OVERVIEW
ISSUES OF labor and workers’ rights have been fertile ground for journalists since the 1800s, when thousands of impoverished Europeans and Americans left farm fields for factories. A reporter needs to look no further than the strict rules governing working girls in the Lowell, Massachusetts, textile mills in the 1850s to find antecedents for the regulations issued 150 years later to Asian workers inside foreign-controlled sneaker factories.
Today, the rush toward globalization and the accompanying exodus of jobs from industrialized to developing countries has reestablished labor as a hot-button issue. Indeed, labor is one of the chief ways in which globalization affects developing countries. Many major multinational companies that sell products in consumer economies no longer produce the products that they sell; they have become branding and marketing organizations. They contract and subcontract actual production to manufacturing firms in developing countries, with long supply chains stretching back through numerous middlemen to the production of the raw materials used to make branded goods. The fact that most newly created jobs offer low-wage, labor-intensive employment has become a rallying point for groups in the West concerned about labor conditions in developing countries, some of whom are also resisting the reduction in manufacturing jobs in developed countries. These include protectionists, trade unions, college students, human-rights organizations, environmentalists and, finally, socially concerned consumers who buy the Nestlé chocolate bars made from West African cocoa, Reebok soccer balls stitched in Pakistan, Gap T-shirts sewn by young Guatemalan women, and Nike sneakers glued together in southern China. The outcry against foreign-controlled “sweatshops” has led some corporations to establish codes of conduct for factories in their supply chains and try to monitor conditions in those factories. Others have closed factories and reopened in other countries, taking the jobs with them. Groups working to improve conditions are struggling to find a way to hold private companies accountable for the treatment their workers receive, in much the same way that governments once were held accountable.
When the United States and other industrialized countries undergo an economic downturn, consumer spending and demand for many of those made-anywhere-but-here products is expected to drop. For the workforce in developing countries, that means reduced orders, more factory closings, and higher unemployment. Add to this China’s ascension into the World Trade Organization and its billion-plus supply of low-wage workers and the fact that the Multi-Fiber Arrangement exemption to the WTO rules will expire in 2005, diminishing the special quotas that many countries receive to export their clothing products to the giant U.S. and European markets, and clearly, in an increasingly competitive global marketplace, developing countries will feel continued pressure to damp down both wages and demands for better working conditions as they attempt to hold onto jobs or attract new investment. Impoverished young women will continue to abandon back-breaking work in rice paddies for indoor jobs stitching and gluing sneakers for $1.50 a day. And antisweatshop groups will continue to seek ways to hold companies accountable and responsible for their workers and factories.
THE SHIFTING INVESTMENT CLIMATE: ASIA AT CENTER STAGE
Asia is at the center of the current debate over labor and workers’ rights. More than half of all textiles and apparel produced each year are made in Asia, the majority in China. These low-skill jobs—cutting, stitching, gluing—traditionally pay the lowest wages within the manufacturing sector. And factory wages in some Asian countries are among the lowest in the world, below those in Mexico and Central America. These low-wage jobs disproportionately go to young women. Indeed, as many as 85 percent of the jobs in apparel factories are held by women, most of them between the ages of eighteen and twenty-three. Asia is also home to some of the world’s poorest and most overpopulated countries, including China, Indonesia, and Vietnam. In agrarian countries like these, too many people and not enough arable land lead to high unemployment and social unrest. Cash-strapped governments also desperately need foreign currency. Foreign-controlled factories offer low-skill jobs and cash. The shift in manufacturing jobs from Latin America to Asia has begun to be felt throughout Mexico, for example, where 200,000 jobs are lost every year to Asian manufacturing.
SIDEBAR
In the mid-1990s, Nike was riding high, its signature “swoosh” the epitome of cool. Then, reports emerged that its subcontractors in Asia, particularly in Vietnam, were underpaying and mistreating workers. The outcry turned into a public-relations disaster for Nike, one from which it still has not fully recovered. Human-rights groups, not reporters, were the first to uncover the abuse in Vietnam. Yet reporters and Nike itself should have seen the trouble coming. The case is a textbook example of how one country’s history and culture helped create a hostile environment for a company like Nike.
When Nike arrived in Vietnam in 1995, the country was just emerging from two decades of postwar isolation. Vietnam ranked as one of the world’s poorest and most overpopulated countries. But it had a semiliterate work force that was already earning praise from pioneering foreign investors for diligence. Freedom of association was illegal, meaning workers could not form their own unions or strike at will. And the authoritarian, communist government was eager to manufacture for export. Nike and Vietnam looked like a perfect match. The company quickly became the largest foreign-controlled employer in Vietnam with ten subcontracted factories and 35,000 to 40,000 employees.
