Code of Practice on Ethical Employment in Supply Chains
This case was submitted as part of the Call for Innovations, an annual partnership initiative between OPSI and the UAE Mohammed Bin Rashid Center for Government Innovation (MBRCGI)
Illegal and unethical employment practices should not be tolerated where public money is being spent. The Code of Practice on Ethical Employment in Supply Chains calls on all organisations receiving public money directly or via contracts to ensure legal and ethical employment for workers in supply chains. The Code’s commitments are designed to combat modern slavery and exploitative practices and to promote responsible employment to improve workers’ lives in Wales and across the world.
The Code of Practice on Ethical Employment in Supply Chains has been developed in response to:
• The supply chain provision in the UK’s Modern Slavery Act (2015), which placed a duty on all commercial organisations with turnover above £36 million to publish an annual statement on actions taken to combat modern slavery.
• On-going concerns around unfair employment practices, especially (but not only) in the construction sector. These include false self-employment, blacklisting of unionised workers, unfair use of umbrella employment schemes and zero hours contracts.
• The Welsh Government’s commitment to promoting a Living Wage calculated from costs of living rather than average earnings.
The Code was developed because evidence had shown that formal policies on some of these matters were not being implemented consistently. There is often a mismatch between an organisation’s stated policies to promote equality, fairness, sustainability and economic development, and its commercial practices focused more around reducing running costs, and securing good deals, for example through outsourcing services.
Procurement staff across all sectors have tended to focus more on the quality and cost of goods and services, and less on the way workers are treated throughout supply chains. The aim of the Code is to address this by promoting widespread assent to a set of principles and commitments and flowing this commitment through supply chains. These commitments emphasise that people matter, and that sustainable and prosperous communities can only exist where workers are employed fairly with adequate job security, opportunities and fair pay. These main beneficiaries of the Code of Practice are low-paid and exploited workers on insecure contracts within public sector supply chains. In the longer term, the benefits will be felt more widely through more sustainable and cohesive communities.
In this way, the Code of Practice complies with the Welsh Government’s flagship Well-being of Future Generations Act 2015 which obliges public bodies to consider the long term, work in partnership to prevent problems and take a more joined up approach. In the UK, the media regularly reports instances of modern slavery being exposed, and examples of exploitative practices taking place in the “gig economy”. These are often found within the supply chains of well-known brands. The Code was developed to ensure that the public sector in Wales takes a lead in rooting out these practices through more rigorous monitoring of employment standards in commercial contracts.
In common with Article 54 of the Modern Slavery Act 2015, it is not prescriptive about precisely how the commitments are put into practice. Instead it is designed to foster a culture of due diligence and continual improvement. Signing up requires organisations to assess the extent to which they already comply, and to develop an action plan to address areas where more work is required. In signing the Code, organisations agree to put the commitments into place within their own operations, but also to promote the Code’s commitments with their suppliers. In order to track progress, organisations are encouraged to upload key documents, and to complete a short checklist of progress against each commitment on the Transparency in the Supply Chain (TISC) Report website www.tiscreport.org.
The Code is supported by a toolkit with advice and links to other sources of help:
• Guide to Modern Slavery and Human Rights Abuses;
• Guide to Tackling Blacklisting;
• Guide to Tackling Unfair Employment Practices;
• Guide to Implementing the Living Wage through Procurement;
• Example tender questions, contract conditions and policy templates.
The final document with example questions and conditions is particularly useful for procurement and contract management staff, allowing them to use and adapt some of the questions and conditions quickly into forthcoming procurements and contracts. We have also recently launched a freely-accessible eLearning course.
The intention is that as each organisation signs up they will in turn invite their own suppliers to sign up, and in so doing the numbers will start to rise more quickly. As we track and publicise sign-up this will encourage more organisations to follow suit. We are now beginning to see signs that these wider levels of knowledge and engagement are developing across different sectors.
What Makes Your Project Innovative?
The Code is innovative in that it is the first of its kind in the world, with just 12 commitments, fitting on two sides of A4. The commitments include putting policies in place, adding important questions about employment practices in procurements and contract conditions where necessary, and carrying out regular risk assessments on categories of spend, with focussed action where problems are identified.
The Code is also innovative in being voluntary. Signing up to it as a whole has not been made a condition of contract or grant funding. However all organisations in receipt of Welsh Government funds, directly or via grants or contracts, are expected to sign up and take its commitments seriously. Illegal and unethical employment practices should not be tolerated where public money is being spent. This voluntary approach helps avoid a tick-box “do minimum” attitude to engaging with the issues.
What is the current status of your innovation?
Around 120 organisations have formally signed the Code so far, including the Welsh Government, all Universities and Police Forces, 13 local authorities, several Health Boards and other public bodies. Several housing associations and third sector bodies have signed, and around 60 businesses across a range of sectors. The small Welsh Government team has focussed attention on ensuring that public bodies sign up at a strategic level, for example at Council (political) level in a local authority. Attention is now on promoting the Code with businesses in public sector supply chains and beyond. The Code’s principles align with a newly-established Fair Work Commission, tasked with addressing the problems of low pay and insecure work. We set up a “Community of Practice” with colleagues around Wales, to share ideas, and work together to address common challenges. The community communicates by email, and also at regular events around Wales.
