Discussing Global Unionism: The Supply-Chain Model

New Unionism Network has recently started a timely discussion on  ‘How do we build global unions? Below is Peter Hall-Jones into and the first paper published on the NUN blog:

That is, how do working people come together across borders to support each other, to protect the environment and to start shifting the goal posts… from competition and profit towards cooperation and sustainability?

We already have international union federations – in fact some of them have been around for more than 100 years. But our global structures are only as influential as we can make them.

Here’s the first in our series of visions on how working people can build a deeper and wider international base – a new global unionism – from the workplace upwards. The New Unionism Network will be meeting to discuss this vision over the next two months.

Global unionism: The Supply-Chain Model

The structure of the existing international labour movement predates what we now call ‘globalization’ by more than 100 years. Although it is undoubtedly the inheritor of a proud tradition of international action, it badly needs updating.

So why does globalization mean we have to think about reforming the international labour movement? The tangible aspects of globalization are to do with the structure of the real economy: the locus of manufacturing has shifted from developed to developing countries; and the production and supply networks of global firms increasingly transcend national boundaries. Even the most powerful states have only limited capacity to effectively regulate the activities of transnational corporations, and less powerful states are severely restricted in imposing rules on these mighty economic actors. As existing international law largely relies on states to enact and enforce appropriate regulation, it adds little to the mix. As Hale and Held put it, “The traditional tools of interstate cooperation – intergovernmental organizations and treaties – have … proven inadequate” in the face of globalization and rapidly increasing interdependence. (Thomas Hale and David Held 2011 The Handbook of Transnational Governance pub. Polity, p.3).

For many workers, above all those at the dirty end of global manufacturing and commodity supply chains, this global ‘governance gap’ means being left to fend for themselves in the face of overwhelming economic and political power. In the absence of well-organized local unions and functioning national systems of worker protection there is no effective means to protect workers from the impact of commercial pressure applied to their direct employers by customers further up the supply chain. Indeed, the absenceof well-organized unions and functioning systems of worker protection has become a card played by developing world businesses and governments in the game of international trade and investment.

The invisible supply chain

It is only possible to play this card because national systems of employment law do not recognise the global integration of capitalism. Take the case of Apple’s iPhone. Even if workers in Apple’s main manufacturing contractor, Foxconn, were allowed to form unions and to bargain about pay and conditions, they would still be dealing with an employer whose margin on each item is $8 rather than Apple itself, whose margin is somewhere between $200 and $300. Despite their work ultimately making huge profits for Apple, the improvement in pay and conditions they could in principle negotiate is limited by the narrow margins that Foxconn, their direct employer, has agreed to. The only durable solution would be for Foxconn to negotiate an increase in the unit price it demands from Apple for manufacturing the iPhone and for Foxconn to use that extra revenue to pay for better pay and conditions. However, Foxconn is making a healthy profit despite its thin margins on account of the sheer scale of its operations. It has no interest in upsetting its principal customer by trying to renegotiate supply contracts. In fact, Foxconn relies on its employees having no meaningful opportunity to punch their true collective weight to ensure that it has the greatest possible margin to attract business by paring costs to the bone.

Apple’s profits depend on minimising manufacturing costs. Foxconn’s ability to win enormous manufacturing contracts depends on its being able to offer the low manufacturing costs Apple demands. Its ability to offer these low manufacturing costs depends in turn on being able to ensure that workers have no choice but to accept whatever it puts on the table and to comply with whatever it demands in return.

Above all else, what companies like Apple want to avoid is allowing workers the opportunity to make the connection between the level of profit being made in the supply chain as a whole and the wages going into their pockets. They want to be sure that ordinary arguments about fairness and reasonableness are kept out of the discussion and that all that counts are contracts and the legal fiction that it’s up to Foxconn and its employees to sort out their relationship for themselves, pay and conditions included. When you start to think in these terms, it’s easy to see why. The business writer Andrew Winston put it like this:

