CHAPTER 2: IMPLEMENTATION AND MONITORING

2.1. Implementation of a Code of Conduct; Company's Approach

2.1.1. Spreading the Message

2.1.2. Instructing the Company Staff

2.2. Criteria for Implementation

2.2.1. Record Keeping

2.2.2. Communication

2.2.3. Streamlining the Suppliers

2.2.4. Contractual Obligations

2.3. Monitoring a Code of Conduct; the Company's Approach

2.3.1. Hire Special Staff or Establish a New Subsidiary

2.3.2. Hire an External Company

2.3.3. Involve a NGO

2.4. Criteria for Monitoring

2.4.1. Transparency

2.4.2. Quality

2.4.3. Feasibility

2.5. Independent Monitoring

2.6. Quality Monitoring

2.6.1. Checking the Implementation of the Code

2.6.2. Ongoing Checks on Compliance with the Code

2.6.3. Procedures in Case of Violations of the Code

2.7. Feasible Monitoring

2.7.1. Stakeholders

2.7.2. Feasibility Criteria

2.7.2.1. Time

2.7.2.2. Money

2.7.2.3. Access to Information/Confidentiality of Information

2.7.2.4. Putting the Responsibility where it Belongs

What do garments and sportswear companies with a corporate code of conduct do with the code?

2.1.1. Spreading the Message

Usually companies claim they have sent the code to all their suppliers. However, this does not necessarily mean the suppliers are aware of the code and its contents. If there no obligations following from the code, why would suppliers take the trouble of doing anything with it? Sometimes suppliers know their clients for example do not want them to use child labour or some other demands, though often this is not put into a contract (SOMO 1997: 4, 5, 7, 13). Another problem is that often the company is not aware who are its suppliers due to the long and complex subcontracting chains. The company then only informs the primary suppliers and does not keep track of all the subcontractors. Lastly it is very rare that workers are aware of the code and its contents. Some examples support this criticism on the companies' action.

V&D is supposed to have signed the child labour code of the Dutch VGT (Association of Large Retailers in Garments). It was found that a Hong Kong buying house that sources for V&D does not know about this (SOMO 1997: 4).

In a factory in Macau producing among others for V&D and C&A the management claims they never got any requirements on working conditions by the buyers (SOMO 1997: 28).

The US Department of Labor visited 70 factories that produce for American companies with codes of conduct in 6 countries. Managers of 47 factories were aware of the existence of these codes. Only 34 of the companies had available a copy of the code that they could show. Only 14 stated they had received some formal training regarding the code. It was evident that the intensity of the training varies widely from company to company. In 21 of the factories there was a code posted. The US Department of Labor officials were told by management of 22 factories that they informed their workers about codes of conduct; 13 said they had done so orally, 9 stated they had done this both orally and in writing. There was only 1 factory that had an explicit policy of informing workers about the code of conduct of its US customer. Of the 6 visited countries El Salvador scored highest on transparency: in all 8 visited factories managers were aware of the codes and could provide a copy and 7 of them had a code posted in the factory. However, representatives of several major labour organisations in the country stated that most workers and even some labour leaders do not know about codes of conduct. In a survey by CENTRA of one thousand 16-17 year old workers conducted in June-July 1995 not a single person had ever heard of a code of conduct. Interviews with workers conducted by the US Department of Labor officials confirmed the workers' lack of knowledge about codes of conduct (US Department of Labor 1996: 84-95). The study concludes therefore: "It is quite clear from the field visits that posting of codes of conduct alone has not had the desirable effect of making workers aware of their existence, and active steps to educate workers about the code of conduct is required (ibid: 96).

• JCPenney purchases infant and childrens' apparel from Renzo, a US based importer. Pursuant to its sourcing requirements, JCPenney requires Renzo to certify that its imports are not made with child labour.
• Renzo imports from its Philippines agent, Robillard Resources. Renzo communicates to Robillard the JCPenney sourcing requirements and its obligations and requires Robillard to sign a certificate that its products are not made with child labour.
• Robillard purchases from a number of contractors in the Philippines, one of which is Castleberry. Robillard requires Castleberry to certify that its products are not made with child labour. The owner of Robillard visits Castleberry from time to time monitoring for quality control, but also for compliance with the sourcing requirements. Occasionally, a representative from JCPenney also visits.
• Contractor Castleberry does cutting, finishing, and packing. It subcontracts sewing to about thirty plants.
• The thirty or so subcontractors who do the sewing do not sign a certificate stating that no child labour has been used, but are supervised by Castleberry line supervisors, who are each responsible for several subcontractors. They spend almost their entire time with the subcontractors. Occasionally, a production supervisor from Castleberry also visits. It is apparent that their primary interest is quality control, but they also monitor compliance with other standards, including child labour requirements. It is safe to say, however, that none of these supervisors are familiar with the code of conduct other than an understanding that they are not supposed to allow child labour. Embroidery and smocking is subcontracted out to home workers; some is done within the plants as well.
• Homework contracts are made with heads of households. Children may help their parents with some of the simpler embroidery and smocking and with the trimming. This is not monitored by any company (US Department of Labor 1996: 102).

Otto Versand has a code of conduct with demands concerning child labour, minimum wage and waste products dumped in the water. The demands on child labour and the use of AZO-free dyes and the other rules on chemicals are written in the contract. Also in the contract is a clause that the supplier has to comply with the local law, so that covers the minimum wage. Otto does a sort of audit when they start working with a new factory but 'not so that they throw somebody out'. Violation of the demands written in the contract can be a reason to cancel, this sometimes happens. Sometimes they do not find out, for example in India the structure of the garment industry does not really allow this, they deal with the big companies who put out the production to a large number of small workshops. Usually they check all the subcontractors but India is the exception (SOMO 1997: 10).

2.1.2. Instructing the Company Staff

A retail company has staff that does visit the production locations. These are usually the buyers, the designers and/or the quality controllers. The frequency of visits ranges from once a year to daily, however, in whatever frequency the visits take place, the company can make it its policy to explicitly instruct their staff to talk to the suppliers on the implementation of the code and/or check on the performance of the supplier. The company might call this monitoring. Since the main job of this company staff is not monitoring working conditions, they will not be specialized in this field. Also it is unclear what the company staff is supposed to talk about or to check. We therefore interpret this step as part of implementation, though one could argue there is some overlap with monitoring, especially in the case where the company staff reports back to the company on what they found at the production locations.

Hij Herenmode has signed the VGT code on child labour. They instruct the buyers to look for child labour if they visit the production locations (interview with a Hij buyer, 1996).

The American US Department of Labor (1996: 54) found that 28 of 48 respondent companies used a form of what they call internal monitoring. "Monitoring of labor policies is usually combined with monitoring for quality and other standards. While the personnel conducting the visits are usually specifically trained to monitor for quality control, it is not always clear that they are trained to monitor compliance with labor policies" (ibid).

In the criticism expressed in 2.1 on the steps that companies take to implement their code we can distinguish 4 core points of criticism. These can be transformed into 4 criteria for how implementation should be done.

