New Maplecroft reports reveal labour standards risks for companies with supply chains or operations in the BRICs – Brazil, India, Russia, China
With the ever increasing importance of the BRIC countries of Brazil, Russia, India and China to the supply chains of multinational corporations, Maplecroft has released a series of labour standards reports to provide in-depth analysis of the key labour issues affecting companies operating in, or sourcing from these nations.
Maplecroft’s labour standards reports analyse and compare the major labour issues affecting countries at both national and provincial levels. Key areas of focus include labour rights and protection (including in the informal economy), especially in relation to working hours, compensation, labour contracts , labour protests, health and safety, freedom of association and collective bargaining, discrimination, forced labour and child labour.
The reports, which are available for all countries, provide in-depth analysis, risk indices and trends, country overviews, stakeholder viewpoints, detailed labour statistics and a breakdown of labour laws and the ratification of ILO conventions. Important recent events are catalogued and supported by sub-national maps of reported labour rights violations.
While Brazil’s legal framework provides a comprehensive set of labour rights, their protection is often not guaranteed in practice. This is due to the weak institutional capacity of the labour inspection system, and the geographic vastness of the country, which mean that labour laws are frequently not applied or enforced in practice. This is particularly the case in rural areas and the informal sector, which comprises approximately half of Brazil’s workforce.
Despite concerted efforts by the government, work that is tantamount to slavery continues to be reported. The ILO estimated that there were 25,000 to 40,000 forced labourers in Brazil in 2008, predominantly in rural areas where they work in agriculture such as in cane-cutting and cotton and coffee harvests. The Ministry of Labour announced in January 2012 that more than 2,000 workers in Brazil were rescued from 'slave-like' conditions in 2011. Companies sourcing from Brazil may therefore need to carefully monitor and audit their supply chain business partners to identify high risk areas where forced labour may occur.
Russia does not have a good track record for enforcing occupational health and safety standards, despite legal guarantees. This has facilitated violations to occur with impunity. Many workers are not aware of their rights, nor are they are being briefed by employers on health and safety issues in the workplace. Businesses which operate in or source from the country may face financial risks related to the potential loss of production due to accidents and accident compensation claims. Poor working conditions may also contribute to declining workforce moral and, accordingly, productivity. Imposing contractual requirements on suppliers and contractors to use safer technology and provide means of individual protection and training to their employees could mitigate this risk.
The use of child labour is also a problem in Russia, though not recognised as such by the government. A changing trend in the use of child labour has been identified, which is the use of the worst forms of child labour. This includes forced labour, labour in dangerous conditions in the construction and agricultural industry, labour involving the use of chemicals, jobs involving the carrying of heavy weights and trafficking in children.
Despite sustained economic growth, the country continues to face numerous labour-related problems, especially in relation to the exceptionally poor legal and regulatory framework for the protection of labour rights. India is ranked as an ‘extreme risk’ country on Maplecroft’s Labour Rights and Protection Index 2012, reflecting severe risks for companies with supply chains in the country of being implicated in, or associated with, violations of internationally proclaimed labour rights.
India's labour laws and regulations are considered among the most complex in the world and frequently suffer from ineffective implementation and enforcement at the local level. In addition, the sprawling informal economy, which accounts for more than 90% of employment, renders the majority of labour provisions obsolete in practice, posing high risks to multinational companies of perceived complicity in labour exploitation. Due to the endemic nature of labour rights violations, and a perception among workers that they are not receiving the benefits of strong economic growth, large-scale protests have taken place across many sectors since 2008. In October 2011, for example, the automobile industry was hit by a wave of labour unrest over working conditions and the growing practice of reliance on contract labour.
Despite recent improvements in China's labour laws, especially in relation to higher legal minimum wages and new mechanisms to resolve labour disputes, the protection of labour rights is undermined by exceptionally poor legal enforcement. As a result, companies outsourcing production to China remain at severe risks of association with violations of international labour standards that take place within their Chinese supply chains.
Poor working conditions and the weak labour law enforcement have also triggered increasing incidents of labour unrest, which have increased dramatically since 2010. A wave of strikes and labour protests has occurred since 2010, posing significant operational risks that stem from work stoppages and other business disruptions. While the government has adopted several new measures to alleviate the risk of escalating labour unrest (such as the adoption of new regulations on labour dispute resolution), these efforts are unlikely to be sufficient enough in the short-term to mitigate the risk of higher operational costs that follow labour protests.
Country risk briefings, in-depth reports and labour standards reports are available for all countries and sectors. Register for trial access to see examples.
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