Watching out for exploitation in the transport sector

With the economy experiencing an upturn, and shipping companies offering larger volumes, the situation for professional goods transport is improving. But competition is fierce and the prices that the transport companies are being paid are not keeping pace. For a number of transport companies prices are still under pressure, says ABN AMRO’s director of Logistics and Transport Patrick van Duijnhoven. “Transport companies are doing whatever they can to maximise flexibility and cut prices. This carries the risk of worker exploitation.” A number of companies have drawn negative headlines recently, in particular for paying their non-Dutch drivers less than the minimum wage. However, some reports described more extreme situations, where companies offer such poor working conditions that drivers are forced to spend weeks at a time on the road. This worker exploitation is incompatible with a number of human rights – for example the rights to just remuneration, periodic holidays and reasonable limitation of working hours. 

Identifying sham employment arrangements

ABN AMRO knows about the examples that have made it into the news, and Van Duijnhoven is aware of the abusive conditions. “The bank is doing everything it can to identify and prevent worker exploitation at the companies with which we have dealings.” Most transport companies handle things properly. “But if we have suspicions or concrete indications of worker exploitation, we may decide against doing business with a company, or terminate the relationship.”

Among other issues, the bank keeps a close watch for sham employment: arrangements where a Dutch company sets up shop in another country to dodge the minimum wage rules that apply in the Netherlands. For guidance, ABN AMRO looks to the Dutch Sham Employment Arrangements Act (1), which provides rules for remuneration of non-Dutch drivers. “It’s a simple fact that foreign drivers from Poland, Romania and the Czech Republic are often paid less than Dutch drivers,” Van Duijnhoven continues, “but the lower cost of living in those countries is irrelevant and therefore not a valid argument: transport companies are required to pay the minimum wage and to be compliant with the laws and regulations adopted at the European level.” 

Relationship managers

Van Duijnhoven stresses the importance of the bank’s relationship managers in identifying worker exploitation. “They know the companies and understand what sector-specific questions to ask. A relationship manager can ask whether the company draws up its employment contracts in the right language, for example.” Underpayment is not the only cause of human rights violations, he adds. “Some transport companies cut costs by forcing drivers to work under poor conditions. Or if a delivery is late, they impose a fine, which is then taken out of the driver’s salary. These conditions aren’t recorded in the employment contracts – or if they are, then only in the Dutch version, which a driver from Romania cannot read.”

Naivety

The bank addresses human rights in serious discussions with existing and new clients. Fortunately, the overwhelming majority of clients see sustainability as an important part of their operations. In some cases it is a matter of naivety, Van Duijnhoven explains, where companies unintentionally break the law by setting up a business abroad. “The complex laws and regulations need to be explained or require practical advice,” he continues. “The companies’ accountants need to be part of the solution. We talk to the people in charge about this.” The bank also passes on information to other operators in the supply chain, including shipping companies, to discuss issues such as price pressure. Shipping companies need to take their share of responsibility and offer appropriate freight prices. “The bank is working to help transport companies become more competitive, while ensuring proper working conditions for their drivers.”

(1) Wet Aanpak Schijnconstructies, passed into law by the Dutch House of Representatives in mid-2016.

Sandra Claassen - Director of FairWork

"Every year, thousands of people end up in slavery-like conditions in the Netherlands. FairWork wants this to stop and encourages all stakeholders to do their little bit to end modern slavery. Companies can analyse their supply chain and minimise the risks, law enforcement can put maximum effort into arresting perpetrators, and service providers like banks can work to protect victims. FairWork informs vulnerable groups of workers about their rights and supports them, training professionals to recognise possible victims and raising public awareness on the issue of labour exploitation in the Netherlands. Sometimes, offering a cup of tea can make a huge difference to an exploited person and give them the courage to escape from their situation."

Click here for an overview of Sustainability news articles for the December 2017 Newsletter.