Why do things develop

"Things are moving very slowly"

Key facts
  • The risk of accidents at work and occupational diseases is much higher for employees at the beginning of the global supply chain and is unevenly distributed overall
  • Many suppliers in developing countries are unable to provide effective occupational health and safety due to the economic pressure on them
  • Effective agreements to improve the situation must also establish supply chain control systems that involve all stakeholders

There are many initiatives that work to improve safety and health in global supply chains. A conversation with the British ergonomists Prof. David Walters and Prof. Philip James about obstacles and possibilities.

The risk of accidents at work and occupational diseases is very unevenly distributed within global supply chains: it is much higher for employees at the beginning of the supply chain in developing countries. What are the main causes of this imbalance?

JAMES: The interests of the most powerful actors in the supply chain are the driving force behind how supply chains are designed. Typically, these actors are at the top of the supply chains and are based in highly developed industrialized countries. The effects of health and safety at work within these chains therefore often also reflect the business interests of these very actors. This includes cost control as well as the definition of strict delivery requirements. And that in turn means a higher likelihood of work-related injuries, fatalities and illnesses that could be avoided, despite different effects. This is particularly true for small and micro-suppliers at the beginning of the supply chains in developing countries, as they have limited resources to invest in preventive measures for occupational safety. In addition, they have little chance of opposing the price and delivery requirements of the main players in the supply chains.

WALTERS: As a result, global supply chains are characterized by considerable inequalities in terms of potential health risks and disadvantages that can be attributed to the fact that contracts are awarded to suppliers who are unable to ensure efficient occupational safety - largely due to economic pressure, that weighs on them. Various catastrophic accidents at the factories of Rana Plaza, Tazreen Fashions and Ali Enterprises, all of which are suppliers to large Western multinationals, which resulted in 1,500 deaths and more injuries, of course, most clearly illustrated this imbalance. But it also determines the everyday life of a huge number of employees within the supply chains worldwide.
In short, the uneven distribution of accidents and illnesses within global supply chains is closely linked to the corporate goals of multinational corporations in developed countries and their implementation at the expense of suppliers in developing countries who are not in a position to withstand this threat.

Initiatives to promote sustainable supply chains have been launched in various industrialized countries. In 2014, for example, the German government founded a "textile alliance". The members of this alliance are committed to improving social, economic and ecological conditions within global supply chains. What is your opinion on these initiatives?

JAMES: The number of initiatives to protect and improve the social, economic and environmental conditions within global supply chains is impressive. It must be emphasized, however, that not all of these initiatives are voluntary and legally binding. A law passed in France in 2017 requires large companies to exercise due diligence of possible abuse against workers in global supply chains, and a similar initiative is being prepared in the Netherlands. And in fact, Germany also seems to be taking this path.

The uneven distribution of accidents and illnesses within global supply chains is closely linked to the corporate goals of multinational corporations in industrialized countries and their implementation at the expense of suppliers in developing countries who are not in a position to counter this threat.

Prof. David Walters

WALTERS: But we shouldn't forget that private voluntary initiatives to improve working conditions in global supply chains are often the result of official regulations and other means of pressure. A good example of this is the anti-sweatshop movement. It put companies like Nike and Gap under pressure in the early 1990s to improve working conditions within their supply chains. Labeling an initiative "voluntary" can therefore be misleading. Rather, they are private, regulatory measures that can be implemented in a wide variety of forms.
For example, there are practical rules of conduct of individual societies, which are often part of a corporate framework program for social responsibility. Or initiatives involving all interest groups, including industry-specific ones such as the Textile Alliance, as well as international framework agreements between global trade union associations and international corporations.

JAMES: From our perspective, all of the above types of initiatives are to be welcomed as they show ways in which the power of multinational contractors can be harnessed to improve working conditions in global supply chains. When considering the aspect of the extent to which this potential has actually brought benefits so far, however, a certain degree of caution is required. The tangible signs of effectiveness, both in general and specifically with regard to health and safety in the workplace, paint a very different and unsatisfactory picture.

On behalf of the German Federal Government, the DGUV received several delegations from the textile industry from Bangladesh for training purposes on the subject of health and safety at work. What effects do you expect from such training offers?