Collaborations & Partnerships
The Code of Practice has been built entirely on collaboration and partnerships between professionals in HR, procurement and a wide range of policy areas in the public sector. Many businesses, NGOs, academics and charities were involved in the consultation and development of the Code, which was overseen by a group of employer and trade union reps chaired by the First Minister, and also by Wales’s Anti-Slavery Leadership Group.
Users, Stakeholders & Beneficiaries
The beneficiaries for this Code exist across all sectors. As organisations sign up to the Code and pay more due diligence to workers in supply chains employment practices will improve, and we will start to realise Wales’s ambition of ensuring Fair Work for all. Better employment brings lower dependency on public services, and stronger communities. For business, it can reduce staff turnover and sickness, improve customer service, reputation, market share and profits.
Results, Outcomes & Impacts
The profile of the work continues to rise. We now have almost 120 organisations signed up, including all Universities and Police forces and some large public bodies and suppliers. Attention is now on putting the commitments into practice. Improved outcomes linked directly to the Code are not easy to measure, but there is evidence that organisations are starting to act. Overall engagement is being measured via stats on publication of statements and action plans on the TISCreport website, and we also receive regular feedback from unions etc on real engagement with the Code on the ground, especially in construction.
For example, Transport for Wales, a subsidiary of the Welsh Government, has appointed a Supply Chain Champion tasked with ensuring that the Code’s commitments are applied throughout supply chains. A housing association in N Wales has worked with other public bodies to identify common key suppliers in the region and invite them to an awareness-raising event.
Challenges and Failures
The Code, whilst focused on procurement and supply chains, crosses traditional boundaries between wider public sector and business HR practices. This created the challenge of securing buy in from a very wide range of stakeholders. This was overcome through extensive engagement with public sector leaders, and employers from business and Union representatives. Support was also secured from Wales' Finance Minister who sponsored the Code at several high profile events.
It has also been difficult to persuade organisations to sign up to commitments that will take time to implement. Organisations are more used to being asked to comply with requirements, rather than commit to longer-term developments in partnership with other organisations. We have responded to this by providing collaborative forums and events to enable the sharing of good practice and intelligence.
Conditions for Success
Senior leadership has been vital in driving through development of the innovative Code. Sponsorship from Wales' Finance Minister raised the profile of the work, and he has also engaged with his Cabinet colleagues to ensure that all parts of the Welsh Government are promoting the Code to their sectors.
Effective governance was vital in bringing the Code to publication - the Workforce Partnership Council, comprising public sector leaders, employer representatives and unions, oversaw the work.
Since publication, success in rolling out the Code so far has been a result of a committed Community of Practice working together.
The TISCreport website provides a publicly available up-to-date record of organisations that have signed up. This transparency helps persuade organisations to take the Code seriously.
Ensuring that employment-related questions are asked during tendering and contract conditions are included and monitored through supply chains is essential in driving improved pract
Wales is widely considered to be leading the way in its approach to tackling slavery and unethical practice in supply chains. The UK’s Director of Labour Market Enforcement included a recommendation in his annual report that an assessment should be made of the Welsh Code’s effectiveness to determine whether a UK-wide roll-out would be beneficial. Discussions have also been held with the Governments of New Zealand and Australia about whether a similar approach would work in those countries.
A voluntary code is a good mechanism for a small country such as Wales to take seriously its commitment to tackling the complex and mutating problems in a global economy. The collaborative and iterative approach to solving problems, based on a simple set of commitments, designed to cascade through supply chains, is an effective model that can be used for other similar issues, such as those designed to tackle other social, environmental or economic challenges.
Delivery of the Code is a perfect example of what can be achieved through social partnership - collaborating with public sector leaders, business employers and unions to develop a solution which will ultimately deliver widespread benefit to our communities. We believe we may have achieved more rapid sign up and implementation through a more refined communications and engagement strategy, which was the main problem with delivering with scarce resource.
In Wales we enjoy the benefits of being a small country where there is already considerable cross-sector engagement and working. For an innovation such as this one it is essential to secure high-level engagement at a senior level across all relevant sectors from the outset. Taking more time at the start to ensure that this was in place would have resulted in a smoother path to publication, and secured more organisations signing up over the first year.
Working in partnership with an independent organisation, TISCreport, to provide transparency on those organisations signing up has been really helpful in persuading organisations that they should be on the list.
Underpinning the commitments with a set of detailed guides, including example questions to be asked during tendering, and example contract conditions, has given people some practical tools to use from the outset. This has helped build confidence and skills at a working level, and ensured that the Code is not seen only as a tick-box exercise.
Our experience with the Code has demonstrated that it is possible for a small country to address global problems collaboratively and over time, and that legislation and enforcement are not always the only or best tools for changing culture and practice.