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How may a future Labour Government impact global supply chains?

30 October 2018 #Supply Chain Governance


It is a gap in many, if not most, senior HR professionals’ experience how to address workforce issues down the supply chains their companies use.

Expertise in supply chain management generally resides with procurement professionals and the buyers who deal routinely with the supply frameworks and the day to day relationship management.

The start point is that most companies appear to see little crossover between supply chain management and HR, save where HR is involved to deal with in-country recruitment and support to deal with the suppliers.

Even the Modern Slavery Act (MSA) seems to have had little impact on that divide of responsibilities. Again the MSA requirements to explain steps taken to avoid slavery in supply chains appears something that often gets a purely formulaic response with compliance or public relations in mind as much as anything else.

Therefore while the Prime Minister is very clearly committed to eradicating modern slavery, to the extent possible without significant legal intervention, the lack of teeth to attack abuse in other countries has caught the attention of experienced lawyers who help develop Labour Party strategies about the workplace, wherever that is, and the global application of human rights.

The international concern over modern slavery is undoubted, as evidenced by the ongoing focus of the International Labour Organisation in Geneva on this topic as part of the ILO’s general attention to international labour standards and the future of work.

The Labour Party agenda looks likely to pick up these issues in a considerably more strategic way to bolster the good intent of the UK Government with a number of key legal changes that would place huge pressure on corporates in the UK to get their act together on tighter controls as to what their suppliers are doing.

While it might be premature to predict a UK general election any time soon and what would happen at it, the odds seem to be shortening on a 2019 election and of course Labour is in with a chance to become the biggest party at Westminster.

This would have massive ramifications for various reasons, including effectively an industrial relations transformation across much of UK industry through the likely introduction of collective bargaining and worker democracy on a scale not seen before in the UK, going beyond even the pre-Thatcher industrial relations landscape.  

However, over and above that the Human Resources and procurement professionals in larger corporates buying from other countries will need to become much better acquainted to collaborate how to address the challenge of better due diligence to ensure that abuses of human rights are identified and stopped wherever they occur.

The improved enforcement of supply chain human rights will need a mix of legal changes in the UK plus a strong support for more international regulation of supply chains. It looks as though Labour would have a good idea what levers to use to achieve change, enabling increased trade union intervention internationally, better regulatory controls at the international level, easier litigation in UK courts against UK based buyers from abusive suppliers, and of course the very important effect of being highlighted as offending human rights in the court of public opinion.

Whatever else is done at the international level, from a purely UK standpoint there is going to be a much higher risk of being found out and sued if the company is neglecting abuse in other countries by its suppliers. Hence workforce management at the suppliers is going to be seen as a more important concern in which UK HR professionals ought to take close interest.

The topic will gain in importance as the UK negotiates future trade agreements after Brexit that Labour would presumably see as a way to improve social justice and economic development as well as securing trade benefits. In this way placing overseas as well as UK workers at the centre of strategic thinking on trade.

The UK government can also of course use its own immense buying power to impose higher standards on its suppliers to safeguard workforce standards in their own supply chains, which may well extend to promoting freedom of association to give more opportunities to trade unions to organise within supply chains, even requiring the suppliers as a contract condition to recognise unions at their workplace.

Possibly there would be new laws to prevent the shipping of goods supplied by enterprises overseas who are abusing worker rights in their own business. Mechanisms for this may sound complex but are possible, especially if there is a focus on certain industries known to carry significant risk of human rights abuses.

Most importantly for HR professionals, their expert help would surely assist due diligence and increased overall vigilance, coupled with increased risk of legal accountability such as joint and several liability shared with overseas suppliers for proven abuses, likely to be with some shifting of the burden of proof onto the defendant company in the UK.

Such direct joint legal responsibility would be a simple tool to focus corporate minds on risks and measures to mitigate. Any ultimate buyer could then be exposed to joint liability as the lead supplier, and the only hope to defend would be demonstrable vigilance to prevent abuses.

There is much for Human Resources professionals to cope with in coming years  just learning how to handle artificial intelligence and automation driven changes in the workforce and the development of totally new skills alongside increasing displacement over time of human workers by disruptive technologies, but a Labour Government is likely to put unprecedented extra pressure on HR and Procurement to manage much better the ethical values in their supply chains and enforcement of standards to protect their supply chain workers wherever in the world they may be.

Disclaimer
This information is for guidance purposes only and should not be regarded as a substitute for taking legal advice. Please refer to the full General Notices on our website.

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Michael Sippitt

Michael Sippitt
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Supply Chain Governance team
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