ILO Calls for Systems Approach to Improve Decent Work in Global Supply Chains

A new policy brief from the International Labour Organization (ILO), titled From root causes to real change: Using a systems approach to foster decent work deep in supply chains, outlines how systemic reforms can transform working conditions in the lower tiers of global supply chains. The brief argues that tackling the root causes of poor labor conditions in micro, small, and medium-sized enterprises (MSMEs) is essential for sustainable improvements in both worker welfare and business performance.

Challenges in Lower-Tier Supply Chains

While first-tier suppliers often meet labor and compliance standards due to direct buyer relationships and stronger resources, MSMEs in lower-tier supply chains face significant challenges:

• Limited access to finance restricts their ability to modernize operations or meet higher labor standards.

• Weak infrastructure and inadequate logistics reduce competitiveness.

• Poor enforcement of labor laws leaves workers vulnerable to unsafe conditions, low wages, and exploitation.

These systemic barriers hinder MSMEs’ potential to grow, access better-paying markets, and create jobs under decent work conditions.

A Systems Approach: Tackling Root Causes

The ILO brief promotes a systems approach—a method that seeks to identify and address the structural bottlenecks that prevent enterprises and workers from thriving. Rather than treating symptoms with isolated interventions, the approach emphasizes:

• Diagnosing root causes of poor business performance and weak labor conditions.

• Collaborating with stakeholders—governments, employers’ organizations, workers’ groups, and supply chain actors—to design sustainable solutions.

• Scaling interventions so that they generate long-term ripple effects across industries and economies.

“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,” explained Dragan Radic, Chief of the ILO’s Micro, Small and Medium Enterprises Branch.

Unlocking Opportunities in Demanding Supply Chains

For MSMEs, entry into more demanding supply chains—those with strict requirements on sustainability, quality, and compliance—can be transformative. Benefits include:

• Enhanced productivity and access to larger markets.

• Improved wages and job creation.

• Safer and more regulated working environments.

However, these benefits cannot be fully realized unless the underlying systemic barriers are addressed.

“This kind of long-term, holistic thinking is what it takes to unlock decent work opportunities where they’ve historically been out of reach,” noted Dan Rees, Director of the 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.”

Long-Term Policy Solutions

The ILO brief highlights how stakeholders can use a systems approach to craft evidence-based, long-term interventions. Examples include:

• Governments: Strengthening labor inspection, improving infrastructure, and expanding access to credit for MSMEs.

• Employers’ organizations: Supporting business development services, compliance training, and industry-wide standards.

• Workers’ groups: Advocating for collective bargaining, workplace safety, and mechanisms to protect vulnerable workers.

• International buyers: Embedding responsible sourcing practices that incentivize decent work at all levels of the supply chain.

A Path Toward Sustainable Change

By placing MSMEs at the center of supply chain reforms, the ILO argues that a systems approach can simultaneously improve business competitiveness and workers’ rights. Such structural reforms could not only address immediate challenges but also ensure that decent work becomes embedded in the global economy.

The ILO’s call is clear: achieving real change in supply chains requires moving beyond short-term compliance to long-term systemic transformation that uplifts both enterprises and workers across all tiers.