“Let’s imagine that Apple tripled expense on assembly to ensure better pay and worker treatment. The total additional cost: $1 billion. The cost of an iPad or iPhone would go up $20 or – and here’s a radical thought – Apple would make a little bit less money.…But would anybody in their right mind be disappointed with $16.5 billion in quarterly cash flow instead of $17.5 billion?”[1]

Relying on the development of worker organization at local level to solve these problems is clearly an unrealistic short-to-medium term strategy, even in those national contexts where the law does not effectively outlaw independent trade unionism as it does in China. What we need is an approach to labour standards regulation that is founded on the belief that direct relationships between employers and independent worker organizations are the best basis for worker protection, democratic worker involvement in decision-making and economic development, but which recognizes that this kind of relationship is unlikely to be possible immediately in every link in the supply chain.Our aim should be to prevent the lack of effective worker protection and voice in some parts of the supply chain being part of the economic logic of globalized production. We need to take action that protects workers now as well as helping and encouraging them to develop their own voice and their own capacity to engage with employers.

The ‘supply chain model’ of global unionism

The model of global unionism that we want to propose aims to update traditional union strategies to take account of the institutional realities of global capitalism and the possibilities for new forms of organization and campaigning opened up by contemporary information and communications technology. Our approach is based on the idea of the joint liability of all the corporations in a supply chain for labour standards. If a business sells a faulty or dangerous product which is faulty or dangerous because of a particular component supplied by an outside contractor, it cannot escape liability simply by saying that it was the contractor’s fault. Similarly, if a business sells a product in the course of the production of which workers were denied their rights, then it should not be able to escape liability simply by saying that this abuse was the fault of the direct employer of those workers.

The supply chain model also aims to take advantage of some of the ideas and practices that have emerged from recent market-driven approaches to business ethics and corporate social responsibility. Up until now these approaches have had little concrete impact on the lives of workers other than creating jobs in the social and environmental auditing industry. However, they have at least established in the public debate that businesses are in principle bound by the same moral and ethical obligations as any individual person. As these obligations always trump the pursuit of private interests, an opportunity has been created for the labour movement not just to step in and challenge global corporations to justify their practices, but also to offer them a means to develop ethical credentials which are credible because they are rooted in reality and not simply in auditing processes that are little more than expensive public relations exercises.

The people that run the major retail, clothing and technology brands are anything but stupid. If they are serious about ensuring that their corporations behave properly – and unfortunately it is not at all clear that they are, but let us give them the benefit of the doubt for the moment – then they should recognize that the credibility of claims about corporate behaviour is greatest when those claims are true. Public trust in a corporation may take many years to achieve, but the process will be a lot quicker if there are independent unions that are able to say ‘they mean it, they’re working with us in good faith to improve conditions’. Properly independent, democratic and representative unions will not say things like this if they are not true. Their members, the best and most reliable source of information about what happens within a business, will not allow them to. The supply chain model of global industrial relations is therefore also about opening up corporate behaviour to public scrutiny, not just to make sure that bad employers are named and shamed, but also to make sure that when companies are behaving properly, the public gets to find that out too.

Putting it into practice: 7 ideas for a new global industrial relations

1.      Global industrial relations has to focus on global supply chains. The most important instrument of global IR is the global collective contract (GCC), negotiated in the first instance between a global union and the corporation or corporations at the origin of a global supply chain.

2.      The basic operating principle of the new global unionism is ‘cascaded contractual obligation’. A corporation that is a signatory to a GCC must include in each supply contract a clause by which the contractor itself becomes a party to the GCC. This contractual obligation is cascaded on to sub-contractors and sub-sub-contractors all the way to the end of the supply chain. Thus the basic terms and conditions in the GCC (see point 3) are priced into commercial contracts from the outset.

3.      The main function of the GCC is to establish basic terms and conditions which apply even where meaningful local negotiations are absent. It should therefore include substantive items like minimum wages (in ppp terms) and maximum hours of work. Locally bargained agreements always take priority, but any derogationdownwards from the basic standards would be exceptional and would have to be registered, monitored and reviewed annually. GCCs could also include commitments to joint action plans to develop independent worker organization, employer and union training and capacity-building etc.

