Regulating supply chains

• DOI: https://doi.org/10.13169/instemplrighj.3.1.0094
• Published date: 01 January 2020
• Date: 01 January 2020
• Pages: 94-106

Regulating supply chains

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Introduction

The widened definition of both ‘worker’ and ‘employer’ in chapter six on the

employment relationship and the broadened spread of obligations in relation

to equality at work and health and safety at work in those chapters will undoubt-

edly do much to ensure that decent labour standards apply to workers and

employers in the UK. The re-establishment of sectoral collective bargaining

advocated for in chapters three and four will impose minimum agreed terms

and conditions across whole industries. But these measures may not capture all

whose work contributes to the production of UK goods and services, particu-

larly where the employer has arranged for the work to be done overseas.

In the latter case, it must be accepted that a sectoral collective agreement

established in the UK may not be able to prescribe the minimum rates of pay

(and conditions of work) agreed for work done outside the UK. Yet we con-

sider that certain minimum standards will be enforceable along the entire

length of supply chains which stretch overseas, just as they and more specific

terms will be enforceable along purely domestic supply chains. The effective

regulation of supply chains is thus an important feature of the prevention of

undercutting which is one of the attractions to employers of the proposals in

this document.

The organisation of production across chains or networks of firms, rather than

within vertically organised firms, has proliferated in the form of outsourcing,

joint ventures, public-private partnerships, and long-term agreements with

suppliers and clients. A major objective of firms entering into inter-firm con-

tracting, whether by outsourcing production activities or forging joint ventures

or partnerships, is to raise levels of productivity. The problem is that in many

cases, short-term productivity improvements are won mostly by cutting wages

and other non-wage terms and conditions of employment.

There is no binding international treaty or ILO Convention which might regu-

late global supply chains for the protection of workers. The 2011 UN Guiding

Principles on Business and Human Rights, which address the responsibility of

business to respect human rights including labour rights, leave out the ques-

tion of home state responsibility and are problematic in terms of their

enforceability against corporations. Further, although there are corporations

Regulating supply chains