Could a new social contract reverse the inequality that riddles global supply chains?

As the COVID-19 pandemic enters its sixth month, inequities that have eroded workers' rights are coming into high relief. Whilst unity amongst communities and countries is needed to fight the virus, old fault lines are being emphasized instead. What has been needed for years now has become urgent: a new social contract that ensures companies protect their employees and prevent the type of negative impact COVID-19 is wreaking.

Past crises such as the Great Depression in 1929 and the 2008 economic “meltdown” should have shown world leaders that everyone benefits when social contracts encompass workers at all levels. This time, the lesson must stick.

On April 28, Didier Reynders, European Commissioner for Justice, pledged to create binding rules requiring companies to enforce respect for human rights throughout their supply chains. This announcement could potentially protect the lives of millions of workers around the globe mandating due diligence.

Due to the urgency of the pandemic, there is no time to waste; there has perhaps been no other time when workers’ rights have been more at risk. The EU needs mandatory regulations that require companies to monitor for human rights and environmental impact. To further facilitate sustainable corporate governance practices in this regard, governments in the EU and the rest of the world should advocate for the implementation of this legislation at the national level.

To implement a new social contract, strong enforcement methods are needed. These can include sanctions for companies that neglect workers’ rights, training in making businesses more sustainable and a system to provide justice for those suffering from corporate negligence. 

Identifying abuses 

Years of abuses in the corporate world have been magnified during the pandemic, with workers denied basic rights in the ensuing chaos, including unpaid wages and restrictions on access to unions.

Many multinational companies manufacture their products in countries where labour rights and regulations are weak. The result has been child labour, forced labour and environmental degradation such as deforestation, unregulated mining, poorly monitored factory fumes. Among these companies are major fashion brands (known as high-street fashion). Countless human rights abuses have been reported in garment-related supply chains.

Low pay, gender discrimination and unreliable work contracts are prevalent in these industries. Fashion companies should do more to protect the workers who enable the firms to achieve low production costs. Retailers benefit from the poor wages and lack of legal protections, which allow them to buy at low cost with no regard for the workers who struggle to survive.

Human rights in the garment industry

During the COVID-19 pandemic, the economic situation for millions of Asian garment workers employed by apparel brands is worsening. With the closure of many retail shops, orders have been cancelled in massive numbers, leaving employees jobless. Global brands have not taken responsibility for the financial harm this has wrought on employees. Likewise, supplier factories in countries such as Bangladesh, Myanmar and Cambodia have been hit hard financially, leaving them unable to pay wages or provide other support for their own workers.

In Myanmar, an estimated 20,000 workers have already lost their jobs, with an additional 70,000 garment workers expected to follow. In Bangladesh, an estimated 1 million workers have been either temporarily laid off or permanently terminated. With no employment regulations, most workers did not even receive pay for the hours they worked before the pandemic forced businesses to close. In Cambodia, an estimated 200,000 garment workers could lose their jobs as a result.

Many global companies are demanding that suppliers offer discounts on products already shipped (in some cases, as far back as January), as well as allow cancellation of orders in process or not yet shipped. They have not shown any willingness to assume responsibility, whilst not providing any detail on when payments will be made.

Workers in Asia who are hired for their cheap labour often have families who rely on the minimal income received for producing clothing for retailers. By laying them off, companies are not only putting the lives of the employees at risk but also their entire families.

The governments of developing countries do not have the financial capacity to solve problems created by global supply chains. Unlike governments in the EU, they are unable to provide the economic assistance and other relief needed by newly unemployed residents.

Solutions 

To implement a new social contract, strong enforcement methods are needed. These can include sanctions for companies that neglect workers’ rights, training in making businesses more sustainable and a system to provide justice for those suffering from corporate negligence. 

There is no better time for the EU to finally put a stop to the abuse of workers, which has gone unquestioned over the years.Global clothing companies, financial institutions and international organisations must come together during the pandemic and after to take the necessary steps to help those who are less financially able. Vulnerable workers should not be forgotten and neglected; instead, international financial organisations should work alongside global companies to protect workers’ rights.  

 

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