2.2.1. Record Keeping

As we have seen, companies sometimes not even know who are their suppliers or lack other crucial information on what is happening in the subcontracting chain. Implementation of a code of conduct can only be ensured if one has access to correct and relevant information on what is happening in the company and its suppliers. Companies must therefore have records (company profiles) on all their suppliers, suppliers must have records (company profiles) on all their subcontractors and so on. To be able to check on wages and working hours, there must be a personnel administration at every production location. Every company and supplier must therefore have records on all their employees (personnel administration). Companies must have access to the records of their suppliers.

2.2.2. Communication

We have seen sometimes suppliers are unaware of the existence of a code or of its contents. Sometimes suppliers know, but their subcontractors don't. It is a rare case that workers are aware of the existence of a code.
Therefore, all suppliers of the company must be informed on the code and what it means, their rights and obligations. All employees of all suppliers must be informed on the code and what it means, their rights and obligations. "It is critical that all actors affected by a code -buying agents, contractors, subcontractors, union representatives and the workers themselves- be aware of its provisions. Research conducted for this report suggests that codes of conduct conceived in the headquarters of US apparel importers are not necessarily well known in the overseas facilities that produce their garments" (US Department of Labor 1996: 9). Sending some paper around is not enough. There must be clear guidelines for how all stakeholders must be informed and involved. Aspects that are often mentioned are: trainings for all involved staff, posting of the code in all production locations in the local language, inform all workers orally and in writing in their language, informing workers on who to contact in the case of problems or questions regarding implementation of the code, informing shareholders and consumers.

2.2.3. Streamlining the Suppliers

Not many companies do public statements on their policy on how they check which suppliers are meeting the standards and which don't. Some companies (such as the Gap) have their direct suppliers fill in a questionnaire. Some do audits without much consequence (as in the Otto example). Critics claim this is not a coherent policy and the consequences of such steps are not clear.
Therefore, after informing everybody there should be a phase in which the company looks into all its suppliers to find out which of its existing suppliers already meet the standards in the code and which do not. This must be done in a structural way, using standardized questionnaires, and involving all production locations. It is unlikely that 100% of suppliers already meet all standards. Since it is the explicit aim of every good code of conduct to improve the situation for each worker, as we have seen in Chapter 1, it is no solution if the company shifts production from the suppliers that do not meet the standards to those who do. The company must urge the suppliers that do not meet all standards to start complying with them, and assist the suppliers in this if necessary. Also, the company should enable their suppliers financially to abide by the code, or at least not disable them to do so. If the company pays such bad prices to a supplier that it is constantly on the verge of bankruptcy, the company cannot expect the supplier to pay decent wages and to invest in the factory.

2.2.4. Contractual Obligations

The last core point of criticism is aimed at the lack of enforcement of the code. Even if a company takes steps to implement the code, if they do not enforce this on their suppliers there is a huge chance the suppliers will not take the trouble of making any changes.
Therefore, after informing all the suppliers, following the correct procedures for communication and training, the code of conduct should be part of regular business. This means it has to be included in all contractual obligations the company makes with its suppliers. Violating the code must be explicitly mentioned as a reason for cancelling the contract, even though this must only be done in the last instance if improvement is not possible. Making the code part of the contracts without taking the previous steps of informing and assisting suppliers is not likely to lead to any improvement.

If a company has taken these 4 steps we can say it has implemented the code of conduct. However, it would be naive to expect that all suppliers now abide by the code and everybody lives happily ever after. The implementation and carrying out of the code needs to be checked. The tool to do this is called monitoring . We will first look into the steps companies have taken so far to monitor their codes. From the criticism on these approaches we will derive criteria for how monitoring should be done. This will be worked out in detail.

As we have seen in 2.1.2, the very first step in monitoring is instructing the staff that visits production locations to check on the code. A step further is to hire special staff or establish a new subsidiary to do this. Since this is their only task, they will be more specialized in this field and therefore be better able to check. However, special staff will most likely visit production locations in a lower frequency than regular staff, and therefore it will not always be an improvement if it is no longer a task of the regular staff to check on working conditions.
Companies can set up a 'human rights division' or whatever name they want to give to this department. It can also be a new subsidiary especially set up for this aim. It depends of course a lot on what resources are allocated to this division or subsidiary whether they are able to check all suppliers on a regular basis. Also the quality of the checking is still an open question.

C&A has a code of conduct that stipulates that suppliers must ensure all manufacturing processes are carried out with 'proper and quality regard for the health and safety of those involved'. Also wages and benefits must be fully comparable with local norms, comply with local legislation and conform to the general principle of fair and honest trade. Suppliers must disclose 'all facts and circumstances concerning production, including the use of subcontractors and of other third parties'. The right to organize and collective bargaining is not included. In 1996 C&A set up the Belgium registered company SOCAM, an 'independent auditing company'. Since May 1996 SOCAM is said to have conducted 1.000 unannounced spot checks at production locations for C&A. However, all information collected by SOCAM is only available to C&A who subsequently decides how to act on it. So far it seems that violations of the code mainly lead to cancelling contracts and not to improvement of working conditions. However, since the information on how SOCAM is doing its job is not public, there is no clear view on the consequences of SOCAMs monitoring on working conditions.

In March 1997 Reebok advertised a job opportunity for a 'Manager, Human Rights Monitoring'. This person has to "support the rapid expansion in monitoring of workplace conditions in factories making Reebok products by: leading the Far East human rights monitoring team to ensure compliance with Reebok's code of conduct, the Reebok Human Rights Production Standards". At the same time there are job opportunities for an associate manager for human rights monitoring and 4 coordinators for human rights monitoring.
In April 1997 research by the Hong Kong Christian Industrial Committee and Surprise Weekly shows that Reebok's code is not implemented. In Hon Tim Factory in China workers have to work 16 to 17 hour a day on average and get 2 days off per month. Refusal to do overtime will be treated as absent, which means no payment for that day. The workers earn less than the minimum wage, and ridiculous fines are being imposed on workers such as a fine if they reject to do morning exercises or if they do not walk on the designated road while travelling between factory and dormitory (Hong Kong Christian Industrial Committee 1997: 2).

In the Women's Centre on the edge of an industry zone in Sri Lanka, we talked to about 20 women working in various factories. We asked them about the buyers' visits and whether the buyers ever talk to the employees, but no one had ever heard of this happening. What does happen, they tell us, is that the factories are given a huge clean before the buyers' visit.
Later, we are told the same thing. In Bangladesh, we talked to a trade union and decided to visit the factory they told us about. It took us about a week to gain entrance, during which time we met the trade unionists several times. They told us they had spent two days cleaning the factory, and the workers had been told to put on clean clothes on the day of our visit (Clean Clothes Campaign 1997: 22).

On the day we made an official visit with Nike representatives to the Sam Yang plant in Ho Chi Minh City, we found that the doors to the six factories of this facility were wide open, as stipulated in the fire codes. However, on the day, we made a surprise visit to the same facility, we found three factories had their doors closed, while workers were still working inside. A small industrial fire in any of these factories could easily lead to the loss of many lives (Vietnam Labor Watch 1997: 4).

