New research has revealed that it is critical for retailers to heighten engagement with workers and trading partners in the supply chain to safeguard against reputational risk.
The study, conducted by Responsible Trade Worldwide (RTW) amongst 1700 plus employees in retail global supply chains, revealed that on average 5.6 working days – or over a week – is lost for each employee per annum due to unauthorised absence, which is time off over and beyond legitimate reasons for being absent from work such as sick leave, holiday and maternity leave. This equates to 9,520 working days across the respondents.
Often such absence will occur due to personal issues such as family difficulties and, as such, it will always need to be managed by employers. However, according to Responsible Trade Worldwide such high levels of unauthorised absence, as revealed in the study, should be a red flag for retailers when assessing their suppliers as it can often indicate poor working conditions, low worker satisfaction, lack of job security, insufficient training, and low pay, amongst other issues. The RTW study also showed that suppliers are ‘passing on’ an average cost of £42,000 per 100 employees with respect to unauthorised absence alone. More broadly, national statistics for the UK show that this issue costs the UK economy £10-12bn per annum.
Another key finding of the research revealed that there was 34% labour turnover amongst those interviewed, which could also create additional risk in the supply chain.
Says Rebecca Taylor, who led the research at Responsible Trade Worldwide: "Ethical trade is currently firmly on the retail supply chain management agenda following the tragedy at the textile factory in Bangladesh. This in turn has led to an increase in demand for transparency and clarity into the working practices of the suppliers that produce consumer goods, and their journey through often convoluted global supply chains.
"Our research shows that it is critical that retailers know about operational standards from the perspective of workers across the supply chain and this requires a shift from a compliance-based approach to one which embraces greater engagement with suppliers and workers. Retailers need to get to grips with working hours, wages, company culture, environmental policies and community engagement activities of their trading partners. This will provide a more complete view of a supplier and in turn will highlight areas of risk, and inform the business case for change."
She concluded: "Not only is unauthorised absence generating a direct cost in the supply chain, which is passed upstream, it does not take into account the cost of potentially irretrievable damage to a company’s brand reputation if it significantly heightens risks in the supply chain."