Statement at the end of visit to Georgia by the United Nations Working Group on Business and Human Rights

Georgian

Tbilisi, 12 April 2019

Introduction

In our capacity as members of the United Nations Working Group on Business and Human Rights, we have today ended our visit to Georgia (3 to 12 April 2019). We warmly thank the Government of Georgia for the invitation to conduct this visit and for its cooperation before and during the visit. We are also thankful to the UN Country Team for their support and assistance.

During our visit, we met with Government officials and agencies: Ministry of Foreign Affairs, Ministry of Internally displaced persons from occupied territories, Labour, Health and Social Affairs, including the Labour Conditions Inspection Department and the Labour and Employment Policy Department, Ministry of Economy and Sustainable Development, including the Technical and Construction Supervision Agency (TCSA) and Enterprise Georgia, Ministry of Environmental Protection and Agriculture of Georgia, the Georgian Government’sHuman Rights Secretariat, Ministry of Justice, and Ministry of Finance, including the Academy of Ministry of Finance. We also met representatives of the National Bank of Georgia, and Georgia Railways and Georgia Post.

We also met with officials from the office of Mayor of Tbilisi, the Acting Mayor of Chiatura, the office of the Government Administration of the Autonomous Republic of Adjara as well as of the Administration of the Governor of the Imereti region.

In addition, we met with representatives of civil society organizations in Tbilisi, Batumi and Kutaisi, business associations, members of the United Nations Global Compact Network Georgia, and individual business enterprises that made themselves available to share their experiences with the Working Group, including the “Nenskra Project”, Georgian Manganese, Adjara Group and Reach Metal Gold Group.

We express our gratitude to the many people from civil society and the business community with whom we were able to engage in an open and frank dialogue on current initiatives, opportunities and challenges in implementing the UN Guiding Principles on Business and Human Rights (UNGPs).

This end of mission statement outlines some initial observations from our visit. It will be followed by a full report with observations, conclusions and recommendations that will be presented to the Human Rights Council in June 2020.

General context

A central theme in our meetings with government officials, businesses, civil society organizations and community members was the legacy of a decade of deregulation, and the need for a new approach compatible with the Sustainable Development Goals (SDGs) and human rights protection.

The Georgia-EU Association Agreement, signed in June 2014, reflects the commitment to such new approach. Amongst other things, it includes a commitment to promote responsible business conduct in line with internationally recognised standards and guidelines such as the UNGPs (Article 231). This commitment is also reflected in the National Human Rights Strategy (2014-2020), the chapter on business and human rights in the Human Rights Action Plan for 2018-2020, and the 2018 National Baseline Study on Business and Human Rights, based on the three-pillar framework of the UNGPs.

Notwithstanding the new focus on finding a more sustainable development path, economic policy remains focused on improving the ease of doing business and attracting investment through tax incentives, such as in Free Industrial Zones and Free Tourism Zones. As we witnessed, a one-eyed focus on attracting investment risk undermining efforts to promote responsible business conduct, unless there is a robust legal framework in place to protect human rights.

Salient issues in specific sectors

In our meetings across the country, we explored in more detail several emblematic cases, which illustrate challenges faced and point to ways forward to promote and ensure business respect for human rights.

Construction sector

We learned that occupational safety and health in the construction and infrastructure sectors is one of the most challenging issues across the country and that a large number of injuries and fatal accidents occur in these sectors, particularly in Batumi and Tbilisi where construction is booming.

We learned that the Ministry of Labour currently has 40 labour inspectors and that they aim to have 80 inspectors by the end of 2019-2020. Moreover, the City Hall of Tbilisi has 60 inspectors who conduct unannounced visits to construction sites. Officials at the City Hall stressed the importance of stricter and more effective safety measures that focus on prevention. We hope that the new Labour Code which obligates companies to have a dedicated safety officer will help to strengthen their capacity to prevent and mitigate occupational safety and health related risks.

We learned that in cases of accidents on construction sites, companies generally blamed employees for being negligent, and that many workers did not have insurance, which is likely to contribute to an underreporting of accidents and injuries. Although we recognize the need to increase workers’ safety awareness, the primary responsibility to ensure a safe working environment rests with the employer.

