GENEVA, Switzerland, (ILO News) – In a newly released brief, the International Labour Organization (ILO) outlines how a systems approach can create opportunities for micro, small- and medium-sized enterprises and better working conditions in the lowest tiers of supply chains.
A new brief from the International Labour Organization (ILO) entitled: From root causes to real change: Using a systems approach to foster decent work deep in supply chains presents a “systems approach” to improving working conditions in lower-tier supply chains. The brief highlights how addressing systemic constraints to decent work in micro, small- and medium-sized enterprises (MSMEs) could lead to long-term improvements in both business performance and worker welfare.
While first-tier suppliers are often able to comply with regulations and benefit from direct buyer relationships, MSMEs in lower tiers remain constrained by limited access to finance, poor infrastructure and weak enforcement of labour laws. These challenges hinder their capacity to grow, improve working conditions and secure better-paying markets.
A systems approach helps ILO programmes and partners identify, prioritize and address the root causes of these systemic issues that affect business performance and working conditions. By doing this, interventions can effectively foster more and better jobs, which can be scaled for long-lasting, sustainable change.
“Through a systems approach, we aim to strengthen MSME competitiveness and promote decent work by first identifying the root causes of key bottlenecks and later working with ILO constituents to address them in a long-lasting way”, says Dragan Radic, chief of the ILO’s Micro, Small and Medium Enterprises Branch.
For MSMEs in these lower tiers, joining more demanding supply chains – those with stricter standards of quality, sustainability and compliance – can lead to concrete benefits such as enhanced productivity, improved wages and job creation. However, without addressing the underlying systemic issues, these opportunities remain untapped.
“This kind of long-term, holistic thinking is what it takes to unlock decent work opportunities where they’ve historically been out of reach”, argues Dan Rees, director of ILO’s Action Programme on Supply Chains. “Supply chains can be an entry point for decent work in MSMEs when they are supported within a stronger, more coherent system, achieving real ripple effects in productivity, wages, safety and overall job quality.”
In its brief, the ILO demonstrates how stakeholders (including governments, employers’ organizations, and workers’ groups) can apply a systems approach in crafting interventions that offer evidence-based, long-term solutions.