Supply-Chain Collaboration Can Enhance Labor Rights
Aside from being the right thing to do, improving labor rights and worker welfare has a compelling commercial case. When workers are happy and engaged, they tend to work more safely and efficiently and the risk of delays and disputes is minimized.
Petrofac is an international service provider to the oil and gas industry, undertaking projects that cover engineering, construction, and production operations.
The company operates in challenging environments where human rights issues can become a source of risk, both for the business and for some of the people who work on Petrofac sites. The company is committed to working in partnership with its clients and suppliers to ensure that human rights and labor rights are respected.
The main exposure in the construction industry is through the employment of large numbers of low-skilled migrant workers from high-risk countries at Petrofac sites. Migrant workers can be subject to risks, including excessive debt incurred through high recruitment fees, nonpayment of wages, poor living conditions, restricted mobility, and limited power to change jobs, which ultimately traps them in exploitative situations.
To address these issues, a labor rights and worker welfare program has been implemented in collaboration with supply-chain partners. The initiative aims to understand the true extent of this exposure, develop a policy framework, and establish a sustainable response.
More than 40 million people around the world are victims of slavery, 25 million of them in forced labor, most of these working in the supply chains of global business. If we are to achieve the UN Sustainable Development Goal 8—Decent Work and Economic Growth—and its target to “eradicate forced labor, end modern slavery and human trafficking” by 2030, businesses and governments must do more to address these issues. In 2014 only four countries were taking steps to develop legislation and investigate forced labor in business and government supply chains. In 2018, that had increased to 36 countries.
Aside from being the right thing to do, improving labor rights and worker welfare has a compelling commercial case. When workers are happy and engaged, they tend to work more safely and efficiently and the risk of delays and disputes is minimized. To tackle this issue, Petrofac worked with its supply-chain partners to understand the realities and address the issues.
Petrofac’s due diligence has revealed that a main human rights vulnerability is through the supply chain and, more specifically, employment of low-skilled migrant workers from high-risk countries. Of particular concern are the practices of any agents used, which may include the charging of excessive recruitment fees, unconsented retention of passports, and the risk of contract discrepancies during recruitment.
To address potential risks identified through the due diligence, a labor rights and worker welfare program was implemented. Groupwide initiatives such as development and roll-out of Labor Rights and Worker Welfare Standards, were supported at site by a labor rights toolkit that included
Supply chain training to highlight the importance of getting these issues right
- Monitoring across projects to understand the extent of the issues
- Implementing arrangements drawn up collaboratively with supply chain partners to establish protections for migrant workers
- Implementing a program of oversight to assure compliance
To date, Petrofac has seen a progressively improving picture of both awareness and management of the issues on its projects. The Employer Pays Principle is being implemented down the supply chain, ensuring employing companies (not workers) pay for the cost of recruitment, thereby reducing the debt workers incur in their search for work. Retention of passports only occurs with worker consent, and workers have unrestricted access to their documents and freedom of movement. Employment contracts are also in a language that workers understand (or that has been properly explained to them), so they are aware of the terms of their employment and more able to assert their rights.
The program is currently being rolled out across Petrofac. The company is increasing its engagement with industry to share good practices and is committed to working in partnership with clients and the supply chain to ensure human rights are respected across the business.