WALTERS: Training courses on relevant topics relating to health and safety can clearly have positive effects if you only think of a greater risk awareness and deepening of knowledge and skills to deal with these risks or to minimize them. However, an effective use of this awareness, knowledge and skills cannot be taken as guaranteed. Because they are faced with the same challenges as those of the use of supply chains to improve working conditions in general and which we are currently debating. In many situations, managers and employees alike find themselves confronted with difficulties in actually being able to implement what they have learned, since desired and necessary measures conflict with the given financial priorities and restrictions.

JAMES: It is therefore particularly important to create mechanisms that make it easier for employees to implement the knowledge imparted in the training courses. One possibility would be, for example, the creation of an independent body such as a state supervisory authority or a private sector body, as is the case in the 2013 agreement on fire protection and building security[1] emerged in order to give employees the opportunity to submit complaints with the prospect that these will also be seriously investigated. Another way would be to ensure the ratification of the ILO's Decent Work Conventions to give trade unions and other workers' representatives a tool to address health and safety issues collectively and efficiently.

Regardless of the various initiatives, working conditions in many supplier countries seem to be improving little or only slowly. In your opinion, why is that?

WALTERS: Things are actually developing very slowly, if at all. There are even signs that they could worsen due to the economic crisis surrounding the current pandemic. This picture of limited progress at best is of course in line with the previously mentioned generally unsatisfactory effects of initiatives to improve labor standards in global supply chains.

JAMES: Basically, it reflects an irony that is actually recurring. The failure of such initiatives is based on the failure to meaningfully question the financial constraints and related motivations that have a negative impact on working conditions and which primarily lead to the emergence of poor working conditions. Four factors, which are somewhat interrelated, can be cited to explain these failures.
First, most initiatives are illegitimate, leaving a lot of space for commercial considerations to undermine the willingness of international buyers to allocate sufficient resources to meet their needs along the entire supply chain, including the lowest parts of the supply chain where subcontracting is offered Subcontracting and home work are common. Second, there are only inadequate control systems for monitoring whether the resources available to meet the requirements are sufficient. Third, the countries where the suppliers are located lack government regulations and employment relationships that support such compliance. And finally, the fourth factor relates to the failure of the initiatives to curb price competition among suppliers, the aim of which is to lower labor costs and thus further worsen working conditions.

The number of initiatives to protect and improve the social, economic and environmental conditions within global supply chains is impressive. It must be emphasized, however, that not all of these initiatives are voluntary and legally binding.

Prof. Philip James

What has to happen in order to achieve sustainable improvements in terms of safety and health along the entire supply chain? And who do you think should be responsible for this?

WALTERS: There are no simple solutions to increase the currently limited impact of measures aimed at reducing or overcoming health and safety risks due to the commercial dynamics of global supply chains. However, there is some evidence that four elements are central to developing effective interventions. This includes:

The requirement for buyers at the top of the supply chain to enter into legally binding vertical obligations, as required by French law on due diligence,

The creation of arrangements to monitor the fulfillment of these obligations by competent and appropriately paid auditors or inspectors who are independent of the customers both financially and with regard to the organizational structure,

· The definition of requirements for the customers with regard to the prices to be paid to suppliers, the duration and security of supply contracts as well

· The involvement of independent trade unions in the design and oversight of such initiatives.

Analyzes of the working of the 2013 - and now dissolved - agreement, which took each of these elements into account to some extent, highlight its importance. But the conclusion of such agreements will obviously be far from easy, as the dissolution of the above agreement shows. Indeed, there are numerous situations in which such an agreement is not feasible, especially considering how such agreements counteract current economic orthodoxy and the anti-government ethos it supports. However, it is clear that previous approaches have had little success, and there are certain signs that point to future changes.

JAMES: For example, trade unions, NGOs, consumer-based campaign organizations and other initiatives need to continue to put pressure to challenge the current situation - both domestically and through international bodies. In many cases, such pressure may not work, but if it does, these measures could ensure further success in the future.
It is clear that the agreements concluded not only embody the elements mentioned above, but must also establish systems for controlling the supply chain that involve all stakeholders and are designed to influence behavior at all levels within the industry and in broader market segments . Only in this way will they gain enough traction to have an effective, positive influence on the competitive dynamics that are currently causing terribly poor working conditions for suppliers in poor countries.

The interview was conducted by Elke Biesel, German Statutory Accident Insurance (DGUV).