Whatwentwrong? Nike made several missteps that helped turn later issues inside factories into full-blown international incidents. For starters, all of Nike’s subcontractors in Vietnam were South Korean and Taiwanese. Yet there are few people more hated by the Vietnamese than the Koreans (who fought with the U.S. in the Vietnam War and were guilty of numerous atrocities in southern Vietnam) and ethnic Chinese (who made up the majority of the boat people driven out of Vietnam in the 1970s and 1980s). The Korean and Taiwanese factory managers quickly gained reputations as harsh managers—an oil-and-water match with young, reticent Vietnamese women from the countryside.
Nor did Nike understand the venerated status of blue-collar “workers” in a communist country like Vietnam, where nearly every propaganda poster features a young male or female member of the proletariat. At the local level, the workers represent the backbone of the Communist Party. When Nike’s subcontractors abused some workers—one was hit with a sneaker, others were made to stand in the noon-day sun or run laps around the plant—the Vietnamese viewed the abuses as an attack on the very heart of their nation.
Nike might have expected that the lack of a free press—common in many developing countries—would keep the problems inside the factories out of the newspapers. But it badly underestimated the survival instinct of the Vietnamese government. The party, under pressure from its population to loosen political and economic control and accelerate reforms, instead found foreign-controlled companies like Nike a perfect distraction from its own internal issues. The government instructed Vietnam’s two most influential labor papers to investigate and attack Nike. The editors, both government appointees, followed through with a vengeance. Nike found itself featured almost daily in the newspapers, stirring further antipathy among the Vietnamese. One labor reporter admitted that his editor was telling him what to write and when to write it. Some of the coverage was at best exaggerated, at worst false. At one point, workers en masse complained to a reporter about the lunch food and demanded the contract go to the government-controlled labor union—a deal worth tens of thousands of dollars. But many foreign reporters picked up the story without noting the controls on the Vietnamese press.
Nike finally got fed up. Its representatives told the Vietnamese government it wanted the attacks ended or it would take the jobs elsewhere. Almost overnight, the critical coverage stopped. Labor reporters said they had been ordered to write only positive stories about Nike. They then turned their attention to the company manufacturing toys for McDonald’s. The problems inside Nike factories continued for another year. But one did not read about them in the Vietnamese press.
In the case of Nike and Vietnam, the country’s historical and political heritage clearly had a significant role in how the story played out.
SIDEBAR
Throughout the 1970s and 1980s, technological innovation, improved transportation systems and infrastructure, political changes, and the rapidly increasing prosperity of a handful of the world’s richest nations led to a rise in the production of goods across the world by workers in poor nations for consumers in wealthy nations. In those richest nations, especially the United States, awareness of these new systems of production and the inequality that came from them gave rise to a new kind of political activism that linked workers, trade unions, community groups, and nongovernmental organizations in developing countries with their increasingly sophisticated and well-organized counterparts in the developed world. Media stories exposing terrible working conditions and blatant injustices in factories producing brand-name goods for multinational companies were often uncovered by local activists and popularized by international groups. By the late 1990s, antisweatshop activism on college campuses and communities across the United States, dovetailing with antiglobalization protests against inequalities in the international distribution of wealth and resources, had made global economic development an issue of public concern.
The multinational companies who found their valuable brand names dragged through the mud of public opinion reacted strongly, if not always constructively. Nike, when accused of sweatshop problems in its subcontractors in Vietnam, Indonesia, and China, initially denied responsibility for labor conditions in the factories. Since Nike did not own the factories, it claimed, it had no control over labor relations; Nike was just a customer of the Asian factory owners. However, with continued public pressure, Nike began to respond by hiring more local staff to mediate with workers and report problems back to the head office. Eventually, Nike became part of the corporate social responsibility effort undertaken by many apparel and footwear companies in the United States.
As part of this effort, many companies have adopted codes of business practice, codes of ethics, or what are most often called “codes of conduct.” These codes spell out the standards for workers that companies promise to uphold throughout their business operations, including in the factories that produce their goods. Most corporate codes of conduct promise to protect what the International Labor Organization calls the four “fundamental” or “core” labor rights. These are: the right to freedom of association and collective bargaining (guaranteeing the right to form independent labor unions); no child labor; no forced labor; and no discrimination with respect to employment. Additionally, most codes promise that workers will receive at least the national minimum wage or “prevailing industry wage” and will be paid for overtime work; codes also usually promise basic health and safety protection and prohibit abuse and harassment. (See, for example, Adidas’s “Standards of Engagement” at http://www.adidas-salomon.com/en/sustainability/coc/default.asp.).
