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Sanne van der Wal & Bart Slob
SOMO
November 2005

This research was commissioned by the European Clean Clothes Campaign (CCC). The Clean Clothes Campaign aims to improve working conditions and to empower workers in the global garment industry, in order to end the oppression, exploitation and abuse of workers in this industry, most of whom are women. It does this by putting pressure on companies to take responsibility to ensure that their garments are produced in decent working conditions; supporting workers, trade unions and NGOs in producer countries; raising awareness among consumers by providing accurate information about working conditions in the global garment and sportswear industry, in order to mobilise citizens to use their power as consumers; and exploring legal possibilities for improving working conditions, such as the CCCommunities project, in which public authorities are pushed to procure their workwear in an ethical way. The CCC is made up of coalitions of consumer organisations, trade unions, researchers, solidarity groups, world shops, and other organisations. The CCC cooperates with organisations all over the world, especially self-organised groups of garment workers (including workers in factories of all sizes, homeworkers, and migrant workers without valid working papers). For more information, see www.cleanclothes.org.

The main objective of this research was to provide the CCC with detailed information about the workwear sector and selected workwear companies that supply European public authorities. To support their campaign on ethical public procurement, the CCC needs further information on the workwear sector and suppliers. The main research questions where the following:

• Do the selected work wear companies have a corporate social responsibility (CSR) policy, code of conduct and are they part of a multi stakeholder initiative (MSI) and/or engaged in a stakeholder dialogue?

• What is known publicly (press, other NGO’s etc) about the selected companies concerning their CSR performance and their supply chains? As this part of the CCC work mainly revolves around public authorities, the research focussed as much as possible on information and issues concerning the supply of workwear to governments and local authorities. The research provides short company profiles of the selected workwear companies (e.g. turnover, main products, location and production facilities) and includes a short description of the sector (e.g. size, trends, legal frame work, important issues). This report is based on information from public sources (databases, media), interviews with experts from the sector and surveys with the selected companies. Work

The workwear market is a large market: between one quarter and one half of all European employees wear workwear. In 2001, the European workwear market was worth $3.59 billion, the equivalent of 306.2 million pieces. The market is expected to grow by 2.5 per cent yearly to $4.27 billion in 2008. Average annual spending per capita is estimated to be between 75 and 100 euros. There are roughly three kinds of workwear: (1) ordinary workwear (overalls, shirts and trousers in ordinary fabrics like (poly)cotton), (2) representative or corporate workwear (ordinary fabrics, but with more emphasis on design and colours than in ordinary workwear) and (3) technical workwear (made of special fabric or specially treated common fabric to protect workers). This report examines all three types of workwear. Workwear is often bought from local/national workwear companies due to the short delivery times and customisation that are common in this market and the nationalistic bias of buyers. However, the market is becoming increasingly international. Large international workwear suppliers such as Kwintet, Induyco and Snickers have established themselves in many different European countries via takeovers or the opening of sales offices. At the same time, concentration (horizontal integration) in the sector is increasing. In the past, the workwear market was fragmented, with many small workwear suppliers per country. More recently, however, workwear companies are functioning on an increasingly large scale and often operate internationally. While some production still takes place in target-market countries, it is clear that most workwear is now manufactured in low(er) income countries. Many workwear companies have subsidiaries in Eastern Europe, Tunisia, Algeria, Morocco and the Far East. The outsourcing of production to subcontractors, however, is widespread and becoming more popular.

Throughout the course of the research, SOMO found few studies and scant information in the media regarding the social and environmental impact of the supply chain of the European workwear companies selected for the research. According to the Fair Wear Foundation, there are fewer problems with workers’ rights in the workwear sector than in the fashion sector. This can be explained by, among other reasons, the long-lasting and close relations with suppliers that are more common in the workwear sector than in the fashion sector. For instance, as already mentioned, production often takes place at subsidiaries, a phenomenon that is not common in the fashion sector. Additionally, workwear companies still do a lot of sourcing from countries like Tunisia, Macedonia and Hungary, where independent union activity is possible and surveillance and observance of the local law is fair.

Nevertheless, in Macedonia as well as in other low(er)-income countries where workwear is produced, particularly in the Far and Near East, the rights of many workers are not respected. Research on working conditions in the fashion sector in garment-producing countries is abundant and shows that violations of labour rights, such as excessive overtime and extremely low wages, are common. As there are many similarities between fashion and workwear production, for example the outsourcing of production and the manufacturing itself, it seems very plausible that similar violations are occurring in the workwear sector as well. Nevertheless, with only one exception specific violations of workers rights at the selected workwear companies and their suppliers could not be found in public sources. Violations of workers’ rights have been reported at a Serbian supplier of military and police uniforms for Induyco. Among other violations, union activity is severely depressed, pay is irregular and sometimes below living wage standards and women workers are not treated equally when it comes to promotion.

