Garment factory, Sri Lanka. M.Crozet for the ILO/Flickr. (CC 2.0 by-nc-nd)

Multinational enterprises (MNEs) constantly look to cut costs to maximise profits, putting considerable pressure on workers’ wages and working conditions. Cost pressures from global firms mean that employment within global supply chains (GSCs) is too often precarious and/or informal, involving frequent human rights violations. Though some companies have made public commitments to ensure the payment of a living wage and investment in safe and secure workplaces, this is by no means the norm and even then such promises are not always kept. Corporate and multi-stakeholder ‘corporate social responsibility’ schemes have had little if any positive impact on guaranteeing workers’ rights, and instead have deferred addressing underlying structural issues.

An ILO convention on decent work in global supply chains can and should form the backbone of any new approach to labour regulation and enforcement.

With up to 94% of the workforce on whom our largest MNE's depend effectively ‘hidden’, there are serious global governance gaps concerning GSCs. While goods and services are produced by workers in multiple countries, most laws and international conventions stop at the borders of each individual country. Today, voluntary guidelines such as the OECD’s Guidelines for Multinational Enterprises, which incorporates the UN Guiding Principles on Business and Human Rights, and the ILO’s long-outdated MNE Declaration are among the few global ‘regulations’ of GSCs; but neither are effective in ensuring that companies respect workers’ rights across supply chains.

A major problem for workers, even in places where there is substantive country legislation, is the lack of an adequate remedy for when their rights are inevitably violated. Local supplying companies are unlikely to face accountability because administrative or judicial processes are too slow, weak or corrupt. At the same time, lead firms are usually immune from any legal accountability, since there is no cause of action or jurisdiction over them in either the host country or the home country.

The ILO can and must fill this governance gap, both through the adoption of a new standard on global supply chains and through complementary measures that position the ILO at the centre of global industrial relations for the new century.

Sharan Burrow gives a post-mortem of ILC2016 after a night of marathon talks on 9 June.

A new convention

An ILO convention on decent work in global supply chains can and should form the backbone of any new approach to labour regulation and enforcement at the international level, which builds on (and requires the ratification of) existing instruments, including the fundamental conventions. Central to this convention should be the obligation of states to pass laws and regulations that, in line with existing ILO standards, regulate the conduct of enterprises under its jurisdiction wherever the alleged harms may occur.

The global economy needs an ILO that is equipped to respond to the global issues raised by supply chains.

Mandatory due diligence is another key component of such an instrument (which is already required when it comes to forced labour, as per the ILO’s 2014 Forced Labour Protocol). Transparency obligations too would ensure that both firms and workers know who forms part of the supply chain, which would in turn allow for greater oversight and ultimately accountability.  

Further key demands are to end the lawlessness of the ‘export processing zones’ which are so critical to supply chain productivity, along with the elimination of forced labour and the formalisation of informal work.  A binding GSC convention should ensure the promotion of secure employment relationships, the removal of discriminatory practices, and the elimination of involuntary non-standard forms of work. Finally, it should emphasise the power of social dialogue, including a framework for truly transnational bargaining. This could push industrial relations finally into the 21st century.

As part of the immediate follow up to the ILC discussion, and as one of the main outcomes, the ILO should convene a tripartite meeting of experts in order to discuss these main elements of any new convention. That has to be the major outcome of ILC 2016.

A 21st-century ILO

The ILO must also position itself at the centre of the global governance of supply chains. The global economy needs an ILO that is equipped to respond to the global issues raised by supply chains. This would include, for example, research and technical support in the negotiation and setting of national and sectoral minimum wages; the establishment of labour inspection capacity at the global level to investigate and report to social partners and governments where exploitation and abuse is exposed; and the mediation and resolution of transnational disputes between workers and MNEs where requested by the parties. This is the ILO we would like to see emerge.