Wage abuse in a fifth of supply chains

Will Green is news editor of Supply Management
20 August 2018

A fifth of firms have found wage abuses in their supply chain, according to a CIPS survey.

The poll found 21% of supply chain managers had seen labour violations in supply chains over the past two years, including late payment (seen by 14% of respondents) and staff not being paid the minimum wage (10%). Some 3% had seen both.

CIPS said the situation could worsen as Brexit is likely to squeeze supplier margins further. A previous CIPS survey found more than half (54%) of UK supply chain managers would renegotiate prices with suppliers to cope with a potential increase in costs after the UK leaves the EU.

When asked in the latest survey what should be done to tackle labour abuses in supply chains, respondents said the UK government should hold the public sector to the same standards as the private sector (65%) and provide more advice to businesses (63%).

More than half (56%) said public procurement contracts should explicitly compel compliance with labour market regulations and a similar proportion (54%) said businesses who use suppliers that commit abuses should be named and shamed.

Cath Hill, group director at 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.

“Ignorance is no excuse. It is the responsibility of procurement teams to regularly visit their suppliers to ensure workers are paid in full and on time. 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. As a country we must take meaningful action against businesses who reap the benefits of worker exploitation in their supply chain.”

The survey, involving 825 UK supply chain managers, revealed poor working conditions, such as a dirty environment or health and safety risks, in supply chains (15% of respondents), suppliers not conforming with quality standards (14%), suppliers giving false information about products (9%), use of undocumented workers (7%), workers banned from unions (5%) and child labour (2%).

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