The briefing describes global supply chains and presents how they offer both opportunities for and challenges to the creation of decent work for women and men.
Summary of key points about global supply chains and decent work
- The global trend to outsource production has led to the fragmentation of responsibility for worker welfare; increasingly, brands and supermarkets no longer have a clear employment relationship with the people who make their goods.
- While a factory is the legal employer of workers, the decision-making power and most of the wealth in a supply chain often lie with the brands at the head of the supply chain.
- Retailers and brands may use multiple suppliers, making it difficult for buyers and suppliers to work together to improve factory or farm production processes.
- Many supply chains have short production cycles and exert strong downward pressure on pay and conditions because lead companies have demanding price targets and delivery times.
- The garment sector has an especially complex supply chain and is made up of thousands of brands, retailers and suppliers around the world.
- Workers on the lowest rungs of global supply chains have little ability to negotiate their conditions of employment - there are low levels of union organization in many industries, such as in apparel.*
* Apparel refers to the production of clothing, footwear and accessories for consumers. Production involves a variety of tasks including cutting and stitching textiles, where workers often perform only one task in the production process. Producing one garment, for example, can involve several factories, often resulting in each factory taking one separate task to produce the finished garment.
One of the key characteristics of the global economy is the increasing fragmentation of production into different activities and tasks along global supply chains, with profound socio-economic impacts. (OECD et al., 2014)
Today many large retail and brand companies - in sectors such as garments, footwear, agriculture, food and electronics - produce their goods through a business model of global outsourcing to factories and farms worldwide. Increasingly goods are produced through global supply chain networks spanning different continents. Companies, suppliers and workers are an integral part of globalized trade, production and employment. Global supply chains depend upon new technology, trade liberalization and capital mobility, and are facilitated through cheaper trade and transport costs and improved global communications networks.
There is a trend towards market power forcing down prices and demanding flexibility. Tight margins mean costs and risks often are passed onto the workers. Workers hired on short-term or seasonal contracts are expected to meet excessively tight targets and work very long hours. Production pressures contribute to the prevalence of poor working conditions that do not meet international labour standards or national laws.