Unit 4, Lecture 3 - The realities of work in global supply chains
60% of production in world trade is going through supply chains of major MNCs
80% of production if you add the financial component of value of global trade
60% of workers (around 3 billion) are in the formal sector but with low-paid, often unsafe work w/o adequate social protection. 40% are in the informal economy – no rights, no minimum wage, no social protection
Taming corporate power in supply chains is one of the ITUC frontlines – in addition to eliminating slavery, ending corporate greed and climate action.
The US $80 billion corporate social responsibility (CSR) industry has failed. Need tougher domestic laws in producer countries and responsibility from the governments where MNCs are headquartered for laws that mandate cross border responsibility for implementation of rights and due diligence from companies.
ITUC recommendations for companies:
- supply chain transparency
- safe work
- secure work (end short term contracts)
- minimum living wages
- collective bargaining
A supply chain is the system that companies use to source and distribute their products and services from origin to customer. MNCs often choose to operate in low-labor-cost countries with weak regulatory environments, leaving owrkers and communities with legal recourse. It can be very difficult if not impossible to hold parent companies accountable for human rights violations of their subsidiaries.
Transfer pricing – process of setting prices for goods and services that are traded between for example parent companies and their subsidiaries. Firms frequently manipulate prices to lower the profits in the subsidiary that is located in a country that levies higher taxes and to declare higher profits in a country with lower taxes. This tax dodge robs host countries of essential tax revenue to support public services, including labor inspection.