provides assistance in borrowing countries on implementing the 

standards of freedom of association and the right to strike, particularly the 

resolution of labor conflicts. The Bank has launched a regional public awareness 

campaign on human trafficking, collaborating specifically on public campaigns 

 

4

 All information obtained from IDB OPS operation system and the report of the Joint Ministerial on trade and labor 

can be found on line at www.iadb.org 

8
with the Ricky Martin Foundation, and has funded country-specific assistance to 

reduce forced labor in national contexts. 

• On child labor, the Bank has financed a series of pilot projects, significant policy 

research, and some outreach events, including a regional conference on child 

labor in Lima in late 2006. 

D. African Development Bank Group 

Neither the AfDB’s efforts to increase borrowing countries’ implementation of core labor 

standards nor the results of such efforts appear as significant as those of other IFIs. As 

such, Treasury is committed to increase the focus it puts into its oversight of the AfDB 

on these issues. 

While efforts to date are disappointing, the AfDB is working to mainstream attention to 

core labor standards in its policies and projects. In channeling its investments (grants 

and loans) to client countries, the Bank Group ensures that its projects adhere to 

internationally recognized core labor standards. The AfDB also works on the country 

strategy level, although such efforts often appear incomplete. For example, the Kenya 

Country Strategy for 2005-2007 details the status of Kenya’s ratification of the ILO’s 

CLS conventions and lists the steps taken by the Kenyan government to reduce child 

labor. It does not identify a role for the AfDB to support these efforts, however. 

Similarly, the AfDB’s 2003 Malawi Country Strategy notes that Malawi has ratified all of 

the ILO CLS conventions. The strategy explains that these conventions have been 

incorporated in Malawi’s labor legislation and identifies challenges associated with 

implementation of the legislation. However, the AfDB does not identify capacity building 

interventions it plans to make to support such needs. 

The AfDB is improving relations with the ILO. The AfDB signed a Cooperation 

Agreement with the ILO in May 2004 replacing a 1990 Memorandum of Understanding. 

The new Agreement enables the ILO to provide advice and expertise relating to the 

AfDB’s work in four areas: 1) promoting standards and fundamental principles and 

rights at work; 2) creating greater opportunities for women and men to secure decent 

employment and income; 3) enhancing the coverage and effectiveness of social 

protection for all; and 4) strengthening social dialogue. 

E. European Bank for Reconstruction and Development 

The EBRD took significant steps during this reporting period to mainstream CLS issues 

into its policies and operations. 

When the EBRD revised its Environmental Policy in 2002/2003, the bank broadened its 

definition of the term “environment” to include community impacts, as well as worker 

protection issues, which include occupational health and safety, harmful child labor, 

forced labor and discriminatory practices. 

9
In accordance with the new Environmental Policy, in 2004 the EBRD introduced a 

procedure to screen and monitor all projects for labor risks, as part of the environmental 

and social due diligence carried out by the Environment Department (now the 

Environment and Sustainability Department or “ESD”). ESD screens all projects for 

labor issues, by reference to the country, industry, sector, client reputation and 

employment impact. The screening identifies specific risks that need to be addressed 

to comply with core labor standards and national labor laws. If the Bank identifies a 

particular risk, it assesses the extent of the risk and asks the project sponsor to take 

remedial actions. Bank staff or specialized consultants may undertake site visits or 

audits to verify the issues and evaluate proposed mitigation measures. 

The EBRD requires that projects it finances meet applicable provisions of the relevant 

ILO conventions, as well as all applicable national laws and standards on employment. 

If necessary, the Bank requires the project sponsor to undertake specific actions to 

meet these requirements and to report periodically on implementation. The EBRD has 

taken a number of steps to assure that these ILO convention requirements are met in 

practice: 

1. In developing its labor due diligence process, the Bank used the services of 

international labor rights consultants, who continue to advise ESD on labor 

issues. The consultants have conducted several audits of EBRD-financed 

projects. 