The last two examples make clear the need for unannounced spot checks by the monitor. A substandard factory will still turn out to be a substandard factory by announced spot checks, for example in terms of health and safety (light, ventilation, fire safety). If the factory management decides to improve the working situation in this respect because a monitoring team is coming, the improvements will probably last. However on other issues it is relatively easy for the factory management to look a lot better for a day if they know they will be checked. They can for example give the child workers a day off, clean the toilets, buy some mineral water for the workers, tidy up, do some overdue maintenance and send everybody home after 8 hours of work.

2.3.2. Hire an External Company

The company can also hire an external company that was not set up by them, to check on the implementation of the code. Often this is a direct result of criticism on the lack of transparency of the companies' monitoring. 'External monitoring' is a booming business that accounting firms, quality controlling companies, consultants and others are ready to leap into. None of them is specialized in monitoring working conditions, the quality of the monitoring therefore leaves much to be desired as we will see in the examples. However, it is a step further beyond keeping it all within the company since it shows a company is willing to pay and starts to take the issue seriously.

As in setting up a separate division or subsidiary, the company might claim that what they do is 'independent monitoring'. They mean it is independent from their buying department or even from their company. However, the information gathered by the department or company is only available to the company itself and the company decides on its own what action they undertake. It is therefore not what we call independent. We will therefore call this 'company controlled monitoring' despite the claims of the company that they do not do the monitoring themselves. In 'independent monitoring' there has to be a form of public access to the information gathered by the monitor and direct input of workers' organisations has to be guaranteed. Later in this chapter we will look into the concept of independence in depth.

Nike has the implementation of its code of conduct monitored by Ernst & Young. Ernst & Young has to conduct independent unannounced audits that include employee reviews, research into any grievances filed, and more traditional payroll audits. Ernst & Young has done this in Indonesia and China. There is not much information on the findings of Ernst & Young other than the public relations statements by Nike on wages and working conditions. Labour groups find many examples of violations of Nike's code of conduct. Such a list of examples suggests that violations are quite common practice, however, without independent monitoring, this remains unclear.

Some recent examples of supposed violations of Nike's code:


• Nike claims that workers in its factories in Vietnam can earn triple the wage offered in state-run factories. Research by the Vietnam Labor Watch (1997: 6) showed pay stubs in which a full-time worker received less than $27 for March and April 1996; the minimum wage in Vietnam at that time was $35. The Vietnam Labor Watch also found pay stubs of other workers who received less than $38 a month between November 1996 and February 1997; the minimum wage in Vietnam since July 1996 is $45 (ibid).
• In the June '96 issue of Life Magazine, Sydney Schanberg (author of The Killing Fields) documented child labour being used in Pakistan in the production of Nike soccer balls - for 60 cents a day (Vietnam Labour Watch 1997: 15).
• The March 16 edition of the New York Times carries a story of union busting by Nike shoe contractors in Indonesia. One worker was "locked in a room at the plant and interrogated for seven days by the military, which demanded to know more about his labour activities" (Vietnam Labour Watch 1997: 15).
• The October 17 edition of the CBS program 48 Hours has a segment on Nike's labour rights abuses in Vietnam, including: beatings, sexual harassment and forcing workers to kneel for extended periods with their arms held in the air (Vietnam Labour Watch 1997: 15).
• On November 3, an article by Australian labour scholar Anita Chan was published in the Washington Post. She described Chinese shoe factories - producing for Nike and other companies- where supervisors submit workers to a military boot camp style of control (Vietnam Labour Watch 1997: 15).
• On March 14 1997, Reuters carried a report on a Nike factory, Pouchen in Dong Nai, forced 56 Vietnamese women workers to run around the factory's premise, 12 fainted and were taken to the hospital emergency room (Vietnam Labour Watch 1997: 15).
• On April 24th 3.000 workers at a South Korean company producing shoes in Vietnam for US footwear giant Nike Inc. stages a one-day strike to protest their salaries and working conditions. Managers reportedly locked employees in the factory cafeteria for three hours when they attempted to contact local trade unions ('Justice Nike' mailinglist 28-4-1997).
• On April 22 and April 25 1997 10.000 workers went on strike at a Nike factory in Indonesia to demand they be paid the new basic minimum monthly wage of 172.500 rupiah that went into effect on April 1. The company asked the government for permission not to pay the new minimum wage on the grounds that the 20-cent-a-day increase would be a financial hardship. After a meeting at the parliament the company agreed to pay 200.000 rupiah monthly. Nike spokesman Jim Small virtually threatened to pull out of Indonesia if the minimum wage gets any higher. ('Justice Nike' mailinglist 23-4-1997, 28-4-1997, 1-5-1997).

Disney hired SGS to monitor (toy)factories in China for them on working conditions. The audits look into 4 issues: age (no child labour), wages (minimum wage and no forced overtime), safety, including safety of the dormitories and health. The audit consists of 3 parts:

1. Disney made a 10 page questionnaire concerning these 4 areas. The factories have to fill this in.
2. The factories are visited by an auditor with a checklist. He/she will observe and ask questions. The auditor will be a local person so he/she can take into consideration the local norms as well as the official regulations. The auditor will check a.o. the electric wiring, the fire extinguishers, access to warm and cold water (in the dormitories), the number of toilets and the state they are in.
3. The auditor will then give a rating for each of the 4 areas and whether the factory is acceptable for each of the 4 areas, based on the questionnaire and the visit. This will be written down in a 2 page summary report per factory and sent to Disney. It is up to Disney what they do with these reports. The idea is that Disney will demand improvements from the factories and have SGS check on the implementation of the improvements.

In the questionnaires there are questions about subcontracting but the subcontractors will not be visited by the auditor. An integral part of the audit is to explain to the factory, before and after, why they do this and what is expected of the factory. Sometimes the factory does not want to participate, especially if Disney is not an important client for them.
An interesting question is if workers are being interviewed. The answer is yes, but there is always someone from the management present. During the visit to the factory, when the auditor is being shown around by management, the auditor will select a number of workers who will be questioned about their working situation. If a worker does not want to answer, the auditor will select another worker. Sometimes the interviews are done in the dormitory or in the canteen, however, also in this case there will be management present.
Concerning working hours, the law specifies 36 hours overtime per month is allowed. However, there is a peak and a low season and during the peak season there will be more overtime. SGS will take an average and sees 72 hours per month as acceptable. The crucial issue is if the workers want to do the overtime, but according to SGS usually they do (SOMO 1997: 43-44).

