Procurement teams 'failing to enforce labour standards'

26 August 2021

Procurement teams are failing to enforce responsible labour standards, according to more than half of European suppliers polled in a study.

According to the research, 58% of European suppliers said buyers rarely or never include responsible labour practices in contracts or agreements.

The report, from Ivalua, also identified a lack of consistent monitoring of labour standards. Only half (50%) of European suppliers said they were frequently asked by their buyers to provide proof that they protect against unsafe working conditions. The figures were even lower for other labour standards such as child labour (47%), modern slavery (45%), and below minimum wage pay (42%).

The UK government has proposed new amendments to the Modern Slavery Act, including fines and prison sentences for the most serious cases, increasing pressure on UK organisations to identify unethical labour practices in their supply chains.

However, most organisations are unprepared for this, Ivalua said, with 76% of UK suppliers not implementing plans to mitigate the risk of fines posed by the proposed changes.

The study, Combatting unethical labour: How organisations can collaborate with suppliers to uphold working standards, was conducted by Coleman Parkes Research and involved a survey of 300 suppliers across the UK, France, Germany and Switzerland.

Only 8% of suppliers said buyers always included responsible labour practices in contracts or agreements, according to the research. However, more than three quarters (77%) of suppliers believed that responsible labour practices could give them a competitive edge. In the UK this was 86%, higher than in France (71%) and Germany (71%).

Ivalua said the findings showed buyers were not enforcing standards for responsible labour practices. However, more than three quarters (78%) of European suppliers reported that they did not have fully implemented plans in place to detect and eliminate modern slavery in their supply chains.

According to the report, most suppliers currently do not have plans in place to eliminate below minimum wage pay (77%), child labour (76%), unsafe working conditions (75%) or unreasonable working hours (78%).

Alex Saric, chief marketing officer at Ivalua, said the responsibility to identify and eliminate unethical labour fell on every tier of the supply chain, but buyers should bolster their ESG strategies.

“Crucially, organisations must have adequate data to identify and avoid partners with unethical labour practices,” said Saric.

“They require 360-degree visibility of their immediate suppliers, sub-tier suppliers, and subcontractors. To do this, organisations must have the right tools in place to ensure the reliability of data, and facilitate timely and effective decision-making. Otherwise, instances of poor labour standards can easily slip through the net.”

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