Although many companies have adopted these codes, working conditions in the global garment industry generally remain poor. In many countries, young female garment workers cannot adequately feed and house themselves and their children on the wages they receive. Many still work more hours per week than is legally allowable, without proper overtime pay, in unhealthy and unsafe environments, and are threatened or fired immediately if they complain. Very, very few have access to an independent trade union that can negotiate their contracts or mediate a formal complaint.
Proponents of the codes movement, including many human-rights organizations, consumer groups, and some labor unions, argue that change will happen but that it takes time. While companies might have expected their suppliers to institute fair labor practices just as they instituted quality control mechanisms and other contract demands, they are learning how hard it is to improve conditions in poor countries where managers are scrambling to wring profits from their hardworking labor force. Much more effort is needed to educate workers and managers about codes and standards and to assist them in developing complaint mechanisms, independent workers organizations, and other systems that will lead to improvements.
Additionally, some companies and activists have put effort into developing more comprehensive systems to monitor and enforce their codes of conduct in factories. Some multinational companies have established “compliance” or “human rights” departments that are responsible for checking whether the companies’ codes are respected. This involves monitoring the factories, sometimes by paying independent groups to do the monitoring, and then trying to fix problems when they are found. Companies have also joined external organizations dedicated to this kind of monitoring and improvement. The Fair Labor Association, for example, is a nonprofit organization that monitors factories, as well as evaluating the internal monitoring systems of companies for many shoe and clothing companies, including Nike, Adidas, Reebok, Liz Claiborne, and Nordstrom. Social Accountability International monitors factories and certifies them as complying with labor standards according to an SAI code of conduct called “SA8000,” modeled on the codes of the International Standards Organization. The Ethical Trading initiative, based in the UK, has some European company members and designs individual monitoring processes for companies in different industries—agriculture, textiles, flower-farming—in different countries.
These corporate-responsibility efforts are very much just the first steps toward improving labor conditions in global manufacturing. Eventually, to effect serious and continuous improvement and lift manufacturing workers out of a cycle of poverty and short-term subsistence and to achieve sustainable national development, countries will need to pass and enforce decent labor laws.
The World Bank endorsed the rush to manufacturing in the early 1990s with two comprehensive and widely quoted reports. One report, in 1990, said that labor-intensive growth provided countries with one of the main exits from poverty. The other, “The East Asian Miracle,” published in 1993, largely credited the remarkable economic growth and rise from poverty in eight high-performing Asian countries to a high savings rate and the governments’ decisions to manufacture for export. Emerging countries could look to countries like Japan and Korea, where workers who had once glued together sneakers or plastic toys now held high-skill, high-wage jobs, and see the rewards of manufacturing for export.
In the United States, manufacturing jobs began moving overseas in the 1950s, and that shift accelerated in the 1970s. For instance, in 1972 there were 1.42 million apparel-sector jobs in the United States. By 1996, that number had fallen 41 percent, to 837,000. During the 1990s, trade barriers continued to fall, and once-isolated countries like China and Vietnam began to open for foreign investment. Foreign-controlled companies shifted jobs to Asia to take advantage of low wages and authoritarian regimes that outlawed trade-union activity. Additionally, in 1993, the U.S. Congress passed the North American Free Trade Agreement, removing trade barriers with Canada and Mexico. The earlier rise in manufacturing in Latin America was the result of preferential trade agreements with the United States, such as the Caribbean Basin Initiative and the bilateral General System of Preferences agreements. Five-year studies on the impact of NAFTA estimated that between 200,000 and 500,000 jobs shifted from the United States to Mexico after NAFTA went into effect.
Foreign-controlled companies and their subcontractors also country-shop in Asia for lower wages. Nike is a case in point. In the 1970s, the Beaverton, Oregon, company employed subcontractors based in Japan, South Korea, and Taiwan to make their shoes. In the 1980s, its subcontractors moved to China and Indonesia, which offered lower wages. In the 1990s, Nike began producing in Vietnam and Cambodia, where workers earned thirty cents to one dollar less a day than their counterparts in China and Indonesia. Nike produces its products—not only shoes, but sports gear and clothing—at more than 900 factories around the world, in a long and fast-moving supply chain. Asian countries continue to compete against one another for jobs, a strong incentive to keep wages low and unions at bay.
