Note #2 – February 2005

The Moldovan Business’ Social Responsibility
by Mariana Argint

Moldovan business community has been only forming: it is 15 years old – a juvenile age. And, despite the fact that private sector dominates the economy (70% of GDP and 93% of all economic units in 2004), Moldovan business has not become fully established yet as regards either its relations with the government, or with the population, including political parties, trade unions and civil society institutes. 

There is, though, the trilateral Commission “Government – patronage – trade unions”, associations of commodity producers, small business associations, etc. There are “The Best Businessman” and “The Best Taxpayer” awards, but the initiative and leadership in these actions belongs to the authorities. That is why, maybe, the country’s business environment is far from comfortable, and the Government has been constantly declaring its aspiration to change the situation for the better: since the mid-90’s it issued 3 (!) state programmes on small and medium business support, decided to simplify the registration of economic units, reduce number of controls, curtail tax burden and curb corruption. 

These efforts have yielded no success yet, and that is why the EU-Moldova Action Plan identified as one of its reference points: “Creation of a business environment corresponding to the society’s needs”. The Government alone cannot perform this task. And thus, acknowledging the fact that the private sector has become the Moldovan economy’s driving force de facto, the society has a right to address the business’ social responsibility. 

One should judge on a company’s (or a businessman’s) dignity and prosperity not only based on production showing (as now, when awarding the “Businessman of the Year” title), but on their moral principles: labor standards compliance, ecologically-compatible technologies, anti-corruption, as well as charity and sponsorship. Not for political parties and state bodies, but rather for the population in such areas as education, healthcare and youth protection. 

Ethics of the Moldovan business is only in the making. Ethics, honest business during “the transition to the capitalism” are considered by many entrepreneurs to be something secondary, devoid of real sense, as a sign of weakness and failure. That is why, maybe, no less than 1/3 of businesses is in the shadow economy and only 6.2% out of 400 thou registered enterprises present activity reports to the Department of Statistics and Sociology. Bribes are a usual means to overcome “lack of attention” of state bodies towards the business. Penalties have become a planned (!) income item of the state budget: more than MDL 80 million in the budget for 2005, i.e. the same amount that the NBM is expected to transfer to the budget from its revenues. 

The Moldovan business neither showed much enthusiasm for the proposal of UNDP-Moldova (November 2004) to join the UNO’s worldwide action, “Global Compact”, whose goal is to link economic growth with human development. Economic units (companies, enterprises, etc.) that declare about joining the Global Compact undertake to observe 10 principles of corporate social responsibility: in human rights, labor conditions and remuneration, anti-corruption and ecology.

By Signing on the Global Compact, Business Commits to: 

Human rights:
Principle 1: Businesses should support and respect the protection of international human rights within their sphere of influence; and
Principle 2: make sure they are not complicit in human rights abuses. 

Labor Standards:
Principle 3: Businesses should uphold the freedom of association and the effective recognition of the right to collective bargaining;
Principle 4: the elimination of all forms of forced and compulsory labor;
Principle 5: the effective abolition of child labor; and
Principle 6: the elimination of discrimination in respect of employment and occupation. 

Environment:
Principle 7: Businesses should support a precautionary approach to environmental challenges;
Principle 8: undertake initiatives to promote greater environmental responsibility; and
Principle 9: encourage the development and diffusion of environmentally friendly technologies. 

Anti-corruption:
Principle 10: Businesses should work against corruption in all its forms, including extortion and bribery.

For the time being, it was mainly foreign companies working in the country (Union Fenosa, Voxtel, QBE ASITO) that responded to the call of UNDP-Moldova. In the meantime, companies from most countries of the world have already joined the Global Compact. The UN intends to evaluate results of its initiative in June 2005. 

The Moldovan business is still lost in thought. And it seems that the population does not even expect a business “with a humane face” to appear. In the conditions when the society is polarized into the “new rich” and the “new poor”, many associate the image of an entrepreneur with cynicism, deceit, disregard of plain people’s needs and social justice. And it is harmful for a country, whose Constitution (1994) proclaims creation of a socially-oriented market economy. 

The Republic of Moldova is now getting out of the transformation crisis and “returning” to Europe. And if so, the necessity of political culture, ethics of business and civil society institutes becomes an axiom. Since 1990 the Moldovan business has already accumulated experience of egoistical development. There appeared a segment of stably working companies and enterprises within the national economy – not only in banking or services, but in industry, agro-business, construction, transportation and telecommunications as well.

The next step is required – towards social responsibility of the business and its self-organization into stable institutionalized forms, such as associations of socially responsible business, academies of business culture, clubs of corporate sponsors in Europe, or Federal center of the business’ social responsibility in Russia.