Italy: S Group to reform procurement after supply chain study links low supermarket prices to wage squeezes & migrant worker exploitation

Author: Gautam Naik, S&P Global, Published on: 27 November 2019

"Hard Labor: Lower supermarket food prices tighten squeeze on migrant workers", 25 November 2019

... S Group, asked Oxfam... to scrutinize the supply chain through which it sources Italian tomatoes to assess its impact on human rights... prompted by growing reports of the widespread exploitation of migrant workers...

Among the findings: S Group.... routinely used its market clout to negotiate lower prices for canned tomatoes from its Italian suppliers.... [and] an indirect link between those low supermarket prices and the exploitation of migrant workers at the end of the supply chain...

[P]rices paid by S Group to... suppliers of tomato products... decline[d]... [which] squeezed farmers' tight margins, providing them with an incentive to avoid paying workers the higher [trade union] negotiated wage...

The... comprehensive human-rights appraisal... illuminates a global problem: how the low prices of hundreds of common grocery items... have become increasingly disconnected from the true cost of labor used to produce them, and indirectly contribute to the exploitation of migrants working in agriculture...

S Group... said the findings... have persuaded it to seek a more ethical price for tomatoes based on the true cost of labor... [I]t is pushing big Italian tomato suppliers to take tougher steps to improve labor conditions... [and] plans to apply... findings... to its procurement practices for other foods in other countries...

Oxfam... is urging more supermarket chains to enact their own human rights impact assessments... 

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Related companies: "S Group"