COVERING WORKERS’ RIGHTS: PITFALLS AND PREJUDICES
A nineteen-year-old girl stands inside a poorly ventilated factory, gluing together 2 of the 150 pieces that make up an athletic shoe. She’ll repeat this same step for the next eight hours, and at day’s end she’ll be paid $1.30 for her work.
The image of young women bonded in sweatshop labor ignites antisweatshop campaigns and stirs consumers to boycott brand names. It is an emotional issue, unlike other business-related issues such as currency controls or privatization, which impact ordinary people in a more obtuse way. But the image is only part of the picture. A reporter needs to leave preconceived ideas and personal prejudices at the factory door when reporting on labor and workers’ rights.
The reality is that many, if not most, workers in foreign-controlled factories desperately want these jobs. Often, the other alternative is seasonal farm work—standing knee deep in muck for long hours every day to bring in the rice harvest. For young women, whose families often leave their meager farm land only to sons, the factories truly are their only route to financial independence. In the poorest countries, such as Cambodia, a factory job can mean the difference between dignity and a life of prostitution. It is imperative for reporters to talk to the workers themselves to find out what their previous lives were like and what their employment alternatives were. It is not a reporter’s job to validate or invalidate the individual feelings of a worker, based on that reporter’s feelings or experiences. In short: if a worker tells you that life in a factory constitutes a better life, then, for her, it does.
TIPS FOR REPORTERS
Who operates the factories? Who is the foreign investor, and who is the subcontractor? What percentage of the subcontractor’s orders are for which companies (for instance, some subcontractors produce only for one company, giving that company virtually complete control over the subcontractor’s factory conditions and regulations)? Does the foreign-controlled company have an on-site representative? What is the country’s minimum wage? What are entry-level workers paid? A reporter should try to see an entry-level worker’s pay stub to determine actual take-home pay. Many companies require automatic deductions for housing, social security, and lunch. How much money does the worker save per month? How much did the worker make in their previous job?
What is the minimum working age in this country? Do workers know of anyone employed at the factory under that age?
What percentage of the workers are women? What percentage of those in supervisory jobs or higher paying jobs are women? What happens when women become pregnant? (In Honduras and Guatemala, female workers in maquilas have been subjected to forced pregnancy tests or asked if they are pregnant during job interviews.) Are there any instances of sexual harassment?
How are workers punished for transgressions?
How many hours and days are in a typical workweek? Is overtime voluntary or required?
Are workers allowed to organize into an independent union? Are they allowed to strike? If there is a union, who picks its leadership, and who does the union report to? Is it government controlled (as is the case in Vietnam and China)? Are any mechanisms in place to respond to problems or complaints? What happens to whistleblowers or workers who file complaints?
Are workers given quotas for production? What happens if they fail to make their quotas?
What safety equipment is issued to workers?
What chemicals are used during processing? Which of these chemicals are in use in industrialized countries? Does the factory use safer, water-based adhesives or more toxic, glue-based adhesives like toluene, which is proven to cause respiratory and brain damage? Occupational health and safety is a technical field requiring extensive expertise: reporters must not assume they can answer these questions themselves. A credible, independent, external source can help assess health and safety conditions in a factory.
Do workers know of anyone who has died at the factory or suffered serious injury? If so, was the victim or her family compensated? Did this conform with national law and company policy?
Has the factory laid off workers? What was the compensation? How did this conform with national law and company policy?
How did the workers land the factory job? Did they have to pay a middle man to procure the placement? Are they in debt to the management, which limits their freedom to leave or complain about unfair conditions? If workers are from another country (e.g., South Asian or Southeast Asian workers in the Middle East, Saipan, Taiwan, or Korea), have their travel documents been confiscated by management, or are they free to leave?
Are workers given opportunities for advancement or skills training?
Does the foreign-controlled company have a code of conduct? Is it visible in the factory?
Who monitors the factory conditions for the foreign-controlled company? Is there an independent auditor? Are outsiders (reporters, human-rights groups) allowed to tour the factory? Have workers met with monitors or a representative from the foreign-controlled company?
Is the foreign-controlled company or source brand a member of the Fair Labor Association, the Ethical Trading Initiative, the Social Accountability International, the World-wide Responsible Apparel Program, or another industry-wide code of conduct program? If not, does the company have its own code of conduct and implementation program (such as Gap, Levi Strauss, or Mattel)? If so, it has probably been visited by external monitors, who may issue periodic reports. It has also agreed to adhere to a code of conduct that includes rules on forced labor, child labor, health and safety, minimum wages, and work hours. Is the company adhering to its own standards as set out in its code of conduct?
