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IBUS2002 Chap.8 Regulating Work in Global Supply Chains

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Chapter 8 of 8 · IBUS2002

Regulating Work in Global Supply Chains

Responsibility at arm's length

Week 8 shifts from well-paid managers to the lower-paid workers who make goods in multinational supply chains. Suppliers are legally independent, which is the argument against holding multinationals responsible; but multinationals exert huge power over suppliers and are often in effective control, which is the argument for it.

Outsourcing sites are often chosen for weak worker power, so campaigns target brands, frequently the biggest target rather than the worst offender.

Three modes of regulation and one disaster

The slides identify public regulation, which lacks a coherent international system and faces states reluctant to raise standards; private governance or political CSR, built on codes of conduct and social audits and criticised for plausible deniability; and the industrial relations approach through international framework agreements, which works best where unions are already strong.

The Rana Plaza collapse of 24 April 2013, which killed at least 1,129 garment workers, tests all three. Brands responded with the legally binding Accord, negotiated with global and Bangladeshi unions under an ILO chair, and the voluntary Alliance led by North American retailers.

Their methods were aligned; their governance and enforceability were not.

Taking a position

Supply chain questions invite a stance, and the course rewards one that is argued rather than asserted. Weigh legal independence against economic control, compare the three modes on the same criteria, and use the Accord and Alliance as evidence of what binding and voluntary designs achieved.

Close with the conditions under which your preferred mechanism works.

In this chapter

What this chapter covers

  • 01

    Arguments for and against MNC responsibility

  • 02

    Power in production and consumption relations

  • 03

    Public regulation, private governance and framework agreements

  • 04

    The Rana Plaza collapse

  • 05

    The Accord and the Alliance compared

Worked example · free

Compare the reach of the Accord and the Alliance

Q [6 marks]. The Week 8 case reports that the Accord covered 1,646 factories and the Alliance 770, half of them shared with the Accord. Calculate the shared and combined coverage and explain what the numbers can and cannot show. The weighting is a study aid, not a University marking scheme.
The blue bar is the Accord's 1,646 factories and the orange bar the Alliance's 770; the dark strip marks roughly 385 factories counted by both, so the combined The blue bar is the Accord's 1,646 factories and the orange bar the Alliance's 770; the dark strip marks roughly 385 factories counted by both, so the combined reach was about 2,031 factories.Accord 1,646 factoriesAlliance 770 factoriesabout 385 shared
The blue bar is the Accord's 1,646 factories and the orange bar the Alliance's 770; the dark strip marks roughly 385 factories counted by both, so the combined reach was about 2,031 factories.
  • 2Calculate the shared factories as half of 770.
  • 2Calculate combined coverage without double counting.
  • 2State one limit of coverage as evidence.
Half of 770 is 385 shared factories. Combined coverage is 1,646 plus the 385 Alliance-only factories, about 2,031. Coverage shows reach, not results: it does not say how many hazards were fixed, and shared factories were inspected under mutually recognised audits.
Sia tip — Remove the overlap before adding two lists; otherwise shared factories are counted twice.
Glossary

Key terms

Social auditing
Social auditing is the inspection of supplier workplaces against a brand's code of conduct, used in private governance of labour standards.
Plausible deniability
Plausible deniability is the criticism that codes and audits let brands show they acted while keeping legal distance from supplier abuses.
Binding arbitration
Binding arbitration is a dispute process whose decisions can be enforced through the courts, as in the Accord's home-country mechanism.
FAQ

Regulating Work in Global Supply Chains FAQ

Should multinationals be responsible for supplier working conditions?

The slides treat this as complex. Suppliers are legally independent, which argues against responsibility, but multinationals exert huge power over them, are often in effective control and benefit economically, which argues for it. Strong answers weigh both and state conditions.

Why are social audits criticised?

Critics call the audit model plausible deniability, because brands can point to codes and audits while keeping legal distance. Audits often catch the worst problems but miss deeper ones, and factories in the Rana Plaza complex had passed a social compliance audit shortly before it collapsed.

What made the Accord different from the Alliance?

The Accord was negotiated with global and Bangladeshi unions, chaired by the ILO with equal brand and union seats, and legally binding through arbitration, with brands committing to maintain purchasing volumes. The Alliance was voluntary, gave unions an advisory role and was binding only on fees.

Why do framework agreements work best where they are needed least?

Many settings where international framework agreements function well are already strongly unionised and covered by collective bargaining. Where unions are weak, the local deals that should follow a framework are harder to secure, so the agreement adds less.

Study strategy

Exam move

Learn the three modes of regulation as a comparison with four tests: enforceability, worker voice, coverage and cost. Memorise the core Rana Plaza facts, including the date, the death toll, the audit history and the earlier factory disasters, and the governance contrasts between the Accord and the Alliance. Practise the coverage arithmetic so you can use the numbers accurately and state their limits.

Prepare a Section B plan on whether multinationals should be responsible for supply chain conditions and which mechanism best balances the interests of brands, suppliers and workers, ending with a conditional judgement. Link the chapter back to Chapter 1 on supply chains and to Chapter 2 on political activity, because both explain why brands can influence rules they are not legally bound by.

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