Getting the Covid lens to assess upcoming social audits
Regardless in which country we are based, we are all aware that the containment measures organized by public authorities to prevent the spread of Covid, such as quarantine and lockdowns, have caused unprecedented social and economic disruption, which have resulted in sever impacts to people concerning incomes, jobs, and livelihoods.
We have seen a rise in unemployment and underemployment in most regions of the world, and sourcing countries are no exception. E.g., According to the International Labor Organization, India will struggle with a 23,5 % of unemployment and Bangladesh with a 12,5 %, which is unprecedented if compared with figures before Covid.
In this situation, CSR managers need to be proactively aware on how social audits are to be conducted and how Covid may have impacted the findings. As CSR managers, we need to contextualize our work, so that we can provide strategic guidelines in our companies, particularly to buying departments.
Revisiting and adjusting the increased precarious employment do not mean to accept bad working conditions as a given, but rather assess the situation with realism and awareness of the imperative role Governments have to play to support their citizens.
We can see a clear impact in the way wages and remuneration was audited and how it will be affected by a number of collateral Covid effects.
Before Covid, companies expected their suppliers to provide workers with a sufficient remuneration that would provide them with a decent standard of living for them and their families. As a minimum, suppliers should enforce social benefits legally granted to their workers. They should pay wages timely, regularly, and fully in legal tender. Allowance and deductions should be paid in line with the law.
Furthermore, the most common living wage calculation method used by social auditors and suggested by NGOs would take into consideration two wage earners adults per family.
Before Covid, we verified major risks concerning wages and remuneration:
· Risk of evasion and informality (e.g. with regard part-time workers, piece-rate workers and seasonal workers, and workers hired through agencies)
· Risk of illegal deductions
The truth is that the calculation of living wage based on two wage earning adults was already unrealistic before Covid. As we know in most countries in Asia, Africa and Latin America, family is a larger human unity that includes several adults, (e.g., grandparents) not all of them being able to work outside home and yet having an essential role to play in the family.
With Covid crisis increasing unemployment, many families will get even larger, including other relatives that may have financial or health issues and count on family’s solidarity.
Understanding the complexity and peculiarities of the social network and relations in sourcing countries is vital for a sound and realistic CSR strategy that adapts to the reality and not the other way around.
Likewise, we will see more families having got debts to buy medical assistance or treatment. Workers with higher private debts are more likely to be abused in jobs, particularly temporary jobs, but not only. And social auditors need to be aware of it.
We will see an increased in the risk of evasion and informality for part-time workers; piece rate and seasonal workers and certainly for workers hired through agencies, with particular attention to be paid to migrant workers and illegal migration.
That is why is crucial to verify during the audit, if former full-time or regular employees have been converted into part-time, seasonal or piece rate workers. Check if workers have been dismissed to eventually be hired through agencies or as freelancers. We can anticipate a lot of changes in working arrangement. At the same time, we will need to be wise in assessing how in some cases these changes can be a good solution for the workers.
With regard the risk of illegal deductions, we will need to take the time to verify if deductions for masks, gloves, and other Covid protection equipment have been deducted from payment during the crisis and beyond. Or verify how quarantine period has been calculated and deducted in payment during the period that took place.
But also, verify if employment was suspended or terminated due to the economic impact of Covid or for health and safety reasons, and if that was the case, check that workers received the allowance, unemployment insurance benefits or assistance to compensate for the loss of earnings incurred as a consequence of the termination.
There are a lot of tiny signs that we need to be able to read during the next social audit after Covid and provide the necessary strategic advice within our company to get the best outcomes and follow up.
Have a look at CSRTalk #2, where we discuss this topic in person.