Building back better with better jobs: Mainstreaming business models for decent work
Recent years have seen declining job security and working conditions as a result of increased outsourcing and ‘gig economy’ business models. This report serves as a guide on how businesses can build back from the global pandemic and create decent jobs without compromising business competitiveness and profitability.
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OVERVIEW
The guiding report is divided into three sections, (1) addressing the need and opportunity to build back from COVID-19 with better jobs, (2) what business models for decent jobs look like, referring to business case studies, (3) how to implement business models with more decent jobs and move it from the margins to the mainstream.
The impact COVID-19 has had on job losses has brought attention to the consequences of years of declining work quality and security. Millions of people lack access to decent work, secure income, and social protection. Recent years have seen a trend in an increase of vulnerable workers as a result of a continuous chase for commercial flexibility and cost savings, often resulting in outsourcing.
In the effort to rebound from the global pandemic, there is a need and opportunity to build back with the creation of decent work as an important priority.
Opportunities of implementing business models for more decent jobs for companies:
- Increased employee productivity and reduced staff turnover
- Greater customer loyalty
- More resilient supply chain
- Enhanced license to operate
Opportunities of implementing business models for more decent jobs for workers:
- Job security
- Equality
- Health and well-being
Challenges of implementing a business model for more decent jobs:
- The competitive disadvantage from increased costs
- Investor pressure
- Capacity to understand and respond to the negative impact on workers
- Systemic complexity where the solutions lie outside the corporation’s direct influence
The delivery of decent work in existing business models is distinguished between being intrinsic to the business model or being delivered by incremental changes. The report illustrates examples of companies that have solutions which are both intrinsic and incremental. Two examples include:
The Dutch chocolate company, Tony’s Chocolonely, have five sourcing principles intrinsic to their business model to ensure decent work in their cocoa sourcing supply chain:
- Tracing all ingredients
- Paying higher prices to farmers (9% of the retail price, versus 6% which is the standard in the industry)
- Improve productivity
- Encourage the farmers to adopt modern practices and diversify crops
- Empower farmers by investing in farm cooperatives
Hermes, a major UK provider of online delivery solutions, made incremental changes to their business model to tackle some of the worker vulnerabilities related to the gig economy. In 2019, the company started the transition from self-employment to a ‘’self-employment plus’’ model which guarantees minimum wages and holiday pay for its courier drivers.
The report suggests four big shifts that companies need to do to move business models for more decent jobs from the margins to the mainstream:
- Change mindsets from compliance to opportunity and capture the ‘’win-win’’ opportunities embedded in the shift
- Make principles to attain decent jobs fundamental to the way in which the business operates
- Scale-up collective action at both value chain and industry levels – business-to-business partnerships are necessary
- Think and act more systematically by stepping beyond direct operations and impact
KEY INSIGHTS
- The International Labour Organization has predicted that 1.6 billion workers in the informal economy can face devastating consequences on their livelihoods due to the global pandemic. It may take away the equivalent of 305 million full-time jobs.
- Even though the rise of the gig economy has created flexible job opportunities, it has also placed a major portion of the risk on the low-paid, vulnerable workers, both in terms of low and unpredictable wages and lack of social protection.
- In rebuilding after the pandemic there is an opportunity and need to ensure decent jobs, which can be defined in SDG 8 as encompassing the principles of job security, equality of opportunity, and well-being and health.
- Good practices of businesses that deliver decent jobs are distinguished between incremental changes that are made to existing business models and businesses where decent jobs are intrinsic to the business model.
- The report illustrates four big shifts that are necessary in order to implement decent work into the business model: (1) Change mindsets from compliance to opportunity (2) Make decent job principles integral to how the business does business (3) Scale-up collective action at a value chain and industry level (4) Think and act more systemically.
- By changing the mindset from compliance to opportunity, corporations are able to take advantage of the ‘’win-win’’ situation embedded in attaining decent work. Investors play a central role in influencing the corporation's actions and mindset.
- The principles to create decent work need to be implemented into the core of the business model and be illustrated throughout the supply chain in order to have a real impact. Cross-functional cooperation in and across the supply chain should be incentivised.
- To overcome competitive challenges, there is a need for increased business-to-business pre-competitive partnerships, to make sure decent work becomes the ‘’new normal’’ in the industry.
- Several of the root problems of precarious work lies beyond the direct influence of the corporation. Businesses are encouraged to go beyond direct action and impact to advocate for solutions. Governments play an important role in driving change through policy frameworks.