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New study* on working conditions:

Nokia employer policies in Brazil respectable,
but concerns voiced about shares of various stakeholders

Helsinki (18.10.2002 Juhani Artto) The world’s largest mobile telephone manufacturer Nokia, which is based in Finland, has a factory in the Manaus Duty Free Zone in Brazil with a staff of more than 1,300.

In September the Union Solidarity Center of Finland SASK published a study* on how Nokia treats its labour force in Brazil. On learning of the favourable outcome of the study, the Finnish public breathed a sigh of relief at the prospect of continued satisfaction with this Flagship of Finnish industry. Even though some 90 per cent of the company is nowadays owned by foreigners, Finns still regard Nokia as a Finnish enterprise. And there are good reasons for doing so: Nokia has its roots and Head Office in Finland, and in 2001 roughly half of its 54,000 employees worked in Finland.

The study, conducted by the union-related Brazilian research centre Social Observatory, was first of its kind on a multinational based in Finland. This has generated a particularly keen interest in its findings here. As few studies of this kind have been made elsewhere, this carefully compiled research document also deserves attention beyond the borders of Finland and Brazil.

Does Nokia pay well or badly?

According to the report, the lowest pay rate at the Nokia unit in Manaus is R$ 411 a month (this was EUR 135.63 at the official exchange rate of R$ 1.00 = EUR 0.33 quoted on 8 October, 2002). This figure is 12 per cent higher than the minimum wage defined in the local collective agreement, and is more than double the official national minimum wage of R$ 200.

In a mid-September press conference held in Helsinki Agostinho Pereira Corrêa, the President of the Manaus Metalworkers Union (SMM/CUT), reported that, of the 400 or so enterprises operating in the Manaus Duty Free Zones, only Toshiba pays a higher minimum wage than Nokia. Toshiba pays ten per cent more than the Nokia minimum.

In a written comment on the study Kjeld Jakobsen, the international affairs director of the Brazilian trade union confederation CUT, also notes that Nokia’s competitor Ericsson pays its workers in Southern Brazil twice as much as Nokia pays in Manaus.

Seppo Pakarinen, the international director of the Finnish Metalworkers Union, advised the Helsinki press conference that Elcoteq – an electronics manufacturing services company based in Finland and an important subcontractor of Nokia – pays a minimum wage equivalent to EUR 200 (R$ 600) in Estonia. He added that before 1996 – the year when Nokia began production in Manaus – comparable wages in China where only one third of the level in Manaus.

Dieese, a union-related research centre in Brazil, reckons that in March 2002 a family of four needed R$ 1,091 a month to cover the cost of basic necessities. According to Dieese, in 2001 Brazilian manufacturing workers earned an average of R$ 880 a month. More than 60 per cent of Nokia employees in Manaus have a salary of R$ 800 or less.

The study did not review the working conditions of Nokia’s two subcontractors in Manaus. Corréa estimates that these subcontractors pay only half of the Nokia wage level. A third subcontractor may soon join the production chain. "Our union is also keen to begin a dialogue with subcontractors as a matter of urgency," Corréa stresses, and he adds: "It is nothing short of a miracle that there are plenty of families in Brazil able to exist on R$ 300 to 400 a month."

Nokia full-timers enjoy several non-mandatory social benefits

Nokia voluntarily provides full-time employees in Manaus with certain social benefits not guaranteed in the collective agreement, the research document notes. These extra benefits include:

  • medical assistance (consultations, examinations, hospitalisation) and dental assistance for full-time employees and their dependants,
  • subsidised educational opportunities, meals and transportation,
  • life insurance and loans.

The company profit sharing programme has also given the employees an average of R$ 500 a year. The profit sharing formula is based on quality, productivity, absenteeism, material waste and cleanliness.

The additional social benefits only apply to full-time employees and not to contracted outside labour. This is a clear weakness in Nokia’s social programme in Manaus, as in April 2002 a whole fifth of the personnel consisted of contracted outside labour. These workers mainly comprise guards, cleaners and kitchen staff. As most of them are women, the exclusion of contracted outside labour from non-mandatory social benefits involves an element of gender discrimination.

Previously the enterprise also used contracted outside labour in production, but nowadays this only happens in exceptional situations, for example when many employees are simultaneously on sick leave.

The Nokia community programmes in and around Manaus concentrate on supporting education in technology-oriented subjects.

Low organising rate

Nokia’s employer policy in occupational health and safety gets good marks in the report.

As to the ILO core labour standards, the Nokia unit in Manaus has no problems. Both the report and Corrêa agree that the low organising rate is not due to a union-busting employer policy. Rather the opposite is true, as the comparably good wages and social benefits may encourage many employees to believe that no union is needed.

