Q&A: A New Social Contract for Workers and Business

Do you think it’s fair to say that the COVID-19 pandemic has exposed—and exacerbated—the profound inequalities that exist between workers and their employers?

Yes, most businesses have responded to this global health crisis in a self-interested fashion. Understandably, they want to ensure their preservation. Too often, though, that comes at the expense of the workers that deliver the goods these companies depend on for their profits. We see this across the board in the industries we monitor.

Do any sectors immediately come to mind?

Millions of workers in the “fast fashion” global supply chain have been dismissed or laid off because of the mass cancellation of orders by brands in Europe and the United States. And while many fast fashion brands have made some effort to look after their own direct workers, their direct workers generally represent somewhere between two and five percent of their total workforce.

What about the other 95 to 98 percent?

The rest of the workforce is in the global supply chain, in places such as Cambodia, China, Myanmar, Bangladesh, and India. It’s those workers whose labor has been shed—at no cost to the business.

They are not seen as employees of the business, even though the UN Guiding Principles on Business and Human Rights is explicit that companies have a responsibility to their workers in their operations and in their supply chain. 

Who are these workers, generally?

These are particularly vulnerable workers. They tend to be women, and they tend to be migrants. They often live in the poorest of conditions; some of them live in dormitory factory complexes, and many of them have been left essentially without the ability to survive.

Are there any examples of corporations doing this right, or at least trying to live by the principles of corporate social responsibility? 

Yes, H&M and Inditex, for instance, will pay for the orders that have been produced. L’Oreal has gone further and said they are going to shorten—not lengthen—the payment term. Unilever, meanwhile, has provided a €500 million fund to support workers in their supply chains. 

Do you agree with those who say that this crisis widens the political possibilities for workers’ rights, and that ideas that were once nonstarters are now on the table? For example, is now the time to move “beyond” corporate social responsibility?

Yes, and yes. Corporate social responsibility is what companies do with the money they make; what we at the Business and Human Rights Resource Centre are focused on, meanwhile, is how companies make their money. Put simply, we’re interested in fundamental changes in business models that we consider exploitative. 

That said, after the 2008 financial crisis and ensuing Great Recession, we saw a rapid return to business as usual, even though the unsustainability of our current system—the massive inequalities and the climate change crisis—were exposed then, too.

Why are you optimistic that this time will be different?

I think we in the global workers’ rights movement are in a better place now than we were in 2008. We are more capable of driving an agenda and winning the public debate—which is crucial. For example, even before this crisis, we were gaining momentum. The movement to address climate change was stronger than it had ever been. And ideas such as mandated—as opposed to voluntary—workers’ rights due diligence for companies were gaining traction. 

The risk, of course, is that the crisis conditions brought on by the pandemic will be used as an excuse to implement rapid deregulation—which is the exact opposite of what we need right now. Ultimately, we’re going to have to be strong enough to push through fundamental transformations. 

What kind of “transformations” do you have in mind?

We need a new social contract between capital and labor, one that guarantees shared prosperity—and it must be enforced by governments themselves.

Right now, we’re seeing governments financially backstopping companies, just as they did during and after the 2008 financial crisis. This is the moment to demand that these companies give back something in return; Green New Deal-style initiatives to handle the climate breakdown, the building of truly equitable and functional public health systems—the major changes we need to ensure widespread security and prosperity for the 21st century.

How do you expect business interests will react to such a movement?

The vast majority of companies will have almost nothing to say about it, and a good number of them will be deeply antagonistic and will have their views enunciated by business interest groups. But I also think that many firms will keep their heads down and focus on their own interests, and an increasing number of firms are coming to understanding that their long-term interests align with the movement to fight inequality and climate breakdown.

In the immediate term, then, what do you see as a key point of leverage?

If we can get that economic stimulus to drive that agenda by incentivizing and rewarding companies that are doing the right thing—and excluding those that are not—we will find ourselves in a much better place in 10 years than where we are right now. 

Back then, governments were extraordinarily timid when it came to workers’ rights and climate; they didn’t feel there was enough political will to reform those aspects of society. I think that’s changed, and that now is the time to act.