Hydropower sector

As part of its policy to secure energy independence, the Government has promoted the investment in hydropower plants. Georgia currently has a total of 84 hydropower plants (with a rated capacity of 3,227 MW), while 24 hydropower projects (rated capacity of 1,235 MW) are at the construction and licensing stage, and another 67 projects (rated capacity of 1,314 MW) are at the technical-economic research stage.

The 2018 National Baseline Study on Business and Human Rights noted the problem of deficient assessments of the impacts of hydropower projects on the environment and local communities. We also observed the shortcomings in past environmental and social impact assessments, and it remains to be seen if the new Environmental Assessment Code, that entered into force on 1 January 2018, will remedy this situation.

One of the major hydropower projects which is being contested by local communities and civil society organizations is the planned construction of the Nenskra power plant (280 MW) and a 125 meter high dam in the Upper Svaneti region. We met different stakeholders, including the promoters of the project, JSC Nenskra Hydro, a joint venture of Korea Water Resources Corporation and JSC Partnership Fund (a Georgian Government agency).

In October 2015, the Ministry of Environment approved the project based on an environmental and social impact assessment carried out by the company. However, the international funders, including the European Bank for Reconstruction and Development (EBRD), identified several gaps and set a number of conditions for their approval of funding. This forced the company to carry out supplementary studies, including a more robust social impact assessment, which were completed in 2017. Changes were also made to the project to reduce the impact on pasture land. According to the company, they had consulted the entire valley through door-to-door meetings.

Yet, despite the additional measures taken to comply with the standards of international financial institutions, the project remains contested. Like several other hydropower projects that we learned about, there was a perception that consultations with communities were conducted as a check box exercise. Given that several hydropower projects are being developed at the same time, there is also a legitimate concern that inadequate attention is being paid to the cumulative negative impact of multiple projects on the environment.

Mining sector

In Chiatura, a mining town of around 20,000 inhabitants, we met with trade union representatives, local community members, the acting Mayor, and representatives of the company Georgian Manganese (GM) to learn more about challenges faced in the mining sector.

Manganese has been extracted in Chiatura for the past more than 100 years, and the mining operations currently provide employment for some 3,000 workers. In 2006, GM – a subsidiary of US-based Georgian American Alloys Inc – obtained a 40-year licence to extract manganese in Chiatura, taking over the assets of JCS Chiatumangaese, which had been declared bankrupt in 2005. In Chiatura, another 43 smaller companies extract manganese as sub-contractors under GM’s licence. GM also operates a ferroalloy plant in Zestafoni, and a hydroelectric power plant that supplies power to all of the company’s operations.

We witnessed first-hand how some of the sludge from manganese extraction is currently being discharged directly into the river. We heard from local communities about the impact of this practice on safe drinking water, farming livestock grazing and landslides. Residents of Chiatura also complained about air pollution caused by the mining operations and recurrent practice of trucks transporting manganese ore without adequate cover.

To manage environmental pollution the court of Tbilisi, on the request of the Ministry of Environment, in May 2017, appointed a special manager for period of three years to monitor and improve the environmental situation. However, there is a perception that the local and national authorities are not doing enough to remedy the situation.

We learned that since 2012, GM has been done its own environmental audits every two years, but that the results were only shared with GM’s shareholders, lenders and banks. We express concern regarding the lack of transparency and of access to information on the results of such audit.

We learned from GM representatives that the company is taking steps to stop discharging sludge into the river through a new enrichment plan. While we welcome this development, we are concerned that currently there are no plans for safe management of waste materials resulting from the operations of GM’s contractors. GM representatives did not consider that they had any responsibility to address the polluting practices of its sub-contractors. However, this position runs counter to the UNGPs, which clarifies the responsibility of companies to seek to prevent or mitigate adverse impacts that are linked to their operations or products by their business relationships.

Mitigating environmental harm caused by decades of unsustainable mining practices and abandoned mining is also a challenge in other parts of Georgia, as recognized in the 2017-2021 National Environmental Action Programme. We urge the Government and all relevant companies to work together to urgently address the current massive environmental pollution and transition into sustainable mining practices.

