BUS604: Innovation and Sustainability

How can businesses pursuing the Global Goals respond to the likelihood of the next wave of automation having even more radical consequences for employment than previous technological revolutions? The Commission would encourage business leaders to work with civil society and governments on developing market opportunities with the greatest potential to create growing amounts of decent work in well-paid jobs. 

Private business already creates most of the world's jobs: in developing countries, 90 percent of jobs are in the private sector, while among OECD countries the pre-crisis average was around 85 percent, a figure likely to have risen since because of public sector austerity programmes. In today's employment context creating the estimated 380 million new jobs in business that arise from achieving the Global Goals (see Section 2) becomes all the more important. They could account for more than 10 percent of the estimated global workforce in 2030. Equally important is making sure all the jobs in a business provide decent work and that no-one is left behind.

At a minimum, business leaders are expected to ensure that jobs throughout their supply chains are physically safe, and to be ready to show how they are making sustained efforts to tackle unsafe working conditions, child labor, and modern slavery. Today, job-related injuries and sickness kill more than 2.3 million people every year. Around 21 million people work in forms of forced labor (some estimates suggest up to 40 million). And 168 million children are involved in child labor, half of whom are in hazardous work. They are embedded, invisibly, in the first mile of almost every global value chain – from mining to garments to food and agriculture to waste management.

Global businesses are also expected to have integrated human rights into their operations. While many companies have embraced the need to reduce their negative environmental impacts, much less progress has been made on their social impact. The UN Guiding Principles on Business and Human Rights aim to bring this issue to the center of business practice, through helping companies identify how to reduce human rights risks along their entire supply chains – an approach that promotes sustainable development as well as reducing harm. These principles also create a formal responsibility on both states and businesses to protect human rights and decent work, and to provide effective grievance procedures and remedies against human rights abuses. 

To help businesses meet this responsibility, the Better Work programme, a partnership between the International labor Organization and the International Finance Corporation, helps enterprises to improve labor standards at the factory level through training and capacity building, and to increase competitiveness in global supply chains by increasing productivity and quality.

There has been strong progress here. Since 2000, there has been an 80 percent increase in global framework agreements between multinational firms and global union federation, where companies consent to respect workers' rights and to promote decent work globally within their subsidiaries and along their global supply chains. And many new and effective business-NGO platforms have formed to help companies uphold human rights throughout their operations. These include ACT in the fashion sector (see Box 11: Action, Collaboration, Transformation), the Ethical Trading Initiative in food and agriculture, the Bangladesh Accord, and the Malawi 2020 Tea Rehabilitation Programme. 

Box 11: Action, Collaboration, Transformation

The recently established apparel sector initiative Action, Collaboration, Transformation (ACT) describes itself as an "initiative between international brands and retailers, manufacturers, and trade unions to address the issue of living wages in the textile and garment sector. It aims to improve wages in the industry by establishing industry collective bargaining in key garment and textile sourcing countries, supported by world class manufacturing standards and responsible purchasing practices". One of ACT's roles is to examine the purchasing practices of brands and retailers and how they affect wage levels. Through this work, companies understand their influence on suppliers and also tackle instances where particular actions or their business models in general hinder progress towards living wages. ACT makes a clear business case for industry collective bargaining agreements.

Through such approaches, workers and communities become more aware of their rights. Paying living wages ensures that families can support themselves, educate their children, and cope with periods of sickness or other contingencies. Business can engage with communities as partners in protecting and sustaining their livelihoods and in making sure women and girls can be free of sexual harassment and discrimination. 

Companies can have a particular influence on gender equality by prioritizing progress in their workforces. There is still a very long way to go to ensure a fair deal for women – above all in developing countries, where structural gender discrimination is a central issue in poverty and development. At current rates, it will take 70 years to close the gender pay gap for those in direct employment and throughout supply chains, with women worldwide earning nearly 25 percent less than men for doing the same work. Across all major economies, women hold fewer senior business leadership positions than men. They are also far more likely to work in informal, low-paid, or undervalued sectors – 49 percent of working women are in jobs classified as vulnerable. And women take on a disproportionate share of unpaid domestic care, with significant career consequences: 25 percent of women in the European Union cite care and family responsibilities as the reason for being out of the labor force, compared to just three percent of men.

Governments will also need to do more during this time of pronounced uncertainty and insecurity for many workers to help people retrain and cope with periods of unemployment. Sustainable business leaders can support government spending in this area and complement their efforts. One mechanism is support for active labor market policies such as training schemes, employment subsidies and public employment programmes. The amounts that governments spend on such schemes vary wildly. Belgium, Finland, the Netherlands and Sweden all spend one percent of GDP or more. For Denmark, the figure is as high as 2.3 percent. However, the OECD average is 0.6 percent, and the US spends just 0.1 percent.

Another way companies can directly protect their workforces, especially workers at risk of redundancy, is through their own training and skills programmes. While the nature of skills needed in the economy of 2030 remains unsure, low skilled workers are likely to be most at risk of long-term redundancy in an increasingly automated economy.