INDEPENDENT MONITORING

1: CODES OF CONDUCT IN THE GARMENT AND SPORTSWEAR INDUSTRY

1.1. Strategies for Improvement

1.2. Companies Responses

1.3. Criteria for Codes of Conduct

1.3.1. Issues

1.3.2. Measurableness

1.3.3. Scope (which part of the production chain is covered)

1.3.4. Implementation and Monitoring

1.4. New Initiatives

CHAPTER 1:

CODES OF CONDUCT IN THE GARMENT AND SPORTSWEAR INDUSTRY

1.1 Strategies for Improvement

To ensure that 'cheap and flexible labour' remains that way, trade unions or other workers' organisations are discouraged, to say the least. It is common practice for a garment worker to get sacked at the first sign of organising. In some countries there are elaborate systems of blacklisting to enable factory management to keep 'troublemakers' out of their workforce. The demand for compliant workers also explains why we find so many (especially young) women working in this sector; in Asia and Central America over 80% of the workforce is female and under 25. This is not because (young) women are compliant, even though that is what management might think. In general women are being discriminated against and their position on the labour market is worse than that of men with similar education and experience. They have therefore much more reason to be afraid to lose their job. Also, in many countries trade unions are dominated by men and are not very sensitive towards specific problems that women encounter in their work. A 'female' sector like the garments and sportswear is therefore often not a high priority for these unions. The general discrimination against women also makes that management usually gets away with paying women less than men for the same job. This is often excused by the image of men as breadwinners and women as making some extra money. However, many women workers in the garment sector are the sole wage earners in their family. This wage discrimination of course strengthens the preference management has for hiring women. Management themselves will usually state other reasons for this preference, like 'the nimble fingers' women are supposed to have, or a sort of 'natural ability' to be good at sewing. To regard this as something that you are born with instead of as something that has to be learned, enables management to qualify this as unskilled work, and pay accordingly. Opposed to that we see that physical strength and mechanical ability are associated with men and are considered skills. For example cutting is considered skilled work. You need a jigsaw instead of a sewing machine. Cutters are almost always men, and cutting is a better paid job than stitching. It has been argued that jobs in the export oriented industry at least provide women workers with one more option to obtain an income, albeit often at sub-subsistence level. Conclusions about whether a certain form of employment is beneficial to women or not depend on the alternatives that are available to them. However, it must be taken into account that in the current state of affairs women only work in such industries for a short period of their lives. It is rare to see women over 30 working in the garment and sportswear industry. By then they have severe health problems and/or cannot keep up the work speed that is demanded of them. They will move on to jobs usually of even lower quality, lower paid and with lower job security, such as in the services sector or as homeworkers. On the one hand one can argue that this means that factory jobs are among the better employment alternatives. On the other hand one can argue that jobs that 'use up' women in a few years, leaving them with few or no marketable skills and little or no capital from savings, are not beneficial to them at all. Recent research in Sub-Sahara Africa showed that in Kenia, Zimbabwe, Madagascar and Mauritius the majority of the workforce is male. Though we can explain why in the Asian and Central American countries the workforce is predominantly female, we do not yet know why in the African countries it is predominantly male. There are no reliable data on Eastern Europe as yet. This requires further research since a gender perspective is essential to understand the situation of the worker and to support worker organisation. A lot of study has been done on the work of children in the garment industry and in other export-oriented industries. It is generally estimated that about 2% of the workers in the garment industry are children. They are usually employed as helper, for example cutting threads or cleaning. This means they are on helpers' salary even when working more then fulltime. The fact that they are children means that they stay on a helpers salary, despite the amount of months or years they've been employed or the number of people in the household dependent on them. A consensus has slowly emerged over the past few years that the way to abolish child labour is to provide adequate transitional economic assistance and appropriate educational opportunity to any replaced child workers. Workers organize themselves in many different ways and try to improve their situation. They can demand negotiations and when these are refused, go on strike. Sometimes this leads to massive lay-offs (lock-outs), or -in an earlier phase of organizing- to lay-offs of active workers. Sometimes management responds by closing the factory and re-open on another