A fifth of UK businesses have found wage abuses in their supply chain

Research from the Chartered Institute of Procurement & Supply (CIPS) has revealed that 21% of UK supply chain managers have seen wage violations in their supply chains over the last two years. 

When asked about the types of wage violations they have seen:

  • 14% have seen evidence of staff being paid late  
  • 10% have seen staff not being paid the minimum wage within the country the supplier is based
  • 3% have seen both 

The situation could worsen as Brexit is likely to squeeze supplier margins further, with more than half (54%) of UK supply chain managers stating that they will renegotiate prices with suppliers to cope with a potential increase in costs after the UK leaves the EU, according to an earlier survey from CIPS released in March 2018

This comes after the release of the Labour Market Enforcement Strategy in May 2018, which provided recommendations to the Government on how to prevent labour abuses, such as wage violations and cases of modern slavery 

When asked what should be done to remove labour abuses from supply chains, supply chain managers based in the UK said the Government should:  

  • Hold the public sector to the same standards as the private sector (65%)  
  • Provide more advice to help businesses find labour abuses in their supply chain (63%)  
  • Public procurement contracts should explicitly compel compliance with labour market regulations (56%)  
  • Name and shame businesses who use suppliers that commit labour abuses (54%)  

Cath Hill, Group Director at the Chartered Institute of Procurement & Supply (CIPS), said: “The vast majority of British businesses would agree that short changing their employees is inexcusable, but when it comes to the workers further down their supply chain they don’t have the same level of concern. Whether a supplier is in Shenzhen or Sheffield, businesses have an obligation to ensure that the human beings making their products are free, safe and properly paid. 

“Ignorance is no excuse. It is the responsibility of procurement teams to regularly visit their suppliers to ensure workers are paid in full and on time. When suppliers are squeezed and prices are pushed down, cuts must be made. Too often it is the people at bottom of the supply chain who feel the pinch. As a country we must take meaningful action against businesses who reap the benefits of worker exploitation in their supply chain.”

 Types of labour market abuses 

Supply chain managers who have found the labour abuse in their organisation’s supply chain 

Poor working conditions (e.g. dirty environment, health & safety risks) 

15% 

Suppliers not conforming with relevant quality standards (e.g. food health safety standards) 

14% 

Late payment of staff 

14% 

Staff not being paid the minimum wage in their country

10% 

Suppliers giving false information about their products (i.e. providing inaccurate or fraudulent details about raw materials) 

9% 

Use of undocumented workers 

7% 

Workers banned from forming unions 

5% 

Child labour 

2% 

About these figures 

These findings were drawn from a survey of 825 UK supply chain managers who were asked about their views on modern slavery and other labour abuses. The survey ran from 29th May to 25th June 2018. 

While the responses are from supply chain managers based in the UK, many of the businesses have global supply chains with suppliers located in a variety of different countries.

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