Shoppers have reason to be confused this holiday season. Sure, most of us are interested in finding a good deal, but the growing awareness of sweatshops and child labor has heightened concerns about how the good we buy are manufactured. What we lack now are clear guideposts to help us make informed decisions about our purchases.
It’s because of such concerns that I became involved in investigating manufacturing practices overseas — in the hope of bringing up to standards that are acceptable to concerned shareholders and company employees. Polls, such as the one conducted in 1996 by Marymount College in Virginia, show that Americans are willing to pay more to be sure that the goods they buy are not produced at the expense of basic human rights.
As any shopper knows, the goods available today in stores — ranging from exclusive boutiques to discount chains — are often made somewhere other than in the United States. But while they label may say “Made in China” — or the Philippines or India — the route that a particular ski jacket, or child’s toy, or woman’s purse takes on its way to the racks and shelves of U.S. retailers is often as complicated and as harrowing as Gulliver’s travels.
Most major merchandisers now use hundreds of suppliers and vendors — so many, in fact, that companies themselves often have little or no knowledge of the exact course of their supply chains. The soles of a particular line of shoes, for example, may be made in China, the laces in the United States and the uppers sewn where the shoe is assembled in Indonesia.
This recent separation of functions has enabled young companies such as 17-year-old Nike to become world industry leaders. Unlike the old days, when companies generally owned their manufacturing facilities, practically anyone today can start or expand a company by contracting out the factory work. Most of hese companies rely upon middlemen — contractors, agents, trading companies and others — to broker or facilitate their overseas operations. It’s a system that allows companies maximum flexibility — with minimum responsibility for what happens in host countries.
Hoping to become long-term suppliers to a big American corporation, foreign manufacturers are often willing to accept deals that foster the abuse of their employees. In many producing countries, wages are set to help local factories attract foreign investment rather than to provide a living wage for workers, the majority of whom are women and young girls. The process begins when the U.S. buyer meets with a broker, say in Hong Kong, and signs a purchase order set at a particular price, The broker then works through yet another set of intermediaries — as many as five or six — who set out in search of a factory that will meet the contracted price. So most buyers for U.S. companies will not even have visited an overseas factory before placing an order.
To further complicate matters — and confuse consumers — add to this the phenomenon known as “triangle manufacturing.” Contractors in economies that expanded rapidly such Hong Kong, Taiwan, Singapore and South Korea shirt their most labor intensive production into even lower-wage nations such as the Philippines, Malaysia, Indonesia, Vietnam and China as well as Central American, Caribbean and Eastern European countries.
Firms in Hong Kong, fore example, have been relocating across the border to Guangdong province in China since the 1980s. Today, more than 3 million people in Guangdong work exclusively for Hong Kong firms. South Korea has focused more on Indonesia, Guatemala and the Dominican Republic, while Singapore firms have become leading investors in Malaysia.
Although some companies claim to care about the conditions of their workers, most don’t do much to follow through. “These [multinational] companies adopt codes of conduct, some of them in very nice language, but then they negotiate deals which make it impossible for their contractors to honor the codes,” says Neil Kearney of the Belgium-based International Textiles, Garment and Leather Workers Federation. “The companies say to the contractor, ‘Please allow for freedom of association, pay a decent wage.’ But then they say, ‘We will pay you 87 cents to produce each shirt.’ This includes the wage, fabric, everything.”
Sparked in part by increase public concern, and in part by the headline-making revelation that Kathie Lee Gifford’s apparel line was being produced in sweatshops overseas, a growing number of companies have begun looking more carefully at their production operations. When Verite began doing business three years ago, we were routinely shunted off to the public relations departments at major apparel companies. But as consumer awareness has grown, companies have realized that staying alert to how and where their products are made can actually pay off. Today, monitoring labor conditions has moved from the PR realm to the bottom line. Reflecting this trend, a few companies have joined a White House task force, the Apparel Industry Partnership (AIP), which was launched in 1996 in the hope of establishing new ways to address unfair labor practices.
That group’s recently released “code of conduct” is a step toward ensuring that the factories that manufacture goods for U.S. companies will be prohibited from using child or forced labor, required to abide by a maximum 60-hour workweek, and to pay whichever is higher — the local minimum wage or the prevailing industry wage. Unfortunately, the move is more symbol than substance.
What we’ve learned at Verite is that effective monitoring takes much more than a perfunctory tour of the factory floor. We have to engage the help fo local advocates and non-governmental organizations (NGOs) who have gained the trust of workers who might otherwise be wary of losing their jobs by sharing information with outsiders from the United States.
We’ve developed a network of coordinators and factory auditors around the world and have now conducted inspections in 30 countries. These factory inspections — from Saipan to El Salvador — have demonstrated that 80 percent of factories that claim to abide by their U.S. clients’ codes of conduct, don’t. Consider this: In China, where the average wage is 30 cents per hour, the highest overtime wage paid to workers in factories we inspected in 1997 that claimed to be complying with these codes of conduct was just 4 cents an hour.
As discouraging as those results are, we’ve been able to have a positive impact by identifying and responding to problems — even those that appear to be minor. In several Asian countries, we’ve helped obtain fire safety equipment and trained workers how to use it; elsewhere, we’ve made sure stools are provided for workers who used to stand for eight-hour shifts.
Major problems — compulsory overtime (forced labor), workers being locked inside factories, physical abuse and working several hours a day unpaid — are much more difficult to identify and correct. Bringing about change involves close scrutiny, factory by factory, listening to workers and maintaining a presence to ensure that the improvements they need are actually made.
Our findings at one factory in Saipan, where we discovered that workers were living in spaces smaller than allowed in U.S. federal prisons, led to the construction of additional buildings to house workers. At another, in India, our interviews with women workers revealed that many of them would faint before their lunch breaks because most of them came to work without having eaten breakfast. The simple remedy we suggested was to introduce a morning tea break with snacks, and follow-up inspections have show that the problem has abated.
For the AIP agreement and other monitoring efforts to bring about real change — as well as provide real guidance for consumers — we must develop much stronger criteria for how private monitoring firms conduct their investigations. All to often these firms are branches of the manufacturers’ accounting firm and have no training in oversight and investigation of work practices. Most of these private firms do not interview workers in private, or at off-site locations, for example, where they can speak candidly. Without that sort of attention to detail, it is easy to overlook a host of abuses, such as overly long work hours and “piece” rates that violate minimum-wage laws. Workers need access to monitors they trust and who will transmit the workers’ reports back to U.S. manufacturers accurately.
In addition, the whole process needs aggressive monitoring. Under the AIP code of conduct, companies can be certified “sweatshop free” by monitoring conditions at as few as 10 percent of their subcontractors. But the vast web of global manufacturing demands much more to provide a meaningful review — ideally 75 percent. In the age of global manufacturing, merchandisers should be responsible for which factories produce their products and under what conditions. Acquiring this information should be considered part of the normal course of doing business.
Americans don’t want the imported products they buy to come as the result of abusive and unfair labor practices overseas. Consumers must keep up the call to action, but it is only the companies that can make exploitative labor practices truly a thing of the past — one factory at a time.
Heather Hiam-White is executive director of Verite, a nonprofit organization based in Amherst, Mass., that provides independent monitoring form manufacturers worldwide.