Chapter 6: How to enforce minimum wages

6.10 Global supply chains

While wages and working conditions for the numerous workers engaged in global supply chains are sometimes better than those provided in enterprises which supply the domestic market (particularly in the informal economy), the existence of low wages and long hours remain a source of concern.1 In many enterprises, women are paid at the lowest end of the scale2.

Excessively long hours with extensive overtime work is a prominent issue — often exceeding the ILO limit of 48 hours per week established in Conventions Nos. 1 and 30. For example, one recent study of working hours in Chinese and Thai supply chain factories producing football products found that 48 per cent of the workers in these factories were working more than 60 hours per week.3 In addition, the lack of adequate rest periods and paid annual leave is also a common issue. For example, the same study found that 25 per cent of workers in the factories studied did not receive at least one day off work in every seven-day period.

In response to workers’ demands for higher wages and better working conditions in supply chains, some brands and retailers have adopted corporate social responsibility (CSR) practices and have included “living wages” or “fair wages” in their codes of conduct, requiring their members to implement minimum conditions in their supply chains. However, different studies suggest that such initiatives have had only modest effects.4

Falling prices paid to suppliers have contributed to stagnating or in some instances falling wages, and have made it difficult for suppliers to pay higher wages and sometimes even to comply with minimum wages5 Suppliers, and at the end of the chain, the workers, continue to receive a small share of the retail price. Compliance with minimum wages thus also require responsible purchasing practices.

The box below highlights the work of the ILO-IFC Better Work Programme in monitoring and furthering compliance.

Better Work Programme

The Better Work Programme is a partnership between the International Labour Organization (ILO) and the International Finance Corporation (IFC). The programme assists enterprises to improve practices based on core ILO labour standards and national labour law, including minimum wage legislation.

It does this with a strong emphasis on improving worker–management cooperation, working conditions and social dialogue. Enhancing respect for labour standards helps enterprises meet the social compliance demands of global buyers, improve conditions for their workers, and helps firms become more competitive by increasing productivity and quality.

Better Work focuses on labour-intensive industries with large numbers of vulnerable workers in developing countries, such as agribusiness, apparel, construction and light manufacturing. The programme is developing both global tools and country-level projects.

Source: Better Work Programme.

1 Miller, D, and Hohenegger, K. (2016) (forthcoming), ‘Valuing labor, buying practices and the low wage question in apparel supply chains’, preliminary version, ILO-INWORK
2 JETI (Joint Ethical Trading Initiatives),2015. “Living wages in global supply chains: A new agenda for business”.
3Smyth, R.; Qian, X.; Neilsen, N; and Kaempfer, I. (2013), “Working hours in supply chain Chinese and Thai factories: Evidence from the Fair Labor Association’s ‘Soccer Project’”, British Journal of Industrial Relations, Vol. 51:2, June 2013, pp. 382-408.
4 Locke (2013), The Promise and Limits of Private Power: Promoting Labour Standards in a Global Economy, New York, Cambridge University Press.
5 Starmanns, M., “How is value shared within global supply chains? Purchasing practices and low wages in global supply chains”, ILO Working Paper, INWORK Series, forthcoming