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25 Jan 2022

Marlese von Broembsen, WIEGO

From factories to homes: Why human rights due diligence must extend to all workers in the supply chain

The world is still reeling from the devastation caused by the COVID-19 pandemic, with economic recovery unfolding as a stark, two-speed story of the Global South and Global North. Supply chains that were brought to a grinding halt by lockdowns are still limping along, with recent studies showing garment sector workers remain some of the world’s worst affected.

This crisis has compounded the pre-existing exploitative conditions commonplace before COVID-19. This is why it is critical, ahead of a Directive which could transform this broken industry, that workers from Asia, “the garment factory of the world” are heard. Worker organisations and trade unions from South and South-East Asia garment production countries have written an open letter to EU policymakers outlining the fundamental principles this Directive needs to create meaningful change. These organisations represent the voices of millions of workers from Bangladesh, India, Cambodia, Sri Lanka, Thailand, Indonesia, Vietnam, the Philippines and Pakistan.

The resounding call is for the EU sustainable corporate governance regime to apply to all workers in all tiers of the chain, irrespective of their employment status. Why is this important?

First, by targeting only tier-one factories, the Directive would ignore the real structure of the chain and leave most workers unprotected, enabling suppliers to violate workers’ human rights with impunity. Subcontracting is ubiquitous in supply chains, not only in the garment sector. In India for example, almost 90% of garment sector workers are employed in small and medium enterprises, many of which subcontract to homeworkers. A survey of 340 garment factories in Delhi and Bengaluru showed 58 percent of surveyed factories outsource to homeworkers. Factories subcontract to homeworkers for many reasons: some work, like embroidery, cannot be done in factories and homeworkers constitute a flexible workforce for big or rushed orders. Because homeworkers are not legally protected, they can be paid slave wages. Before the pandemic, homeworkers earned between half and one third of the minimum wage. The cost of the space they work in, electricity and equipment such as sewing machines, needles and scissors, comes out of their own pockets.

Social auditing also drives subcontracting. A study of 40 factories in eight garment and footwear producing countries found it is common practice for suppliers to maintain one factory that complies with codes while subcontracting to unaudited factories. Auditors themselves recognise this. Researchersinterviews with auditors revealed significant blindspots. They showed that “because many exploited workers are technically employed by labour providers and contractors or at off-site production facilities, they are thus not officially on the books, and so auditors had little scope to detect or address this issue.” It follows that if human rights due diligence legislation applies only to employees in factories, the human and labour rights of workers in workshops and homes can be violated with impunity.

Finally, in most production countries, even in tier-one factories, only a small percentage of the largely female workforce is permanent and full-time, meaning few are legally classified as employees. The remainder are fixed-term contract workers, often employed through intermediaries and casual workers paid by the piece. Workers have reported to the Asia Floor Wage Alliance that many audited factories provide fixed-term contract workers and casual workers paid by the piece with ID cards so that auditors record them as employees who receive social protection.

A 2012 study disaggregated supply chain workers to understand the impact of strategies to realise decent work for employees on other categories of workers. They concluded that if labour rights are only for some, not all workers, the cost of ‘upgrading’ some workers’ terms and conditions of work is borne not by factories or brands, but by other workers who are not covered by audits: informal workers in factories and subcontracted workers in workshops and at home. This is a gender issue: In the textile, garment and footwear sectors, 80 percent of the workforce is female and women are always found in the most insecure work: casual work paid by the piece and homework.

How might the EU Directive include all workers in all tiers of the chain? This question is addressed in a platform of demands addressed to EU Policy makers submitted by 14 organisations of homeworkers to the Commission. Indeed, the OECD Due Diligence Guidance for Responsible Supply Chains in the Garment and Footwear Sector (module 12) and Australia’s supply chain regime illustrate how the Directive could include homeworkers. One way to include homeworkers is for enterprises to contractually oblige their suppliers to ensure that all tiers of the supply chain keep a register of the names and contact details of all contracted homeworkers, with copies of all individual contracts. In accordance with the OECD Guidance, the register should include a record of the quantity of goods produced by each homeworker, and the amount and basis of their pay. National legislation by EU member states could create a statutory duty to this effect.

Most importantly, the Directive should make it mandatory for enterprises to contractually oblige their suppliers to provide every worker in their supply chain with a contract which includes the names of the brands for which they labour. Factories are known to hide the names of brands they supply, and workers are threatened with dismissal if they try to identify which brands they produce for. If workers –inside and outside factories– do not know the names of the brands for which they produce, they are left unable to report abuse and seek redress. Even if the legislation covers all workers, suppliers will likely continue to violate their rights with impunity.

For supply chain workers in the developing world, the delay of the legislative proposal is lamentable. In the absence of expeditious intervention, gross human rights violations of workers in Europe’s supply chains will continue unimpeded. Both factory and homeworkers, their organisations and trade unions urge the European Commission to do the right thing and publish the legislative proposal as soon as possible.

By Marlese von Broembsen, WIEGO

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