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Making supply chains work for workers? The 2016 International Labour Conference and beyond

Employers, worker’s organisations and politicians are gathering to discuss decent work in global supply chains. BTS launches three months of multimedia analysis asking how – if at all – we can guarantee it.

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

Chances are, you’re reading this on a laptop. If so, you’re sitting at the end of a long and winding global supply chain. The typical computer contains a memory chip from Malaysia, a battery from Indonesia, a screen from South Korea, RAM from Germany, and a hard drive made in Thailand. This all before it was assembled in China and then bought off a shelf in Buenos Aires, New York, or Vienna. The reality is that most products are now made by a global workforce fragmented across dozens of national boundaries, worksites, and employers.

Transnational retail and manufacturing companies like Apple, Walmart, Tesco, and Unilever organise large swathes of global production across these complex, multi-national networks. The United Nations Conference on Trade and Development estimates that they encompass 80% of all world trade. The transnational corporations (TNCs) sitting at the top of them source goods through commercial contracts across thousands of arms-length supplier firms, each of which is a discrete legal entity employing its own workers. This allows products to be made cheaply and quickly, but it also distances TNCs from legal responsibility for the labour and environmental practices associated with their production.

While transnational corporations create the rules of the game, they bear little responsibility for its outcomes.

The reorganisation of production, investment, and trade into global supply chains represents a decisive break in the history of global capitalism. And many claim that it’s a positive development. The World Trade Organisation, for example, estimates that developing countries’ engagement in global supply chains caused their share of world trade to rise from 33% to 48% between 2000 and 2012. Economists argue that TNC investment helps lift the poor countries where suppliers firms are located out of poverty. And business leaders often claim that working conditions in global supply chains are better than they are anywhere else in the local economy.

Of course, it’s no surprise to hear them tout the virtues of global supply chains since TNCs derive vast profits from this business model. One recent study estimates that Apple retains 58.5% of the value of every iPhone as profit, while the workers who make it take home only 5.3% as wages. Global supply chains allow big brands to hoard record amounts of cash, but as suppliers scramble to get goods to them on time and for low costs, workers are often left underpaid and unprotected.

Recent incidents – such as the discovery of “bonded servitude” amongst Apple’s factory workers; rampant “forced labour” in Thailand’s prawn industry; and reports of criminally abusive conditions in Cambodia’s garment factories (which make clothes for Marks & Spencer, Gap and Adidas) – have focused the world’s attention on the dangers that global supply chains can pose for workers. Disasters such as Rana Plaza have done the same, and workers’ organisations, consumer activists, and academics now routinely ask whether the current structure of global supply chains can ever guarantee worker safety or social justice. In one recent and hard-hitting report, for example, the International Trade Union Confederation claim that the rules governing global supply chains (or, rather, their absence) allow TNCs to accumulate historic levels of wealth and power precisely by taking both from everybody else.

One of the key challenges from a workers rights and social justice perspective is that while TNCs create the rules of the game, they bear little responsibility for its outcomes. Top-tier firms like Nike or Adidas pay fiercely low prices, demand goods too quickly, or chronically delay their payments, but it is up to suppliers to cope with these dynamics without cutting legal corners. Yet ample evidence shows that corners are often cut, through practices like unauthorised subcontracting, under- and non-payment of wages, excessive and involuntary overtime, or the use of exploited, under-age, or illegal labour. Suppliers often claim that they have no alternative if they wish to stay in business.

For their part, workers have little recourse against the TNCs whose products they are producing, since legal liability for labour standards and the responsibilities of ‘employment’ are fractured across supplier firms and intermediaries (like recruiters or temporary labour providers). Whereas once a Ford employee could have picketed his factory in Detroit if he wished to pressure his manager for better pay or safer working conditions, now the workers in Guangdong have no such option when it comes to the contracts they work on for Apple in California. And this is made worse by the fact that many poor governments choose not to enforce minimum labour standards in a desperate attempt to attract footloose foreign capital.

A garment factory in Sri Lanka. M.Crozet for the ILO/Flickr. (CC 2.0 by-nc-nd)

As calls for corporate accountability for labour standards have intensified, companies have claimed that they can respond meaningfully by using voluntary corporate social responsibility programmes (CSR), such as certification schemes, ethical auditing, or codes of conduct. Governments like those of the US or UK have given these programmes credibility by mandating that industry report on their voluntary efforts to prevent and address forced labour, human trafficking, and other forms of exploitation within their supply chains. But after almost two decades of such efforts, activists, workers, and consumers are wondering whether CSR can ever really be enough, or whether a new approach is needed to promote corporate accountability for supply chain labour standards.