Workwear is often purchased through procurement procedures by public authorities. Experts estimate public procurement to be responsible for 60 percent of total workwear sales in the Netherlands. In most cases in Europe, the Procurement Directives of the European Union apply. In the European Union, workwear companies from all member states must be able to tender for public contracts, regardless of their country of origin. All bids must be evaluated in objective and transparent procedure. In March 2004, the European Parliament and Council adopted a revision of EU procurement legislation: Directive 2004/17/EC (the so-called Utilities Directive) regulates contracting of works, supplies and services by utilities in the water, energy, transport and postal services sectors. Directive 2004/18/EC (the Public Sector Directive) regulates contracting of works, supplies and services by all other public authorities. These new directives should be transposed into national law by January 2006. The Directives regulate large public purchases and define detailed procedures and guidelines for specific requirements, rejecting and selecting tenders and awarding contracts. They also prescribe appropriate advertising of calls for tender and contract notices across all EU Member States and define clear time-frames for procedures. Public authorities can play a key role in improving the sustainability of the workwear sector by including social and environmental criteria in their procurement procedures. The revised Directives have clarified some fundamental principles
concerning environmental and, to a lesser degree, social criteria in public purchases. This offers a opportunity for public authorities to purchase socially and environmentally “responsible” workwear. Authorities have the responsibility to spend money wisely and must therefore secure best value for money. The concept of best value requires that purchasing decisions not be based only on the price of offers, but also on their quality and ability to deliver additional benefits. If authorities are willing to award contracts to bids offering best value for money rather than to the “lowest price tender,” they must state from the start that they will use the option of awarding contracts to the “most economically advantageous tender.” The criteria used to determine the most economically advantageous tender must allow for a fair, transparent and objective evaluation. When including social and environmental criteria in a procurement process, public authorities must consider the following aspects:

1. Any “responsible” requirements must be relevant in terms of the object of the purchase, must relate to the capability of the contracting company to deliver the contract or must enable the contracting authority to deliver or improve its services to the public.

2. Any environmental or social criteria that will be used to evaluate a bidder or a bid must be published together with the contract notice or call for tender.

3. Specifications regarding product performance or performance conditions should make reference to recognised (international) standards, such as eco-labels and standards of working conditions (the ILO conventions for example), but equivalent standards must always be accepted.

4. Contracting authorities can specify conditions for the execution of a contract that embrace its environmental or social policy goals.

The aim of the research was to provide information on large companies supplying local authorities and governments in different European countries. Seven workwear companies that all have public sector clients were selected for closer inspection in this study. Based on information from public sources (media and corporate websites) and communications between the selected companies and the researchers (questionnaires and correspondence), a short company profile was drafted for each company in this report. These profiles provide general company information (size, production, location(s), customers, etc.) and specific information on their corporate social responsibility (CSR) policies. Additionally, two of the seven companies were (also) selected because of their involvement in the Fair Wear multi-stakeholder initiative (FWF). All companies were contacted by the researchers and were asked to answer questions (via e-mail or phone). Most companies readily announced their cooperation, but in the end only three actually responded. It should be noted here that the researchers urged those responsible at the companies many times by phone, fax and e-mail to reply. Only two companies (Carhartt and Alsico) eventually stated why they did not want to answer: they do not want to provide information that they deem confidential. Most companies provide some general company information on their website (products, production locations, size). However, financial company information can only be found on the websites of the three selected workwear companies that are listed on the stock markets . Except for Havep, Carhartt and Induyco, all selected companies have a short CSR statement on their websites. Alsico, for instance, refers to the Clean Clothes Campaign’s (CCC) model code and “the ILO conventions” in one sentence. The other statements refer to workers’ rights, such as minimum wages and the ban on child labour, but their definition is not clear nor is there reference to ILO core labour conventions. Moreover most companies do not provide information on their websites about the way these policies are implemented or whether and how compliance with these policies is monitored and verified. Finally only Alexandra, Kwintet and Snickers have a short statement on their environmental policy.

However three companies seem to take CSR more seriously: Havep, Induyco and Snickers. Moreover, or therefore, these companies did answer additional question of the researchers. Havep is a member of the Fair Wear Foundation, which means that they have an adequate code of conduct (COC) and this code’s implementation is monitored and independently verified by the FWF. Moreover Havep was the only company that responded to all of the researchers’ questions. The CSR policy of Snickers is not as advanced as Havep’s. For example the company does not independently verify compliance with its CSR policy nor is it engaged in a multi-stakeholder dialogue. In addition, Snickers’ COC only explicitly refers to four of the fundamental ILO labour conventions plus the minimum wage convention. But compared to other selected companies that did not respond this company’s code already stands out. Induyco’s COC is much more complete than that of Snickers. All eight fundamental ILO labour standards are included, except for the convention on working hours. Although Induyco’s code refers to this matter, the company states that working hours have to be in accordance with applicable national legislation. Whereas the working hours convention limits the number of working hours internationally. Also like Havep’s and Snickers’ COC, Induyco’s COC explicitly includes suppliers. Furthermore Induyco’s COC includes some provisions on the use of hazardous substances and the conservation and preservation of nature and the environment. However, unfortunately, the company would not answer questions regarding implementation of its CSR policy nor about monitoring and verification of compliance with its code. Also the company refused to disclose information on its suppliers and clients. Part of Kwintet (Lonneker) is also a member of the Fair Wear Foundation, but the company has not answered the questions from SOMO’s researchers. Furthermore the CSR policy of the holding is rather limited and it is not clear as to whether it applies to suppliers. Based on the findings of the study, one can tentatively conclude that, thus far, CSR is not a matter of priority at most selected companies. This seems a more plausible explanation than the argument that the selected companies do take CSR seriously, but just do not want to tell researchers and consumers Work in progress much about it via websites and/or interviews. Compared to fashion and sport wear companies, it seems clear that, regarding CSR, workwear companies still have a long way to go. Indeed, many high profile fashion and sport wear companies have more substantial CSR policies. Additionally, many of these companies are monitoring compliance with their CSR policies and have suppliers audited by commercial auditors and sometimes independent auditors. To learn about these policies it often suffices to visit their websites. Many positive changes in the fashion and sportswear sector in this respect are undoubtedly the result of media exposure and pressure from NGOs. The absence of these factors in the workwear sector so far might explain why this sector is lagging behind when it comes to CSR.