Taking action on working poverty

Stories of slavery and trafficking might hit the headlines, but we hear much less about working poverty – the plight of those who have jobs, yet still not the means to decent lives. And there is more that the world's leading companies can do to help address this

Home life people work Taking action on working poverty

For decades, perhaps even centuries, the conventional wisdom has been that the solution to poverty is work. It's the idea that underpins almost every welfare system in the world. Getting into work is supposed to be the surest way out of poverty and exploitation, and off welfare. But is that always the case?

For companies that provide employment for millions of people worldwide, this is a pressing question. There are now troubling signs that working poverty is no longer declining – and in some parts of the world may be increasing. That is one reason why many companies including Pirelli have joined the United Nations Action Platform on Decent Work in Global Supply Chains*, which is designed to ensure what the UN calls ‘decent work' through sustainable procurement practices.

Relative poverty

Imagine you are in a hotel, a restaurant, a farm, a factory or even a hospital, anywhere in the world. Everyone around you is working, making food, finishing products or giving care. Everyone seems to be a normal part of the working economy.

Yet that may be far from true. A significant proportion of those workers may be in poverty – not the extreme version defined by the World Bank as living on less than $1.90 a day, but the widely accepted relative poverty measure of living on less than 60 per cent of the national median income.

Some of those working people may even be homeless. A recent study in the UK showed that over half of families with no stable home were in work, and there is evidence that some full-time workers in the UK are living on the street. That is a reminder that while working poverty is a global phenomenon, it is not restricted to the poorest countries. In the European Union there are many large economies where more than 10 per cent of workers fall below the relative poverty line, including Greece, Spain, Luxembourg, Italy, Portugal and Poland.

Global links

But working poverty is worse in Asia, the Middle East and particularly Africa, where the World Bank forecasts that almost 90 per cent of the world's poorest people will be concentrated by 2030. It is no accident that working poverty tends to be greatest in countries that are at the poor – and sometimes almost invisible – end of very long supply chains, the places where corporations source raw materials, agricultural products and labour-intensive manufactured items like clothing.

Companies may argue that it is not their job to control what happens in other businesses, even if those businesses play some part in their global operations. But that argument is wearing thin: working poverty is often associated with extreme exploitative working conditions like modern slavery, human trafficking and child labour. Companies that tolerate working poverty in their extended supply chains run the risk of being identified as complicit. As companies work on how to engage their global suppliers (who may number in the hundreds or even thousands) on the issue of decent work, they often find they are on a journey of significant discovery.

Simple, effective actions

For example, one member company of the UN Action Platform, a global industrial products manufacturer with around 5,000 suppliers worldwide, had an advanced decent work programme but found the message never seemed to get beyond the specialist sustainability team. Yet the simple step of making a video about decent work featuring culturally diverse staff from right across the company and using everyday language instead of sustainability jargon helped make the message resonate with suppliers, who began to see how they could be supported in creating decent work.

Another member company, a global auto manufacturer, decided to run workshops with global suppliers with the aim of getting away from the idea that the supplier was being audited and fault-checked. Instead, the workshops concentrated on how human rights issues in work could create risks for the manufacturer and for suppliers. As a result, suppliers started coming up with their own solutions to the decent work challenge.

And a global energy company with over 100,000 suppliers had already mapped human rights issues in its supply chain, but found it wasn't winning buy-in from its procurement team. This company also took the workshop route, but with an internal focus: it brought in external experts to help highlight specific issues that made decent work a significant risk factor for every aspect of procurement. This helped to change the company's whole approach to supply-chain management.

Reasons to act

These corporate experiences demonstrate that the decent work issue is complex – as complex as the supply chains that can give rise to working poverty if not managed well. But many companies are discovering that the root causes of working poverty in their businesses are not greed or cost-cutting, but ignorance, poor planning and inefficiency.

That means that if the issue of decent work is tackled seriously, the outcome can be a win-win. Not just better work, but also better businesses.

*Pirelli is one of the 27 lead companies in the United Nations Global Compact, which launched the Action Platform on Decent Work in Global Supply Chains in 2017