It is in this context that the International Labour Organisation (ILO) has taken the watershed decision to put global supply chain governance on the agenda for its annual International Labour Conference (ILC), which begins today in Geneva. For the first time in history, and amidst much political contestation, the leaders of the world economy will gather at the ILO’s seat to begin discussing whether and how global supply chains can ensure decent work for all their workers.

For the first time in history the leaders of the world economy will gather at the ILO’s seat to discuss whether and how global supply chains can ensure decent work.

Workers organisations, social justice activists and concerned citizens all want the ILO meetings to be a first step on the road towards binding international accountability for labour standards in supply chains. Noting the limited scope and effectiveness of national regulation in resolving these issues that plague ‘decent work’, workers organisations have called for the ILO to “move towards a binding legal convention regulating [global value chains]”. But businesses and many governments see it differently, arguing that regulation is unnecessary and perhaps even counter-productive.

Whose voice will triumph? What is fair? And who or what should be responsible for guaranteeing that supply chains bring us the good without the bad of globalisation? These questions are of critical importance for decent work and social justice in the twenty-first century, and the ILO’s ILC is a key opportunity to begin addressing them.

Our coverage of ILC 2016 and beyond

Beyond Trafficking and Slavery will be reporting live from the ILC 2016, with comment, analysis and real-time reflection on what promises to be an important moment in the history of international labour relations. We’ll also continue to focus on supply chain governance right throughout the summer, since what happens in Geneva certainly won’t be the end of this conversation.

BTS explainer: what is the International Labour Conference?

Our coverage will kick off today in tandem with the ILC. For the ILC’s first week, we’ll be giving readers a ‘primer’ on the key issues and debates. Articles from a renowned group of experts, activists, and policy-makers will think about what exactly decent work in supply chains means, how it can be guaranteed, what obstacles exist to it, and what the ILC may or may not achieve. We will feature case studies of corporate or governmental failings, profile the demands and desires of some of the key actors, and give voice to the workers who are so often silent at the bottom of the supply chain ladder. If this isn’t enough, readers can work through our Short Course on Forced Labour in the Global Economy for an accessible but academic take on all of the key questions.

During the ILC’s second week, from Monday 6 to Friday 10 June, BTS will be on the ground in Geneva to cover events live from there. We’ll tweet from inside the ILO, talk to key actors involved in the ILC negotiations and discussions, and profile the social justice campaigners and workers rights activists camped outside. Our daily progress updates will give readers an on-the-ground idea of what is happening and where to go for more in-depth reading, while our video interviews and a number of further articles will highlight key stories, contributions from those involved, and why this is all important.

The ILC meeting itself is of course no more than a start to this conversation. And in many ways, what happens after it will be far more important. So after the dust settles in Geneva, we’ll be preparing a wave of analysis and reflection that looks forward to the future. This will begin with a roundtable that includes a heterodox mixture of grassroots activists, global unions, major corporations, analysts of global supply chains and key government actors like the UK’s anti-slavery commissioner. Each participant will answer core questions about how we can ensure decent work in global supply chains and who is responsible for doing so.

For the weeks that follow, we’ll commission reflection pieces from a number of interested observers. These will look at what the ILC meant and what its outcome means for the future. We’ll also have a full week of video testimony from voices that are often marginalised in the supply chain debate, and these will allow us to put human faces to the stories that are so often ignored.

BTS’ coverage will continue beyond this right throughout the summer. One of the highlights will be a high-level debate that we’re convening on the future of decent work in supply chains. This debate will bring together a select group of major players from the international business and policy community and will put them in conversation with workers, activists and scholars. Will they agree on where we go? Or will supply chain workers be left none-the-better because the powers-that-be couldn’t agree on what to do? Join us for the coming months to find out!

About the authors

Neil Howard is an academic activist based at the Institute of Development Policy and Management at the University of Antwerp. His research focuses on unfree labour, and on the workings of the policy establishment as it seeks to respond. Follow him on twitter @NeilPHoward.

Genevieve LeBaron is Senior Lecturer in the Department of Politics at the University of Sheffield, Chair of the Yale University Working Group on Modern Slavery, and a UK ESRC Future Research Leaders Fellow. You can follow her on twitter @glebaron


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