Beyond Trafficking and Slavery

Roundtable: what are the pros and cons of global supply chains as a production 'model'?

Some say supply chains bring upgrading, jobs and development for poorer countries. But don't they always do so at a cost to worker rights and wellbeing?

26 June 2016
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ILO in Asia and the Pacific//flickr.cc(by-nc-nd)

COLSIBA

The Coordinating Committee of COLSIBA, the coordinating body of Latin American Banana and Agro-industrial Trade Unions and a partner of the International Labor Rights Forum.

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In the last 15 years, the international banana market has been increasingly squeezed by low prices. Of the net proceeds from the sale of a kilo or box of bananas, only between 0.70% and 1% goes to workers. This is barely enough for subsistence. It is not enough to achieve a living wage, nor decent work, as understood by the ILO. The price set for a box of bananas makes it impossible to pay better wages and give guarantees to workers. 

In commercial contracts it says that the buyer can withdraw their contract at any time if the profit margin is not sufficiently high. The economic costs of these provisions fall on national or independent producers, small producers, and at the end of the chain on the workers, who always bear the brunt. What is clear is that business practices end up worsening unequal relationships between buyers, producers and workers, due to the power inequities inherent in global supply chains. Those in charge are those who have the purchasing power in negotiations.


Kevin Hyland

Kevin Hyland is the UK’s first Independent Anti-Slavery Commissioner.

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The bargaining power of purchasing companies at the top of the supply chains is enormous. The trafficking of citizens and exploitation of workers is only profitable insofar as somebody is willing to buy the goods these workers produce. In most cases, the immediate buyer of such goods is another company. Consequently, the behaviour of buying companies, particularly those at the top of a supply chain, can be an important determinant of standards throughout the chain.


Neha Misra

Neha Misra is a senior specialist at the Solidarity Center, a non-profit international worker rights organisation. Prior to this she worked as a senior attorney with the US Department of Justice. Neha serves on the executive board of the International Labour Recruitment Working Group and on the Global Workers Justice Alliance Board of Advisers.

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While global supply chains may offer development opportunities in poorer countries they also allow for a race to the bottom. On top of that, they limit the liability for multinational corporations seeking both cheap labour and loosely regulated business environments in which to produce their goods. Global corporations have gone from being factory owners to buyers, allowing them to claim less responsibility for abuses in their supply chain.

Workers and the unions and organisations representing them are finding ways, however, to use the reliance on global supply chains by multinational corporations to promote worker rights. From framework agreements to the Bangladesh Accord, these groups are educating consumers and leveraging brand recognition to push for binding agreements to improve the treatment of and respect for workers around the world.


Tola Moeun

Tola Moeun, head of the Center for Alliance of Labor and Human Rights (Cambodia), a partner of the International Labor Rights Forum.

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Global supply chains mean that workers are not alone. Workers in producing countries can be connected to consumers and to other workers in other places. There is a link, and this is good. In the garment sector, for example, such links provide great opportunities for solidarity and positive change. It’s a powerful thing when we connect the workers at the factory level all the way through the levels of transport, warehousing, port, and shops and consumers. Workers can become empowered to demand the things promised by multinational corporations.

However, global supply chains as they are currently organised are not transparent. It is very hard to track the supply chain. Subcontracting is used by employers at all levels to try to avoid legal responsibility for workers and working conditions. Business owners and policy makers are joining hands to exploit workers. Policy makers don’t invest back in communities, but they draw huge benefits from businesses. The brands definitely have control of and power over supply chains. They set prices, and set them too low, pushing suppliers to exploit their workers. They also go to the government and push for policies that are anti-worker, and are always seeking to find cheaper and cheaper labour – making producing countries compete in a ‘race to the bottom’.


Ruslan Myatiev

Ruslan Myatiev, head of Alternative Turkmenistan News, a partner of the International Labor Rights Forum.

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There are many more plusses for businesses than for workers. First, the market becomes broader and more competitive for businesses. If a company does not like the price in one location, it can find another option elsewhere. Supply chains are also beneficial for many suppliers, as they open more options for the sale and distribution of goods. Nevertheless, the biggest minus is that, while searching for the cheapest goods, global companies ignore the problems related to the origin, manufacture and trade of products. Regardless of the fact that almost all companies declare their support for human rights, few of them demonstrate adequate due diligence to ensuare decent working conditions and good pay for workers. As they are currently managed, global supply chains are opaque, making it hard to track and monitor working conditions throughout them, and therefore extremely hard to ensure that legal liability and human rights are respected throughout the whole chain.


Raphael Sandramu

Raphael Sandramu, general secretary, Tobacco and Allied Workers Union of Malawi, a partner of the International Labor Rights Forum.

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The plusses are that they create job opportunities, particularly for youth, and benefit developing governments in terms of foreign exchange earnings through taxes. However, global supply chains often do not benefit vulnerable groups. In Malawi, these include tenant farmers, small-holder farmers, the widowed, and orphaned children, none of whom are ever consulted and none of whom benefit from the programmes implemented by the major players within global supply chains. This is because the planning of economic systems excludes such vulnerable groups.

The grassroots organisations that work with these groups are also not consulted. In global supply chains, it is very unlikely for freedom of association to be realised or for collective bargaining to take place. Most vulnerable groups, in practice and often in law, do not enjoy the protections of ILO Conventions 87 or 98 on Freedom of Association and the Right to Collective Bargaining Agreements. For example, in tobacco supply chains, most tobacco companies deny farmworkers and tenant farmers their right to negotiate a collective bargaining agreement.

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