Rachel Wilshaw, Oxfam GB’s Ethical Trade Manager, explains why investors are key to improving working conditions in global supply chains.
At the World Economic Forum in January, an exchange between Oxfam’s Winnie Byanyima and the CFO of Yahoo went viral. Why? Because it highlights two contrasting views of job creation. For many business leaders, a low unemployment figure is a source of collective pride. But as Winnie says: “You are counting the wrong things. You are not counting the dignity of people, you are counting exploited people… The quality of the jobs matters, it matters!”
Job quality often fails to meet the standards needed for sustainable development. According to the International Labour Organization (ILO), 42% of workers globally—1.4 billion people—are estimated to be in vulnerable forms of employment, with 24 per cent % earning less than $2 a day.
Institutional investors have a great deal of influence over the lives of workers in global supply chains. So where do they stand in this debate?
Harnessing investor power as a force for good
The Workforce Disclosure Initiative (WDI) has secured impressive investor support over the last two years. And for good reason. Poor management of labour destroys shareholder value and is the single biggest barrier to effective risk management. Yet a 2017 study found that, of 6,441 large companies analysed, only 24% disclosed injury rates and just 15% employee turnover.
Oxfam has partnered with ShareAction to develop investor-backed company surveys for the WDI. We have also contributed a range of case studies and short films to help investors understand the nature of the problems for workers in supply chains, the questions they should be asking companies, and what good looks like.
Myanmar: Fast Fashion Creates Precarious Conditions for Garment Workers
As one of the world’s fastest growing economies, Myanmar is of significant interest to investors. The case study brings to life a range of issues faced by workers making clothes for multinational garment brands. These include: extremely low pay, excessive working hours, and poor training—all of which are associated with high worker turnover, health and safety risks, and sudden factory strikes, which disrupt production. As one female worker said: “We get frequent injuries from the needles as we are sewing. We get no protection for our eyes as they break off.”
Malawi: Towards Living Wages in a Revitalised Tea Industry
Tea is one of Malawi’s main exports, used in the blends of many global brands. Until recently, the industry faced serious challenges and tea pickers’ incomes were extremely low. A critical mass of stakeholders formed Malawi Tea 2020 to create a competitive industry; where workers can earn a living wage and smallholders a living income. The case study reports progress in closing the ‘living wage gap’ by around 20%. Progress depends on local employers, sourcing practices of global brands and retailers, and workers’ ability to negotiate collectively.
Morocco: Better Work for Women Strawberry Pickers
We started the ‘Better Strawberries’ group to improve employment conditions for women in Northern Morocco. This initiative includes supermarkets, importers, producers and local NGOs. The case study reports positive change, particularly in workers’ awareness of their rights. However, significant challenges remain. A collaborative approach can improve conditions for workers, but only when they understand their own, specific priorities, and work towards a common action plan.
India: Impacts of Poor Health and Safety Conditions on Vulnerable Workers
80% of workers in India work informally, and are therefore not covered by national health and safety legislation which protects employees. Most companies provide no safety training or personal protective equipment to informal workers, or compensation when accidents occur. 48,000 deaths a year are due to occupational accidents—a rate twenty times higher than in the UK. The case study highlights the health and safety risks for informal workers, and the data that investors should look for as responsible investment grows.
Better quality data contributes to better quality jobs
Two years of survey data are starting to yield useful information about companies’ own employees, but have shone a light on the woeful lack of information about workers in their supply chains:
• Most companies haven’t mapped their supply chains. Only five included detailed information, and even fewer had started to track measures of decent work over the longer-term.
• Companies are not even tracking how many workers in their supply chain have a secure contract and development opportunities, how many are represented by a trade union, and how many women are in management positions.
• In 2017, 31 of the 34 companies disclosing workforce information said they were committed to engaging with suppliers on wages. Yet only three provided examples of concrete improvements.
Investors are key to creating an enabling environment.We hope that these case studies will open investors’ eyes to the human cost of poor labour practices, and how they can use their influence to drive improvements from the companies they invest in. Investors are key to creating an enabling environment. By using their position at the top of the supply chain, they can drive progress across a wide range of geographies and sectors. But they need meaningful information and relevant data to track the quality of jobs business provides.