How does the factory compare to another foreign-controlled factory manufacturing the same goods? How does it compare to a locally owned factory producing those goods?
LINKS FOR MORE INFORMATION
1. Bartlett, Donald, and James Steel. “Importing Goods, Exporting Jobs.” Philadelphia Inquirer, 9 September 9 1996; and Bartlett, Donald, and James Steel. “Endangered Label, Made in USA.” Philadelphia Inquirer, 10 September 1996.
2. Multistakeholder initiatives bring together companies, nongovernmental organizations, labor unions, and other groups that issue a code of conduct on labor standards and implement a monitoring program. The Fair Labor Association includes North American universities, major footwear and apparel companies (Nike, Reebok, Liz Claiborne, and others), human-rights groups, and others, and it issues public monitoring reports. http://www.fairlabor.org.
3. Ethical Trading Initiative is a UK-based consortium whose members include Chiquita, Marks and Spencer, and NEXT. http://www.ethicaltrade.org.
4. Social Accountability International certifies factories as following a code of conduct. Members include Dole Food, Toys R Us, Eileen Fisher. http://www.sa-intl.org.
5. Worker Rights Consortium investigates allegations of code violations at factories producing for member universities. http://www.workersrights.org.
6. Worldwide Responsible Apparel Production was established by the American Apparel and Footwear Association without civil-society involvement and is considered the weakest of the code initiatives. Members include the Sara Lee Corporation and Osh Kosh B’Gosh. http://www.wrapapparel.org.
7. Human Rights Watch has information in the “Labor and Human Rights” section of its “Global Issues” page. hrw.org.
8. Clean Clothes Campaign is a European-based antisweatshop group that issues reports and urgent appeals on specific cases on its Web site. http://www.cleanclothes.org.
10. Behind the Label is the antisweatshop e-newsletter of the Union of Needletrades, Industrial, and Textile Employees. http://www.behindthelabel.com.
12. International Labour Organization is the specialized UN agency to promote social justice and internationally recognized human and labor rights. http://www.ilo.org.
GLOSSARY
EXPORT-PROCESSING ZONES (in Latin America, maquiladoras or maquilas). This is a term used to describe industrial zones—often with geographic barriers—in which companies manufacture for export with few restrictions and a loose regulatory environment. Often, governments impose few trade or environmental barriers to attract investors to these zones. Some countries do not impose minimum wage laws for foreign-controlled factories inside the zones. Most jobs inside the EPZs are held my women.
GENDER GAP. Women hold most of the low-wage, labor-intensive factory jobs, particularly in the apparel industry where that number is as high as 85 percent. Apparel employers say that they prefer women workers for a variety of reasons: they have smaller fingers and hands than men and thus are more dexterous and better able to do delicate stitching work; they can be paid less than men; and they are less likely to cause unrest within a factory or unionize. At least one human-rights group that focuses on labor rights in China has charged that such hiring is discriminatory and calls for a mandatory increase in the number of male workers at foreign-controlled factories.
LIVING WAGE. Many antisweatshop groups argue that foreign-controlled companies have a corporate responsibility to pay workers in overseas factories a “living wage” that enables those workers to live with dignity. There is wide disagreement, however, on what constitutes a living or dignity wage. Some would include all basic needs, such as housing, food, energy, clothing, health care, education, potable water, childcare, and savings for an average family. Others would include only such essentials as food, water, and housing. Because most workers in low-wage apparel jobs are young, unmarried women, some would calculate a wage based only on an individual’s needs, not a family’s. Advocates generally agree that there is no “one-size-fits-all” global minimum wage because of different standards of livings and costs in different countries.
PROTECTIONISM. When a government places duties or quotas on imports to protect domestic industries from global competition.
SUBCONTRACTOR. Many large apparel companies hire outside contractors to build and operate factories, thus removing themselves from day-to-day operations and, in some cases, responsibility for worker-related issues. The contractors serve as middle men. They take the orders from the foreign-controlled company and hire, pay, and discipline workers. For instance, Nike contracts all of its footwear and apparel manufacturing to subcontractors, most of them Korean and Taiwanese companies that have worked with Nike since the 1960s. Abusive treatment of workers by some subcontractors and a lack of oversight by foreign-controlled companies is a central issue in the debate over workers’ rights.