A guard check-point on an IOI estate. In 2014, Finnwatch criticised IOI for restricting its workers’ freedom of movement.


A Finnwatch report on the responsibility of palm oil published in September 2014 has resulted in measures that will improve working conditions at IOI Group-owned estates. IOI is a palm oil supplier for Neste Oil and Paulig. In a newly published follow-up report, Finnwatch praises already implemented measures, but adds that these alone will not be enough.

“As a result of Finnwatch’s report, the IOI Group has discontinued the use of its probationary period for new workers, which Finnwatch strongly criticised. As a result, the starting salary of new migrant workers will rise by approximately 30 per cent,” Finnwatch Executive Director Sonja Vartiala explains.

The IOI Group has also removed a clause from its employment contracts that limited its employees’ right to strike and has provided employment contracts to migrant workers in their native language.

“This change is important, as previously, migrant workers did not understand their terms of employment,” Ms Vartiala notes.

Finnwatch feels that the IOI must continue to improve the working conditions of its migrant workers by ensuring, for example, that workers are always paid at least the minimum wage for eight hour workdays. The IOI must also take steps to influence the activities of recruitment agencies in the countries where the agencies recruit migrant workers.

“The IOI is responsible for ensuring that migrant workers fully understand the kind of work that is being offered and that they do not need to pay recruitment fees in order to gain employment. The company must bear all costs for recruitment, and cannot transfer these costs to migrants, who are already very vulnerable,” Ms Vartiala states.

International palm oil certification schemes RSPO and ISCC do not receive praise in the newly published follow-up report. Although, the certification schemes have observed salaries that are below the minimum wage and shoddy recruitment practices at estates, they have publically stated that the IOI acts in accordance with legislation and the criteria of the certification schemes.

“The RSPO and ISCC still require extensive development with regard to their mechanisms for monitoring labour rights. This is important piece of knowledge for Finnish companies that purchase palm oil, as they have basically out-sourced monitoring of working conditions to these certification schemes.”

Finnwatch is presently awaiting Neste Oil’s action plan for the observation of labour rights in the company’s supplier chain and will continue to monitor working conditions at plantations. Neste Oil, in which the Finnish state holds majority ownership, is a significant actor in the global palm oil market, as it purchases 1-2 per cent of all the palm oil produced world-wide.

“We also want to see the Finnish government implement procedures. Government has promised that reporting of human rights risks would in future be mandatory for government-owned companies. However, we have yet to see anything happen in practice,” Ms Vartiala reminds.

The follow-up report by Finnwatch can be downloaded here >>>

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