Decent Work during COVID: The Role for Investors

The COVID-19 crisis has both illuminated and intensified economic inequality. The growth of temporary, casualised and precarious work in recent years has left some workers more exposed to the impacts of the pandemic than others. The crisis has also revealed the race and gender divisions that run through the workforce, with female and/or migrant workers more likely to be exposed to the virus through their essential — but low paid — work in nursing, aged care, childcare, cleaning and horticulture.

COVID-19 is a whole-of-economy crisis that requires a whole-of-economy response. While governments are leading with stimulus, there is a role for investors in ensuring that companies adhere to strong social, labour rights and human rights standards. The COVID crisis is an opportunity for investors to fortify their engagement on the “S”in ESG.

ACCR has developed this set of principles to guide investor engagement on decent work and workers’ rights during the COVID crisis. These principles will be further developed through a series of posts on workers’ rights and S-risks in COVID-impacted essential industries. As each of these principles makes clear, effective investor engagement through the crisis will necessarily be attuned to the different impacts of gender, race, contract status and visa status on workers’ rights.

1. Bailout and stimulus funds must be used for the long-term development of the company, not for short-term shareholder returns, share buybacks or dividends

Human capital is critical to the long term performance of companies. Stimulus packages and bailouts must be used to maintain the employment of the existing workforce, prevent the erosion of human capital, and allow companies to emerge more successfully on the other side of the crisis. Stimulus measures and bailouts should not be transferred to shareholders via dividends or share buybacks.

2. Management must share in the burden of COVID-19 restructuring. Any stimulus must go to supporting workers and maintaining the overall human capital of the organisation.

Companies must review their remuneration plans in light of the crisis. At a minimum, no executive bonuses should be paid during the crisis. In companies that are most exposed to the crisis, management should forego a portion of their remuneration.

3. All workers must be provided with a safe workplace, if they are required to work.

Employers have a responsibility to ensure a safe workplace for their entire workforce, irrespective of whether they are directly employed or hired through third party contractors or labour hire agencies.

Where workers cannot work from home, companies must minimise their exposure to the virus. Workers must be provided with sufficient Personal Protective Equipment (PPE). Appropriate measures for proper physical distancing and hygiene must be put in place.

Paid pandemic leave forall workers, irrespective of contract type, is essential. Without leave, workers are less likely to self-isolate as required, putting the whole workforce and broader community at risk.

4. Workers must have an active role in the design, implementation and monitoring of a company’s COVID-19 response.

Any restructuring of work in response to COVID-19 should actively include workers and trade unions. This includes modification of occupational health and safety (OHS) procedures to mitigate against virus risks, and restructuring to address downturns in business due to COVID-19 shutdowns.

Workers must not face consequences for raising safety issues, removing themselves from an unsafe work environment, or exercising their freedom of association.

Lobbying for IR reforms that limit worker engagement is counter to the effective involvement of the workforce in the COVID response.

5. Companies must ensure that all workers have access to health care, irrespective of health insurance or visa status.

Some sectors of the economy are reliant on temporary and undocumented migrant workers. These sectors face specific vulnerabilities given the inability of their workers to safely and cheaply access healthcare. For undocumented workers, the lack of an official firewall between health services and border control means that they may be reluctant to seek healthcare for fear of deportation.

Companies must ensure that their migrant workforce has access to gap-free healthcare, that they can access without fear of deportation. This is critical to ensuring the overall health of the workforce and ensuring the ongoing operation of these sectors. It is also critical to maintaining the health of the broader community.

6. Companies must take responsibility for their indirect workforce and suppliers in developing their COVID response.

Suppliers, contractors and labour hire workers have — in most cases — greater exposure to the health and economic impacts of the pandemic. Host companies and lead companies have, in many cases, limited their responsibility for worker protection to their direct employees. The indirect workforce is exposed to greater economic hardship through the cancellation of supplier contracts in industries affected by shutdowns, and to greater health risks through failures to extend pandemic sick leave provisions to labour hire and contracting workforces.

A COVID response that only focuses on direct employees will exacerbate existing inequities and leave a significant proportion of the global workforce exposed to increased risks of forced labour, and safety incidents.

7. Investors must engage lead companies in sectors with high risk of modern slavery on the additional due diligence they will undertake to mitigate modern slavery risks in their supply chains.

The pandemic increases the risk of forced labour and modern slavery in global supply chains. Low paid, migrant workers live paycheck to paycheck, and have minimal or low savings. They are typically excluded from government payments to mitigate the economic impacts of the crisis. Job losses — or even temporary stand downs — puts these workers at risk of falling into slavery-like conditions as desperation leads them to seek out more precarious work, often at the hands of unscrupulous employers.

Reports of forced labour in supply chains making protective equipment have already emerged, as suppliers intensify their workloads to meet global demands. In light of this, investors must seek assurances on the additional due diligence taken by companies to mitigate increased modern slavery risk due to the crisis.

Investors and companies may also seek to advocate for a whole-of-workforce government stimulus package that includes migrant workforce, in order to address economy-wide modern slavery risks.