The ambivalent role of multinational corporations in ending labour exploitation
Creators: name: SHIRGHOLAMI, ZAHRA
Publisher: name: University of Surrey
Year: 2022

description: The growth of private regulation to address labour exploitation in global value chains (GVCs) has not led to a steady improvement in labour standards. Private compliance systems are inadequate, no matter how well-intentioned and designed. Such interventions primarily focus on the point of production – the factories producing for Multinational Corporations (MNCs). Although most labour exploitative practices happen in the factories, such practices are often products of policies and practices designed and implemented upstream by MNCs. MNCs’ economic behaviour, e.g., price and lead times squeeze, creates countervailing pressure on suppliers and discourages labour compliance (Locke and Samel 2018; Amengual et al. 2020; Kuruvilla et al. 2020).
description: While downward pressures on suppliers regarding purchasing practices exit and persist, buyer-driven assumptions and the power of MNCs in a sector like apparel have been called into question. Hence, through secondary data analysis and semi-structured interviews with informants within apparel value chains, this research contributes to the literature by analysing the extent to which MNCs see themselves as part of the problem and how they respond to the conflict between their practices. Also, this thesis explores how the value chain dynamics facilitate the persistence of exploitative purchasing practices. More generally, it analyses who shapes and influences the global value chains and in what ways.
description: The findings indicate that while MNCs’ practices adversely impact suppliers’ labour compliance, corporations do not want to (or do not have to) take responsibility and better understand their role in exploiting workers making their goods. Their commitments have been hollow, and they have plausibly denied their role. Apparel corporations have hidden behind different multistakeholder initiatives or done pilot washing with no outcome and no public accountability. Still, the buying team are not trained to understand purchasing practices' impact on labour exploitation, nor are they encouraged to cooperate with the sustainability team in their company. The reward system for the buying team could still be linked to their ability to drive down costs. The opaqueness of the apparel value chain could further facilitate MNCs’ denial of their role. There is a considerable dearth of competence gaps in the industry, and MNCs’ claims are taken at face value.
description: Moreover, the apparel industry has been the flagship of buyer-driven chains. But this study’s findings suggest that the buyer-driven and monopsonistic assumptions are partially plausible in the apparel GVCs of the Global North. Based on the findings, no firm is powerful enough to orchestrate the entire value chain. MNCs can think outside the box and stretch the limits to align their purchasing practices and labour standards. However, corporations’ freedom is relatively circumscribed in the current dynamics of GVCs, whereby different actors knowingly or unknowingly suppress labour rights in favour of businesses.
description: Based on the findings, MNCs cannot go so far in addressing their adverse impact unless government enact laws with robust accountability and liability. This research suggests that mandatory human rights due diligence, along with legislation limiting certain purchasing practices, are needed to motivate MNCs to rethink their business models. In a competitive industry, regulating the competition terms could be a promising avenue for providing leverage to align purchasing practices and labour standards.