Wage violations in industry supply chains are rife, according to findings from the Chartered Institute of Procurement & Supply (CIPS).
Over the past two years UK supply chain managers have seen evidence of staff being paid late (14 per cent), staff not receiving the minimum wage in the country the supplier is based (10 per cent) and three per cent said they had seen both of these failings.
Cath Hill, Group Director at the Chartered Institute of Procurement & Supply (CIPS), said: “The vast majority of British businesses would agree that short changing their employees is inexcusable, but when it comes to the workers further down their supply chain they don’t have the same level of concern. Whether a supplier is in Shenzhen or Sheffield, businesses have an obligation to ensure that the human beings making their products are free, safe and properly paid.”
The CIPS warned that the situation could worsen as Brexit is likely to squeeze supplier margins. Research from the Institute found that 54 per cent of supply chain managers believe they will have to renegotiate prices with suppliers to cope with the potential increase in costs post-Brexit.
“When suppliers are squeezed and prices are pushed down, cuts must be made. Too often it is the people at bottom of the supply chain who feel the pinch,” said Hill. “As a country, we must take meaningful action against businesses who reap the benefits of worker exploitation in their supply chain.”
In May 2018 the Labour Market Enforcement Strategy was published providing recommendations to the government on how to prevent labour abuses, including wage violations and cases of modern slavery.
When asked what should be done to remove labour abuses from supply chains, supply chain managers based in the UK said the government should:
hold the public sector to the same standards as the private sector (65 per cent) provide more advice to help businesses find labour abuses in their supply chain (63 per cent) public procurement contracts should explicitly compel compliance with labour market regulations (56 per cent) name and shame businesses who use suppliers that commit labour abuses (54 per cent).Beyond wage violations, the CIPS research also revealed other labour abuses. These included 15 per cent finding poor working conditions in their supply chains, 14 per cent finding suppliers were not conforming to relevant quality standards and nine per cent had received false information about their products from suppliers.
More seriously, seven per cent of supply chain managers said their suppliers had used undocumented workers, five per cent had found workers banned from forming unions in their supply chains and, most shockingly, two per cent of supply chain managers had found child labour in their supply chains.