2.3.3. Involve a NGO

A lot of the criticism on companies' monitoring focuses on the fact that it is not independent i.e. there is no involvement of trade unions and ngo's. All the above mentioned steps do not do anything about this criticism. The first example of a company in the garment sector that took a step in this direction is the US garment retailer The Gap. In December 1995 an agreement was signed between The Gap and US ngo's and trade unions. A short history:

• When workers at the Korean-owned Mandarin clothing factory in El Salvador sought to put an end to harsh and degrading treatment that included being forbidden to talk while working, beatings and sexual abuse, their attempts to form a union were brutally suppressed. In the course of a vicious anti-union campaign over 350 mostly women workers were fired.
• In the United States a pressure campaign directed at Mandarin's biggest customer, the US retailer The Gap, was supported by trade unions, religious, consumer, women's and students' organisations. At first, The Gap which is one of the largest clothing companies in the world, sought to deny that its sub-contractor was guilty of exploitation and human rights violations. In the face of the overwhelming evidence that the charges were true, and in the face of mounting pressure including from shareholders and politicians, The Gap announced that it would pull out of El Salvador. But the campaigners demanded that The Gap reconsider this decision and instead use its influence that workers rights were protected.
• The Gap agreed to remain in El Salvador, to translate its hitherto ignored codes of conduct into the languages of the 47 countries where clothing is produced for the company and to make sure that the code is posted prominently in each factory. The Gap also accepted responsibility for the working conditions where its products are made and agreed to independent monitoring of its sub-contractors by a third party" (International Textile Leather and Garment Workers Federation, 1996).
• The Gap set up a pilot 'independent industry monitoring program'. A monitoring team consisting of El Salvadorean religious and academic groups has been engaged to verify that conditions in the Mandarin plant meet The Gap's standards. This independent monitoring group consists of the Jesuit University's Human Rights Department, the Catholic Archdiocese and the Center for Labour Research.

It is an important step for a company to accept that implementation and monitoring must not be entirely in their hands. The fact that The Gap recognizes it needs cooperation with ngo's is to be applauded. However, this is not enough, since they only allow independent monitoring of their production in El Salvador. Given the number of countries producting for the Gap, it is likely to take centuries before all their production is covered by the monitoring program if they continue at the current speed. Also there is the risk that companies go in search for a 'pet-ngo' that will give them a seal of approval, thereby passing over criticism that might have been expressed by other ngo's and trade unions.

Based on all this criticism on the company's approach we can distinguish 2 core points of criticism. These can be transformed in criteria on how monitoring should be done to make it effective. Subsequently these criteria will be looked into in depth.

2.4.1. Transparency

Much of the criticism focuses on the fact that all the information on what the company is doing in respect to monitoring and on how it is doing this, is kept within the company itself. Even if they hire an external company to check for them, there is still no public access to this information. We would therefore have to believe the company on its word. Obviously this would be very naive. Therefore there is a strong demand for 'independent monitoring', where other stakeholders are involved. In 2.5 we will look into this criterium.

2.4.2. Quality

Another core point of criticism focuses on the quality of the monitoring. If the information that is collected is incorrect or insufficient, it is not possible to make an quality check on implementation of the code. It must therefore be specified what information must be collected and how this information should be collected. In 2.6 we will look into this criterium.

2.4.3. Feasibility

A third criterium that we will look into is feasibility. This is not derived from criticism from trade unions and ngo's. However, obviously any system that one develops on paper must be feasible for all involved actors in the system. If not, it simply won't work. We will therefore look into the different stakeholders that are supposed to play a part in a monitoring system and their specific needs. We will do this in 2.7.

Now, even if a company has a good code of conduct and it has done its utmost to implement it, we still have to believe the company on its word. The staff of the company, or the special division or the subsidiary or the external company only report back to the company that hired them. If you are not in the management of this company you do not know if they found any violations, how many, of what kind and what steps were undertaken to improve the situation, to just name some of the obvious questions. The interest of the company is to make profit, not to ensure good working conditions. History teaches us that a company will only ensure good working conditions if forced to do so (by a government, a trade union, public opinion or whatever force). Monitoring the working conditions in the locations that produce for them should therefore not be left to the companies themselves.
There must be involvement of appropriate trade unions and ngo's in every step of the monitoring process. This does not mean the monitoring itself (the actual spot checks and interviews) must be carried out by trade unions and ngo's. Independent monitoring means that trade unions and ngo's must be involved in how the monitoring is set up, how the monitoring is carried out and what is done with the results of the monitoring, in terms of who should have access to the information collected and what action should be undertaken as a result of the collected information.

We did not find examples of independent monitoring in the garment and sportswear sector, apart from The Gap in El Salvador. This has been described in 2.3.3. On all other production locations of The Gap, there is no structural form of monitoring, as the following example shows.


"A factory manager in Sri Lanka: "The Gap gives you a questionnaire, so you fill it in. They evaluate it and send a quality controller through their buying office. Then they place the order" (Schone Kleren Kampagne 1996: 19). In the Philippines we get to see this questionnaire. It is very extensive, The Gap asks everything you could possibly want to know. However, according to the manager of the factory in the Philippines, they do random checks only, for example they don't count the fire extinguishers, they just check on some departments if there are any (Schone Kleren Kampagne 1996: 19-20).

As part of the 'independent industry monitoring program' The Gap "also employs local Sourcing Compliance Officers, who check whether contractors operate in compliance with local laws and The Gap's Code of Vendor Conduct. They are responsible for the education and training of factory management and supervisors about The Gap's code and they liaise with local groups to inform them and maintain a dialogue" (NEF/CIIR 1997). We can interpret this as 'hiring special staff' with a move in the direction of independence by contacting local groups. However, 'contacting local groups' so far has consisted of asking information from local ngo's, not giving it back. There is no involvement of trade unions and ngo's in how the monitoring is set up, how it is carried out and what is done with the results of the monitoring. Therefore we conclude that The Gap is not independently monitored.

The monitoring proposals in the two new initiatives we discussed in 1.4 also have something to say about independent monitoring. Do they meet the standard for independent monitoring?

