Can local industrial relations improve working conditions in global supply chains?

This article was inspired by a crucial question: What is the effect of workplace unions and collective bargaining agreements (CBAs) on working conditions, especially in the export-oriented apparel industries that supply major multinational brands and retailers? This question, we believe, is fundamental to global discussions on the enforcement of labour rights, the pursuit of decent work, and the fostering of more responsible business practices within supply chains. To answer this question, we use a unique dataset spanning over ten years from the Better Work programme, a joint initiative of the International Labour Organization (ILO) and the International Finance Corporation (IFC), in Bangladesh, Cambodia, Haiti, Indonesia, Jordan, Nicaragua and Viet Nam.

Previous research from countries in the global North has consistently shown that unions and collective bargaining help improve job quality, wages and workplace safety. For example, unions often do so by training workers, negotiating with employers, and supporting labour inspectors and auditors in the identification and remediation of issues. However, the landscape changes significantly with neoliberal globalisation and the relocation of production to the global South, where production costs are lower and workers’ ability to organise collectively might face restrictions. In these settings, workers often face legal or political barriers to organising, which are compounded by significant power imbalances between multinational buyers and producers. These lead to intense price competition, shorter lead times, and volatile orders, which often translate into negative impacts on working conditions, such as poor wages, unsafe environments and excessive working hours. Against this background, we ask: can local industrial relations still play a meaningful role?

Our overall findings are compelling: the presence of workplace unions is linked to better compliance with labour standards, even in countries where union activity is restricted—challenging the assumption that unions are too weak to make a difference in these contexts.

However, our results vary considerably depending on the specific legal frameworks and industrial relations environments within each country. In countries such as Indonesia, Cambodia and Nicaragua, we found that unionised workplaces were significantly more likely to comply with labour standards. Collective bargaining agreements in these countries were also associated with fewer violations. In contrast, in Jordan and Viet Nam, where governments maintain a single-union structure, we did not observe significant improvements tied to union presence. Bangladesh also showed limited effects, likely because of the very low number of unions in apparel factories.

These findings have important practical implications, suggesting that unions and CBAs, even under constraints, can make a measurable and significant difference in upholding labour standards. For programmes such as Better Work that provide consistent advice, assessments, training and feedback across countries, our evidence highlights the critical need to engage with and support local actors and institutions, underscoring the importance of integrating local industrial relations systems into policy and practice. For multinational brands and retailers who source from these factories, the results serve as a reminder that investing in and fostering genuine local collective organisation, such as unions and CBAs, can be a powerful and necessary complement to international policy interventions.

Looking ahead, this article opens up several avenues for future research: What makes some unions more effective than others? How do the contents of CBAs vary? What role does worker mobilisation play over time and at different supply chain tiers? These will require delving deeper into factors such as union independence, density, the specific content of CBAs, and the broader history of workers' mobilisation in different contexts and sectors. It also highlights the persistent policy challenge of how to effectively overcome restrictions on freedom of association to ensure decent work for all.