Although the Nokia workers in Manaus are free to organise, it is noteworthy that this right is not expressed in Nokia’s global values. This is also noted in the commentary made on the study by the Finnish Metalworkers Union and two of the unions** organising Nokia’s salaried employees in Finland.

Even the largest circulation daily newspaper in Finland, the liberal Helsingin Sanomat, warned in its leader column on 21 September, 2002 of the risks of a paternalistic attitude: "This distorts industrial relations and may prevent the development of proper collective bargaining between the employees and the employer."

Comparatively low staff turnover may be regarded as an indication of general job satisfaction. In an area of high unemployment, however, low staff turnover may result from the scarcity of alternatives. This is not the case in Manaus, however, because job satisfaction is confirmed in the responses given by the workers to the survey questionnaire. Almost 96 per cent of respondents rated Nokia’s general labour conditions as excellent or good.

Nokia transparency appreciated

No in-depth study could have been conducted without willingness on the part of Nokia to co-operate. The researchers and union representatives both in Brazil and in Finland were most appreciative of the transparency and spirit of co-operation exhibited by the enterprise. At the Helsinki press conference Corrêa pointed out that such transparency cannot be taken for granted in Manaus, and he commented disparagingly that "Honda, for example, has shunned this kind of partnership."

Following all these favourable findings, it is surprising that Nokia has not so far reacted positively to an initiative to establish a world council representing Nokia employees in various countries. The International Metalworkers Federation – IMF has submitted such an initiative. The main function of such a council would be to monitor how Nokia realises its declared values in different parts of the world. The IMF and Nokia should seek an agreement on this matter.

Erkki Vuorenmaa, the President of the Finnish Metalworkers Union, told the press conference that although the parties have discussed the world council initiative, this has not been forwarded for official negotiations. According to Helsingin Sanomat (20 September, 2002), Nokia immediately announced after the press conference that the enterprise sees no cause to reach a separate agreement based on the IMF initiative.

In their statement the Finnish unions call attention to the fact that some 20 multinationals, including Ikea, Skanska, Volkswagen, Danoe, Chiquita and Statoil, have concluded agreements with the world labour federations on globally applicable Codes of Conduct. None of the multinationals based in Finland have concluded such agreements.

Exporting good labour market practice

Kjeld Jakobsen, international affairs director of the Brazilian central trade union confederation CUT, says that the Brazilian trade union movement welcomes foreign investors to Brazil on condition that they promote Brazilian economic development and adhere to the good labour market relations that they practice in their countries of origin.

At the press conference in Helsinki Vuorenmaa emphasised that the Finnish trade union movement works globally to promote fair business practice and to prevent all forms of social dumping: "Conclusions cannot be drawn on every matter from the Finnish perspective, as we are working in different cultures. However, injustice can always be recognised."

"We support the export of good labour market practices from Finland. Fundamentally this means the right to organise and engage in collective bargaining."

In Vuorenmaa’s opinion Nokia has a reasonable employer policy in Manaus "even in part with respect to wages and salaries," and he continues: "The challenges are to increase the organising rate and get shop stewards elected in workplaces."

"It would be real progress to realise elsewhere in the world the standard of working conditions achieved in the Nokia unit in Manaus," Vuorenmaa concluded. Instead of leaps and bounds in the industrial relations, he expects steady progress in small steps.

What is a fair share?

"Human rights and trade union rights go hand in hand," notes Helsingin Sanomat in its leader column commentary on the study of Nokia’s employer policy in Manaus. "As a counterweight to deregulated flows of capital and goods, greater attention must be paid to employee rights and to the duty of enterprises towards their surroundings," the leader writer continues.

The study outlines in concrete terms how Nokia employees in Manaus benefit from the investment and operations of multinationals in the Duty Free Zone. There is also no doubt that the economic, social and other impacts of Nokia in the surrounding region is a positive one.

However the material inevitably raises the question of whether the employees and communities in Manaus get a fair share of Nokia’s profits, whether an unfairly large proportion goes to shareholders and/or the measurable option programmes that have greatly benefited a few thousand employees working in leading or other key positions.

The purpose of the study is not to take a partisan stand or even to debate these issues, but to offer material objectively describing the working conditions in the Nokia unit in Manaus. This means that publishing the study is not an end in itself, but instead provides an important boost for the essential debate on the meaning of a responsible employer policy. This question has much wider implications than merely paying better wages than most of the other enterprises in the region, providing non-mandatory social benefits and pursuing a sympathetic community programme.

- - - -

*Nokia do Brasil Tecnologia Ltda, social and labor conduct, executive summary, by Social Observatory, July 2002

**Union of Salaried Employees TU
  Union of Professional Engineers in Finland