Another major challenge in Chiatura and in other mines in Georgia is the need to improve workers’ health and safety and ensure decent working conditions. While GM representatives did not deny that current working conditions in the old mines were hazardous, they explained that conditions have improved in the new mining sites. We were informed that GM employees receive salaries that are above the industry average as well as free transport and meals, and that workers as well as their families also have free medical insurance.

However, we were concerned to learn about the practice in the new mines of organizing miners into 15 days of 12-hour shifts, followed by 15 days of leave. During the 15 on-work days, mine workers work 12 hours in the mine and are then taken to a dormitory where they are provided free accommodation and meals. Workers must stay in the dormitory to rest and need to seek permission of a supervisor to go outside. Such practice is not consistent with international labour standards and the relevant EU Directive, and we also question whether this is line with the Georgian Labour Code.

Tourism

The promotion of tourism and the development of new tourism infrastructures are among the Government’s top priorities, as witnessed in a range of infrastructural and tourism investment projects, especially in Batumi. Implementation of tourism-related infrastructural projects requires land and we note that currently the legislative and institutional framework in the area of involuntary resettlement is fragmented, which raise the risk of human rights abuses.

Environmental and social impact assessments

A recurring challenge we witnessed relates to the current negative impact of large-scale projects, such as hydropower and mining, on the environment.
The new Environmental Impact Assessment Code expands the scope of procedures in relation environmental impact assessment, strategic environmental impact assessment, transboundary environmental impact assessment, and public participation in decision-making. Under the new regime, activities that may have significant effects on the environment, human life and/or health are subject to mandatory screening and scoping procedure that aim to prevent risks and improve the planning of mitigation measures. The same provisions apply to modifications introduced to any strategic aspects of already approved business activities.

However, we are concerned that the level of implementation and oversight of the regulations remain weak. There also seems to be a lack of institutionalized mechanisms to ensure coordination across relevant ministries as well as regional and local authorities on oversight activities.

We also received information regarding violation of the right of affected individuals and communities to participate meaningfully in environmental decision-making processes. We heard of examples where stakeholders had not been able to participate from an early stage, when all options were still open and no irreversible decision had been made prior to the commencement of a given project.

Another cause for concern relates to on-going assessments of environmental impacts of business operations that were authorized before the new Code entered into force on 1 January 2018.

The gaps in the legislation regarding proper and safe management of waste generated from mining is also a source of concern and we witnessed how mining waste poses a high risk to the environment and human health and requires urgent and stricter regulation.

Labour rights

Occupational safety and health

Occupational safety and health of workers is one of the most serious human rights concerns in Georgia, resulting from a labour market that was almost completely deregulated until 2015. The lack of a comprehensive regulatory framework on occupational safety and health combined with a general lack of awareness among workers about their rights has resulted in alarming number of accidents across sectors and throughout the country. Between 2010 and 2018, 1183 workers were injured and 418 died. We were also told about the practice of hiring irregular works in the construction sector.

These concerns have rightly led the Government to undertake a substantial revision of the regulatory framework in the area of occupational safety and health, with a focus on preventive measures.

Labour inspections

We learned that after having been abolished for almost 10 years, a labour inspectorate was reintroduced in 2015 under the Minister of Labour, Health and Social Affairs. The Department had a limited mandate, lacked resources and had no authority to conduct unannounced inspections, except for alleged cases of human trafficking and forced labour. The new Law on Labour Safety was introduced in March 2018 to reinforce the mandate of labour inspectors by conferring the power of sanctions such as warnings, setting penalties, as well as suspending business operations. However, the current law remains limited in scope as it only covers sectors that are identified as especially hard, risky and hazardous. Also, labour inspectors need to seek a court order to conduct inspections, except in cases of annually planned inspections and accident investigations. It was therefore a welcome development that in February 2019, a new Organic Law on Occupational Safety has given the labour inspectorate the authority to inspect all sectors, both public and private, without a court order and prior notice. The amendments will enter into force on 1 September 2019, and subsequently the labour inspectorate will also become a separate legal entity.

