Read this month’s update on trade and sustainability topics, with on the ground analysis from our international network.
Austria and Germany
Lorenz Berzau, Network Representative Austria and Germany
Final Report Concludes Monitoring of German National Action Plan on Business and Human Rights
Monitoring has been part of the German National Action Plan on Business and Human Rights (NAP), conducted in two parts in 2019 and 2020. The objective was to identify to which extent German companies with more than 500 employees meet due diligence criteria stipulated in the NAP. More than 5,500 companies were contacted for the monitoring in total.
The key elements of due diligence in the NAP correspond to the UN Guiding Principles: companies should publicly express their willingness to respect human rights in a policy statement, assess the risks and the impact of their activities on human rights, take countermeasures if necessary, communicate how they deal with risks internally and externally, and establish an effective complaints mechanism.
This month, the final report of the monitoring has been published. The report comes to the main conclusion that a large part of the companies show difficulties, particularly in the areas of risk analysis and taking measures to prevent and mitigate risks. The final report can be found here; general information in English is available here.
The NAP foresees that in case this monitoring doesn’t show satisfactory results, legislation on Human Rights Due Diligence will be on the agenda, which has been a topical debate in Germany for more than a year. Some ministries are pushing for legislation by the middle of 2021, though this would include a transition period.
Natasha Majumdar, Network Representative India
New Labour Bills Passed in India
On 23 September 2020, the Indian Parliament passed three new labour codes. The move seeks to simplify the labour laws and ease the compliance burden on firms. In total, India passed four new labour codes between 2019 and 2020 that replace 29 central labour laws. The four labour codes are the Industrial Relations Code, Occupational Safety, Health and Working Conditions Code, Social Security Code, and the Code on Wages (passed by the Parliament in 2019).
The Codes are part of major labour reforms in India as the country looks to achieve its aspiration for greater economic growth and increase integration in the global economy.
Source: Overview of Labour Law Reforms
Farm Bills Become Law in India
On 24 September, the President of India approved three agricultural bills. The three bills will come into force immediately. The three farm bills are:
The new law aims to de-regulate the agriculture sector by allowing buyers to trade without any license or stock limit, therefore increasing the number of buyers. In this way, farmers would have a greater choice of buyers to sell their produce to.
Indian Government Circulars
New guidelines were issued on 30 September by the Indian Ministry of Home affairs (MHA) for the opening up of more activities in areas outside the Containment Zones. In these guidelines, which came into effect from October 1 2020, the process of re-opening has been extended further. The new guidelines are based on feedback received from States and Union Territories and extensive consultations held with related Central Ministries and Departments.
Additionally, the Directorate General of Civil Aviation has released a circular dated 30 September 2020 on travel and visa restriction related to COVID-19.
Saiful Millat, Network Representative Bangladesh
Fashion Brands Accused of Exploiting Workers at Risk of Layoffs
Millions of garment workers could lose their jobs as global brands are demanding price cuts and delaying payments to suppliers who are desperate for orders to survive the coronavirus pandemic, US researchers have said. Suppliers have been asked to make their prices an average of 12% cheaper than last year, research by the Center for Global Workers' Rights (CGWR) at Penn State University found, describing such practices as, "Leveraging desperation."
In a survey of 75 factories in 15 countries, suppliers said they had to wait an average of 77 days for payment, compared to 43 days before the pandemic, raising fears of further factory closures in an industry employing 60 million people worldwide. Manufacturers and labor rights groups said some orders that were cancelled or suspended earlier in the year were being restored, along with new orders, but they were less than the number of firms jostling for contracts. More than half of manufacturers surveyed said they would have to close down if the "sourcing squeeze" continued.
The Thomson Reuters Foundation spoke to five garment manufacturers in Bangladesh - which hosts more than half of the 75 suppliers involved in the study - who said they had been forced to cut their prices by 5-15%. Iqbal Hamid Quraishi, a factory owner and a director at the Bangladesh Garment Manufacturers and Exporters Association, said order volumes had risen since September but prices had fallen. "There isn't much room to negotiate with brands. They tell us that if we don't agree to their price, they can go to other suppliers," said Quraishi, adding that the industry could recover if the second wave of COVID-19 did not hit sales.