The Apparel Partnership code:
In the preamble of the code it is stated that the companies are determined to "adhere to the Code and to implement as soon as reasonably practicable a monitoring program consistent with the attached 'Principles of Monitoring', by adopting an internal monitoring program consistent with such Principles and utilizing an independent external monitor that agrees to conduct its monitoring consistent with such Principles". This in itself is not enough, since with hiring an external monitor we still have company control monitoring as we explained in 2.3.2.
In the 'Principles of Monitoring' there is a distinction between 'Obligations of companies' and 'Obligations of independent external monitors'. One of the obligations of the company is to "Establish Relationships with Labor Union, Human Rights, Religious or Other Local Institutions". However, it is specified as: "Consult regularly with human rights, labor union (including legally constituted unions representing employees at the work site), religious or other leading local institutions that are likely to have the trust of workers and knowledge of local conditions and utilize, where companies deem necessary [own emphasis], such local institutions to facilitate communication with company employees and employees of contractors and suppliers in the reporting of noncompliance". Obviously this leaves a large loophole for companies to escape.
In the obligations of the external monitor we find again the phrase on "Establish Relationships with Labor Union, Human Rights, Religious or Other Local Institutions". Here it is specified as: "In those instances where independent external monitors themselves are not leading human rights, labor, religious or other local institutions, consult regularly with human rights, labor union (including legally constituted unions representing employees at the work site), religious or other leading local institutions that are likely to have the trust of workers and knowledge of local conditions". This one can call independent monitoring.
However, the agreement leaves open a number of questions like: who decides who is a leading human rights etc. institution? Who decides how often consultation needs to take place? Who decides what is done with the information gathered in this way? How transparent is this process? These are very crucial questions that turn up in every debate on monitoring.
The Apparel Industry Partnership has tried to solve this problem by stating that within the next 6 months they would form a nonprofit association that would have to deal with some of these matters. Some of its tasks will be to "develop criteria and implement procedures for the qualification of independent external monitors, to design audit and other instruments for the establishment of baseline monitoring practices and to develop means to maximize the ability of member companies to remedy any instances of noncompliance with the Code". This nonprofit association will be governed by a board whose members would be nominated by companies, labour unions and consumer, human rights and religious groups.
We will have to wait and see what they come up with before we can come with any conclusions on the level of independence of the monitoring of this initiative. Some critics have severe doubts: "The agreement leaves the foxes even more firmly in control of the proverbial hen house, which now carries the label 'Fox Free'" (Greg Smith, 'Justice Nike' mailinglist 25-4-1997). "It doesn't look as if the monitoring will be independent enough" (Charles Kernaghan, National Labour Committee). There is broad consensus on the need for constant pressure to make this initiative worthwhile. "The code is so littered with loopholes its impact will probably be limited unless public and press attention remains fixed on the problems of sweatshop workers (New York Times editorial 16-4-1997). "Certainly only continued public pressure on this issue can make commission's efforts succeed (Washington Post editorial, 16-4-1997).

An initiative to set up a system of independent monitoring that shows a lot of similarity with the direction the US initiative is taking, is the Foundation Model as developed by the Dutch Clean Clothes Campaign. In this model there is a Foundation, equally representing trade unions, ngo's, producers and retailers in its board, that is responsible for the monitoring. All parties in the Foundation agree on the contents of the code of conduct and on the principle of independent monitoring. If a company wants to adopt the code of conduct that is being advocated by the Foundation, it can sign a contract with the Foundation, specifying the obligations of each of the parties. The Foundation will be responsible for the monitoring and it will use among others record checks, unannounced spot checks, interviews with workers and a complaint procedure to do that.
Part of the monitoring can be subcontracted to a third party, for example a quality control company (the Monitor). The company must give information on where they source to the Monitor, the Monitor has to guarantee the confidentiality of these data. The Monitor will report its findings to the Foundation, who will decide what steps must be taken. The advice from the Foundation to the company is binding; if the company does not follow the advice, the contract between the company and the Foundation can be cancelled. In the Netherlands a Foundation is currently being set up and will start working before the end of 1997 (Clean Clothes Campaign: 1997: 10-11). On a European level a draft for a similar model is currently in development, connected to the Code of Conduct for the garment and sportswear industry as described in 1.4.

The big advantage of such a Foundation is that it enables direct involvement of all parties in all phases of monitoring. This system also acknowledges the fact that experiences with monitoring are still relatively rare and that whatever system you set up, you will need constant evaluation, debate and improvement. The Foundation can do that. However, it will be complicated to arrange this in a way that avoids stalling practices and endless delays, due to the fact that one must come to an agreement within the Foundation on what action needs to be undertaken.

Now, even if we have a company who accepted a good code of conduct, who has gone to all lengths to implement it and who has accepted independent monitoring, if the quality of the monitoring is not good, we still know nothing or the wrong things. The information that is collected must be correct and sufficient to be able to evaluate the performance of the company. The information must be available to those who need it and it must be there in time, to just name some of the obvious demands. In this paragraph we will specify criteria for quality monitoring. To do that, we will first distinguish three sub-tasks of monitoring:

1. checking on the implementation of the code
2. ongoing checks on compliance with the code
3. establishing and carrying out procedures in case of violations of the code

We will look into each of these three and define criteria that must be met in each of these tasks in order to fulfil the quality standard. Before we do that, we will look into one general criterium that must be met in every aspect of monitoring: the safe involvement of workers.

For an effective monitoring of working conditions it is of course crucial that workers' voices are heard. If workers' rights are being violated by the management of the factory, for obvious reasons the management of the factory will not tell this to buyers or monitoring staff. By just looking around in the factory one can say something about health and safety conditions and get a general impression. However, it is not possible to check on a number of rights like wages, working hours or the right to organize; these cannot be seen. It is therefore necessary in any monitoring system that workers are being interviewed on their working conditions.

It is very important that this is done with guarantees for the workers' safety. If a complaining worker gets fired after the monitoring staff has left, in the future no worker will say anything negative about the working conditions. A minimum requirement is therefore that the interviews take place without a representative of the management present and without the management knowing which workers have been interviewed. However, it will be necessary to take additional steps to ensure that workers speak out. A white man in a suit whom they have seen talking with the management, asking questions about working conditions, even if he is telling them that speaking out will have no repercussions, will in many cases not be trusted by the workers. "They feel they're employed by the company and you open your mouth and suddenly you end up in the ironing section where you're on your feet 12 hours a day" says National Labor Committee's director Charles Kernaghan (New York Times 13-4-1997).
Involvement of local organisations that are known and trusted by the workers can help. However, apart from that it is crucial that workers are informed, know their rights and the procedures for what to do when these rights are violated, in short they should play an active role in the whole monitoring process. If this is neglected, workers will not feel part of the monitoring process so why should they take the risk of repercussions or losing their job by speaking out? And if they refuse to speak out, how can any outsider find out what is going on in the factory?

Bearing this in mind, we will now return to the three sub-tasks of monitoring as described above and look into what criteria must be met here in order to fulfil the quality standard.

2.6.1. Checking on the Implementation of the Code

Monitoring must check on if the code is implemented. The following three questions must be answered:


1. what steps does the company plan to make to implement the code?
   This can simply be answered by the company.
2. are these steps sufficient to implement the code?
   The statement of the company on what they plan to do must be checked against criteria for implementation.
3. did the company take the steps they planned to make?
   Can the company prove they took the steps as stated by them? Do random checks confirm this?

2.6.2. Ongoing Checks on Compliance with the Code

• record checks
  The relevant information collected by companies on suppliers, by suppliers on subcontractors and on workers must be cross checked with information from other sources.
• Spot checks
  Production locations must regularly be visited by the monitor. During a spot check the monitor will look at the working situation and interview the management. A standard checklist and a standard questionnaire will be used, which have been approved by companies, trade unions and ngo's. These checklists and questionnaires must be evaluated regularly. Spot checks must be done down the entire subcontracting chain. The spot checks must be unannounced.
• interviewing workers
  In the example of SGS monitoring for Disney we have seen how this should not be done. Asking some random questions to a worker while the manager is listening is useless. Levi Strauss claims their audits "often include interviews with employees, both at the factory and away from the factory" (US Department of Labor 1996: 55). Also Nike claims "the auditors conduct interviews with employees away from the management" (US Department of Labor 1996: 58). It is difficult to establish the truth of such claims; the fact that no ngo or trade union can confirm the claim does not prove it is not true. This again makes clear the need for independent monitoring! It also shows that companies start to acknowledge the fact that involvement of workers is necessary in any monitoring system.

