BSI Supply Chain Services and Solutions, USFIA's Sustainability Partner for 2017, has provided the below alerts from  Supply Chain Risk Exposure Evaluation Network (SCREEN), BSI’s web-based, comprehensive global supply chain intelligence system. This week, BSI has provided alerts on political instability in Turkey, a risky textile factory in China, and an analysis of workplace fatalities in factories in Bangladesh. 

May 2: Political Instability in Turkey Drives Array of Supply Chain Risks

Political instability in Turkey increasingly poses an array of risks to supply chain security, business continuity, and corporate social responsibility with domestic and international impact.

An ongoing government crackdown and consolidation of political power following a military coup attempt against President Recep Tayyip Erdogan directly threatens Turkish supply chains, particularly in the areas of unmanifested cargo introduction, tense relations with the European Union, and labor violations in major export sectors.

The mass arrests and firings of state personnel critical to supply chain security contribute to the High BSI threat rating for the introduction of unmanifested cargo, including drugs, weapons, and stowaways, into legitimate Turkish shipments. Turkish authorities have suspended or detained more than 140,000 people, including thousands of police and customs personnel, on charges of collaborating with the coup plotters. Criminal groups are likely attempting to exploit these well-publicized gaps in security capacity, driving larger flows of contraband into the country. For example, in the first quarter of 2017, BSI recorded more seizures of heroin and heroin precursors from cargo in Turkey than all of last year.

In addition to these widespread purges, President Erdogan continues to successfully centralize his control over the Turkish government, posing serious business continuity concerns for Turkey and the European Union. A divisive constitutional referendum process, which will transform Turkey into an executive presidency and potentially enable the current incumbent to rule until 2029, has largely diminished prospects for greater EU-Turkey integration. Turkey has repeatedly threatened to reevaluate critical agreements that slowed disruptive migrant flows into Europe if progress is not made soon on visa liberalization. However, EU-Turkey negotiations on various accession requirements have effectively stalled since late last year due to EU condemnation of Turkey’s current political direction. The downturn in relations also halts momentum on other issues essential to supply chain continuity, such as modernizing an EU-Turkey customs union dating back to 1995.

With government priorities focused on internal security and weakening incentives from the European Union, Turkish supply chains suffer from heightened risks of labor violations, including in key export sectors. BSI recently increased the threat rating for child labor in Turkey to High, as upwards of 400,000 of the 1.3 million Syrian refugee children in the country are employed. Most Syrian minors work in the agricultural industries of southern free trade zones such as Mersin, Adana, Gaziantep, and Mardin. A local media investigation also recently discovered child laborers in Istanbul textile workshops linked to the supply chains of major Western retail brands. The presence of these corporate social responsibility violations in the agricultural and textile industries, both leading export sectors of the Turkish economy, contributes to the significant risk of goods produced by child labor entering the international supply chain. These findings underscore the broad range of supply chain risks stemming from ongoing political instability in Turkey

April 28: Chinese Textile Factory Used by Multiple Fashion Brands Cited for Poor Working Conditions

An apparel company in China is in violation of two dozen international and Chinese labor standards of minimum wage, overtime limits, working conditions and workers’ benefits, according to an investigation by a non-profit monitoring organization. Workers at the factory worked up to 82 hours of overtime a month between September 2015 and August 2016, 46 hours over the legal limit in China of 36 hours a month. Additionally, the factory workers made between 1,879 to 2,088 yuan a month ($255-$283), below the minimum wage standard in many parts of China. The factory was not assessed on occupational disease hazards as mandated by standards, did not contribute as legally required to a fund for assisting worker housing, and lacked worker training on safety techniques and safety equipment. The factory has pledged limited changes to their policies, but has yet to fully address the violations revealed during the investigation.

April 27: Reported Workplace Fatalities in Bangladesh Remain High Despite Remediation Efforts

A Bangladeshi non-governmental organization released a report tabulating recorded workplace fatalities across the country for the first quarter of 2017, finding that at least 294 workers died in workplace accidents and another 101 were severely injured. The latest report did not identify the specific sectors in which accident victims worked, although reports in previous years have found the transportation, construction, and apparel and readymade garment (RMG) sectors to suffer from the highest rate of fatal incidents. Statistics on Bangladeshi working conditions and workplace fatalities are inconsistent, and national government data is generally inaccurate due to widespread underreporting of worker deaths by employers. Non-governmental organizations have documented increases in reported workplace fatalities since 2014, and while some portion of that increase is likely due to better NGO monitoring, the rising numbers suggest that high-profile efforts to improve worker safety in Bangladesh have not yet effectively mitigated the core factors driving the high rate of workplace mortality in the country.

A number of factors contribute to this trend. BSI reported yesterday on a media investigation into Bangladesh’s labor inspectorate which discovered that only six inspectors were assigned to enforce safety regulations on over 5,000 registered and 20,000 unregistered factory boilers. Bangladesh has only approximately 300 labor inspectors responsible for enforcing workplace safety regulations in a country with a workforce of at least 58 million people, with each inspector responsible for over 170,000 workers, well beyond the ratio of 40,000 workers per inspector recommended by the International Labor Organization for developing countries. Another concern is that attempts to remedy hazardous working conditions in Bangladesh do not sufficiently focus on non-textile industries. BSI has reported on deaths and severe injuries in recent months at tanneries, a rice mill, a gas lighter factory, and a packaging factory in Bangladesh that are not covered by worker safety improvement programs organized by Western brands.

Even in the garment sector, where conditions have improved in the four years since the collapse of the Rana Plaza garment factory in 2013 that killed over 1,100 workers, the impending departure of the two major Western brand-led worker safety programs in 2018 threatens to slow down future progress on safety improvement and reform. A recent report found that only four factories out of over 1,500 inspected by a national government initiative intended to complement the two Western brand-led programs had even approved corrective action plans. These latest findings underscore the Severe threat to working conditions in Bangladesh.