A publication of the Clean Clothes Campaign 1997

OF RAGS AND RICHES

Contents:

Introduction:

A typical shopping street in the UK: C&A, Marks & Spencer, Next, Debenhams. The advertising, window-displays and clothes are the same. There is a price war on, with each shop attempting to outdo the others with more and better offers. "We have to keep production costs to a minimum", the owners say, "or we'll lose our customers."

One of many factories in the Philippines - 500 women are seated in long rows behind their sewing machines. Boxes are stacked against the wall, ready for shipment to the UK, Belgium, Holland, Germany, the USA... The time is 20.00 and you can see from the boards at the front of every production line that today's `target' has not yet been reached. "The competition is cut-throat," the director assures us. "If we don't work harder, longer and for less money, we lose our clients."1

A worker in the garment industry anywhere in the world today is faced with decreasing wages, deteriorating health, and the increasing risk of losing her job. Consumers, however, can help improve the situation by demanding that the clothes retailers sell are made under good working conditions. Those who buy on behalf of retailers could inspect working conditions when they visit factories. And when selecting suppliers, meeting criteria for good working conditions could be as important as meeting those for quality and delivery times.

But for consumers to be able to make such demands, they need to have access to the right information. Which retailers are the worst offenders when it comes to profiting from poor working conditions? How do they do their buying in? What is the situation for workers in different countries? What steps are trade unions and other organisations taking to improve the situation? What is the balance of power in the industry?

This booklet was written to answer these and other questions.

In chapter one, we take a look at the importance of the market and at where its various stages take place. In the second chapter, we look at the different `players' involved. Large retailers, mail order companies, buying associations, producers and pressure groups all play a role in the British clothes industry. Which are the most important companies and organisations? What is their relationship to one another? In chapter three, we take a look at the relationships between UK retailers here and their Asian producers. How do these relationships work? What does a buyer do? How does a buying house work? How important is quality control? The working conditions portrayed in this booklet leave no doubt as to the need for improvement. In the same chapter, we take a look at what trade unions and women's organisations are doing to improve the situation.

The booklet ends with suggestions as to the role that companies can play to improve working conditions.

*** The information used in this booklet is based on research done by SOMO (Centre for Research on Multinational Corporations) and is part of the European Clean Clothes Campaign, a European project. The Clean Clothes Campaign is supported by a large number of organisations and is active in the Netherlands, Belgium, France, Germany and Great Britain. Its aim is to improve working conditions in the garments industry. To this end, it has developed a code of conduct: the fair trade charter. This charter makes a number of demands based on ILO (International Labour Organisation, a UN body) standards. They are:payment of a living wage

freedom of organisation and collective bargaining

no forced overtime

no discrimination

no child labour

safe and healthy working conditions.

*** In the autumn of 1995, the National Garment Workers Federation (NGWF) of Bangladesh started a campaign for one day off a week under the slogan: "No More Slave Labour - Friday Total Holiday Is A Must." Friday is the national day off in Bangladesh, and all government buildings and shops are closed. Garment factories, however carry on working. The right to Friday off is not only important from a human-rights angle, but also from the point of view of stimulating trade union organisation: people who are always working have no time to become active in trade unions. An earlier campaign was aimed at getting 1 May off as a holiday as 1 May was a national holiday for almost everyone in Bangladesh except the garment workers. After running for about half a year, the campaign was successful in almost all garment factories. The Federation used to make a number of demands simultaneously - it has now found that making one demand at a time is more effective. If and when the 'Friday off' campaign is successful, the next demand may be that wages are paid out before the seventh of the month. Although this is laid down by law, wages in practice are generally paid later: perhaps the tenth or the fifteenth, or in some cases not even until the end of the month. Occasionally, wages are paid out two or three months late.

The level of wages will probably be the focus of the following campaign. The official minimum wage is 930 taka a month (£8.40), but according to the Federation, at least 1,400 taka are needed to cover basic needs for a month. In some cases, wages are lower than 930 taka, in which case a complaint can be lodged with the labour courts or inspectorate. The NGWF has presented the Labour Department with a list of 30 factories which pay less than the minimum wage. This is a symbolic list, as in reality there are many more.

