Aus Govt Should Get On with the Job of Protecting Vulnerable Workers in Global Supply Chains

Australian companies and government have a responsibility to meet human rights abuses such as forced labour and child labour head on, write Martijn Boersma from Catalyst Australia and Brynn O’Brien from The Australia Institute.

There are more people subjected to slavery-like practices today than at any time in history: almost 21 million people are victims of forced labour.

Due to complex and opaque supply chains, something you wear, eat or drink may very well have touched the hands of a person, even a child, working under duress and in hazardous conditions.

These human rights abuses are linked to Australian companies, investors, government and consumers through global supply chains: 60 per cent of trade in the real economy depends on the supply chains of 50 companies, which only employ 6 per cent of workers directly.

A total of 11.7 million victims of forced labour and 78 million child labourers are located in the Asia-Pacific region. Given the fact that seven countries in this region comprise Australia’s top 10 import sources, Australian companies and government have a responsibility to meet these human rights abuses head on.

In the wake of the Four Corners investigation into the abuse of migrant workers in fresh food supply chains, and a Pulitzer Prize-winning investigation into slavery in the South-East Asian seafood industry, the human cost of inaction to protect vulnerable workers is clear.

A government-initiated, multi-stakeholder working group on slavery and human trafficking delivered its proposals to Justice Minister Michael Keenan late 2015, yet despite ongoing reports of exploitation in the supply chains of Australian companies, the government is yet to act.

A recent paper by Catalyst Australia and the Australia Institute demonstrates that while foreign governments have begun a program of action and progressive reform, local reform proposals aimed at protecting workers have languished under successive Australian governments.

A consequence of Australia’s sluggish response is that, instead of being on the front foot by introducing its own reforms, Australian companies are now forced to respond to a legislative agenda shaped abroad.

Under the 2015 UK Modern Slavery Act, any company exceeding £36 million (A$62.2 million) in annual revenues doing part of its business in the UK must report what it is doing to ensure that its operations and suppliers are free from slavery, forced labour and human trafficking.

When an Australian company has a UK-based subsidiary, markets and sells its products and services in the UK, or is provided with capital from UK sources, it will be subject to the act.

The UK Modern Slavery Act is modelled after regulatory developments in the United States.

The California Transparency in Supply Chains Act, effective since 2012, requires companies of $100 million annual revenues or more to “disclose [their] efforts to eradicate slavery and human trafficking from [their] direct supply chain[s] for tangible goods offered for sale”.

At the federal level, since November 2012, the Dodd-Frank Act rule on conflict minerals seeks to prevent the complicity of companies in the conflict in the Democratic Republic of Congo via the trade of minerals. Initial reports under this provision show encouraging results.

Furthermore, in 2015 the Obama administration finalised an executive order, requiring federal government contractors in the United States, with contracts that exceed US$500 million (A$662.84 million) in value, to take measures to ensure that their supply chains are free of human trafficking and slavery.

Progressive regulatory developments are also taking place in the European Union.

A 2014 directive by the European Commission requires member countries to implement legislation that requires non-financial reporting of “public interest entities”, such as listed companies, describing non-financial impacts of operations and supply chains – including on human rights, as well as measures to identify and prevent risk.

In addition, since 2014, the European Union Procurement Directive gives authority to public procurement offers to require compliance with labour rights while tendering or awarding government contracts. This enables procuring parties to contractually shield workers from exploitation throughout the supply chain.

Finally, the European Parliament passed a bill in May 2015 that enforces the obligatory traceability and monitoring of supply chains that involve conflict minerals, a measure that will affect an estimated 800,000 European companies.

While other jurisdictions are increasingly implementing progressive reform to protect workers in supply chains, the Australian Government has not taken any significant steps forward yet.

That is not to say that Australian politicians have shown no interest in addressing these issues.

On the contrary, both Labor and the Coalition have adopted policies specifically aimed at protecting workers from serious exploitation.

Crucially, in the current parliamentary term, there is a possibility to move forward.

Despite the Coalition’s narrow parliamentary majority, a review of Australian employment and workplaces by law firm Corrs Chambers Westgarth finds that measures to address supply chain worker exploitation have a reasonable chance of making it through the legislative process, a rare point of bipartisan agreement.

The report by Catalyst Australia and the Australia Institute sets out what the Australian Government should do to address exploitation of workers in supply chains.

Principally, legislation should be passed mandating increased transparency; we have learned from other jurisdictions that disclosure and reporting provisions are mechanisms that can help to identify and reduce the risk of abuses.

Australia should set high standards for public procurement and its companies. Regulatory developments similar to those introduced in the United Kingdom, United States and the European Union should be introduced in Australia.

It is no longer possible or acceptable for Australian Government and companies – morally and legally – to ignore the rights of workers impacted by their activities.

About the authors: Martijn Boersma is a researcher at the University of Technology Sydney Business School. He also works for Catalyst Australia, a progressive policy institute and think tank.

Brynn O’Brien is an advisor and researcher on the human rights impacts of the private sector at The Australia Institute.