We can distinguish the following criteria for interviewing workers:


• The interviews must be conducted according to a standard questionnaire, which has been approved of by companies, trade unions and ngo's. The questionnaire must be evaluated regularly.
• The interviews must be conducted in the first language of the worker. Preferably the interviewer also speaks this language. If an interpreter must be used, this interpreter must have quality knowledge of both languages AND have quality knowledge of the situation of garment workers.
• The interviewer must be trained in interviewing workers, have knowledge of the situation of garment workers and "knowledge about the work process under review and an appreciation of what is common practice and what is not" (Bernard 1997: 2).
• Interviewing workers has to be done in a way that ensures no repercussions are taken against these workers and in a way that ensures that workers believe no repercussions will be taken against them.

Concerning ensuring no repercussions are taken against workers, three conditions should be fulfilled:

1. Interviews should be conducted outside the factory either at the workers' house or at a safe place like an office of the local church/mosque/temple, a university, a human rights organisation or a trade union.
2. No management or other employee of the factory must be present or have access to the information that was given by a worker.
3. The interviewing of workers should be arranged in a way that makes it impossible for the management to know which workers have been interviewed. This can be arranged in a number of ways, depending on local conditions. In any case the monitor will have access to the personnel administration and therefore to the addresses of the workers, so she/he can visit them at their houses.
   The second aspect, ensuring that workers believe no repercussions will be taken against them, is more complex and depends even more on the local conditions. Of course practice is the best proof: if workers experience the benefits of working in a monitored factory and experience that speaking out has no repercussions, they will want to cooperate. The first phase is therefore crucial and much can be gained and lost here. Involvement of local trade unions and ngo's that are trusted by the workers is crucial. They must be consulted on how the monitor should work to gain the confidence of the workers and also play a role in carrying this out. Depending on the local context it might be necessary that the interview is conducted by a person of the same sex as the worker. It might be necesary that a third person that has some official status and it trusted by the worker is present at the interview or even conducts the interview in the first phase of monitoring when workers are still very suspicious of what the consequences will be.

2.6.3. Procedures in Case of Violations of the Code

"Enforcement of corporate codes of conduct refers to how US companies respond to violations of their codes. Enforcement is essential to the success of a corporate code" (US Department of Labor 1996: 65).

An example of Nike's poor response when confronted with proof of violation of their code of conduct:

"At 4:40 a.m. on the morning of August 18, 1996, Kim Sung Rat went to inspect passing an area where there were four Vietnamese female workers working in the computer embroidery room. Kim Sung Rat let two of the workers take a break and called the other two female workers, NTH and NTVP, to come to the storage area at the farthest end of the factory where there was no one working, about 50 meters away from the computer room. Here Kim Sung Rat called NTVP into the storage area and made a gesture that she should take of her shirt. After that, Rat tore the shirt of P and felt her up. P furiously resisted and was able to run and escape.
At that moment Rat grabbed a hand and pulled H into the room. Again with a very obscene action, he rubbed her chest, pulls the pants zipper of H, and rubbed her private parts. After that, Rat made a sign by his finger in a very obscene matter indicating sexual intercourse. Although weaker than P and being unable to escape nevertheless, H furiously resisted. Being able to guess the activity of Rat in the storage room, as he had done with her, Miss P had run to call the guards, and R was caught in the act" ('The Worker' newspaper, Nguoi Lao Dong, 23-8-1996, in: Vietnam Labor Watch 1997: 13).

The Nike subcontractor where this occurred tried to bribe the two harassed workers in order to keep them quiet. This failed. Excerpts of an interview with the victims:
NTH: "After this took place, the leadership of the company put forth their 'separate condition' with me and P. The company agreed to compensate us in order to smooth over this matter. Two times they gave to me and to P, each of us, an envelope full of money in order to buy us off and smooth over the action of this expert Kim. But we refused. I answered them, we will not for money sell our dignity or our honour" ('The Worker' newspaper, Nguoi Lao Dong, 25-8-1996, in: Vietnam Labor Watch 1997: 14).

At the shareholder meeting in September 1996, Nike CEO Phil Knight commented on this case. From the transcript:
"Fairly recently in Vietnam, that basically there was a situation on the night shift where four of the women th- who were in the stitching fell asleep. And -and the night watchman who again was Korean in coming through the room, two of them woke up and fled the room. And the shock the other two. And in the shaking of one of 'em, there was perhaps some misappropriate behavior. And then he touched a part that he should not have. That basically she protested. And - and basically, it comes about as close as you can get to sexual harassment in US terms, as you can get. The night watchman was sent back to Korea. And - essentially, trying to rectify the situation. However, it was reported in one of the Vietnam - at least one of the Vietnamese newspaper as a rape" (Vietnam Labor Watch 1997: 13).

Now even if companies do enforce their code, they often do that by cutting all contracts with suppliers who are found to violate the code. However, this is usually not desirable from a workers' point of view. As stated in Chapter 1, the primary aim of a code of conduct is to improve the working situation for each worker. Cutting contracts is not beneficial to that aim and might even deteriorate the situation for workers since it might lead to closing down factories or firing workers because there are less orders. For companies however, cutting contracts in case of violations of the code might be attractive since it is the fastest way of 'solving' the problem. Therefore there must be procedures for what actions must be undertaken by whom when a violation of the code is found. These must at least consist of:

• getting the facts straight
• attempts to improve the situation
• investigation in the results of the attempts
• decision if the supplier can stay on as supplier
• decision if the action undertaken by the company to attempt to improve the situation was sufficient

The last of the three basic criteria is feasibility. We will first look at for whom the system has to be workable, in other words who are the key stakeholders. Then we will look into feasibility criteria: what are the factors that make a system functioning in real life, not just on paper.

2.7.1. Stakeholders

The key stakeholders in a monitoring system for the garments and sportswear industry are the following:

• workers
  All workers producing products for the company, whether or not they are employee of the company, including homeworkers, sweatshop workers, migrant workers and workers without legal status.
• consumers
  All consumers who buy the finished products from the company, either directly or through retail outlets which are not owned by the company.
• trade unions
  Independent and democratic trade unions, representing the interest of the workers, both in the North and in the South.
• ngo's
  Ngo's involved in representing workers' rights (especially in the absence of trade unions, when they don't exist or when they are forbidden) and ngo's involved in promoting codes of conduct and independent monitoring. Consumers organisations, women's organisations, researchers, solidarity groups, development agencies, legal aid organisations etc
• accredited monitors
  Agencies or companies that are hired to do the actual monitoring (spot checks, interviews, record checks, implementation checks). This can be a quality control company, an accounting firm, labour consultants etc. Monitors must be jointly accredited by companies, trade unions and ngo's.