However, the Working Group is concerned that the regulatory framework will remain inadequate after September 2019, as the new law will not cover the whole spectrum of labour rights. From 2020, mandatory inspections covering all labour rights will be implemented for risky, heavy, hazardous and harmful activities. From 2022, it is expected that inspectors would get a mandate to cover all sectors and the full range of labour rights, as per an amendment presented to the Parliament this year.

Concerns were also expressed by different stakeholders regarding the lack of adequate resources, which will prevent the labour inspectors from carrying out their mandate effectively.

Minimum wage and working hours

In 2013, significant amendments were made to the Labour Code to align national legislation on labour rights with international standards. However, monitoring and implementation of such regulations remain a challenge in the absence of an effective labour inspection mechanism that has the mandate to cover all labour rights.

The minimum wage per month is 20 GEL (7 USD) in the private sector and 135 GEL (50 USD) in the public sector, although the Ministry of Labour noted that the minimum wages are much higher in practice. However, we are concerned that the absence of an adequate minimum wage is being touted to attract foreign investment. We encourage the Government to establish a periodically reviewed minimum wage sufficient to ensure a decent living for workers.

Freedom of association and trade unions

The legal framework of Georgia protects the right to freedom of association, including the right to create and join trade unions. The unions have the right to develop their own charters, establish management bodies, elect representatives and administer their activities. The law prohibits discrimination due to membership or activities in any association.

However, the trade unions representatives informed us that trade unions are often unduly influenced by employers, and that some companies may enrol automatically their employees to a specific trade union when they sign the employment contract. We are concerned that this practice threatens the effectiveness of the vital role played by independent trade unions in protecting workers’ rights.

Persons with disabilities

We acknowledge the progresses made and concrete steps taken by the Government to domesticate the Convention on the Rights of Persons with Disabilities (CRPD). The 2014 Law on the Elimination of All Forms of Discrimination prohibits discrimination on several grounds, including disability. However, in practice, persons with disabilities continue to face discrimination in all spheres of life, including integrating them into the labour market. They also face difficulty in accessing educational institutions and other facilities including public transport.

A system in which the Government provides 50% subsidized salaries for an initial period of 4 months for persons with disabilities employed in the private sector with the requirement for the company to extend the contract for a minimum of another 6 months seems to represent a step in the right direction. However, we learned from civil society organizations and persons with disabilities that this measure is not sufficient, as the practice shows low level of retention at the end of one year because of the discrimination they face in the work place.

We encourage the Government to tackle the root causes of discrimination against persons with disabilities, such as stigma around their ability to work, and introduce a range of incentives for companies to hire and retain persons with disabilities.

Migrant workers

We are concerned that the situation of migrant workers, who are more vulnerable to abuse, is not specifically regulated. The Working Group was informed that in some cases migrant workers, employed by foreign companies involved in major infrastructure projects, live at the workplace in bad living conditions. We are concerned that the absence of adequate legal protection exposes migrant workers to abuse. The lack of official statistics on migrant workers is also a cause for concern.

Gender aspects of business and human rights

The impact of business-related abuses is experienced by men, women and non-binary persons differently. The Working Group learned about several types of discrimination faced by women in Georgia. Women are under-represented in the workforce and paid less than men. Unpaid work at home, gender-segregated jobs, sexual harassment and gender-based violence (including domestic violence) also operate as significant barriers for women to avail economic opportunities. Moreover, as many women might not own immovable properties, they often find it difficult to obtain loans from banks to start a new business.

It is a matter of concern for the Working Group to note that women working in the private sector are not entitled to any “paid” maternity leave as a matter of right, apart from GEL 1,000 offered by the Government. We were also told about how the reproductive rights of women are curtailed by internal policies of certain companies that discourage pregnancy in the first 30 months of employment. The Working Group understands that the Parliament is currently considering a proposal to extend the paid maternity leave to the private sector and also to provide for paternity leave. This opportunity should be used by the Government to not only require all companies to provide for paid maternity leave as per the ILO standards as well as emerging best practises in other countries, but also move towards the idea of “parental leave” so as to signal child bearing as a shared responsibility of both parents.

