INTRODUCTION into existence. The United Nations General Assembly declared

INTRODUCTION

In
the next 100 years, when people talk about how human rights have been around
for centuries, they will wonder about how it came into existence. The United
Nations General Assembly declared the Universal Declaration of Human Rights in
Paris on 10 December 1948 (United Nations, 2017). It has two articles
dedicated to Labour rights. Labour movements and protests have been around for
centuries. There are plenty of movies, books and history dedicated to the ill
treatment of labours throughout the world. Karl Marx is known for being one of
the most prominent defender for workers’ rights. His economic theories coupled
with his philosophies about a society ruled by workers gave rise to one of the
earliest socialist movements for the rights of workers – from 1848 to as long
as 1917 (Gaffney & Blunden, 1993).

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The
precedencies that caused the establishment of the international Labour
Organisation and the Human/labour rights start from 18th century.
England was the first country to industrialise and thus, was also the first
country to face capitalist exploitation. This led to the passing of the first
major labour legislation in 1802 – The Health and Morals of Apprentices Act (Hutchins & Harrison, 1903). Thus, protests in
other countries – France, Netherlands, Switzerland, Germany and more – broke
out as industrial revolution pursued. Although, exploitation and abuses were
much worse before the legislation, the biggest human rights abuses in history
were: –

·        
The great palm oil Scandal: Palm oil is a part of almost
everyone’s diet in this age of culinary arts. The biggest food conglomerates
use palm oil in their daily business – AFAMSA, ADM, Colgate-Palmolive,
Elevance, Kellogg’s, Nestle, Procter & Gamble and more. These businesses
also turn a blind eye to the human and labour rights abuses in Indonesia that
goes into manufacturing palm oil. ( (Mongabay and The Gecko Project, 2017)

·        
In 2001, it was found that Nestle kept over 600,000 children
in extremely brutal conditions, long working hours and hit with machetes and
they carried it on until 2012 when an internal audit exposed everything. (Hawksley, 2012)

·        
In 2010, Qatar won the bid to host the FIFA 2022 soccer World
Cup. The contract requires any country to host to build a new stadium. Qatar
has condemned 2,000 migrant workers to build the stadium in the middle of the
desert. According to the guardian, with their passports confiscated and meagre
pay, if at all, one labour is dying every day. FIFA ignored it till they could.
Finally, in 2017, FIFA has been requested by its own advisory board on human
rights to urge the government of Qatar to abolish the kafala system on workers
building the stadium. (Conn, 2017)

WALMART AND BANGLADESH

Bangladesh
is one of the largest retail exporters in the world. It offered the cheapest
labour when multinational firms were finding ways to cut costs in the last few
years on the 20th century. After Ottawa dropped import duties from
Bangladesh in 2003, Imports shot up by 618% from Canada to Bangladesh. (The fifth Estate – Made in Bangladesh, 2013) Clothing and textile
industry provide the single source of growth in the developing economy of
Bangladesh. It is also a major source of foreign exchange earnings for the
country. Global clothing brands such as Primark, Loblaw, Joe Fresh, Gap,
Walmart, Nike, Tchibo, Calvin Klein and Tommy Hilfiger soon outsourced their
production to Bangladesh. Along with creating a Readymade garments industry,
these companies also set up liaison offices in the country. While their duty is
to manage relationships with the RMG industry, they are also responsible for
their supply chain factory’s workplace regulations. (Kolk & Tulder, 2002)

Walmart’s
presence in Bangladesh came into the spotlight on April 24, 2013 when the Rana
Plaza collapsed killing more than 1,100 people in it. The 2012 Dhaka fire in
the Tazreen factory killed 112 people and was deemed as one of the worst fire
disasters in the country then(Ibid.). The fire was caused to negligent fire
safety standards as well as other safety standards that were conveniently
neglected (Chalmers & Quadir, 2012). This caused a
massive uproar in the local community as well as on the international news. The
aftermath of the Rana Plaza disaster took a grave turn as it revealed the
negligence on a global platform and exposed the human rights abuses. Then
President, Barack Obama suspended trading privileges between the United States
of America and Bangladesh in June 2013. The corruption during construction of
the buildings led to use of poor materials. The American federation of Labor
and Congress of Industrial Organisations, in 2007, had submitted a petition –
“alleging a number of worker rights issues in export processing zones, the
ready-made garments (RMG) sector, and the seafood processing sector.” (Porter, 2015) These petitions were
then expedited in light of the events. All major brands were blamed to have
ignored their corporate responsibilities. We will explore the reasons how this
happened and why was it allowed.

GLOBAL SUPPLY CHAIN FOR RMGs

The
Global Supply Chain(GSC) is a long-term relationship. There are broad chains –
Buyer-driven and supplier-driven. Supplier driven chains refers to industries
which are machine intensive and produce semi-final products like machineries,
petroleum products, electronic parts. Buyer driven chains refer to more
labour-intensive industries like footwear, clothing, and toys.  (Rahim, 2017) Firstly, we look at
the textile industry as a whole. The textile industry is buyer-driven industry.
The RMG suppliers mainly accesses the global market through “(…) GSC where the
global buyers coordinate the production network.” (Rahim, 2017) Porter’s five forces
analyses reveals the disparity between the bargaining or negotiating power
between the buyers and the suppliers. The bargaining power of suppliers are:

·        
Large suppliers may attempt forward integration and explore
the retail market themselves – But there are very few suppliers big enough to
create more impact than their clients in the market.

