Global Supply Chains: Time for a Convention on Decent Work

Over the next two weeks in Geneva, the International Labour Organization (ILO) will dedicate part of its annual conference to an important discussion about how to promote decent working conditions in global supply chains.

This discussion is long overdue!

The tragic collapse of the Rana Plaza building in 2013, repeated deadly factory fires in Pakistan and Bangladesh, and the shocking discovery of modern day slavery on Thai fishing vessels are only some of the examples of horrible working conditions that have come to public attention.

The ILO debate should start with a clear understanding of what hasn’t worked. Put simply, decades of voluntary corporate social responsibility initiatives have failed to deliver living wages, safe factories, or effective protections for workers’ right to organize and bargain collectively. In the last ten years alone, more than 1,800 workers have died and thousands more have been injured as a result of catastrophic fires and factory collapses that all took place in facilities labeled “safe” by private social audits performed for major multinational apparel brands. The current regime of voluntary and confidential supply chain monitoring should be replaced with initiatives, like the Bangladesh Accord on Fire and Building Safety, where workers and their unions have a direct role in managing, implementing, and enforcing the relevant standards. Additionally, the Accord’s transparent inspection reports combined with buyers’ time-bound commitments to ensure safety reforms make it possible to hold brands legally accountable.

One issue that ILO delegates should discuss is how multinationals’ business practices, including rock-bottom prices for suppliers and fast production schedules, inevitably create labor rights violations on the factory floor. Large multinationals dominate global supply chains, using their considerable market leverage to demand low prices from their overseas suppliers. Desperate to maintain the global brands’ business, suppliers often squeeze workers and cut corners on safety to stay profitable. Rather than invest in ineffective audits, companies should pay prices to their suppliers sufficient to support living wages and adequate health and safety protections, as well as taxes that support the government regulators and inspectors who have the responsibility to protect workers’ rights.

Business analysts argue that regulatory reforms should be evaluated against the risk that some employers may be put out of business, causing a loss in jobs. But this analysis fails to consider that replacing many bad employers, each trying to underbid the others, with fewer good employers with better paid workers will in turn generate income and jobs as the workers themselves become able to invest in their communities. Taking such a high road approach to development is nearly impossible, however, when global buyers continually seek out countries with lower production costs.

The UN Guiding Principles on Business and Human Rights (UNGPs) provide useful guidance on how to make a shift in global supply chain operations through the “protect, respect, remedy” framework. The Principles advance the debate by basing corporate responsibility on impacts that business activities already have, rather than on whatever corporations may choose to address with voluntary codes. They also advance the notion that enterprises are responsible not only for human rights violations in their own operations, but for all violations connected to their operations by a business relationship with another entity. They lay out a clear model of the responsibility of business to remedy human rights violations, and of governments to protect the rights of workers and their communities.

The UNGPs as they are currently conceptualized, however, risk simply creating a new generation of voluntary programs because they do not define minimum performance requirements or regulatory standards. Thus there is a pressing need for the ILO to develop a Convention on Decent Work in Global Supply Chains. Such a Convention should require member states to regulate the conduct of their multinational enterprises overseas and require mandatory due diligence to identify labor rights risks in supply chains. It should also create a permanent dispute settlement facility, housed at the ILO, where multinational corporations can be held accountable for breaches of existing standards, including the UN Guiding Principles on Business and Human Rights and the OECD Guidelines for Multinational Enterprises.

The fact that some multinational enterprises have already negotiated contractual commitments, such as the Bangladesh Accord, that include unions and other worker-led organizations in developing supply chain solutions shows that even global buyers have recognized that what has been tried so far has not worked. Now is the time to seize on this openness to change and to create a more uniform approach to ensuring workers’ rights in global supply chains, one that requires global brands and retailers to pay for the real cost of production of their goods and enables those who have the greatest stake in improving supply chain governance - the workers themselves - to enforce compliance.

Originally posted on Huffington Post.

Another version of this article, published by openDemocracy.