Companies lax on investigating abuses by subcontractors

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Sexual harassment, uncompensated overtime work, and violence: these are some of the findings of a German television crew during a secret visit to a clothing factory in Bangladesh, which serves as a subcontractor for the clothing chain Hennes & Mauritz.
     Last week the Swedish Fair Trade Center organisation reported that its inspections at mobile telephone component factories in China and the Philippines revealed abuses such as illegal overtime work and shortcomings in occupational safety.
     
Abuses such as child labour and exploitation of cheap labour have been topics of discussion for decades. Meanwhile, industrial production has increasingly been moving from affluent countries to countries of cheap labour, and the trend continues. Industrial companies in wealthy countries are having more of their products, or their components assembled by subcontractors, further and further away from home.
     Only recently have companies started to monitor labour conditions and environmental behaviour of their subcontractors, and it is still not a very common practice.
     “In the past two or three years, Swedish companies have started to build organisations for monitoring ethical standards at their subcontractors”, says director Åse Bäckström at the Swedish office of the consulting firm KPMG.
     In Finland, companies tend to be “rather credulous” and believe what their subcontractors tell them, without further investigation, says Jan Montell Bäckström’s colleague in Finland.
     
Only nine of Finland’s 100 largest companies systematically monitor their subcontractors to make sure that they comply with ethical principles, according to a report by KPMG. In Sweden, the proportion is roughly the same.
     The world’s largest companies monitor their subcontractors the best.
     “In Finland, this is done at a low profile. Risk management of the whole chain is in poor shape. Only a handful of companies do it”, Montell says.
     “In large companies there are risk management directors, and possibly a person named as the one responsible, but they do not necessarily talk to each other.”
     In Finland, KPMG recently surveyed what aspects were important to Finnish companies when choosing a manufacturing subcontractor.
     “Responsibility was in fifth place. Before that, were things such as price, quality, and availability”, Montell says.
     He adds, however, that closer monitoring of the subcontracting chain seems to be coming to Finland. “Now we are just waiting to see if the enthusiasm will fade away as the economic slump sets in”, Montell ponders.
     
A fresh legal reform requires for the first time that companies should report on how internal supervision is arranged.
     “I hope that questions of responsibility will come with it”, Montell says.
     Åse Bäckström says that inspection activities also have internal significance for companies.
     “Employees might easily feel that ethical standards are not really a part of the corporate culture, if they are not enforced and reported on.”


Previously in HS International Edition:
  Chinese activist protests at Nokia headquarters (24.11.2008)
  Workers protest at Nokia subcontractor’s factory in China (22.8.2007)

Helsingin Sanomat