2. To support implementation, ESD has put in place a range of guidance materials, 

and provided several rounds of training for all ESD professional staff, including a 

2-day course on practical aspects of labor due diligence, with a focus on site 

inspections and labor audits. 

3. In addition, ESD and the labor consultants conducted a series of Labor Issues 

Training Workshops for EBRD bankers between November 2005 and February 

2006. 

To broaden the impact of these steps, in 2007 ESD engaged expert consultants to 

conduct a review of its current policies, procedures and practices related to 

occupational, health and safety (OHS), as well as a comparison of various OHS 

standards and benchmarks. The consultants’ recommendations are feeding into the 

next Policy Revision. 

The EBRD has also taken numerous steps to maintain constructive relations with the 

ILO. ESD consulted with the ILO in the development of its labor due diligence 

procedures, to ensure that the Bank’s approach had the support of this key stakeholder. 

The EBRD shared draft guidance materials with ILO staff, as well as with social experts 

from other IFIs. Since then, ESD staff has been in regular contact with the ILO, formally 

and informally, including: 

10
• In May 2006, ESD staff participated in an ILO-sponsored workshop to discuss, 

the integration of international labor standards in emerging market project 

finance. 

• In December 2006, the EBRD and ILO signed a Memorandum of Understanding 

to update and expand the 1992 Agreement of Cooperation between the two 

institutions and to reflect the increasing level of collaboration. 

Textbox 3: Beyond the project: EBRD intervention at the sector level 

Due diligence and project monitoring sometimes reveal violations of labor rights that are 

endemic in the sector or country, and are beyond the scope of remedial actions taken 

by the client. Where this occurs, the EBRD may explore possibilities for technical cooperation initiatives to improve overall labor conditions, in cooperation with other 

organizations, such as the ILO. For example, to help address endemic labor issues in 

the Russian construction industry, EBRD has teamed up with the ILO to carry out 

technical cooperation aimed at improving labor practices in the industry by developing 

and promoting an industry code of conduct. 

During 2006, ESD undertook a review of its labor due diligence process and identified 

construction as one of the main sources of labor risks associated with EBRD’s project 

portfolio, mainly due to: (i) the large number of EBRD projects affected, (ii) the 

hazardous nature of the work, (iii) the high fluctuation in the workforce (temporary 

workers, migrant workers, workers hired through contractors or labor providers) (iv) ILO 

reports on forced labor exploitation of migrant workers in the Russian Federation, and 

(v) difficulties to enforce regulatory compliance through a sub-contracting chain. The 

EBRD prepared a construction toolkit for use by ESD staff during due diligence. 

Attendees also discussed the issue and shared best practices during the annual 

meeting of Development Financing Institution’s Social Experts and the meeting of Micro 

Finance Institution Heads of Procurement, both of which were held at EBRD in 2006.

F. International Monetary Fund 

The IMF and the ILO continue to collaborate and exchange views on labor market 

issues, such as employment creation, wage policy, and social protection mechanisms, 

and the implications of globalization. IMF and ILO collaboration and interaction take 

place through several channels. The two institutions exchange drafts of reports of 

relevance for comment, such as the IMF's World Economic Outlook and the ILO's 

annual report. 

In addition, the ILO meets with senior management and Board members of the Fund 

every two years to further enhance collaboration and the ILO regularly sends observers 

to spring and fall meetings of the International Monetary and Financial Committee 

(IMFC). There are also periodic interactions of the managements and staffs of the two 

institutions, including meetings and participation in major conferences. 

