Trading Away Our Rights - Oxfam International

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EPORT final 19/1/04 10:20 am Page 38Short-term commitmentsIn search of ever-lower costs, better quality, and faster delivery, many retailers and brands,or their mid-chain suppliers, are ready to switch between producers for a better deal.This ‘grazing’, or ‘churn’ in the supply chain, keeps competition high and prices low,but leaves producers in uncertainty. Contracts with producers are sometimes verbaland easily broken if a better deal can be found; buying commitments often go no furtherthan one season or just a few months.Demands for better labour standardsUnder pressure from unions and NGOs to improve labour conditions in their supplychains, many leading brands and retailers adopted ‘codes of conduct’ in the 1990s,with the best of those codes based on international labour standards. Some of theseinitiatives have helped achieve significant improvements, especially in health and safetyconditions. But their approach is too often focused on ensuring compliance at the farmand factory level. What it fails to examine is the role of retailers’ and brands’ ownpurchasing practices – which demand faster turnaround, higher quality, and lowerprices but without long-term commitment – in undermining the ability of farms andfactories to meet labour standards at the same time.International labour standards and codes of conductIn 1998 the International Labour Organizationproduced the Declaration on FundamentalPrinciples and Rights at Work. In thedeclaration, the ILO’s member states agreedthat, regardless of their level of development,they should all respect, promote, and realise:• freedom of association and the effectiverecognition of the right to collectivebargaining;• the elimination of all forms of forced orcompulsory labour;• the effective abolition of child labour;• the elimination of discrimination inrespect of employment and occupation.Together, these are known as core labourstandards. 18If corporate codes of conduct are to beuseful tools for workers’ rights, they must atleast be based on these and otherinternational labour standards, as set out bythe ILO. A good code includes: 19• freedom of association and the right tocollective bargaining are respected;• employment is freely chosen;• child labour is not used;• no discrimination is practised;• working conditions are safe and hygienic;• living wages are paid;• working hours are not excessive;• regular employment is provided;• no harsh or inhumane treatment is allowed.Employers’ strategies down the chainFaced with intense pressures on cost, speed, and quality but without the commitment ofa longer-term supply relationship, many producers down the chain lack themanagement training and tools to handle the pressures effectively – and they rarely getsupport from retailers and brands in doing so. Instead, they pass on the pressuresthrough a mix of the following employment strategies:• Recruiting women and migrants: women are typically perceived to be more careful,more compliant, and cheaper to hire than men. Migrant workers, with fewalternatives to fall back on, often come from impoverished rural areas and solikewise can be paid less.• Hiring short-term: employing workers on temporary contracts or through subcontractors.For the employer, it cuts the cost of benefits, creates a workforceresponsive to fluctuating orders, and discourages union membership.• Putting on the pressure: setting wages, piece-rates, and production targets at levelsthat force workers to put in long hours at high speed to earn enough to live on –while enabling producers to meet tight delivery deadlines at low cost.• Undermining organising: Intimidating unions, firing organisers, or harassing andabusing workers can undermine workers’ efforts to organise and claim their legalrights, so reducing the costs to employers of paying for their rightful benefits.• Looking good: when pressured to meet labour standards, many producers complyonly with the most visible ones. Some fake compliance by falsifying records, hidingtheir use of sub-contractors, and intimidating workers into saying the right thing.As shown in chapters 3 and 4, these employment strategies are being played out timeand again in the fields and factories, workshops and homes found at the end of manyretailers’ and brands’ global supply chains.Governments’ strategies on labour laws and practicesGovernments face a range of choices in how they ensure that their country gains fromtrade. They can raise competitiveness by raising productivity, quality, and delivery.That calls for policies that include promoting education, management and skills training,backward linkages into the economy, and improved transport, communications, andshipping procedures. But these cost money to the State – money that is not coming in whenforeign investors are offered an array of tax exemptions and holidays. An apparently easierstrategy, especially in labour-intensive sectors, is to raise competitiveness by cutting costs:making labour cheaper and more flexible. No need for investors to pay – nor for states,at least in the short term. The resulting costs of precarious employment fall particularly onwomen workers and their families – and create a potential long-term liability for society.3839