The Geneva-based International Organisation of Employers (IOE), a global business network, said brands and suppliers were trying to find solutions in "extremely difficult circumstances". "Brands ... have shown responsibility by engaging in the joint Call to Action in the Garment Industry, which aims to support manufacturers to survive economic disruption ... and to protect garment workers," said IOE spokeswoman Jean Milligan. The Call to Action, written in April by the IOE and global unions, seeks to protect workers' incomes and support manufacturers during the COVID-19 crisis by lobbying for loans, social protection schemes and unemployment programmes. The British-based Ethical Trading Initiative, whose members include H&M and Primark, said that the pandemic was not an excuse to row back on human rights and that it was in everyone's best interest to ensure a sustainable and robust supply chain.
Australia and New Zealand
Antonio Pantalone, Network Representative Australia and New Zealand
Australian Budget Released October 2020
The Government’s Economic Recovery Plan for Australia is to rebuild the economy, create jobs and secure Australia’s future. The 2020-21 budget commits further response and recovery support, bringing the Government's overall support to AUD 507 billion, including AUD 257 billion in direct economic support.
The initial COVID-19 response totalled AUD 299 billion, including health measures, the JobKeeper Payment, Boosting Cash Flow for Employers and the Coronavirus Supplement. The AUD 2 billion National Bushfire Recovery Fund has supported families, farmers, business owners and communities. The 2020-21 Budget includes AUD 98 billion in response and recovery support, including AUD 25 billion under the COVID-19 Response Package and AUD 74 billion under the JobMaker Plan. The underlying cash deficit in 2020-21 is expected to be AUD 213.7 billion (11% of GDP). This is expected to improve over the forward estimates to AUD 66.9 billion deficit (3% of GDP) in 2023-24 and to a AUD 49.5 billion deficit (1.6% of GDP) by the end of the medium term.
Gross debt is expected to be 44.8% of GDP at the end of 2020-21, increasing to 51.6% of GDP by the end of the forward estimates. Gross debt is projected to stabilise at around 55% of GDP in the medium term. Net debt is expected to be 36.1% of GDP at the end of 2020-21, peaking at 43.8% of GDP at the end of the forward estimates. Net debt is then projected to fall to 39.6% of GDP at the end of the medium term.
NEW ZEALAND VOTES
Prime Minister Jacinda Ardern and the Labour party have surged to a huge victory in New Zealand's general election. Projections indicate Labour could win more than 60 seats in the 120-member parliament, meaning it could govern with a majority for the first time since the country adopted mixed-member proportional voting in 1996.
New Zealanders also voted in two referenda on Saturday - to legalise cannabis and, separately, euthanasia - but these results won't be confirmed until next month.
Pierre Strub, Network Representative Switzerland
A Vote on the Corporate Responsibility Initiative
On 29 November, a vote will be held in Switzerland on the Corporate Responsibility Initiative. At the heart of the initiative is the obligation for due diligence on environmental and social issues in the supply chain, which is to be newly introduced. If a Swiss company fails to comply with this obligation, it will be liable for any damage caused by its subsidiaries abroad. The initiative demands that Switzerland-based firms will be liable for violations caused abroad by companies under their control. When a company can credibly demonstrate to the Court that it carried out adequate due diligence and that it took all necessary measures to prevent the violations, it will be exempted from liability. The initiative therefore has a preventive effect as it provides companies with an incentive to comply with their obligations.
Parliament and the Federal Council recommend that the initiative be rejected but passed an indirect counter-proposal that automatically comes into force if the initiative is rejected. It does not introduce new liability rules but includes a reporting obligation and a duty of due diligence with regard to child labour and conflict minerals.
The amfori Switzerland Network has held in-depth discussions with members (see Network Connect from 2 September 2020).