New Report Spotlights Hidden Workforce Behind Global Brands

Global brands rely on a hidden workforce within their supply chains to avoid responsibility for poor working conditions and abuse, according to a new report from the International Trade Union Confederation.

The report, released Monday, is based on surveys of 50 major companies—a number of which source from Cambodia—and states that 94 percent of their workforces are indirectly employed through subcontractors.

The Coca-Cola Company, for example, which owns bottling operations in Cambodia, only has 129,200 people on its payroll, but depends on 5.7 million supply-chain workers.

“Today the majority of the largest multinationals exploit complex global supply chains through countries in which they source cheaper raw materials, use low wage labour, escape government regulation and reduce taxation,” the report says.

“Employment in global supply chains is often insecure with poor working conditions and frequent rights violations,” it adds.

“Meanwhile companies are usually immune from legal action by workers, as host country tribunals are weak and ineffective and courts in their home countries often have no jurisdiction when the violation is caused by a supplier in another country.”

In Cambodia, most of the impact is felt in the garment sector, which employs at least 700,000 workers and accounted for nearly 80 percent of the country’s merchandise exports in 2014.

Clothing retailer Gap, the report says, officially employs 140,000 people but has an estimated 1 million supply-chain workers. About 98 percent of the San Francisco-based company’s purchases are from factories outside the U.S.— including Cambodia—where audits have revealed consistently low wages and long working hours, according to the report.

“There is also evidence of precarious work at the site of Gap sub-contractors in Cambodia,” it says.

To supply the likes of Nike, Adidas and Reebok, Yue Yuen Industrial Holdings also resorts to low pay, with claims of violence and sexual harassment at its factories, the report says. “Complaints are regularly filed in Cambodia regarding labour disputes,” it adds.

Neither Gap nor Yue Yuen could immediately be reached.

Ken Loo, secretary-general of the Garment Manufacturers Association in Cambodia, said that while compliance varies, there is adequate oversight of supplier factories in the country.

“I think there’s a sufficient level of oversight,” he said. “Different brands, they obviously have different commitments.”

Mr. Loo added, however, that if laborers have complaints about working conditions, brands should not be held responsible.

“Why should they hold the brands accountable? They should talk directly to their employers,” he said.

ITUC general secretary Sharan Burrow, however, disagrees.

“Even the CEOs of 50 of the world’s largest companies know it’s a scandal, but to admit it would be to accept responsibility,” she writes in the report.

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