Workplace Relations Minister Michael Wood today announces plans for modern slavery legislation, working with big businesses to eliminate exploitation in supply chains – but government needs to start by cleaning its own shop.
Opinion: Imagine the New Zealand government throwing $42 billion at a problem – you’d expect some compelling results.
Well, $42 billion, or around 18 percent of GDP, is what the current government spends on procuring products and services from third party suppliers.
With that kind of budget in the government wallet, it is effectively the country’s largest company and has the leverage (and the responsibility) to ensure workers are treated properly in its supply chain.
Imagine if that $42 billion was spent only on companies, contractors and suppliers that could demonstrate their commitment to providing an ethical workplace free of modern slavery – that is, worker exploitation, coercion, bullying and sexual harassment. Doing so would set the standard for what good supply chain due diligence looks like and lead the way for all New Zealand businesses.
First steps to maintaining ethical workplaces
Could this scenario become reality? Recently the government announced that it would require a living wage for caterers, security guards and cleaners in public service contracts with third parties.
An excellent move – and there are other legislative changes on the horizon, such as the Duty to Prevent Labour Rights Breaches. This will ensure third parties working closely with employers, or with influence over them, will be required to take “reasonable steps” to prevent any breach of employment standards.
Today, we’re expecting to hear more detail on how proposed modern slavery legislation could look for New Zealand businesses, particularly those bigger corporates with long supply chains.
“We’ve worked closely with businesses, non-governmental organisations, unions and academics through our advisory group chaired by Rob Fyfe." – Michael Wood, Workplace Relations Minister
Increasingly, as an export nation, Kiwi businesses need to be meeting global market prerequisites when it comes to human rights, and adequately protect our vulnerable workers most in danger of manipulation and abuse.
It seems the government, under the advice of a Modern Slavery Leadership Advisory Group made up of experts, academics and business leaders, has understood the scale of the problem. “We’ve worked closely with businesses, non-governmental organisations, unions and academics through our advisory group chaired by Rob Fyfe," Workplace Relations Minister Michael Wood tells Newsroom. "The proposals that will be announced today will drive meaningful change.”
These actions are all very encouraging but the most important announcement the government has made, at least in regards to labour conditions, is the intention to use government procurement to improve working conditions, protect workers from unfair and unsafe behaviour, and incentivise those that perform well, while ensuring they are not undercut by firms who have reduced costs through poor labour conditions.
But legislation isn’t a silver bullet
Several countries, including the UK and Australia, have already introduced modern slavery reporting requirements. Companies are, amongst other things, required to produce an annual modern slavery statement on the modern slavery risks in their operations, including their supply chains, the steps they have taken to address those risks, and the effectiveness of those actions. The statements must be approved by the board and signed off by a director.
Modern slavery reporting has some benefits. For example, it gets human and labour rights matters into the boardroom and part of ESG (Environmental, Social and Governance) considerations. But we are fooling ourselves if we think it will make a profound difference on the ground.
Reporting doesn’t always translate into action. Both the Australian and UK modern slavery legislation have come under fire for lacking the teeth to penalise companies for insufficient reporting or not reporting at all. Studies have estimated that only 20 percent of UK modern slavery statements meet the UK’s minimum reporting requirements and one third of companies that submitted Australian modern slavery statements appeared to be non-compliant with one or more legal requirements.
Thankfully, governments are beginning to realise that they need to be involved to effect real change. For example, the New South Wales Commonwealth Modern Slavery Act will require government agencies and councils to take steps to ensure services or goods they purchase are not produced via slave labour. The Auditor-General will also have the authority to undertake reviews of government agencies to ensure they have exercised due diligence in the procurement process.
We need to do this here. Our government could adopt the same approach, insisting that its $42 billion is only spent with suppliers that demonstrate compliance. But how can they prove their workers are safe, valued and respected, at every level of the supply chain?
Due diligence is the only answer
When it comes to combatting exploitation, the government needs do more than require an annual box-ticking social practice audit. Easily manipulated, evidence shows these are far from effective in addressing systemic issues in the supply chain.
Recognising and rewarding best practice through the adoption of a reporting tool such as Ethical Voice enables a race to the top rather than a race to the bottom. It also delivers meaningful insights back to the employer so that improvements can happen effectively, quickly, and be easily measured again.
What should the Government do?
The New Zealand government says it intends to adopt the United Nations Guiding Principles on Business and Human rights – the principles requiring governments to protect against human rights violations within their territories.
The logical place to start this piece of work would be within government procurement and could quickly deal to those sectors where exploitation historically has taken place – for example cleaning and security.
To achieve this the government should take a multi-stakeholder approach in addressing worker exploitation, and focusing on continuous improvement:
- Identifying and assessing human and rights risks in the government’s supply chain
- Taking steps to prevent or mitigate those risks
- Consulting with affected groups such as unions, workers, business and NGOs
- Taking part in remediation if violations have occurred
- Reporting on how impacts are identified and addressed
Our government has a unique opportunity to lead by example. At the same time, it has a duty to use its power to become part of the solution.
And while today is a very exciting moment in the fight for the eradication of modern slavery in our country, it’s a big job and one we need to do well. Let’s hope the New Zealand government shows some fortitude and foresight, ensuring a due diligence approach that will see vulnerable workers protected both on and off our shores.
