(From CCC newsletter 11 july 99)

Inside Bulgaria

In April 1999 the Clean Clothes Campaign took the next step in its project on garment production in Central and Eastern Europe. A researcher from the German CCC returned to Bulgaria for the third time, visiting five factories and conducting a workshop with Bulgarian unions and NGOs.

Scope of the research

All five of the factories visited employed between 150 and 300 people. One was a former state-owned facility located in Sofia, the capital city, another was situated in a small town in the center of the country, and the other three were located along the Greek border. The research included in-depth interviews with 13 shop stewards and an interview with the director of a major Bulgarian knitwear and sportswear trading company. This trading agency also owns five textile factories, and the researcher visited their facility in Sofia. Most of the factories produce mainly for German clients and buyers, for example Adidas, C&A/Germany, PUMA, and Karstadt. Apart from the Sofia factory, the other factories visited utilized the "lohn system" -- outward processing trade. This means that the foreign buyer delivers all materials to the producer, who only provides the labour and the workplace, after which the buyer re-imports the finished merchandise.

General situation

Considering the experience gained during two earlier visits to Bulgaria, as well as long-term contacts with Bulgarians, the most striking impression was that Bulgarians do not any longer crack so many jokes. Managers were more reluctant to answer questions; they do not allow anybody to visit their factory unescorted. Workers, meanwhile, were extremely nervous and suspicious when faced with questions. Workers in the formerly state-owned factory displayed an almost hostile reaction to questions, which the researcher found to be unusual in her experience.

There were considerable contradictions between the statements of managers and those made by workers on such issues as wages and the percentage of seamstresses who meet quotas within regular working hours. The standard answer of managers concerning the wages in their factories was 200 DM. This response is similar to that of Romanian managers (see Made in Eastern Europe, the 1998 CCC research report on Romania, Poland, and Bulgaria). When workers are asked to respond anonymously, with nobody from factory management present, they say they earn between 75 and 215 DM, but the majority reported between 120 and 150 DM. This is still the lowest industrial wage. During bad times when quotas are not met or orders are smaller and fewer, wages can be reduced by as much as 50%. According to a report from a trade unionist, this was the case for instance at a supplier factory for the Steilmann Group. In the factory where one of the witnesses who testified at the International Forum on Clean Clothes in 1998 was employed, management dismissed 400 of the 1000 employees and reduced working hours to six per day.

Anticipating gloomy perspectives was the only common opinion held by those interviewed. Why? The first reason is the war in Yugoslavia. It makes traders and investors think twice about whether to have business relations with a country so near a conflict area. Transportation costs have already doubled due to the detour through Romania. Secondly, there is pressure to adjust to the criteria for EU membership. When the existing labour law is harmonized, the laws concerning paid maternity leave with job security, for example, will be much weaker. Now after the employers and foreign investors associations have lobbied their proposals for harmonization of the labour and social security laws, the trade unions are working on their own proposal. The third reason for a gloomy future is recession and stagnating demand in main export markets, namely Western Europe. As far as we know, at least 95% of garment factory production is exported. Germany has become the biggest export market, along with Italy and Russia -- each receiving approximately 9% of exports. In 1997 61% of exports to Germany consisted of end products, and those mainly being garments. The last reason: the crises in Russia. Russia accounts for 9% of Bulgaria's exports and 37% of imports (1997). Note that a big percentage of trade with Russia is done informally. The informal sector is estimated at 50% of the GDP. But in the case of Russia it is definitely even higher. Bulgaria is still Russia's strongest partner within the former Eastern block and has the best relations to Russia. That is why Bulgaria was hit hardest by the crises in Russia. This includes garment exports to Russia.