location under another name. The rise of a strong labour movement might even lead to a massive international relocation, such as in the case of South Korea. However, the decision on where to locate production is always taken for a number of reasons, such as access to markets, infrastructure and tax advantages. Low labour costs and a compliant workforce are certainly attractive factors, but never the only ones. The argument that organizing workers and demanding better working conditions is not in the interest of workers, is therefore not very strong. Workers risk to lose their jobs due to relocation anyway, whether they organize or not. Without the assistance of (non-yellow) trade unions or ngo's, workers are usually not in the position to fight massive lay-offs and lock-outs. They lack knowledge and resources to follow the legal procedures that can be undertaken. They also lack time for massive organizing, especially in the Asian countries where most workers are women who have to do a triple shift: organizing work, housework and childcare, and incoming generating work. It's hard to stick to the case, since they have to find another job or other means of making some money. With the assistance of (non-yellow) trade unions or ngo's the situation improves but is still very difficult. The legal procedures often take years and the verdict is by that time largely irrelevant. Massive organizing can have some results though it usually does not bring back jobs. It does play a role in pressuring the government to undertake action, and in general to make the public more aware of what is happening. However, the power of governments is not unlimited. If -due to trade union or ngo pressure- a government starts to take measures to improve labour legislation or to implement the existing labour legislation, the response of foreign investors is to (threaten to) shift production to another country. Governments of third world countries are usually heavily in debt and under pressure of Structural Adjustment Programmes by IMF and World Bank. The strategy to attract foreign investors, a policy of strict implementation of labour legislation is not helpful. In general we can say that due to the international nature of the garment and sportswear sector (and many other sectors) it is not possible for a government on a national level to come with a 100% solution. Solutions need to have an international dimension, otherwise companies always have a way out, as long as there is another country or region that will fulfil their requirements. This is not to say that governments have no responsibility in this matter, or that they are powerless. Not all companies will run away if labour legislation is implemented. It is important to have examples of how a labour situation can improve, so others can be pressured to follow these examples. However, the point is not to look only at governments or to see them as the only actor in this matter. The garment and sportswear industry makes products that are bought by individual consumers. Therefore, they can play a role in promoting decent working conditions. Through their purchasing power they can influence company policy. Consumers' organisation for a long time was only concerned with issues like price, guarantees and quality. When you want to buy a new refrigerator you look in the consumers magazine for the best one. 'Environment' is by now a more accepted issue to include. The magazine will also tell you which refrigerator is most environmentally friendly. However, you will not find anything on working conditions. That is not to say that consumers are not concerned with social issues. If they are provided with the information to distinguish between different companies or products, many people will take social responsibility into account. Although it still remains to be seen how many consumers are really willing to pay a higher price for products that include some social standards in their production, a large majority of consumers expresses that they would purchase these goods when given a choice. For example research by the Dutch youth organisation NJMO showed that 75% of young people is willing to pay 25 guilders extra for a pair of jeans if it is guaranteed that the jeans are produced without child labour. In the 1970s and 1980s we have seen the boycott of South African products because of the apartheid and the Nestlé boycott because of the baby food marketing. Consumers can decide to buy Max Havelaar coffee. Shell gave in to consumers' demands in the Brent Spar affair, and so did Heineken when severe pressured on their production in Burma. We can see this both as a sign of growing consumer awareness but also as a sign of growing company awareness on such environmental and social issues. Companies have been increasingly responsive to demands from consumers concerning their social responsibility. On the one hand companies make use of bad working conditions to maximize their profit, but at the same time consumers are much more important for companies than in the past. Higher competition, more information and more awareness on many issues have led to the situation where companies do not get away with an attitude of being closed off for any consumer demands. They have to 'seduce' the consumers to buy their products, and increasingly they have to account for their behaviour if the consumers demand so.

