Workers should get their fair share of the pie

Although Pakistan is a beneficiary of the European Union's Generalised System of Preferences Plus (EU GSP+) arrangement, little progress has been made with regard to the enforcement of labour standards. The case studies show that references to labour standards in trade agreements and different systems of generalised trade preferences have had a very limited impact on working conditions.

"Many value chains are characterised by an unbalanced power relationship, in which large corporations can exploit their dominant position"

“The downward pressure on working conditions can partly be explained by the organisation of production processes in global value chains,” says Veronica Nilsson of the FES Office for Regional Cooperation in Asia, which released the publication. “Eighty per cent of world trade takes place through these chains,” she says. "Many value chains are characterised by an unbalanced power relationship, in which large corporations can exploit their dominant position.”

By organising production in this way, multinational corporations can outsource low-productivity and low-skill tasks to the countries offering the lowest price.

Typically, a few major global brands, such as mobile phone producers or fashion brands, set the price. Suppliers worldwide then compete for orders without any influence over the price. The purchasers effectively use their dominant position to squeeze labour costs, even though these constitute only a fraction of the retail price, and the minimal savings lead to breaches of labour standards. In the case of sport shoes, labour costs are less than 5 per cent of the retail price, according to the case study for Vietnam.

The publication is one output of the project Core Labour Standards Plus, which advocates for binding labour standards in trade and global value chains

“With this publication, FES wishes to draw attention to the poor working conditions in global supply chains and the link between trade and labour, and to contribute to finding solutions to these challenges,” says Adrienne Woltersdorf, Director of the Office for Regional cooperation in Asia. It is one output of the project Core Labour Standards Plus, which advocates for binding labour standards in trade and global value chains, going beyond the core labour standards of the ILO.

The publication contains the executive summary of each case study together with a synopsis by Hansjörg Herr and Christoph Scherrer, and is accessible for free download. The full country studies will be made available on this website within the course of the year.

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For more information on the regional project Core Labour Standards Plus, read the project's brochure or contact directly Veronica Nilsson, Programme Manager at FES Office for Regional Cooperation in Asia.