Weeding out worker exploitation in the food supply chain

According to the recent Four Corners report, the food supply chain in Australia is ‘riddled with exploitation’ with many migrant workers working in slave-like conditions on farms and in factories.
While the workers in this story shared harrowing personal experiences, broader research reveals that incidents of underpayment and mistreatment are not necessarily isolated. Rather, it is clear from the Four Corners investigation, and earlier government inquiries, that many stakeholders – including farmers, factory supervisors, wholesalers, supermarket retailers, fast food chains, unions and government agencies – are well aware of the problems plaguing this sector. But what can be done and who should be held responsible for worker exploitation in the production of food in this country?

One of the main culprits flagged in the ABC program were the shady labour hire contractors that supplied a steady stream of migrant workers on expired or invalid visas. However, fly-by-night contractors are just one part of a much bigger, murkier picture. Even if these contractors were removed (or better regulated through a licensing regime), the underlying drivers of employer behaviour and employee vulnerability are likely to remain. Supermarkets and fast food franchisors are still likely wield enormous power over the price paid to growers. Employees are still likely to be in an inherently precarious position.

Both Coles and Woolworths are unabashed in spruiking that their prices are ‘down, down’ and their products are ‘cheap, cheap’. While making food affordable may be good for many consumers, someone must ultimately pay the cost for these everyday low prices. Growers in the horticulture industry are generally seen to bear the brunt of these intense price pressures. What is rarely acknowledged is the fact that if farmers are not making a profit, workers are getting an even poorer deal.

The Four Corners investigation has elicited a range of responses. A number of government inquiries have been announced at the state and federal level. Others have argued that a specific visa needs to be introduced that allows for better regulation of low-skilled work. More generally, there has been a push for an undercover taskforce that spans different government departments to crack down on unscrupulous labour hire contractors.

While all these ideas have merit, they do not address some of the fundamental problems facing agencies charged with the formidable task of enforcing legal regulation on behalf of working holiday-makers and other seasonal workers. Some have alleged that government regulators, such as the Fair Work Ombudsman (FWO), have simply turned a ‘blind eye’ to the problem. This is not correct. The FWO has undertaken a number of compliance activities and collaborated with key industry representatives to educate growers about their obligations, inform workers of their rights and weed out employment non-compliance by bringing enforcement litigation in challenging circumstances. But ultimately government agencies, such as the FWO, have limited resources. They cannot be everything to everyone. While the problems highlighted in the horticulture industry are extreme, they are also emblematic of similar issues facing foreign workers in a range of other low-paid industries, including cleaning, security and hospitality. Such workers also rely heavily on government regulators.

A more fundamental question raised by this report is whether the taxpayer should be forced to bear the enforcement burden, when it is the cut-price strategies of key market players that have partly prompted this race to the bottom. Indeed, the stakeholders with the highest level of resources, and potentially the greatest ability to influence employment practices, are leading supermarkets and the fast food heads, which sit at the apex of the food supply chain. In overseas jurisdictions, regulators, unions and worker advocacy groups have concentrated their efforts on harnessing branded companies to promote positive change. For instance, in the UK, the Gangmasters’ Licensing Authority has sought to tackle the problem of seasonal worker exploitation by so-called ‘gangmasters’ (i.e. labour hire contractors) through close collaboration with leading supermarket chains, such as Marks & Spencer, as well as the key association representing reputable labour hire contractors and interested unions. In the US, the labour inspectorate has strategically embargoed food products picked or processed in contravention of workplace laws. Similarly, worker advocacy groups have raised consumer awareness of issues through the public boycotting of fast food chains. As a result of these initiatives, lead firms in these countries often believe that it is in their best commercial interests to undertake active monitoring of their own supply chain.

In response to the Four Corners episode, Coles, Woolworths and KFC, amongst others, reaffirmed their commitment to ethical sourcing and reassured their consumers that they expect all their suppliers to comply with Australian workplace laws. They have emphasised that they would be prepared to terminate the relevant supply contracts or refer the matters to authorities for further investigation where wrongdoing has been found. What is less clear is how these companies intend to prevent contraventions being perpetuated in the first place. Indeed, there seems to be far less commitment to adopting a comprehensive, accountable and transparent monitoring regime. Government agencies can only do so much in terms of detecting non-compliance and imposing formal sanctions. Overseas experience suggests that it is far more powerful and effective for leading companies – either on a voluntary or coercive basis – to stand up and take real responsibility for protecting vulnerable workers in their supply chains.

www.law.unimelb.edu.au