1.2. Companies Responses

We can distinguish two strands of action that are undertaken by companies in this respect. The first is direct responses to 'scandals', as in the mentioned examples of Shell and the Brent Spar and Heineken and Burma. In the garments and sportswear sector the reaction of companies when faced with criticism has changed considerably during the last 5 years. In the early 1990s the common response to criticism was outright denial of responsibility or no response at all. Nowadays companies usually acknowledge their responsibility, and claim to be very concerned about the environment and human rights. When faced with criticism, their first reaction is often to say "we have investigated the matter very thoroughly and found that nothing is wrong". If then the criticism continues and is supported by evidence, the company will acknowledge the accusations and get rid of the problem as fast as possible. This is not always a victory, since in some cases it might even deteriorate the situation. In the garment sector for example, the fastest way out usually means to withdraw orders from the factory that has been found to violate workers' rights. That might lead to workers losing their jobs instead of getting their rights. Also this strand of action does not lead to any structural improvements and so new scandals will come to light again and again. The second strand of action goes a step further. Companies start to develop policy on social and environmental issues. By means of self-regulation they make claims about the ethical level of their business. They actively try to distinguish themselves from their competitors on ethical grounds. Since the early nineties codes of conduct are a frequently used tool in this respect. Recently an American consultant even advised companies to adopt a code of conduct as a strategy to deal with criticism by labour activist groups, which he calls watchdogs. "Although following these steps will not guarantee that you will not be bitten by the watchdog, they should ensure that any bites you get will be 'nips' as opposed to gashes that require rabies shots" (Roinick 1997). In the garment and sportswear sector we see American companies taking the lead in cleaning up their image. After several scandals concerning bad working conditions in Central America and Mexico, sweatshops in the US itself, low wages, child labour and a prohibition of union organisation, large retail and producer companies developed codes of conduct to protect their image. The contents of these codes differ, as does the wording and the references they make. Usually they say something about not using child labour and forced labour, about complying with local laws and in general demanding 'fair practices' both in their own company and in those of their subcontractors. Some go as far as to refer to ILO conventions. Some of the better ones (Levi Strauss, The Gap) include the right to organise and the right to collective bargaining. With some distance, European companies have been following this approach. C&A, Otto Versand and others have some sort of code or general statement of principles with which they profile themselves on social responsibility. It is perhaps no coincidence that the first companies in Europe to take such a step are also the ones that were most heavily under attack by consumer campaigns. C&A has been the focus of many actions in the Netherlands and the UK since 1990, and in Belgium, Germany and France since 1995. Otto Versand has been the first action target of the German Clean Clothes Campaign since 1995, and immediately developed principles for their production that were sent to all suppliers. A conclusion might be that 'pestering pays off'. Trade unions and ngo's have heavily criticised corporate codes of conduct. One argument is that these codes are nothing more than tools in a public relations strategy and are not implemented at all. The critics demand that companies have their codes independently monitored to ensure that they meet their own standards. The claims companies make in this respect ('monitoring' their own code, hire accountant firms or getting an ngo to 'advise' them) are a reaction to this criticism. Company codes are accused of being vague and therefore not effective. First we will give general principles for a good code of conduct. Then, after going into the criticisms on existing company codes, we will derive more specific principles for a good code of conduct. should not be a substitution for government action. has both a workers' and a consumers' perspective. will be endorsed by both ngo's and trade unions. must not be a substitute for collective bargaining and other forms of normal union activity. must not be protectionist. A code of conduct is aimed at manufacturers as well as retailers and all in between, either directly or through their federations.

1.3. Criteria for Codes of Conduct

The criticism on company codes can be distinguished in 4 core points of criticism, of which we can derive principles for what a good code should look like.

1.3.1. Issues Corporate codes are limited in their coverage. They deal with child labour only, or otherwise exclude basic labour rights. For example Nike's Memorandum of Understanding refers to safety and health, worker insurance, forced labour, environment, equal opportunity and government regulation on minimum wage, overtime, child labour laws, provisions for pregnancy and menstrual leave, provisions for vacation and holidays and mandatory retirement benefits. The right to organize and to bargain collectively, which is an internationally recognized basic labour right, even included in discussions on social clauses in trade agreements, is not mentioned. Principles: A code of conduct must consist of a total package with at least the following labour standards: freedom of association right to collective bargaining no forced labour no child labour no discrimination maximum hours of work health and safety a living wage security of employment

