Social unrest

Hazards 105, January-March 2009

Big business has never been bigger business. Today, 51 of the 100 largest economies in the world are not countries but rather transnational corporations. The 500 largest corporations control 70 per cent of world trade, a third of manufacturing exports, threequarters of trade in commodities, and four-fifths of technical and management services.

There has been a profound shift in manufacturing over the last two decades. Production has shifted from relatively “well regulated,” high wage, often unionised plants in the developed world to very low wage, basically unregulated, non-union plants in the developing world. All of these plants are now competing with one another for maximum competitive advantage in low production costs.

SOLE SURVIVORS  Sports shoe workers in Guangdong Province, China, work on a “lean manufacturing” production line, where they are exposed to the full range of hazards, from airborne chemicals from spray melt, to noise from punch and rivet machines,  and from the production pressures inherent to the bonus system, where pay rates are dependent on the productivity of a work team.
Photo: Garrett Brown

Global manufacturing, especially in consumer goods, consists of long, long production chains that start with the international “brand” which ultimately sells the product, to contractors who operate the factories where the products are made, to sub-contractors and sub-sub-contractors who operate factories producing parts of the final product, to brokers and agents, to industrial homework in workers’ houses. For example, Nike sources its products from more than 700 factories in 52 countries with more than 600,000 workers – but not a single one of these workers works for Nike. Gap sources from 2,000 factories world-wide. Disney has 6,000 licensees with a supply chain of 40,000 factories. Again none of the supply chain workers are employed by Gap or Disney.

Wal-Mart is the 800-pound gorilla, of course, with 62,000 factories worldwide – 20,000
of these in southern China alone – supplying products sold in Wal-Mart stores. Wal-Mart is the indirect employer of millions of workers globally, and is now the largest private sector employer in the United States and the world’s largest retailer.

Wal-Mart’s 2007 sales amounted to $344.9 billion. This is $100 billion more than
Russia’s entire 2007 budget ($206.1 billion) and twice as much as India’s 2007 budget ($154.6 billion). General Electric’s 2007 revenues came to $173 billion, which is greater than the 2007 Gross Domestic Product of Costa Rica, Luxembourg, Syria, Ghana, Sri Lanka and Turkmenistan all combined.

Firms fail on corporate codes

Consumers should know that some high profile brands are failing to live up to their own hype when it comes to corporate social responsibility,the global union representing workers in the clothing, textile and footwear industries has said. Commenting in December 2008, ITGLWF general secretary Neil Kearney said: “Nearly every brand and retailer claims to have their own code of conduct with some suggesting there are as many as 10,000 such codes in existence. But if these codes are not applied they constitute little more than a waste of paper.” 

Among firms criticised by ITGLWF is Swedish home furnishing retailer Ikea. “Ikea is one of the main customers of the Turkish textile company Menderes, yet the retailer has failed to take adequate action to resolve the problems that have arisen at the plant, including the victimisation of union members,” Mr Kearney said.

“In November, a worker was killed in an accident at the plant – the fifth fatal accident at the plant in the past 10 years – highlighting the urgent need for dialogue between the company and the union on a wide range of issues including health and safety”. He added: “Ikea has conducted audits and has encouraged the company to train managers on labour laws, but has done nothing to seek reinstatement for workers who have been dismissed in violation of the right of freedom of association or to create a climate in which workers are free to organise”.

The global union federation has also criticised Wal-Mart, the world’s largest retailer. In January 2009 it asked the company to amend the provisions of its code of conduct relating to working hours, as well as to address allegations that it is allowing its Indonesian suppliers to work up to 18 hours a week more than the legally permitted maximum. Neil Kearney said: “Wal-Mart’s Standards for Suppliers allow workers employed by its suppliers to work up to 72 hours per week, or a maximum of 14 hours a day”. He added: “Fourteen hour work days are abusive. In addition, excessive hours make no sense for the employer as they greatly reduce productivity and diminish quality”.

ITGLWF website: http://www.itglwf.org

The top six transnational corporations in the global economy have annual revenues that are greater than the combined budgets of 64 countries with 58 per cent of the world’s population. They have the resources to influence or even dominate –as we have seen in the US and the UK – political parties and national, regional and local governments. Major corporations can either promote or obstruct new health and safety regulations, and the enforcement of all regulations.

The result is a ferocious competition between corporations roaming the world in search of the lowest possible production costs and the most accommodating governments, at the same time there is a huge labour pool of people who are so desperate for work that they are unable to refuse any worker, no matter how dangerous or unhealthy.

When campaign and advocacy groups and unions highlighted employment and safety abuses in the international supply chains of multinational firms, the companies did respond. Many established ‘corporate social responsibility’ (CSR) programmes involving corporate codes of conduct, in-house monitoring of the codes, third-party or ‘independent’ monitoring of factories, CSR business associations, and multi-stakeholder initiatives involving non-governmental (NGO) and community-based (CBO) organisations. There is now a sizeable global CSR ‘cottage industry’ which now involves literally millions of dollars annually for conferences, magazines, journals, websites, CSR consultants and ‘social auditors’.”

