Sally Paxton
Formerly with the International Labour Organization (ILO), now independent

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As the discussions in the convening meetings demonstrate, the issues facing multinationals in the developing world are complex and not easily solved. Acting as a true responsible corporate citizen requires sustained and innovative solutions that have the support, endorsement and involvement of both the most senior members of corporate management and company employees. Equally as critical, corporate social responsibility must be an integrated part of the business model that plays a real role in business decisions — not an add-on that is too easily discarded, particularly in more difficult business environments.

The issue of labor is one of the most critical and enduring of the challenges facing international business. The availability of low-cost labor is one of the important incentives that put jobs in the developing world, creating opportunities for countless workers to feed and support their families. But the continued downward pressure on wages creates some of the worst conditions imaginable — terrible working conditions, intractable poverty, low productivity, frequent work disruptions — all of which may result in serious consequences to a business’s reputation and profits.

Some of the current trends — auditing, codes of conduct, attention to supply chains — are a start, but do not get to the heart of the solution. Auditing/monitoring of either working conditions or supply chains — even when done properly by an independent third party, with the necessary transparency — does not by itself bring sustainable improvements. Standards, codes and even laws are helpful, but are ultimately a paper victory if there is not the means and capacity for their proper enforcement. Without more, these tools allow for only minimal progress.

There are proven approaches in the developing world that take a much bolder path. In these cases, both management and labor have committed to working in partnership, rather than as adversaries, resulting in both an improvement in workers’ lives and an increase in businesses’ bottom line. Understanding and implementing labor rights and responsibilities will have significant beneficial effects not just on working conditions, but also positive impacts on productivity, absenteeism, waste, reputation — and ultimately profits. This is an investment opportunity that corporate leaders can’t afford to miss.