The Working Group notes with appreciation that the Government of Georgia has been taking several steps to achieve gender equality in recent years. The Government, for example, enacted a law in 2014 on the Elimination of All Forms of Discrimination. The Government provides for shelter for women facing violence. The Parliament’s Gender Equality Council is leading the way by amending existing legislation or enacting new laws to empower women. A proposed amendment to extend the power of the Public Defender to make binding recommendations to companies for discrimination is a case in point.

During the visit, we also became aware of discrimination against LGBTI persons. The Government of Georgia should promote the LGBTI Standards of Conduct for Business and take proactive steps to eliminate discrimination based on sexual orientation or gender identity in both public and private sectors.

Access to effective remedies

Judicial mechanisms

Courts are the bedrock of an effective mechanism of remedies in cases of business-related human rights abuses. The Constitution of Georgia establishes a hierarchy of independent courts with the Constitutional Court of Georgia and the Supreme Court of Georgia at the apex level. The Working Group, however, learned that judicial remedies in Georgia are often not effective in practice for several reasons, e.g., low awareness about rights, high cost of litigation, complex corporate structures, delay in deciding cases, and practical obstacles in enforcing court orders. We encourage the Government to conduct an internal review of the effectiveness of judicial remedies in business-related human rights abuses and make systematic reforms in line with recommendations made by the OHCHR’s Accountability and Remedy Project.

We understand that the Ministry of Justice is drafting a mediation law to resolve disputes with companies. Although this law is a step in the right direction, it will be critical to ensure the mediation process does not exclude access to judicial remedies.

The Public Defender

The Public Defender of Georgia is a constitutional institution to monitor the protection of human rights and freedoms as well as deal with discrimination and disability complaints. It can take up cases of alleged human rights violations on its own and can also submit amicus curie to courts in administrative and criminal matters.

The Working Group learned about the active role that the Defender has played in the last few years in the business and human rights field. For instance, it played an active role in conducting the National Baseline Study on Business and Human Rights and participated in the drafting of the business and human rights chapter of the Human Rights Action Plan.

While the Public Defender’s recommendations concerning a finding on discrimination are not binding, it can approach courts to implement a recommendation in relation to public authorities, but not regarding private actors. The Working Group considers this to be a serious limitation because it undermines the potential of the Public Defender in operating as an effective non-judicial mechanism in business-related human rights abuses. We are, however, encouraged by the fact that the Georgian Parliament is considering an amendment to extend the powers of the Public Defender to private companies.

Operational-level grievance mechanisms

With a few exceptions, such as the Nenskra hydro project, we found little evidence of business enterprises in Georgia establishing or operating operational-level grievance mechanisms to provide remedies to the affected individuals and communities. The Government, the UN Global Compact Georgia and business associations such as the Georgian Chamber of Commerce and Industry should raise awareness about the importance of establishing effective grievance mechanisms to address concerns and adverse human rights impacts at an early stage. State-owned enterprises should lead by example in this area.

The State as an economic actor

As underlined in the UNGPs (Principle 4), States should take “additional” steps to protect against human rights abuses by business enterprises that are owned or controlled by the State. State-owned enterprises (SOEs) such as Georgian Railways and Georgian Post are amongst the largest employers in the country, and we encourage the Government to set out a clear expectation that SOEs commit to respecting human rights in line with the UNGPs. In this regard, we refer to the guidance provided by the Working Group to ensure that SOEs lead by example (A/HRC/32/45).

We are also encouraging the Government to integrate the promotion of responsible business conduct into its diplomatic trade missions and other forms of economic diplomacy, such as export credits and trade missions. While the Government has yet to take such steps, we encourage the Government to seek inspiration from the emerging practices described in our report on how economic diplomacy should be used to promote responsible business conduct (A/HRC/38/48).

Public procurement offers another important means for the Government to incentivize responsible business conduct. Currently there are no mechanisms to set out a requirement for contractors to respect human rights. We encourage the Government and the State Procurement Agency to integrate responsible business conduct criteria in the bidding process for public procurement. Public procurement can also serve as an effective tool for an economic empowerment of women and persons with disabilities.