  The different company structures in the garments and sportswear industry can not always be clearly distinguished. Production can be arranged in many different ways, and since this has consequences for the monitoring system we will first look into definitions and the different strategies companies use.

• retailers
  "Retailers are primarily engaged in the distribution, merchandising, and sale of garments to consumers. Retailers include department stores, mass merchandisers, specialty stores, national chains, discount and off-price stores, outlets, and mail-order companies... retailers who sell their own private labels go beyond their traditional role as distributors and become directly involved in the design and sourcing of garments from manufacturers and contractors" (US Department of Labor, 1996: 15-16). Especially big retailers do this. Examples: C&A, H&M, Marks & Spencer, Next, Otto Versand.
• producers
  Producers produce items that are sold in many different retail outlets. Actual production can be subcontracted to suppliers, just like with retailers. We use the term producers when the company can influence the retailer to whom they sell the goods, in other words they are more than just a supplier. Usually they have strong brands and/or a high quality that the retailer can not obtain from its own suppliers. Producers usually do not own stores. Especially in sportswear we find well-known producers, as in jeans. Examples: Nike, Reebok, Levi's, Lee. Other examples: Coats Viyella, Triumph, Sara Lee, Hugo Boss, Laura Ashley.
• suppliers
  Suppliers are "Manufacturers primarily engaged in the design, cutting and sewing of garments from fabric. Some manufacturers are contractors of subcontractors, which generally manufacture apparel from materials owned by other firms. Larger manufacturers often contract production to many such contractors and subcontractors" (US Department of Labor, 1996: 15-16). Usually suppliers are responsible for the buying of raw materials, it is also possible that this is done by the (intermediary of) the retailer. Usually suppliers have no control over retail, though in some cases (big) suppliers in Asia start their own sales office in Europe to improve their position in relation to the retailers. Suppliers work for several retailers or production companies, some have a small number (3 or more) of regular clients, others differentiate more.
• intermediaries
  Between the retailer or producer in Europe or the US and the actual manufacturer who does the cut, make and trim there is usually one or several intermediaries. This can be buying offices, buying houses, importers, agents or traders. These terms are not always clear since again there is no strict division of tasks going with certain names. Based on research in Hong Kong (SOMO 1997) we will explain the different ways in which the relations within the sector can be structured. The tasks of intermediaries usually are:
  
  • communicating between retailer and supplier, problem shooting.
  • sourcing: finding (new) suppliers that can produce what the retailer wants.
  • quality control: sampling, in-line inspection, final inspection (pre-shipment inspection).
  • (sometimes) sourcing of raw materials (often this is a task of the supplier).

  Intermediaries owned or controlled by retailers:
  If the intermediary is owned by the retailer we call it a buying office. It often has the same name as the parent company. A buying office only works for the company it is a subsidiary of. If the intermediary is not owned by the retailer we call it a buying house. A buying house can have more clients, as long as they are not competitors (not operating in the same country).

  Herma Ltd is a buying house for Manor in Switzerland, Vroom & Dreesman in the Netherlands and La Redoute in France (SOMO 1997: 2).

  Intermediaries not owned or controlled by retailers:
  These are called agents or traders. In Hong Kong they are also called manufacturers: these often used to be 'real' manufacturers, but nowadays hardly any production takes place in Hong Kong. This has all been shifted to mainland China. Therefore these manufacturers work as agents or traders. They accept an order from a retailer and subcontract this to a supplier in China. Sometimes they own or control suppliers to which they subcontract (usually the best) orders, while also using suppliers not owned or controlled by them.

  K.Y. Garment Manufacturing has its own factory in China (100% owned). Their capacity is not very big so they sometimes subcontract the more basic items to a nearby factory that also produces for Adidas and Puma (SOMO 1997: 16).

  Sometimes a trader plays the role of a supplier, taking care of delivery of all raw materials at the right moment, the packaging etc.

  Li & Fung Ltd, the largest trader in Hong Kong did a big order for Limited Stores, 150.000 pants in 1 style, delivery time 30 days. So they place the order at 4 or 5 factories to have it ready in time, but make sure they use the same fabric, the same zippers etc. (SOMO 1997: 14).

  Usually owning or controlling intermediaries is a strategy chosen by larger retailers and after a period of working with agents and traders. It is safer and cheaper to have your 'own' company working for you, though of course it requires investment and is therefore not an option for small retailers. If a company uses this strategy, they usually still do part of the sourcing through agents and traders. This means the 'own' buying office/house must compete with these agents and traders. "Buying agents ... may be used by US [or European] companies that do not have a large presence abroad, or in addition to a US [or European] company's buying staff" (US Department of Labor, 1996: 15-16).

  "Cortefiel started in Hong Kong 12 or 13 years ago, first with traders and agents, then they slowly started to approach manufacturers directly" (SOMO 1997: 6).

  "Next sources about 35% of the total sourced through Hong Kong via this office. They have another 18 companies in Hong Kong they buy from, this buying office is the only office actually owned by Next" (SOMO 1997: 4).

  Laura Ashley: "At first they worked via agents and traders, but this was not ideal and the price was high. 4 years ago this office was established [buying office in Hong Kong]" (SOMO 1997: 8).

  Sometimes the 'own' intermediary gets the best deals and the riskier ones go to the agents and traders. Also the buying office/house can subcontract to an agent or trader, for example to get rid of the responsibility for quality control, if they do not want to do this themselves.

  Shelsham Trading Company works almost entirely for major retailers in Europe such as C&A, BhS, Littlewoods, Debenhams, Burtons, Next and Makro; mail order companies such as La Redoute and Otto and some producers (no names given, too sensitive) which is then sold in big department stores such as Peek & Cloppenburg. "Buying offices of the retailers themselves, like Mondial [for C&A], are for the safe items, they ones you can always sell. The risky items are placed via others. They prefer to pay the percentage and have the agent, the trader or the importer take the risk" (SOMO 1997: 12-13).

  Marketing Partners Ltd is a buying office for K&L Ruppert. "For bulk items like t-shirts they will also work with traders since they will not go to themselves to Northern China or something" (SOMO 1997: 1).

2.7.2. Feasibility Criteria

2.7.2.1. Time

If in Bangladesh you file a complaint with the Ministry of Labour, they will investigate the case and come with a verdict. Labour legislation in Bangladesh is quite good and usually if you are in your right you will win the case. Amirul Haque Amin, trade union leader and lawyer tells us: "We have just won a case. The owner of a factory unlawfully fired some workers for organizing a union. This was in 1985. Now it is 1995 and we have won and the owner has to pay wages for all these years. He probably will not do this. That means we have to start a new case to force him to pay. That will again take years (interview with Amirul Haque Amin, 1995).
This makes clear the need for criteria on time. There should be procedures to avoid stalling practices on all levels. Procedures should be as less time consuming as possible, while not damaging the quality and the transparency.

