Informal Workers, Social Audits and Human Rights Due Diligence in Supply Chains

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In December 2020, the EU Council adopted Conclusions on Human Rights and Decent Work in Global Supply Chains and requested the EU Commission to draft a legal framework that would make it mandatory for all companies established or retailing in the EU to undertake human rights and environmental due diligence in their supply chains. Civil society is concerned that companies will simply repackage their existing protocols—codes of conduct and social audits—to meet their mandatory due diligence obligations. 

Due diligence responsibility has been guided by voluntary ‘soft law’ but the shift to mandatory due diligence legislation is now underway. If the EU is serious about addressing the violation of supply chain workers’ human rights, legislation will have to ensure that procurement and production practices become gender-sensitive, with freedom of association and collective bargaining forming its backbone. The human and labour rights of all workers in all tiers of supply chains, including homeworkers, must be taken into account and workers need to participate in the design of grievance mechanisms. 

Thus far, corporations have approached the due diligence responsibility from a risk management perspective, protecting their reputations from consumer or shareholder backlash should labour or environmental rights violations in their supply chains come to light. They have adopted a range of practices—codes of conduct, certifications, audits by independent private firms and collaborations with multi-stakeholder bodies that include civil society organizations—as part of their due diligence. This approach has yielded limited results.

Current social audits—which measure a company’s social and ethical performance—fail to penetrate lower tiers of the supply chain, including outsourced and subcontracted work. They ignore homeworkers who are largely invisible, labour at the very bottom of supply chains and are the most vulnerable workers in these chains. They are invisible because subcontracting without written contracts occurs at multiple levels. Homeworkers have neither labour nor social protection and little opportunity to mobilize and bargain collectively to address their exploitation. Homework is an important source of income for older women and women with care responsibilities who find employment in a factory difficult. 

This is only one of the reasons why social audits have failed to protect workers’ rights. Further critiques fall into three categories. First, suppliers manipulate audits—for example, through choosing who will be interviewed and tutoring workers in preparation for the audit. Second, audits are carried out by non-professionals, are of an inconsistent quality, suffer from a lack of transparency and corruption is rife. Both Ali Enterprises in Pakistan and Rana Plaza in Bangladesh were audited by certified auditors a few weeks before catching fire/collapsing, taking the lives of hundreds of workers. Finally, audits focus on issues such as adequate lighting and clean toilets instead of monitoring compliance with critical labour rights, such as collective bargaining, compliance with minimum wages and ensuring that overtime is voluntary and paid.

The journey from ‘soft law’ to mandatory due diligence

After its adoption of the Conclusions on Human Rights and Decent Work in Global Supply Chains, the EU Council has now requested that the EU Commission create a mandatory due diligence legal framework. The European Parliament has issued a draft directive for suggesting that companies should be required to identify and assess human rights and labour rights risks; build a strategy to carry out a supply chain due diligence; undertake stakeholder consultations; and establish grievance mechanisms. Non-compliance should lead to penalties, temporary suspension of business operations and, in egregious cases, even attract criminal liability.     

The idea of corporations bearing responsibility for labour rights violations in their supply chains is based on The UN Guiding Principles (UNGP) on Business and Human Rights, which has three pillars: a) states’ duties to protect human rights; b) corporations’ responsibilities to respect human rights; and c) workers’ access to remedies in the event of a violation of their human rights. The OECD Guidelines for Multinational Enterprises and the OECD Due Diligence Guidance for Responsible Supply Chains in the Garment and Footwear Sector incorporate the UN Guiding Principles.                                                                         

A worker-driven compliance model

Gender-sensitive norms and practices

Brands squeeze their suppliers for ever lower prices. Coupled with short lead times, this pressure on suppliers has resulted in an intensification of work and has led to forced, unpaid overtime. Since approximately 80 per cent of the garment workforce is female, procurement practices and production norms and schedules must factor in women’s child care responsibilities and their occupational health and safety needs, including the need for bathroom breaks. Yet, for both factory and homeworkers, in addition to exploitative wages/piece rates, work pressure compromises child care and holds occupational health risks, including urinary tract infections.      

These purchasing practices have also exacerbated violence and sexual harassment in factories. Homeworkers face a particular form of structural violence at the hands of intermediaries. Bulgarian homeworkers report that intermediaries threaten them with non-payment if they fail to complete the whole order on time. Homeworkers in Asia report that contractors threaten to stop sending them work if they contest the piece rate, which often amounts to as little as a third of the statutory minimum wage. 

Freedom of Association

The ILO Declaration on Fundamental Principles and Rights at Work (1998) recognizes freedom of association and collective bargaining as core labour rights. Yet, according to the International Trade Union Confederation (ITUC), social audits frequently ignore rights to freedom of association and collective bargaining or give factories full marks for respecting these rights in countries that are hostile to trade unions.

Freedom of association and collective bargaining are enabling rights and are fundamental to realizing all other labour rights. For these rights to be a reality for homeworkers, homeworkers’ organizations must be recognized as trade unions. This is vital for homeworkers who struggle to access information and to bargain individually with intermediaries for piece-rates that add up to the minimum wage. 

Worker-driven auditing

Brands need to replace professional auditors with mechanisms that triangulate the due diligence process. Active worker participation, active citizen participation and a robust engagement with trade unions and organizations of homeworkers must be the way forward. The OECD Guidance on the Garment and Footwear Sector enjoins multinationals to engage meaningfully with vulnerable groups whose human rights are likely to be violated, identifying homeworkers as such a group. 

Suppliers should be contractually obliged to provide all workers with written contracts that include the name of the brands for which they produce. They should have copies of brands’ human rights policies and due diligence reports in their own language. 

Most importantly, all workers, including homeworkers, should participate in designing complaints and grievance mechanisms that enable them to complain without fear of losing their work.    

Top photo: Kanyapat Buason sews garments at a unique workers'-owned factory on the outskirts of Bangkok. Her main income is from sub-contracted work. Credit: Paula Bronstein/Getty Images Reportage.