SDWatch | Blog

Subcontracting is a business practice that entails the externalization of a part or the totality of the obligations of a contract to a third party. It is a legitimate practice used by businesses to access to  external specialized skills and to lower costs, and it has been particularly spurred in recent years by globalization and the affirmation of global value chains.

Lately it has become clear how subcontracting , when implemented with certain modalities, can also have devastating effects on people, fostering labor exploitation and social dumping. 

We are in the field of business and human rights, which are frequently violated by companies in order to gain competitive advantage and increase profits at the expenses of a precarious workforce.

The transnational dimension that often subcontracting adopts hinders transparency and creates obstacles to national courts’ intervention, making it difficult to regulate the practice. The fragmentation of the workforce and its diversification inside the workplace is another effect that weakens trade unions and their possibility to promote better conditions. 

As Silvia Borrelli defined it in her study , subcontracting gives the possibility to businesses to ensure profits and power without having to deal with risks and responsibilities, commonly avoided through contractual clauses.

Albeit the critical situation, we can appreciate the consolidated effort that States, IOs and the civil society are making to achieve better conditions. 

let’s take a quick look at some of them

At the international level we can find a series of instruments with different legal validity that have started addressing the behavior to be adopted by enterprises with respect to human rights and sustainability.  We can recall the OECD Guidelines for Multinational Enterprises and the UN Guiding Principles of Business and Human Rights. The ILO, which had a primary and inspirational role in the operations following the Rana Plaza catastrophe of 2013 and the resulting agreements, has also contributed with the elaboration of a series of relevant instruments, ranging from the tripartite declaration of Principles Concerning Multinational Enterprises and Social Policies (1977) to the resolution on Decent Work in Supply Chains (2016). 

In the European Union, a satisfactory starting point can be considered the European directive on corporate sustainability reporting. Although important  aspects set out by the CSRD have been  recently delayed, by replacing the Directive 2014/95/Eu on Non-Financial Reporting, it requires large companies and SMEs to include in their report a dedicated section on sustainability, which encompasses the description, among others, of  their due diligence process regarding the potential negative impact that their business may have on the environment and on people. 

In this very moment trilogues , are taking place for the adoption of the Corporate Sustainability Due Diligence Directive, proposed in February 2022. The CSDDD, despite having some limitations regarding the sectors and the type of enterprises concerned, would provide an enforcement system composed of national supervision mechanism and the possibility to refer to courts for damage compensation. 

Remarkable is also what the third sector is doing, through dedicated network initiatives, advocacy and awareness raising activities we can strongly affirm that it played an essential role in this process.  Last but not least, Individual choices and awareness on their impact can make a long way in ensuring that changes for the better are stable, durable and widespread, the fundamental ingredient for sustainable societal development.

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