Transforming Supply Chain Industrial Relations

Pressure on multinational corporations (MNCs) to account for violations of workers' rights in their global supply chains is increasing. Campaigns by Global Union federations, NGOs and online campaign networks are making the connections between labour rights abuses at the far reaches of a company's supply chain and the global headquarters that controls the chain and collects the profits. Workers and their unions are becoming increasingly sophisticated in identifying the MNCs at the top of the supply chain when violations take place, and are pressuring them to act.Workers at all stages of global supply chains can justifiably ask why their pay and working conditions are so poor when they are making products or contributing services for corporations that rake in massive profits and could well afford to guarantee all workers in their supply chains a decent standard of living. In the last quarter of 2014, Apple reported the biggest quarterly profit ever by a corporation: US$18 billion. It is sitting on cash reserves of US$142 billion. Meanwhile the workers who make the products responsible for generating these unprecedented profits receive only US$4 for making an iPhone 6 that retails in the United States for US$649. MNC buyers at the top of global supply chains do not necessarily employ directly the workers in the factories that produce their goods, but their purchasing decisions have a powerful influence over wages and working hours.The UN Guiding Principles make clear that a company is responsible for conditions in its supply chain, regardless of where the work is performed and what the employment relationship is between it and the workers. This positive development has made it impossible for multinational companies to evade accountability for abusive conditions through their extensive use of outsourcing, subcontracting, agency work and other means of avoiding direct employment relationships. But what if the entire sourcing model is precisely predicated on low wages, long hours and exploitative working conditions? How can a company fulfil its responsibilities within a system that entrenches abuses of worker rights? The global garment industryIn garment industry supply chains, exploitative working conditions are standard. Workers are forced to work long hours, often far beyond legal boundaries, for poverty wages and in conditions that breach even the lowest of occupational safety and health standards. Many live in absolute poverty whilst others teeter just above it. Continual downward price pressure by companies keeps workers' wages low while their purchasing power declines against inflationary increases on basic necessities such as food and energy.The wage of most garment workers is no higher than the level of the minimum wage in their respective country, which in many cases is well below the level of subsistence. In countries where the minimum wage is set at industry level, wages for textile and garment workers are lower than for other industries. Global average wages in the textile and clothing industries are respectively 24 per cent and 35 per cent lower than the manufacturing industry average wage.Excessive working hours are a continuing and entrenched problem. Production peaks are managed by relying on excessive overtime. Workers are compelled to work extremely long hours in order to supplement their basic earnings towards a level where they can support themselves and their families. Even when they work excessive additional hours, many workers are unable to achieve this goal.Precarious employment conditions are rife, with temporary contracts, agency work and subcontracting the norm. Violations of the right to freedom of association are commonplace, unionization rates are extremely low and collective bargaining is rare.Decades of public campaigning and recurrent fires and building collapses occasioning multiple deaths have given a high level of visibility to labour conditions in garment supply chains. …