Why use OECD Guidelines for the Garment Supply Chain

The pursuit of higher profits and low cost centres led to a fragmentation of the supply chain of garment with the producers being located in the global south and the consumers, mostly in the global north.  The global garment brands, mostly companies in the US or in European countries, source their products from suppliers in the global south. These suppliers are divided into multiple layers, with regulation declining as we go down the different tiers of production. The global brands do not disclose their complete list of suppliers or their sourcing price as both these are used by the brands to push competing suppliers in the global south towards a race to the bottom, thereby squeezing the producers in the south for a greater share of profits for the brands.

While for the workers, most of them are first generation women from rural areas with no or very little idea about wages and rights at work. To complicate matters, most workers live in fear of losing their jobs and hence unionisation is very difficult.

Trade Unions have used and continue to use:

  1. Shop floor or/and street protests to put pressure on employers to negotiate with them. This has become increasingly difficult as workers employed in precarious jobs find it tough to both join and sustain struggles in fear of losing their jobs;
  2. Legal strategy but in most cases, cases drag on and once again it becomes difficult for workers to sustain this. Further, in recent years, the judiciary too has delivered, if at all, very little and late; and
  3. international campaigns of ‘naming and shaming’ to exert pressure on global brands, especially in the garment industry. These campaigns have yielded results in denting the image of the brands to their consumers. But, these campaigns simultaneously blame consumers in the global north for buying low cost garments. Low cost garments are bought by working people of the global north who with declining wages and increasing cuts in social security cannot be made to feel guilty for buying low cost garments. The problem lies in how the profit from these garments is distributed along the supply chain and what proportion of it is lopped up by the brands. Thus increasing cost of garments would not get translated into higher wages and better working conditions for workers. It would only mean higher profits for the global brands. Thus it is time to shift the blame from the consumers to those who take production decisions along the supply chain.

But these strategies together and severally have 2 problems: (1) they may not work at all; or (2) they deal with a case in isolation and do not address the systemic problem. Thus, it is critical to supplement the ongoing struggles with new parallel strategies. One such strategy to exert direct pressure on multinational enterprises is to use the complaints mechanism available within the Organisation for Economic Co-operation and Development (OECD).

The OECD is an intergovernmental economic organisation providing a platform to identify good practices and coordinate domestic and international policies of its members. Most European countries, Australia, Japan, South Korea and the USA are members of the OECD. The OECD, in 1976, adopted Guidelines for Multinational Enterprises that are recommendations addressed by governments to multinational enterprises. They provide voluntary principles and standards for responsible business conduct consistent with applicable laws. Each OECD country should set up a National Contact Point (NCP) that will be responsible for the promotion of the Guidelines at the national level,  handle all enquiries related to the Guidelines in that specific country, including investigating complaints about a company operating in, or headquartered in that country. The NCPs should dispose a complaint within 12 months from the date of filing of the complaint. This time bound remedy can help unions in resolving industrial disputes and even to put pressure on multinational companies. The OECD guidelines allow unions to negotiate with the principle producers – the MNEs and make them accountable for their conduct along their supply chain.

Most global garment brands like Zara, H&M, Gap, PVH, Nike, Adidas, Walmart, A&F, C&A, etc are all companies operating in, or headquartered in OECD countries, and thus violations of labour rights along their supply chain can be reported at the relevant NCP. This could be used as a strategy to pressurize the global brands to be accountable for the working conditions in their supply chain and negotiate with the workers and their organisations at their suppliers. In 2016, the Pragatisheel Cement Sangharsh Samiti, a union of contract worker at Holcim, a Swiss Multinational cement company, with its plant in Chattisgarh, was able to use the complaint mechanism successfully to regularise employment for its membership.

On 8 February, the OECD released a new due diligence guidance for supply chains in the garment and footwear sector.  The guidance is meant to provide practical support to MNEs on their implementation of the due diligence recommendations and associated provisions in the Guidelines. Thus this could also be used by garment workers and their organisations to file complaints against brands in cases of violation of local labour laws and other international labour standards as recommended under the Guidelines.