2.7.2.2. Money

Obviously if we create a monitoring system that is so expensive that each company that adopts it goes bankrupt, there is no gain. Companies are usually quite fast in claiming they go bankrupt if they have to pay things they are not happy with (Nike threatening to leave Indonesia because they can not afford the high wages, see 2.3.2.) so some scepticism is in its place. The system should be designed in such a way that also smaller companies can afford to work with it. There should be clear procedures for payments, it should be transparent who pays how much to whom and procedures must be designed to avoid corruption.

2.7.2.3. Access to Information/Confidentiality of Information

Each stakeholder should have access to that information that she/he needs to do her/his part of the work. At the same time, confidential information should be treated confidentially. Therefore we need clear procedures for which information must be given to whom and which information may not be given to whom.

2.7.2.4. Putting the Responsibility where it Belongs

To do a job properly, it must not demand that you control things which are not in your power. Generally retailers have power over suppliers, since retailers place the orders, and decide on quality, delivery time and price. This control is not absolute and there is a limit to the demands the retailer can make of the supplier. There is a point where the supplier will prefer to lose the retailer as a client, depending on the consequences the demands have for the supplier and the understanding the supplier has of the situation. We will therefore take a deeper look in how retailers select their suppliers and what is likely to happen if retailers start to demand that their suppliers improve working conditions.

There are two main strategies companies can use in selecting their suppliers. Of course in real life companies are often somewhere in between.

Strategy 1: Quality Buyers

The retailer selects the suppliers mainly on quality, less on price. Quality demands are very high; only those suppliers that can meet those demands are accepted. Of course they are the more expensive suppliers. The advantage of this strategy for the retailer is the low level of quality control that is needed since these suppliers are able to do their own quality control.

Cortefiel has one person in charge of quality control in their Hong Kong office, who will soon be joined by an assistant. Their strategy is to find good quality suppliers and then hold them responsible. If the supplier is already doing quality control, why would they do it double. New factories are checked once or twice per order, with established factories they feel they can trust this is less (SOMO 1997: 7).

Marks & Spencer: quality control is the responsibility of the factory/supplier. Every aspect of this is discussed with the management before they start doing business, M&S staff goes to factories to check whether this is set up according to their requirements. Sometimes they station staff at the factory. M&S pays a good price and pays quick, so they expect their requirements to be met. From the buying office they will send people to a factory maybe two times per year (SOMO 1997: 11).

Strategy 2: Price Buyers

The retailer selects the suppliers on the product requirements and on price. The cheaper the better. The company then needs to do a lot of quality control to make sure the supplier meets the product requirements and the delivery times.

Next: "You need your own people inside the factory during the production, if not you'll always have problems". Everywhere he has local people going in on a daily basis. Some is done from Hong Kong, but for example in Shantou, China, he has 3 local people with a company bicycle going to the factories to check. Then he has some senior people monitoring them. Factories are selected on the basis of quality of the products and price. "A factory may look like a hole but still turn out quality garments" (SOMO 1997: 5).

We can also distinguish several sorts of factories.

Conditions on the work floor

• There are factories that look good. They are clean and tidy, ventilation, light, fire safety and equipment are usually regular to good. These things cost money; this means there is investment. If an owner invests in a factory he/she will want the rewards of that. That explains why the factory is clean and well-maintained.
• At the other end of the spectre we find the factories that indeed look like holes: sewing machines without needle guards, 10 store factories without fire stairs, dusty, dirty, dark and messy. One cannot see any sign of investment, and logically there is not much interest in maintaining the little equipment that is there.

Atmosphere

• There are repressive factories: work pressure is high, atmosphere is tense, workers are afraid to look up from their work, nobody is talking or laughing. Supervisors yell at workers and physical and sexual violence occurs. Ridiculous fines and sentences are imposed on workers, visits to the toilet are limited. Organizing is extremely difficult when it is prohibited to talk to your co-workers.
• At the other end of the spectre there are factories where the atmosphere is relaxed, people are talking, the radio is playing, and work pressure is not so high. The relation between workers and supervisors is not based on authority but on cooperation. Often there will be some form of organisation within the factory, either an official trade union or a high level of solidarity among workers.

Combinations

There are factories with bad conditions on the work floor and a repressive atmosphere. We found these factories are not the most common. If they get the chance, the workers will leave. These factories will either pay slightly better to attract workers, unless unemployment is so high they will always find people accepting the conditions. This category also has the highest level of forms of forced labour, like migrant workers whose work permit is bound to one factory, so workers cannot to try to find a better job.
Factories that have good conditions on the work floor and a relaxed atmosphere are even rarer. Almost always they are heavily unionized. 'Enlightened' factory owners who think that investing in the workers is the best way to turn out efficiently a quality product are the rarest phenomenon in the garment sector.
A more common category is factories with bad conditions on the work floor and a relaxed atmosphere. Here efficiency is low, business is going bad, they have to accept the orders nobody else wants. They pay bad and get away with it by claiming a sort of loyalty from the workers ("business is bad, we can not afford to pay you better, we would go bankrupt and you would lose your job"). Factories are very eager to make this sort of claims, however, in the case of these factories it is often true.
Also quite common are factories that have good conditions on the work floor and are very repressive. They see the worker as an essential part of the machine and not as human beings with a right to labour in dignity. They demand as much from the workers as they can get away with, believing that that will bring the highest reward.

Quality buyers will go to factories that produce quality and are reliable. Factories with good conditions on the work floor are better able to meet those requirements. Most of these factories are repressive. Now quality buyers will not necessarily want repressive factories, and efficiency can also be established by investing in your workers. If quality buyers want to improve conditions, they can urge their suppliers to change their working atmosphere and invest not only in factory conditions but also in the workers.
Price buyers will go to factories that are cheap. That usually means factories with bad conditions on the work floor, since they compete mainly on price. To improve working conditions, price buyers should urge these factories to invest in the factory conditions. This is more complicated than in the case of quality buyers. If a factory with bad conditions on the work floor starts to upgrade, it will lose its clients who came because they were the cheapest of the cheapest. It has to attract clients that are more interested in quality, i.e. quality buyers. If only one of its buyers demands that they make such changes, this will not be feasible for them. The factory will only make such a change if (most of) their buyers want them to and are willing to pay accordingly. Or if only one buyer demands it, the factory will need a lot of assistance in attracting other buyers.
Therefore we can conclude that for quality buyers it is easier to demand from their suppliers to improve conditions. Price buyers source from the sort of factories for whom it is more difficult to respond to such demands. That is not to say that price buyers should not make demands, nor should they simply change their suppliers. The basic issue is always improvement. Shifting production from one factory to another does not result in any improvement for the workers. However, price buyers who start to make demands on working conditions from their suppliers will to some extent have to become quality buyers, and assist their suppliers in changing accordingly.

In this chapter we have looked at the implementation and monitoring of codes of conduct. We have looked at what companies have done so far in this respect. We have looked at the criticism that has been expressed by trade unions, ngo's and others and we have designed criteria that must be met by a monitoring system. These criteria can be used as an checklist to evaluate any existing monitoring system. In the next chapter we will translate the criteria into a system, in terms of actors, responsibilities and information flows.