4.      It is up to local unions to organize and bargain improvements on the GCC, but ensuring the implementation of the basic terms and conditions specified in the GCC is the collective duty of the employer parties and is not dependent on local unions making claims for those conditions to be implemented. All companies ‘upstream’ from the location of any violation of the basic terms of the GCC are jointly liable for that violation – although they are not responsible for locally-negotiated improvements.

5.      GCCs are registered with and placed under the authority of a new International Labour Court (ILC), which would issue (non-binding) rulings at the request of any party. Where no GCC exists, the ILC would nevertheless be able to issue rulings with respect to compliance with the ILO’s core conventions.

6.      An ILC judgement against a company in a supply chain which was not followed by action by the companies further up the chain would trigger a right for workers upstream from that company to take part in legally protected solidarity action – in effect, they would be taking action against their own employers for failing to enforce the contractual duty of their contractors and subcontractors to respect the terms of the GCC.

7.      The implementation of each GCC is funded accorded to a formula which forms part of the contract and is negotiated along with it. It is the corporations in the supply chain that provide this funding. This formula includes budgets for compliance monitoring and evaluation, union and employer capacity-building and a levy to fund the activities of the International Labour Court.

Five things about the international labour movement that will need to change

1.      Relationship between organizational form and policy development. As things stand, entrenched institutional agendas too often put the brakes on new ideas and new policies.

2.      Organizational structure. At the moment there is too much bureaucracy and duplication of functions and structures. There is arguably no need for permanent global structures when temporary communication and participation structures can so easily be constructed

3.      Representation. The existing permanent structures are insufficiently representative. There is a lack of direct democracy and participation of members in policy development.

4.      Role ambiguity. The role of the international unions is ambiguous – should they be trying to introduce global collective bargaining or should they be acting as global campaigning and advocacy organisations?

5.      Fragmentation. The organizational fragmentation of the movement means that it fails to make effective use of its global reach and connections.

Five things about the international labour movement that need to stay the same

1.      Global advocacy and campaigning. Powerful voice for workers in global policy debate and campaigns for workers’ rights.

2.      Specialized expertise I. Specific contributions of the more specialised GUFs eg voice of IFJ on press freedom, voice of EI on education, ITF negotiations on seafarers.

3.      Specialized expertise II. Experience of negotiating and enforcing international framework agreements.

4.      Formal representative role. Institutional embeddedness of international union organizations, for example ITUC providing secretariat to workers’ side on ILO GB and voice of TUAC in the OECD.

5.      Ground-up movement. Primacy of union organizing from below: global bargaining is only a backstop and can never be a substitute for workplace level relationships

Implications for the reconstruction of the global labour movement

1.      The ITUC and the global union federations should merge, forming a single, sectorally organised global union organization.

2.      The New Global Union (NGU) would be split into a policy, research and campaigning wing and a bargaining wing. The bargaining section would reproduce the existing sectoral composition of the GUFs. Its job would be to negotiate GCCs for supply chains.

3.      The basic principal of membership in the NGU is that workers can join an appropriate section directly as well as via membership in local or national unions. In this way workers can if necessary get around the absence of genuinely independent and effective local organizations.

4.      Individual membership fees should never be zero, but the greater part of the cost of servicing members will be met from GCC funding.

5.      Organization structures would be fluid and ideally temporary. The principle is that the NGU would organize cross-national groups of unions and individual members into temporary ‘global supply chain union networks’

6.      The GSCUNs would exist as long as necessary to negotiate each GCC and would be reactivated if necessary to organize action against employers within supply chains. Appropriate temporary structures of representation would be organized (and dismantled) as required, making extensive use of ICT.

[1] http://blogs.hbr.org/winston/2012/01/apples-greatness-and-its-shame.html

Source: http://newunionism.wordpress.com/2012/10/09/global_unionism/


The name of the author of this paper has been withheld. It is envisaged that the same process will be applied to subsequent papers — all of which have come from members of the New Unionism Network — until the Network has discussed the visions collectively. After this, we will start presenting visions for wider discussion among the union movement.

The authors may (or may not) elect to identify themselves and promote their views individually.

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