EPORT final 19/1/04 10:20 am Page 40Under international conventions, all member states of the International LabourOrganization (ILO) are obligated to respect core labour standards – including the rightof all workers to join unions and bargain collectively with employers. And manycountries have legislation that provides good benefits and protection for workers too.But in practice, many governments, both South and North, fail to respect and enforceboth international conventions on core labour standards and their own national laws.Competing pressures – from trade agreements, from local and foreign investors,and from IMF and World Bank advice and conditions – have led too many governmentsto develop labour laws and practices that put the needs of companies before the rightsof workers.Trade agreements and labour lawsThe International Labour Organization is the natural home of labour rights andprovides a unique tripartite structure which brings together governments, unions,and employers. But 43 out of 177 member nations of the ILO have not yet ratified bothConventions 87 and 98, which assure workers freedom of association and the rightto organise and bargain collectively. And many of those that have done so stillsystematically undermine workers’ organisations in practice. The ILO’s 1998Declaration on Fundamental Principles and Rights at Work obliges all its membersto respect and promote these rights. But naming, shaming, and providing technicalassistance are its most commonly used tools.How to prevent workers’ rights from being eroded by the pressures of trade liberalisationhas been one of the most contentious issues in the debates on globalisation. Some haveproposed adding ‘social clauses’ into World Trade Organisation agreements that wouldoblige member governments to ensure respect for core labour standards or risk acomplaint from a trading partner that could result in WTO-approved trade sanctions.But others – particularly developing-country governments – have opposed the idea,partly out of concern that such a tool could be misused for protectionism, given thecurrent imbalance of power at the WTO. Lacking a global institution that is both trustedand empowered to defend workers’ rights, the debate has been stuck in an impasse.Many regional and bilateral trade agreements have been drawn up in recent yearsand are currently being negotiated between developed and developing countries.The proliferation of such agreements is great cause for concern, because on matterssuch as agriculture, intellectual property, and investment, they do not take developmentneeds sufficiently into account. Moreover, these agreements can increase competitivepressures to weaken workers’ rights, especially when labour standards differ acrosssignatory countries.Some regional agreements contain clauses obliging signatory governments to respectlabour standards, but these vary in their strength and effectiveness. For example,NAFTA, the agreement between the USA, Mexico, and Canada, contains a clause onlabour, but only in a side agreement, and only requires governments to enforce theirown labour laws, instead of meeting internationally agreed standards. The proposedtext for the Free Trade Area of the Americas provides even weaker protection, merelyrequiring countries to ‘strive to ensure’ that their existing labour laws are not relaxed inorder to attract foreign investment. Likewise, labour clauses of varying strengths existin bilateral trade agreements, such as those that the USA has drawn up with Chile andJordan. And the USA and the EU sometimes attach labour conditions in granting tradepreferences to developing countries: the USA, for example, increased quota access forCambodian garments and textiles in 2000 in part as a result of that country’s progressin implementing national labour laws and complying with international core labourstandards.Such clauses in regional, bilateral, and access agreements could potentially play avaluable role in protecting labour rights. But, as with the wider debate on social clauses,there is a need to be cautious if the negotiating power of the parties is highly unequal,and if one party is in a position to dictate terms to the others and extract concessions.Any labour standards provisions in such agreements must be judged on whether theyare a serious attempt to improve working conditions and livelihoods of workers, or arethere for protectionist purposes.Investor pressure: foreign and localThe mobility of foreign investors leads some governments to attract them with a labourforce whose costs and flexibility fit with the demands of global buyers. Sometimes thosedemands are explicit. The American Chamber of Commerce in China claimed, in its2002 white paper, that the costs of labour in China were getting too high in relation tothe rest of Asia, and that the government’s requirements for investors to pay towardssocial protection were unreasonable, complaining that ‘recent legislation requiring aminimum wage and benefits for part-time workers has also placed an additional costburden on employers’. 20Domestic investors depend on staying cheap and flexible in order to keep a place insupply chains. When labour laws clash with the dictates of the global market,many blame the ‘rigidities’ of national laws, not the excessive ‘flexibility’ demandedby retailers’ and brands’ sourcing strategies. According to one Moroccan garmentfactory owner, ‘Our struggle is with the government to be competitive with countries furthereast where salaries are much lower. I place a lot of importance on what clients tell me – I acceptall their pressures.’ 21 Others like him can use their political influence through employers’4041
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Trading Away Our Rights - Oxfam International

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