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Change incentives, change the outcomes: three ideas to stop the global race to the bottom

Companies have little reason to prioritise workers’ rights over profit. It’s up to us to change that.

Ranjit Bhaskar for Al Jazeera English/Flickr. (cc by-sa)

On 8 October 2018 we published the BTS Round Table on the Future of Work, in which 12 experts explain recent changes to the nature of work and offer new ideas in labour policy, organising, and activism. This piece has been written in response.

When I co-founded the fair labour company FSI Worldwide in 2006, my colleagues and I thought that we were in the vanguard of an ethical business revolution. The illegal and unethical practices of recruiters were well known by then, and we sensed that the tide was turning on the issue of workers’ rights in global supply chains. It seemed there was a growing willingness and ability on the part of governments, businesses, and consumers to properly invest in better protections for vulnerable workers.

We were wrong.

Global corporate demand for our services, which seek to provide migrant workers to employers willing to offer safe and protected employment, remains a tiny fraction of the overall market. Only a handful of multinational companies have been prepared to elevate ethical practice over rhetoric and invest in the services provided by companies like ours.

While we applaud the companies that have invested, it is troubling that 12 years after our founding we are still offering plaudits to businesses simply for acting within the bounds of legal and ethical compliance. Yet this remains the case, in large part because those of us working for greater corporate responsibility and accountability have little in the way of leverage. We are effectively reduced to appealing to the better angels of corporate nature. While some companies engage, too many others conclude that the financial costs of cleaning up their supply chains outweigh any potential benefits in tackling the abuse of workers.

There are no easy or quick fixes to this problem. Progress will only come when we have fully appreciated the scale of the challenge and identified effective levers for change. There have been many thoughtful and helpful responses to this round table so far, most of which I agree with wholeheartedly. The problems we face are multi-dimensional and require several layers of intervention. In my view three potential levers of change stand out.

  1. Concerted political action: Three decades of neo-liberal deregulation have resulted in a transnational race to the bottom on consumer price. Worker welfare and environmental protections have been sacrificed in the cause of higher shareholder returns. Frameworks like the United Nations Guiding Principles on Business and Human Rights have attempted to arrest this fall, but national politicians generally remain either unable to meaningfully restrain corporate activity or choose not to do so. This needs to change, but no one country can do it in isolation. We need to see serious, multilateral engagement between governments in the Global North and the Global South to produce and robustly enforce common standards of protection for workers and the environment.
  2. Smarter laws, better enforced: There has been some progress – notably in the United States, the United Kingdom, and France – on transnational corporate accountability legislation. However, these laws have little power to enforce standards, and the transparency provisions in the UK Modern Slavery Act 2015 are especially light-touch. We need to see more ‘failure to prevent’ provisions that penalise inaction and shift the evidential burden onto companies. There is precedent for this in Section 7 of the UK Bribery Act 2010, which states that a company is automatically liable for any bribery discovered in their operation, unless they can prove that they had in place reasonable measures to prevent such bribery. This could be applied to cases of modern slavery and doing so would compel companies to take much greater responsibility for the protection of workers in their operations.
  3. Nudging better behaviour: The procurement practices of very large buyers can reshape how suppliers are treated and how they, in turn, recruit and manage their workers. Since governments are frequently very large buyers, they have the capacity, currently under-utilised, to shift markets in ways that prioritise ‘best value’ outcomes that incorporate human rights concerns over lowest cost bids. One way this could work is via a points system: demonstrably ethical companies are rewarded with better payment terms and procurement selection priority when it comes to government contracts. Companies who consistently fail to demonstrate proper compliance would be downgraded or blacklisted from government contracts. A standardised system would need to be created and effective monitoring imposed, but these procedural challenges can be overcome with sufficient, if currently lacking, political will.

Ultimately, we should not be facilitating competition on worker welfare. We need global minimum standards that are robustly enforced to create a level commercial playing field. This would allow ethically minded entrepreneurs to compete and would decrease the advantages currently accruing to companies engaged in a race to the bottom. This is a long way from the current system of deregulation, global corporate impunity, and fig-leaf attempts at reform. Yet it is possible if we are willing to disrupt entrenched, privileged, and powerful vested interests.

Round table on the future of work

About the author

James Sinclair is an English lawyer, academic researcher and social entrepreneur. He co-founded FSI Worldwide, a UN award winning ethical recruitment and management company, in 2006. He currently runs Ethical Innovations, a strategic advisory practice helping develop smart solutions to labour abuse problems. He is also writing a PhD thesis at King’s College London on the abuse of workers in government supply chains.


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