On the issue of health and safety, a case against the government and the employers' association is unfolding in the high court. It aims to force factory owners to provide:

1. Emergency exits

2. Fire extinguishers

3. Sufficient toilets

4. Separate toilets for men and women

5. Fire drills

6. Doctors (the law states that the employer is obliged to provide them)

7. Free medical expenses.

In Bangladesh, one million people work in the garment and textile industry, of whom 90% are women. A large percentage of the clothes produced are exported to Europe.

1. THE MARKET

In 1993, consumers in the UK spent £19.3 billion on clothes. In 1994, this went up to £20.4 billion. The increase is slightly higher than in previous years, even with inflation taken into account. The share of the

household budget spent on clothes and footwear, however, decreased from 6.3% in 1993 to 6.04% in 1994. A further increase in sales, mainly in women's wear, was recorded in the first half of 1995.

Clothes are sold through a variety of distribution channels. The trend is for chain stores (such as Next, Laura Ashley, Top Shop) which have both large and small outlets. Their share of the market is 42% and is increasing by 1% every two years. The market share of department stores is around 30% but decreasing. Independent retailers are losing ground: by 1995, their share was 18%, having decreased steadily over the last few years to the benefit of chain stores. Mail order companies account for 8% of sales decreasing, discount stores for 6% and hypermarkets and supermarkets for 2%.

Production still takes place in the UK, but the middle range of the fashion market is imported from other EU countries, particularly Italy. In the eighties, German wholesalers also became important suppliers.

The lower range of the market is supplied by importers from East Asia. Over the last five years, own labels have also increasingly come from the Far East. NEXT and Burton, for example, are importing more from Asia. In 1995, UK imports from outside the EU amounted to £3.7 billion, whilst those from EU countries came to £1.3 billion. The most important suppliers by country were Hong Kong, India, China, Turkey and Indonesia. UK exports to non-EU countries were worth £898 million in 1995, and to EU countries £1.7 billion in 1994. Much of the latter was re-exporting however. The UK's most important clients are the USA, Japan, Switzerland, Hong Kong and Saudi Arabia.

1.1 The future

Retailers are expected to do more and more of their own buying, rather than buy through warehouses. Warehouses are moving into clothes production and design themselves, whilst producers are getting involved in the trading and marketing of their own products in order to better control their sales network through own shops and franchises.

Over the next ten years, the trend among large retailers will be towards further concentration. This will take the form of takeovers and mergers but also of increased co-operation through, for example, distribution agreements and collective buying. Retailers are becoming increasingly service-oriented and no longer concentrate on the product alone. In ten years' time, competition will be largely determined by price and the quality of service. Good service will depend on better personnel, improving the retailing environment, and gaining a better understanding of the relationship with the customer. These two trends of concentration and service provision will increase the power of the retailer over that of the producer.

Retailers selling only their own labels (Next, C&A) are expected to increase their sales, whilst the market share of labels sold through other retailers (Levi's, Adidas, Nike) is expected to remain the same.

**** A worker in the Philippines works at a factory making shoes for Adidas and Nike among others. She's a stitcher and earns 120 peso (£2.50) a day. There are a number of production bonuses apart from this basic wage. However, these do not provide her with as much as the managers would have us believe when they say that it is possible to double the basic wage with bonuses.

If workers reach their target, they receive a monthly bonus of 25 peso (52p) and a canteen voucher for 11.50 peso (23p). Every two weeks, the best three in the group (of 50 people) are awarded a ticket for the cinema worth 8 pesos (16p). The top worker gets two tickets, whilst the second and third are left to go to the cinema on their own. It is extremely difficult to reach the targets as they are frequently raised. Workers who are never absent, never late, and always work overtime have a chance to be made "worker of the year", a title which earns them a bonus. Besides this, there is a group bonus which is given out on a daily basis: the group which achieves 75% of the target receives 1500 pesos (£31.25) to share between 50 people. Finally, there is a production bonus which is awarded in the form of free time. Working hours are from 7.00 to 20.00, but if the group reaches 75% of the target before 20.00, the workers are allowed to go home, whilst receiving payment until 20.00. If this happens two days running, however, the target is raised.