TIJUANA CLASS  Workers in a Maquiladora – a foreign-owned assembly plant - in Tijuana, Mexico, take part in a health and safety training session hosted by a local workers’ centre. Garrett Brown’s US-based Maquiladora Health and Safety Support Network links up with unions and workers’ organisations to provide trainers and medical and safety expertise for events like this in central America and beyond. Photo: Garrett Brown

But fifteen years of CSR has had a limited impact, with sweatshops alive and well throughout the global economy. The balance sheet of 15 years of CSR programmes is only marginal improvements for global supply chains as a whole; uneven, haphazard progress among industry leaders; while the vast majority of transnational corporations have no occupational health and safety (OHS) programmes for their supply chains at all.

A series of reports such as China Labor Watch’s ‘The Long March: Survey and case studies of work injuries in the Pearl River Delta region;’ or China Labour Bulletin’s ‘Bone and blood: The price of coal in China’ reveal how unsafe and unhealthy workplaces persist despite being the subject of years of CSR programmes and code of conduct monitoring.

Nike’s ‘2005-06 Corporate Responsibility’ report indicated the extent to which supplier plants had failed to adhere to the Nike Code of Conduct.

• 50-100 per cent of supplier factories exceeded the hours of work limits in the Nike
Code of Conduct;
• 25-50 per cent of supplier factories exceeded the hours of work limits established
under law in the countries where the plants were located;
• 25-50 per cent of supplier factories had worker reports of physical, verbal and sexual abuse; and
• 10-25 per cent of supplier factories were located in countries where freedom of
association does not legally exit.

Sweatshops are a problem here



Working conditions in Manchester factories supplying clothing to UK retailers, including Primark, represent the import of third world conditions into British workplaces, the global trade union representing workers in sector has claimed.

Commenting on abuses of safety and employment law revealed by the BBC and Observer in January 2009, Neil Kearney said: “Nothing can excuse this disgusting exploitation of vulnerable workers which is more reminiscent of 1909 rather than 2009!”

The general secretary of the Brussels-based International Textile, Garment and Leather Workers’ Federation (ITGLWF) added “the three villains of the piece are the UK government for dismantling effective oversight of workplace conditions, TNS Knitwear and Fashion Waves - the two employers – for grossly exploiting and endangering the lives of their workforce and Primark and other retailers for paying their suppliers prices which preclude decent work and then ignoring the resultant sweatshop consequences including slave wages, excessive hours, dangerous working conditions and other labour scams.”

Mr Kearney added: “Primark claims that these two factories were audited twice in the past year and as recently as December. Missing these sweatshop conditions suggest that either the auditors were blind or Primark simply doesn’t have the management capacity or the will to ensure a clean supply chain.” He said that the company should not ditch the sub-standard suppliers, but should instead make sure all its suppliers clean up their acts. "Primark need to know that ‘cut and run’ is not an option this time. They must keep these orders in Manchester, work with TNS Knitwear and Fashion Wave to remedy the problems and ensure that every worker involved is identified and paid all the earnings, including overtime, out of which they have been cheated since taking up employment with the two companies.”

Mr Kearney also called on the UK government to strengthen its oversight of working conditions, saying “these factories are not alone in mugging and endangering the lives of workforce. Effective labour and factory inspectorates are urgently needed to protect workers across the UK and root out sweatshop conditions.”

Primark website: www.ethicalprimark.co.uk

Nike’s 2007 Corporate Responsibility report focused exclusively on China in the run-up to the Beijing Olympics. The report indicated there were “persistent problems” in all areas, including occupational health and safety, with Chinese supplier factories. This is despite Nike’s CSR efforts over 10 years involving $100 million and a CSR staff of over 100 people worldwide.

Another prominent CSR practitioner in the sports shoe and equipment industry is the German firm Adidas. Adidas’ 2007 CSR report covers its 1,080 factories in 65 countries, 67 per cent of which are in Asia, with 22 per cent of the total in China alone. Adidas’ report indicated that 56 per cent of the non-compliance issues in supplier factories related to occupational health and safety.

A 2006 study by the Investor Responsibility Research Center that found that of 6,000 leading transnational corporations, only 2,000 filed annual CSR reports and only 12 per cent of these had the requirement that their suppliers comply with the corporate code of conduct.

If we can raise awareness, focus on effective strategies, mobilise the necessary political will and resources, then we can bring about a 21st century global OHS that is based on a genuine integration of CSR into sourcing decisions and practices, on support for government efforts to establish a ‘level playing field’ for all, and on workers as informed, empowered and active participants in supply chain plant OHS programmes.

• Garrett Brown co-ordinates the US-based Maquildora Health and Safety Support Network. http://mhssn.igc.org

Genuine worker participation - An indispensable key to effective global OHS, Garrett Brown, 2008 Professional Conference on Industrial Hygiene, November 2008 [pdf].

American Industrial Hygiene Association power point presentation and resource flyer [pdf]

Related resources: Prospect CSR webpages and Negotiator's guide to corporate social responsibility