11
12

Meetings between the International Trade Union Movement and the IMF and World 

Bank were held in December 2006. IMF and World Bank management and staff met 

with 62 labor union leaders, advisors and observers from 35 countries. Discussions 

focused on issues of common interest, including debt relief, loan conditionality, and core 

labor standards. In his discussion with the unions, the IMF Managing Director Rodrigo 

de Rato underlined that the current state of the global economy presents opportunities 

not seen in two generations, but also new and complex risks. The IMF’s role in helping 

countries to better understand those risks is complementary to union efforts to make 

globalization work for workers. 
APPENDIX 1: Text of Law 

P.L. 103-306, SECTION 526 (e) 

Section 526 (e) of P.L. 103-306, the Foreign Operations, Export Financing, and 

Related Programs Appropriations Act, 1995, passed on August 23, 1994, as 

amended, states: 

(a) The Secretary of the Treasury shall direct the United States Executive 

Directors of the international financial institutions (as defined in Section 

1701(c)(2) [of the International Financial Institutions Act]) to use the voice and 

vote of the United States to urge the respective institution: 

(1) to adopt policies to encourage borrowing countries to guarantee 

internationally recognized worker rights (within the meaning of Section 

507(4) of the Trade Act of 1974) and to include the status of such rights as 

an integral part of the institution’s policy dialogue with each borrowing 

country; 

(2) in developing the policies referred to in paragraph (1), to use the 

relevant conventions of the International Labor Organization, which have 

set forth, among other things, the right of association, the right to organize 

and bargain collectively, a prohibition on the use of any form of forced or 

compulsory labor, and certain minimum labor standards that take into 

account differences in development levels among nations including a 

minimum age for the employment of children, acceptable conditions of 

work with respect to minimum wages, hours of work, and occupational 

safety and health; and 

(3) to establish formal procedures to screen projects and programs 

funded by the institution for any negative impact in a borrowing country on 

the rights referred to in paragraph (1). 

(b) The Secretary of the Treasury shall submit to the Committee on Banking, 

Finance and Urban Affairs of the House of Representatives and the Committee 

on Foreign Relations of the Senate by the end of each fiscal year a report on the 

extent to which each borrowing country guarantees internationally recognized 

worker rights to its labor force and/or progress toward achieving each of the 

goals described in subsection (a) of this section.
APPENDIX 2: The Core Labor Standards 

The internationally recognized core labor standards and their corresponding ILO 

conventions are: 

• Freedom of Association (ILO Convention 87) - The right, freely 

exercised, of workers and employers, without distinction, to organize for 

furthering and defending their interests.

• Right to Organize and Collective Bargaining (ILO Convention 98) - 

Protection for workers who are exercising the right to organize; noninterference between workers’ and employers’ organizations; promotion of 

voluntary collective bargaining.

• Forced Labor (ILO Conventions 29 and 105) - Suppression of forced 

labor for certain purposes (political coercion; labor mobilization for 

economic development; labor discipline; punishment for participating in 

strikes); prison labor permitted under state supervision and in accordance 

with due process of law. 

• Minimum Age (ILO Conventions 138 and 182) - Minimum age for 

employment not less than the age of completion of compulsory education 

(normally not less than 15 years). Convention 182, the Worst Forms of 

Child Labor Convention, was adopted at the ILO’s General Conference in 

1999 went into effect in November 1999. This convention prohibits the 

employment of children in especially abusive situations such as 

prostitution, pornography, armed conflict, and bonded labor. 

• Equality of Opportunity and Treatment (ILO Conventions 100 and 

111) - Equal remuneration for men and women for work of equal value 

and equality of opportunity and treatment in respect of employment and 

occupation. 

There are five core labor standards. Freedom of association and the right to 

organize and bargain collectively are sometimes combined under one rubric for a 

total of four, most recently in the ILO’s Declaration on Fundamental Principles 

and Rights at Work. Note also that there are seven ILO conventions that are 

relevant. Freedom of association (Convention 87) has been interpreted to mean 

the right of all citizens to associate in defense of their rights, free from 

government interference. Convention 98 (right to organize and bargain 

collectively) obligates the government parties to protect workers from reprisal by 

employers and to promote collective bargaining. As workers associate for the 

purpose of collective bargaining with their employers, the two are often 

combined.