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Multinationals gear up to tackle labor exploitation in sourcing factories

"Although shares of Fast Retailing, the Japanese company behind clothing brand Uniqlo, surged more than 75 per cent over the past year due to its steady expansion in overseas and endorsement deals with tennis star Roger Federer and golfer Adam Scott, around 2,000 of its Indonesian laborers were laid off with unpaid wages and no severance payments by its vendor. Their employer, who went bankrupt in 2015, has been accused of labor violations that included unpaid overtime and union busting."

 

Multinationals gear up to tackle labor exploitation in sourcing factoriesAlthough shares of Fast Retailing, the Japanese company behind clothing brand Uniqlo, surged more than 75 per cent over the past year due to its steady expansion in overseas and endorsement deals with tennis star Roger Federer and golfer Adam Scott, around 2,000 of its Indonesian laborers were laid off with unpaid wages and no severance payments by its vendor. Their employer, who went bankrupt in 2015, has been accused of labor violations that included unpaid overtime and union busting. These workers then demanded $5.5 million of back wages and severance payments from Uniqlo (Fast Retailing) which was rejected, as the brand claimed that it was under no legal obligation to fulfill these demands.

Recently, due to increased pressure from workers, unions and other organisations that support them, multinational companies have been reimbursing laborers for unpaid wages. However, this is not the only issue that laborers face. They are also troubled by the intricate imperialist relations that characterise the capitalist world economy.

Reorganisation of work augments labor exploitation

As per unit labor costs data, countries like China, India and Indonesia, which have the highest global labor-valueMultinationals gear up to tackle labor exploitation in sourcing chain, also have very low unit labor costs. This is also true for Southern countries like Mexico, which has experienced a sharp decline in unit labor costs relative to the United States within the 1995-2014 period. These countries not only have high productivity rates but also low wages which results in higher profit margins with the additional value generated often credited to production in the countries in which these multinationals are headquartered.

These global labor-value chains largely benefit the multinationals that control them through subcontracting. Any misconduct is therefore, attributed entirely to the subcontractors though these mega-corporations are majorly responsible for the exploitation of these workers. Multinationals often place strict conditions and unreasonable demands on their suppliers which lead to the reorganisation of work in their factories leading to more exploitation of workers.

Ways MNCs can control supply chains

A large part of this fault also lies with suppliers who regard their multinational clients as highly prestigious. Therefore, they willingly submit to the unreasonable demands of multinationals even though it often leads to difficulties in production processes. Most demands are delivered through the imposition of systemic rationaliaation and flexible production that began in the 1970s and are continuously maintained by new information technologies, aiming at establishing production, administration, and distribution processes.

For example, the imposition of delivery on demand by multinationals compels suppliers to implement a buffering policy which makes it imperative for these suppliers to get their finished goods ready and store them in warehouses, to be sent only when their multinational customers need them.

This reorganisation of intensifies the exploitation of workers by forcing them to increase their productivity while stalling wages. To counter this, multinationals should ensure that their suppliers comply with national regulations limiting overtime by monitoring them through third party organisations that audit the suppliers and issue standardization certificates. They should also encourage suppliers to increase strict, direct control of labor on the factory floors, as well as apply an incentive system and a specific measurement of individual or group performance that would reward “productive” workers and punish those who fail to achieve production targets.

The intricate global value chain is a system of balls and chains in which the Northern capital is in a commanding position. This phenomenon indicates a new phase of imperialism, used by capital and its state instruments to propose a new set of demands from brands through which they can control their production systems.

 
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