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The ILO report on ‘decent work in global supply chains’ - much ado about nothing?

The background report for the International Labour Conference 2016 raises important questions about supply chain responsibility, but does not provide enough answers about the way forward.

Aaron Santos for the ILO/Flickr. (CC 2.0 by-nc-nd)

Given that labour conditions in global supply chains have been in the public spotlight for over two decades, it is no surprise that the topic ‘decent work in global supply chains’ is on the agenda of this month’s 105th session of the International Labour Conference (ILC). However, it can be argued that the accompanying report is a missed opportunity. Whilst it is a thorough assessment of the status quo regarding labour rights and working conditions in global supply chains, it does little to move the debate forward.

It is a well-known fact that western companies at the top of the global supply chain tree (called ‘lead firms’) not only outsource their production through global supply chains, but also their potential legal liability. They therefore reduce both their costs and their responsibilities.

Global supply chains increasingly consist of complex networks of different tiers of suppliers and sub-suppliers who are only linked with each other through contracts. The structure of these chains poses major legal challenges for holding the lead firms (i.e. the western transnational corporations) legally accountable for labour violations that occur lower down and throughout their supply chains.

Often these violations occur at the bottom of the chain, at factories of sub-contractors in countries with weak laws and/or weak law enforcement mechanisms. The reason why the western transnational corporations operate with impunity is the existence of ‘governance gaps’, as the report rightly acknowledges. In particular, the combination of the separate legal personality of companies and the territorial nature of law makes it difficult to translate the moral responsibility of western transnational companies into legal liability.

Filling the gaps

The ILC discussions about supply chain responsibility need to focus on how these gaps can be filled in order to move the debate and the legislation forward. But this background report really only describes the status quo. Following a detailed outline of the structures, uses, and functioning of global supply chains (chapter two), it assesses the ways in which lower-level actors in global supply chains can benefit from their participation in the chain (through a process called ‘upgrading’ –chapter three). It then reviews the existing regulatory approaches towards working conditions throughout global supply chains in chapter four.

Here, the discussion of private governance and private compliance initiatives does correctly identify many existing problems, such as the lack of accountability, flaws in monitoring systems, patchy coverage, and dependence on the lead firm’s commitment. Unfortunately, however, the subsequent discussion on ‘closing the governance gap’ only describes three (weak) examples of how improved governance could be applied to promoting decent work. This is a major missed opportunity. The report does not sufficiently discuss how existing governance gaps could be closed in new ways, nor does it explain how an international labour standard for global supply chains could contribute towards closing governance gaps.

The fact remains that in the absence of a (desirable) binding international human rights framework on corporations, and in the presence of weak laws and/or law enforcement mechanisms in the host states (i.e. the countries where the labour rights violations at supplier factories occur), the world has to begin designing effective mechanisms to disrupt the status quo. The absence of these at a global level is what has now led some western countries (i.e. the countries where the transnational corporations – the lead firms – are based) to pass legislation that affects supply chain governance. But these will only ever be a ‘second best’ solution.

In summary, then, the report provides for interesting reading about the functioning and structure of global supply chains and existing governance approaches. However, whilst it identifies the governance gaps, it does little to move the debate forward. A discussion of human rights due diligence imposed on transnational corporations (currently debated in France) as well as the possible contribution of an international labour convention on supply chains is missing. Therefore, the danger is that rather than kick-starting a genuine debate, the report presented at ILC 2016 will see this crucial global discussion stillborn.

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