Responsible supply chains

Keynote address at the project launch and stakeholders engagement of the Responsible Supply Chains in Asia Project in the Philippines

By Secretary Silvestre Bello III of the Department of Labor and Employment (DOLE), delivered by Undersecretary Ciriaco Lagunzad at the project launch and stakeholders engagement of the Responsible Supply Chains in Asia Project in the Philippines, Manila, Philippines, 20 November 2018

  • Director Khalid Hassan of the ILO Country Office for the Philippines;
  • His Excellency Franz Jessen, Ambassador of the European Union Delegation to the Philippines represented by Mr Cellini, EU Trade Section Head;
  • Governor Napoleon Concepcion of the Board of Investments;
  • Our social partners from the workers and employers’ sectors;
  • Fellow workers in government;
  • Ladies and gentlemen, good morning.
On behalf of Secretary Silvestre H. Bello III and the Department of Labor and Employment, I would like to commend the International Labour Office, the European Union and the Organization for Economic Co-operation and Development for their partnership in this “Responsible Supply Chains in Asia” project. Designed to contribute to an enhanced respect for human rights, labor and environmental standards by businesses with supply chains in Asia, we hope that this project will facilitate a better and deeper understanding of the supply chain dynamics that govern multinational enterprises or MNEs operating in the Philippines and the local enterprises that are connected in their supply chains. I would say that our minimum expectation is that MNEs operating in the country should be good corporate citizens not only in terms of their consistent and sustainable contribution to our economic development, but also in terms of their willingness and readiness to pursue other corporate activities that are not necessarily tied to corporate bottomlines.

A social agency like the DOLE is inclined to view responsible supply chain as one that enables small businesses to grow, expand and make net positive contribution in their communities, especially in providing better employment opportunities and creating value. MNEs, as the “big brothers”, have the responsibility to help their “small brothers” navigate the turbulence and survive the vagaries of international trade. But the sad fact is that SMEs are generally under-represented in international trade and susceptible to short-term export relationship in a volatile global trade market, a situation which perennially threatens their continued viability as a going concern. While it is the way global trade operates, the vulnerabilities of SMEs in a volatile environment might be lessened by a responsible supply chain that builds on complementarities and interdependencies between MNEs and SMEs.

The DOLE will continue to work with international organizations like the ILO, EU and OECD to further strengthen the labor and employment dimension of policies and programs related to international trade. In fact, we have always supported multipartite initiatives that complement our efforts in laying the foundation for an inclusive and sustainable development. In the face of increasing interconnectivity among people across the world and interdependence between and among countries, we recognize the opportunities offered by international trade in growing our domestic economy. As trade facilitates technological progress and the spread of innovation, it has the potential to contribute to economic growth, better employment outcomes, and improvement in the working conditions and quality of life of our workers.

However, there have been concerns about the current process of globalization, which we have seen to be generating unbalanced results between and within countries and societies. While wealth is being created due to increased integration, the benefits do not seem to be equitably shared among different groups of people. Something is wrong, and something must be fixed.

We thus see responsible supply chains and responsible business conduct as a necessary condition to put some things in order. The potential of trade openness in promoting sustainable economic and social development can only be maximized if it is complemented by appropriate domestic policies on trade, investments, industrial development, social justice, social protection, and safety nets. We have a collective obligation to ensure that trade and investments do not encourage race-to-the-bottom models of economic growth, where gains from international trade are pursued by reducing labor costs at the expense of labor rights and safety, health and well-being of our workers. To my mind, responsible supply chain is the missing link that ought to connect MNEs and SMEs and thus ensure that our workers are able to benefit from international trade.

Today’s stakeholders’ engagement gives us a new window from which to view these issues and situate the role of responsible supply chains and corporate social responsibility and good business conduct in enhancing economic opportunities for our SMEs. We are eager to hear from our social partners their insights and ideas on these issues. As what we have always stressed at DOLE, social dialogue is key in developing relevant and responsive policies and programs. Our experience tells us that social policies tend to be more effective when they are produced as a result of rigorous studies and reinforced by strong involvement of stakeholders.

Today we will also have the opportunity to take another hard look at the 41-year old Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy (although it has gone several needed amendments in 2000, 2006 and 2017), and see how this MNE Declaration and other international instruments such as the OECD Guidelines for Multinational Enterprises, have fared and contributed in the following areas: 1) promotion of economic and social welfare; 2) improvement of living standards and the satisfaction of basic needs; 3) creation of employment opportunities, both directly and indirectly; and 4) enjoyment of human rights, including freedom of association and the right to collective bargaining, in the country.

For the DOLE, we would like to see how this project can support our efforts to promote productivity among MSMEs through the supply chain approach. Our view is that MNEs have the unique opportunity to build a culture of productivity in their host countries by embracing the productivity aspirations of their supply chains. The DOLE is ready to partner with the ILO, the EU and the OECD through this project to implement a joint program that will improve our productivity efforts, including possible study on a legislative proposal that will seek the institutionalization, with appropriate incentives, of productivity structures in business enterprises in the country.

We also would like to see how this project can help improve compliance of SMEs with labor standards and other labor laws and regulations. One possible area of cooperation between the DOLE and MNEs is on the conduct of joint actions that increase the capacity of SMEs to comply with labor standards. These can take the form of capacity-building, joint monitoring and evaluation of inspection outcomes, and advocacy.

On this note, I would like to once again commend the ILO, the EU and the OECD for implementing this important project in the Philippines. I also would like to recognize the efforts of the participants for taking time to attend this two-day activity despite your busy schedules and the transportation challenges we face every day. Let us continue to work together and do our share toward the attainment of a sustainable and inclusive development for all Filipinos, whether here or abroad.

Thank you for your attention.