16 January 2006 | Rebecca Ellinor
Buyers need to do more with Chinese suppliers in order to improve both productivity and working conditions, according to a consultancy report.
In the view of ethical trade consultants Impactt, existing codes of conduct adopted by purchasing companies have done little to improve working conditions.
It carried out a three-year project examining whether better working conditions would improve productivity.
Changing Over Time: Tackling supply chain labour issues through business practice worked with factories to ensure staff got time off, which it found increased their productivity. It proved pay can be increased even when hours are cut because more work is done in the time available and workers saw the benefit of it. It said significant increases in earning were achieved at some factories as a result of introducing 'production bonuses'.
Impactt found that some workers toil for up to 400 hours a month. That is almost twice the legal limit and equivalent to 12-13 hours a day. The report said this should be of concern to purchasing organisations because it is not sustainable.
"Supply chain labour problems have emerged as a key risk factor for China-based companies and global companies which rely on Chinese suppliers," it said. "Badly managed workplaces with substandard labour conditions are also inefficient, unproductive workplaces."
Impactt director Rosey Hurst, told SM
: "The bottom line is for buyers to engage in this. Ethical trading is not just a technical issue, it's a commercial one and buyers' voices are extremely important - they have the pot of money so the supplier listens."
She said buyers needed to convince suppliers they will not be shocked by existing practices but will help factory managers to change their approach.
"Something is only sustainable if it's in the interest of everyone in the supply chain," added Hurst.
The report is free to download at www.impacttlimited.com