In this time of coronavirus crisis, we are seeing many of the less well-off workforce in the UK and the West under stress. There have been layoffs by businesses such as restaurants that cannot operate in the shutdown. The recent growth of zero-hour contracts and outsourcing to sole traders or small business owners instead of full employment has left many ineligible for government support and needing to continue working whether safe or not. The result has been crowded London subways, despite the need to social distance, as workers in construction, often sole traders or running small businesses, have had to join ‘essential’ workers on the Underground to make ends meet.

Nevertheless, whilst not sufficient, there have been efforts by our governments and communities to provide support for livelihoods of all citizens. Even the worst affected might access unemployment benefits, or foodbanks, shelters, and in the UK and much of Europe, free national healthcare.

This stands in stark contrast to the situation faced by millions of the world’s most vulnerable citizens. This is most pronounced in considering the millions of people who have, also due to outsourcing in recent years, made our things in manufacturing supply chains in Asia.

In Bangladesh, (the focus of much human rights attention since the 2013 Rana Plaza garment factories collapse which killed over 1100 people), over a million garment workers have lost their jobs (without severance pay) or been furloughed since the crisis began. And while buyers such as H&M have committed to pay suppliers for orders placed before the coronavirus shutdown, many buyers still have not honoured their contracts to pay for orders of garments and fashion goods, often already cut, sewn or even shipped. Factories across Asia with orders cancelled, unpaid, and needing to shut down, has led to, in some cases, workers needing to travel to any factory that remains operational for work;  in Dhaka over 1,000 workers walked over 100km to manufacturing facilities.

In Cambodia, where  the garment sector is exempted from the shutdown, factory workers returning from the Khmer New Year were given a bleak choice between not self-isolating if they had symptoms, or following government prescription and not being paid for the two weeks during which they were supposed to self-isolate. Those unable to work would only receive $70 (USD) a month, barely a third of the country’s already below living wage minimum wage, after factory owners said they were unable to pay more given cashflow challenges from western buyers’ cancellations. Cambodian workers – already vulnerable, sharing slum rooms, transported to factories in cramped transport, and suffering medical problems, have the highest microloan debt per borrower in the world – have been left like other south Asian workers fearing banks, loan sharks and destitution as much as the virus.

The dire situation for millions of Asian garment employees, working dozens of hours of exhausting overtime a week, comes against a background of avowed corporate concern for human rights and worker welfare. Thousands of corporations are signatories to the UN Global Compact (by which firms commit to respect human rights and human rights in supply chains) and have made public commitments to respect the UN Guiding Principles on Business and Human Rights and OECD Guidelines for implementing these in supply chains. Many even signed a public letter urging German or EU business human rights due diligence legislation to specifically require business efforts to respect worker rights in supply chains. This progress, and the numbers signed up to ETI[1], FLA[2], and Amfori, shows the increased expectation in recent years that buying corporations have responsibilities to support respect for basic workers’ rights in their supply chains.

Whilst most businesses’ monitoring of respect for human rights in supply chains has focused on rights of workers to be paid at least legal minimum wage in line with local laws, be provided a safe workplace, and not be made to work excessive hours or undertake forced labour, the most basic step that buyers must take towards this should be to honour their contracts and pay suppliers for work they had undertaken due to orders from buyers. Workers are paid for work they have done on orders for a brand given unpaid work in supply chains is usually termed forced labour and modern slavery, and imports of goods made under conditions of forced labour are banned under amendments to USA law.

Corporate fashion brand reactions to the dire situation the makers of their products find themselves undoing the years of image-building the industry has conducted. Very few global brand buyers have agreed to honour contracts for orders, even where the garments are ready to ship. Primark, which made much of its efforts to right wrongs exposed from its buying from a Rana Plaza factory, is among a long list of firms that by, 15 April 2020, had still not countered reports that they have cancelled orders. Some firms, including GUESS?, Inc. have taken a nakedly opportunist approach, demanding significant discounts from manufacturers even on goods already shipped, further contributing to the destitution of workers. A ‘PayUp’ petition and campaign is under way.

As with human rights abuses in ‘normal’ times, these issues cause us to look again at risks from outsourcing. Recent developments in human rights due diligence laws expect that business should ensure respect for people who make their things in their supply chains. Yet outsourcing complicates the ability to hold business to account for this. By contrast, some companies have retained some production in-house. Louis Vuitton, Burberry, and New Balance own key factories, and in recent years the Kering Group, owner of Gucci, Balenciaga and other brands took ownership of a reptile farm to overcome due diligence challenges. If respect for ecology is a good enough reason for companies to bring production inhouse, then why not to ensure respect for basic human rights of people? The ability to bring business inhouse has also helped the efforts to pivot and respond in the crisis. Some firms switched in-house manufacturing to other products. New Balance, Burberry, and others are using their factories to produce masks and other medical goods in response to needs. Some others are working with suppliers to support similar projects, but without the ability ownership brings to apply their Multi-National Corporation resource.

Supply chain concerns in the age of the Sustainable Development Goals (SDGs) have been brought into focus again with the coronavirus crisis. There was a time when arguments for outsourcing may have seemed to be based on what appeared practical and commercial logic, but with human rights now a mainstream concern that is no longer necessarily the case. Some MNCs are now proud to report pay rates for inhouse employees.

The time to outsource responsibility to respect human rights may be over. These responsibilities are now intertwined with corporate reputations with both consumers and in law. Over 30 brands using Rana Plaza factories paid into a US$30 million compensation fund for survivors and their families. There is also evidence that protection of workers offers productivity gains and a reputation for ethical behaviour likely to be viewed positively by consumers and ESG investors.

A more complex conversation may be needed regarding miniscule mineral components which are sometimes not a highly important part of a technology device, yet it seems hard to argue that a chocolate company could do without cocoa, and therefore not have a responsibility to better support the right to a decent livelihood of the cocoa farmer, a coffee company could exist without coffee farmers; some fashion houses without leather, most toy companies without plastic injection moulders, or even smartphones without cobalt. In the immediate term, due diligence to respect rights of workers in supply chains who make our clothes could mean saving lives that survived the virus from death by destitution.

Discussions are ongoing on proposals for human rights due diligence laws across Europe. Such laws should learn from existing, legally empowered multi-stakeholder initiatives (MSIs), which mandate transparent reporting from suppliers, effectively holding buyers to account through the choices they make. The coronavirus crisis has once again highlighted the risks to human rights of the outsourcing model. The time to learn from this and incentivise in-house responsibility is long overdue if we are to achieve the SDGs and make good on the UN Global Compact commitments to which so many state they are committed.

Kate Larsen works on Human Rights in supply chains. She applies 17+ years’ experience, including in China and Asia 11 years. Kate speaks Mandarin Chinese, created Burberry first Asia Corporate Responsibility programme, worked in Human Rights Watch, and has input to OECD Guidelines, etc. She has spoken on BBC podcasts on Uighur forced labour in China factories.

Michael Rogerson is a PhD candidate in the Centre for Business, Organisations and Society at the University of Bath’s School of Management. His research focuses on detection and disclosure of modern slavery in supply chains. He previously worked on labour rights issues in the construction industry in the Middle East.

 

[1] Ethical Trading Initiative.

[2] Fair Labor Association.