Working conditions

This gloomy picture does not seem to be justified however if one looks at the 1998 figures of the German garment imports out of outward processing trade (lohn system). Bulgaria achieved an increase of 16.3% and ranks 12th -- higher than countries like Greece and China! It is argued that an increase in production costs will drive garment producers out of Bulgaria. But the Polish example does not prove this at all. Despite an 11% increase in wages, Poland increased its garment exports to Germany under the lohn system by 7.7% and is by far the leading exporter to Germany in this trade. In fact it is partly due to the increase in wages that Poland performs better. Still all the factors mentioned above are used by the sourcing companies and employers to increase pressure on seamstresses. Reports that had previously originated from garment factories in Asia or Central America are now also heard in Bulgaria: Workers are locked in until they finish their quota; there is a black (accurate) and an official payroll to circumvent social security expenses; workers are verbally abused; rooms are dark, cold, and noisy; and there is excessive unpaid overtime. There were no trade unions in any of the factories visited.

The public labour inspectorate theoretically has some power to act but in reality cannot do much. Some inspectors even complain that they themselves and their families are threatened by employers.

The factories visited belong to three problem areas of Bulgarian garment production: (former) state-owned companies; factories near the Greek border; and factories in an area with high unemployment. First, the former state-owned factories. Approximately 50% of state property has now been privatized. In the garment sector the majority of the state-owned companies are either privatized or closed. At the factory visited in Sofia the machinery is rented from and is situated on the premises of a formerly state-owned factory which has filed for bankruptcy. This textile and garment factory is extremely run down. For example, dates of the last inspection of the fire extinguishers were not readable. Once this factory employed approximately 600 people, now there are 250. Clients included PUMA, Reebok, Adidas, Quelle Versand, C&A, and Masterpiece, as well as British and German football teams. In 1996/1997 the shop stewards of the two big trade unions were illegally dismissed. They won their case but hesitated to go back into a hostile atmosphere.

A similar report came from a factory near the Greek border where a shop steward was dismissed and came back with the regional leadership of the union, but the workers pretended not to know her. This leads us to the second problem area of the Bulgarian garment production which is situated near the southern borders to Greece and Turkey. Greek managers shift their production to the neighboring country where, one manager reported, they pay only half the price for an available and well-qualified labour force. In some areas women workers from the Turkish/Moslem minority population provide an even cheaper female labour pool.

According to a trade unionist report the union and the labour inspectorate undertook a visit to a factory about which they had received many complaints. Management refused to let them in for a week. In these areas most men are unemployed, while women work in the garment production. Families only survive due to backyard agriculture. Still unemployment is not as high as in central Bulgaria -- the third problem area. On average the rate of registered unemployment was 11% in 1998. Among those unemployed 74% were long-term unemployed (December, 1988). ILO 1997 estimates placed 65.5% of the population below the relative poverty line of approximately 95 DM per month. The minimum wage was 53 DM in September 1998 (Romania: 120 DM). Now it is 75 DM, which is still below the poverty line. The average cost of living for a family of four accounted for 880 DM with an increasing share spent for food (now 50%)! If this is the average the situation in the central areas is even worse.


NGO/Trade Union Workshop

Together with the German union IG Metall (which includes the union of garment workers) a workshop . was held on globalization in the garment industry and codes of conduct. Twenty-six union activists (regional coordinators and shop stewards, for example) and two women from NGOs specializing on occupational health and safety participated. Much material, including the CCC Code of Labour Practices, was circulated. The unionists reacted cautiously but with interest. Their discussions and reports were very lively. The NGO representatives were very interested in further cooperation. The vice-president of the largest Bulgarian trade union confederation (CITUB) made a presentation on his experiences in international union work, particularly in dealing with multinationals. He said that codes of conduct will become our strongest weapons and encouraged the trade unionists to explore the possibilities of international work.

Accomplishments and plans for the future

With this trip the CCC aimed to follow up on cases which had been made public by gaining more insight into factory conditions and the overall situation in the Bulgarian garment industry. Relations between the two biggest Bulgarian unions and with NGOs were further developed. Policies and positions were clarified, better establishing a common ground for future cooperation.

It was decided that the unions will make efforts to train their shop stewards about the objectives and instruments of the CCC and the possibilities of codes of conduct, particularly the CCC's Code of Labour Practices. The NGOs agreed to use their media contacts to get more coverage of the situation in the garment industry. Furthermore, NGOs also agreed to begin consumer awareness raising and will utilize translations of German CCC materials.