1.3.2. Measurableness Corporate codes have general text on the demands in their code. It is therefore difficult to interpret them and/or to prove they have been violated. An example: "Reebok will seek business partners who share our commitment to the betterment of wage and benefit levels that address the basic needs of workers and their families so far as possible and appropriate in the light of national practices and conditions. Reebok will not select business partners that pay less than the minimum wage required by local law or that pay less than prevailing local industry practices (whichever is higher)" (Reebok Human Rights Production Standards). Now this code is not the worst one, but still if Reebok gets confronted with underpaid workers they have several ways out. First of all Reebok only says they 'will seek' business partners, so maybe in this case they had not found them yet. Secondly, 'commitment to the betterment of wage and benefit levels that address the basic needs of workers and their families' is something that is difficult to measure. The supplier could say 'we are very much committed but lack the cash right now to pay more' and not violate the standards. Thirdly the clause 'so far as possible and appropriate in the light of national practices and conditions' is of course a nice way out if all else fails. Does this mean that if most other factories pay their workers a wage below subsistence level, Reebok can do the same? The clause referring to legal minimum wage and local industry practice is nice, but in most developing countries the legal minimum wage is far below subsistence level and therefore not a good standard. However, even in these countries we find factories that pay less than the legal minimum wage so it is good to mention it. But it is not enough. To compare, we look at the text on the same issue in the ICFTU/ITGLWF/FIET code: "Fair wages are paid. Wages and benefits paid shall meet at least legal or industry minimum standards and should be sufficient to meet basic needs and provide some discretionary income". There can still be discussion on what are basic needs, however, the text is very clear. Usually one can find sources on what covers basic needs in a certain country or region through the national bureau of statistics or by the UN. Principles: A code should specify standards which are precise and measurable. In the absence of precise and measurable standards, it is reasonable to conclude that codes of conduct are statements of intent rather than anything more serious. For the interpretation of the standards the ILO conventions and ILO jurisprudence will be used. Where applicable also other internationally existing and accepted standards can be used.

1.3.3. Scope (which part of the production chain is covered) Corporate codes do not specify precisely the limits of their responsibility. Does the code only apply to the direct employees or also to the employees of the subcontractors and suppliers? And if so, who is considered to be a subcontractor or supplier? Does the code apply to all products? A good code needs to answer these questions. Most company codes do not. Principles: A code should apply not just to the company which sells products, but also to its suppliers, subcontractors and licencees. Companies accept responsibility for the labour conditions under which the products they sell are produced, down the entire supply chain in their sector. The limits of their sector have to be defined. A code of conduct applies to all workers. Definition of a worker so that it includes homeworkers, sweatshop workers, migrant workers without legal status etc. A code of conduct applies to 100% of the company's products. The implementation of the code might take place within a specified timeframe.

1.3.4. Implementation and monitoring

Many (company) codes are not implemented and monitored. It must be clear in the text of a code that it will be implemented. It has been shown that often even the management of a supplier is not aware of the existence of a code, let alone the workers of the factory. It must also be clear that there are some sort of procedures in case of violations. If these are absent, the usual response of a company when faced with violations is to withdraw orders. This does not improve the situation and can even cause workers to lose their jobs. In Chapter 2 we will look into the concepts of implementation and monitoring.

1.4. New Initiatives

After public accusations of sweatshop practices by several American companies in the garment sector, the Apparel Industry Partnership was formed in 1996. This consists of a group of companies, several trade unions and ngo's and the US Department of Labor. They drafted a 'Workplace Code of Conduct' and 'Principles of Monitoring'. In April 1997 these have been signed by Nike, Reebok, Liz Claiborne, Warnaco, Nicole Miller, Patagonia, Phillips van Heusen, LL Bean and Kathy Lee. The Code of Conduct refers to forced labour, child labour, harassment and abuse, non-discrimination, health and safety, freedom of association and collective bargaining, wages and benefits, hours of work and overtime compensation. Most criticism is aimed at the wages and benefits and hours of work parts. The code refers to legal minimum wage or industry wage and not to living wage as is demanded by trade unions and ngo's. The wording of the hours of work part allows a 60 hour week as regular and allows for overtime on top of that "in extraordinary business circumstances". During 1997 there were several meetings of the International Trade union Secretariats, Clean Clothes Campaigns and ngo's. A draft text for a code of conduct that meets all these criteria was discussed and is currently being finalized. The principles described in this Chapter can be used as a checklist for any (corporate) code of conduct to see what is good about the code and at what points it needs improvement. However, this is only a first step. Even if a company has a good code of conduct or signed an agreement with trade unions and ngo's on a good code of conduct, this in itself does not improve the situation of any worker. Therefore a code must also be implemented and monitored. In Chapter 2 we will look into these complex issues in depth.