The Government should also make sure that the FIZs that currently operate in Poti, Kutaisi, Kulevi and Tblisi, as well as a Free Tourism Zone in Batumi, are managed in a way that is consistent with the UNGPs. These zones offer companies an indefinite exemption from income tax and simplified rules for the issuance of a construction permit. While we were assured that all human rights and labour rights fully apply in FIZs, we did not hear of any efforts to exercise human rights due diligence in the efforts to attract investment. Therefore, we see a risk that development projects in FIZs could be rushed through without adequate assessment of their adverse social and environmental impacts.

The business and human rights chapter in the Human Rights Action Plan

We welcome the steps taken by the Government to raise awareness about the business and human rights agenda, including by having a chapter on business and human rights in the Human Rights Action Plan for 2018-2020. This Plan sets out actions to be carried out by different public authorities to implement the 2014-2020 Georgian National Human Rights Strategy. Implementation of the Action Plan is monitored by an inter-ministerial and multi-stakeholder Human Rights Council chaired by the Prime Minister. The Human Rights Secretariat, under the Administration of the Government, is responsible for inter-agency coordination and monitoring the execution of the Plan.

We learned that a national baseline study on business and human rights was conducted jointly by the Civil Development Agency, the Public Defender and the Human Rights Secretariat. This baseline study informed the work of an informal inter-ministerial working group that drafted a specific chapter on business and human rights.

While welcome these efforts, a stronger push for implementation is needed. From our meetings with different ministries, it was clear that they had yet to take concrete actions to achieve the objectives and targets assigned to them under the business and human rights chapter. We hope that the planned establishment of a formal inter-ministerial working group will accelerate the pace of action. We encourage the Government to include representatives of civil society, business and trade unions in the proposed working group.

Another concern is that the business and human rights chapter in the Action Plan was adopted without assignment of adequate funds for its implementation. Moreover, to spur action and policy coherence, the Human Rights Secretariat and Human Rights Council will need to assume a more proactive role in coordination and monitoring implementation of the business and human rights chapter. We also learned that the Human Rights Council had not met since 1 April 2015, though it should meet every six months. Holding regular meetings will be critical to allow the Council to carry out its monitoring function.

Moreover, the Working Group believes that the content of the chapter on business and human rights should be improved post-2020 to capture fully all recommendations of the baseline assessment as well as our June 2020 report to UN Human Rights Council. The Government should also consider developing a comprehensive National Action Plan on Business and Human Rights as per the guidance provided by the Working Group. Such a plan should cover all three pillars of the UNGPs and deal with adverse human rights impacts of Georgian businesses operating abroad. Finally, it will be critical to ensure that “business and human rights” remains an integral part of the next national Human Rights Strategy, due to be adopted in 2020.

Policy coherence

We learned about a number of inter-ministerial, multi-stakeholder coordination bodies under the Georgian Human Rights Council and the Administration of the Government to coordinate action on the SDGs, the rights of the child, and on gender equality. The fact that some of these coordination bodies allow for the participation of civil society, business associations and academia is positive, something that could be expanded in future.

These coordination bodies have the potential to strengthen coordination across critical human rights policy areas, all of which are closely related to the business and human rights agenda. We would encourage that there should be a greater interaction among these coordination bodies operating both within the Parliament and the Administration of the Government.

Closing

From meetings held across the country, it was clear that most companies, including small and medium-sized enterprises, were not familiar with the concept of responsible business conduct and were unaware of their independent responsibility to respect human rights under the UNGPs. In this regard, we welcome the commitment of the Government and business associations to raise awareness about the UNGPs. The project to train a number of trainers by the end of 2019 to raise awareness about responsible business conduct is noteworthy. This project is supported by the ILO in cooperation with the Academy of the Ministry of Finance and involves the Human Rights Secretariat, Georgian Employers Association, and the Business Ombudsman Office. Representatives from these organizations will participate in a training of trainers programme on responsible business conduct, including the UNGPs. Trainers will be certified for two years, and be obliged to conduct trainings for at least four groups of companies that operates in all parts of Georgia.

We hope that there will be a sustained effort to promote responsible business conduct with a fuller integration of the UNGPs in the next national human rights strategy of Georgia which is due to be adopted in 2020.