·        
Large number of small suppliers; limited number of large
suppliers: Large retailers normally have multiple small suppliers while the
large suppliers may have multiple retailers. These large suppliers have some
bargaining power.

·        
The threats to new entrants are low – Although, it is very
difficult for a new entrant to build a brand image and compete with other
brands.

The
bargaining power of retailers are quite high as:

·        
Buyer to supplier ratio is small – Large retailers can source
from multiple suppliers which give them more power while negotiating.

·        
Purchase volumes are large – The retailers generally have
large purchase orders, so suppliers have a lot to lose if they don’t satisfy
the retailer.

·        
Threat of backward integration – Large retailers may build
their own manufacturing plant to cut costs.

POWER OF RETAILER OVER SUPPLIER

The
disparity between bargaining powers between large retailer and suppliers is
very important in discussing the responsibilities of large retailers over
labour rights in the supply chain. As mentioned earlier, the relationship
between the retailer and the supplier is long-term investment. (Ibid.) Demand
for textile products is high throughout the year and thus, the purchase orders
of most of the large and medium supplier make them work at maximum capacity.
When it refers to branded garments, the fashion is everchanging and the
production needs to keeps changing as well.

POWER OF SUPPLIER OVER RETAILER

The
suppliers earn a fraction of the revenue earned by the large retail firms for
the products they produce. Although the suppliers do not hold bargaining power
as discussed above, they cut costs for themselves via corruption in developing
countries like Bangladesh. (Carroll, 1991) (Visser, 2008) The Rana Plaza
collapse was due to use of poor materials and cheap architecture. The owner had
constructed 2 additional floors outside the original building plan which was
not recommended for the foundation laid. All of this, even though the official
building report mentioned expensive materials and labour. The Human rights
abuse, child labour, health and safety standards violations in the factories,
poor wages, extremely hours and overcrowded working facilities were all ways to
cut costs and earn more for the suppliers themselves. (Ibid.) All of it was
petitioned and campaigned against in Bangladesh.  Policies were in place for auditors to check
and prevent such atrocities, but the suppliers would find a way to bribe or
cheat the audits and the firms ignored it till they were getting their
merchandise at a very cheap cost. (Hussain, 2007)

UNDERSTADING THE GLOBAL SUPPLY CHAIN AND
CORPORATE RESPONSIBILITY

The
firms have two general philosophies regarding the business structure
surrounding their supply chain – Absolutist and relativist. (Kolk & Tulder, 2004) The absolutist
philosophy dictates that the firm provides its workers the wages and standards in
accordance with its home country. (Blowfield, 2005) Whereas, relativist
philosophy allows the firm to set the wages and work standards according to its
home country. (Bowie, 1988) Reflecting on the
wage gaps and differences in working standards between developed and developing
countries – say, U.S.A and Bangladesh – , most firms opt for the relativist
philosophy as it allows the firms to claim their ethical standards and have a cost
advantage in this competitive world. (Ibid.) I wish to present some examples of
companies who have turned their supply chain management around after being
accused of committing extreme negligence towards human/Labour rights:

·        
After 20 years of campaigning, Nike turned itself around to
build a corporation based on openness and transparency. External Audits and
making all supplier information available to public and led it to earn the
trust and build back its brand value after the massive boycott campaign it
faced in the 1990’s. (Birch, 2012)

·        
Nestlé has been at the top of the food industry as well as
the bottom of the food industry, all for the questionable ethics of itself and
its suppliers. Nestlé has been accused and fined for child slavery in Ivory
Coast, Union busting in India, and water exploitations in desert states of USA.
In 2016, it had disclosed that it found slavery in its supply chain in Thailand
seafood industry while it was already facing a legal battle against the US for
child slavery. After many years of denying and ignoring these allegations,
Nestlé used meticulous external auditing of its supply chain and started
working towards eradication of such abuses. (Kelly, 2016)

CONCLUSION

Human
rights or the fundamental rights of a man is the most important part of the
foundation of any society. In a world where corporations and business
conglomerates are the biggest power after the government, their involvement in
uphold justice is paramount. Therefore, the large garment retailers should be
responsible for ensuring that the labour rights are upheld in its supply chain
factories. They have a personal agenda for doing so as well as it their duty
to. The retailers control the better part of the bargaining power in the supply
chain, the supplier factories are totally dependent on the retailers. The suppliers
will have no choice but to follow any all policies of the company and conduct
business in accordance with the company’s ethics and values. Any human rights
abuse or other social injustices would only reflect on the brand of the retailer
thus, they have market share and revenue to lose as in the case of Nike
mentioned above. The retailers have made the most out of globalisation and it
can set the standards for new companies or other factories in developing
countries to build better relations with the country. After the incidents in
Bangladesh, Walmart has reviewed the auditing policy and a greater pressure is
being put on external auditing and targeting corruption in the supply chain.
Multinational companies also have an important part to play in the development
of developing countries and bridging the gap between them. If we can’t hold
them responsible for the mistreatment of people, resources, and environment
then there isn’t an entity powerful enough to make a change.

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