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NEWSLETTER 20, Dec 2005
Purchasing Practices Can Undermine Workers' Rights
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The phrase "purchasing practices" refers to the
way in which companies - such as sourcing companies, brands,
retailers, and agents - buy products or services from their
suppliers, such as manufacturers or agents. The purchasing
practices of athletic footwear and garment brands and retailers
can undermine the implementation of workers' rights and provision
of decent working conditions in their supply chains. For workers'
rights activists there are still many questions to be answered
about the nature of these practices and ways to address them.
An issue at many levels
As the Play Fair at the Olympics Campaign report from 2004
highlighted, pressure on suppliers to produce quickly and
flexibly for lower prices and in the context of other factors
easily translates into widespread and well-documented precarious
employment for women workers in particular. At the other
end of the supply chain, workers in the shops selling garments
to consumers, also often face increasingly difficult working
conditions: low wages, unstable or flexible contracts, and
anti-union practices are common.
As well as considering brands and retailers in relation
to purchasing practices, it is also important to consider
the role that the purchasing practices of large Southern
manufacturers or purchasing companies - for example, the
Asian multi-national companies (MNCs) active in the garment
and athletic footwear sectors - play in the structural violation
of labour rights. Whilst buyers for brands and retailers
often have more power and are capable of dictating the contract
terms, the emergence of large manufacturing MNCs or buying
houses means this is not automatically the case.
Three key problems
There are a number of purchasing practices in the garment
and athletic footwear industries that can undermine working
conditions. At the manufacturing end of the supply chain
three structural characteristics of current purchasing practices
in industry have been identified as factors that influence
the capacity of suppliers to comply with labour standards:
These practices can lead to short-term contracts, forced
and/or unpaid overtime and low wages for workers. There
is a risk that suppliers will simultaneously be confronted
with falling prices and additional costs in order to comply
with a code of conduct. For example, an increase in holiday,
menstruation or pregnancy leave or payment of social security
contributions will all increase costs.
Campaigning for better purchasing practices
For the CCC, the Play Fair at the Olympics Campaign was
the first public campaign in which purchasing practices
emerged as an important element. It urged companies to "…change
their purchasing practices so that they do not lead to workers'
exploitation, with prices being made fair, deadlines realistic,
and labour standards given the same status as price, time
and quality".
Asics, Fila, Lotto, Kappa and Mizuno failed to respond
to these campaign recommendations. Umbro and Puma gave similar
replies: That there is no real issue around purchasing practices
since Umbro and Puma both plan a significant proportion
of their products a year in advance. Puma did concede to
consider developing standards related to ethical purchasing
practices. A survey of Puma's suppliers indicated that 42%
responded no to the question of whether there is a conflict
between Puma's code and buyer's requirements, while 9% responded
yes and 49% sometimes.
Starting with the workers
There are few tools available to verify whether company
statements on this issue make an sense, and few studies
to fall back on - indeed much of this information is a closely
guarded corporate secret. Suppliers may also be afraid to
speak out against their buyers for fear of losing their
contracts. Buyer-supplier relationships in garment and sportswear
supply chains are very complicated, and involve management
problems that are very different from the issues usually
addressed in campaigns. Increased transparency and a definition
of fair purchasing practices may help improve the situation,
although this approach must be followed with caution. Poor
purchasing practices are often the result of too little
power in the hands of suppliers, and sitting in the management
chair and defining fair purchasing practices may have the
undesired result of putting more power in the hands of buyers
to pressure suppliers.
Changes to business relationships will not automatically
lead to improved conditions for workers. Whilst fair purchasing
practices are an essential part of any code implementation
programme, they only create the circumstances under which
labour practices may improve. Increased prices are just
as likely to profit the factory management/owners. Likewise,
longer delivery times do not necessarily lead to a shorter
workday because factory management may simply accept orders
from other customers instead. This does not mean that buyers
do not have responsibility for ensuring that the way they
make decisions does not impact negatively on workers or
the environment.
Defining fair purchasing practices is complex. Instead
of focusing on a managerial solution, i.e. a top-down approach,
it is necessary to ensure a bottom-up approach with workers
defining what needs to be changed in order for conditions
to improve. This, according to Monina Wong of the Hong Kong
Christian Industrial Committee would mean
spelling out principles which are radically different from
those that determine present practices. Purchasing practices
must be defined through mechanisms which involve the workers
concerned directly.
There are still many questions to be answered, and research
to be carried out on purchasing practices, but it is clear
that companies need to address the conflicting logic of
demanding compliance with labour standards whilst at the
same time pursuing lower prices and shorter delivery times.
Purchasing practices need to be covered by a monitoring
system that is able to guarantee that they are compatible
with good labour conditions. Better purchasing practices
will only contribute to sustainable improvements in working
conditions if workers - through freedom of association and
collective bargaining - are able to negotiate better wages
and working conditions.
For more on this topic, see "Fair Purchasing Practices?
Some Issues for Discussion" by Jeroen Merk, May 2005
available at
www.cleanclothes.org/publications/05-05-purchasing_practices.
htm
