Supply Chain Human Rights in Clothing Retailers
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The present report is about the Importance of upholding human standards of the workers both inside and outside their home countries in the large clothing retailers. Human rights still remain to be one of the most challenging issues all over the world because of international variations in politics, history, social and cultural differences. The implementation of human rights, however, does not go unexcused in any place of situation regardless of the circumstances. Upholding of human rights is very important and it is the fundamental right of every human being.
This report specifically focused on the Clothing Retailers operating in the United Kingdom. These include: Nike, Gap, Levi Strauss and Marks and Spencer. The task of this report was to examine how these multinational firms uphold human rights in their operations all over the world.
The report has found out that among other factors, globalisation also contributed to a great extent for international firms to violate human rights. In the 1980s, shaped by globalization, clothing retailers and brand manufacturers were forced to source their produce and manufactured goods from low-wage, economically less developed countries. These less developed countries were in most cases characterised by child labour, sexual harassment, and intolerable working conditions. Global awareness about inhuman conditions in working places drew together voices of numerous activists from all over the world to divert the trend.
During the 1970s, various national and multinational organization, Non governmental organization and trade unions accused these clothing retailers companies for violating human rights. These multinational companies were specifically blamed for their failure to put into consideration the economic level of less developed countries in which they operated. This criticism led to establishment of voluntary labour codes by these companies in an effort to uphold their image. Most of these voluntary labour codes adopted principles in the International Labour Organization (ILO) Conventions.
Among other things, this report examines the historical aspect of clothing retailers and the challenges involved in upholding human rights in their supply chain production. The report further examines the role played by these clothing retailers in upholding human rights in their operations all over the world.
1. BACKGROUND INFORMATION
Human rights or sometimes referred to as natural rights are free and fundamental liberties entitled to an individual without the interference from any government or group of people for whatever reasons. A person's civil liberties are protected by the constitutions that define them and the organizations that exist to promote them. Under any circumstances the implementation of human rights does not go unexcused in any place or situation. Every individual regardless of his/her social economic status deserves to be treated with dignity. But due to rapid economic development, multinational companies are becoming more susceptible to violating human rights because of increasing international competition, undistributed wealth, and weak national laws (Krage, 2007).
The World Commission on the Social Dimension of Globalization (2004) in one of its reports indicated that the global economy is changing in many ways. These massive changes affect multinational investment, capital markets, technology and business, more specifically impacting companies, consumers, workers and governments. The report further concludes that globalization has led to interdependence in economic relations that has created more opportunities for the advancement in business, investment, finance, organization of global production, and also more social and political interaction between organizations and individual around the world (World Commission on the Social Dimension of Globalization, 2004). It is unfortunate that not all countries are developing with the same pace and outcomes. Some countries specifically the developing countries, cannot utilize these rapidly growing expansion to their advantages (Misol, 2006). For example, there are plenty of evidences that increasing global competition puts worker's human rights in jeopardy because company protection standards are lowered and an employee's civil liberties are often denied (Christerson and Applelbaum, 1995; Hathcote and Nam, 1999).
In the 1970s, considerable criticism was raised against multinational companies regarding their operations in less developed countries. Nongovernmental organizations, national and international trade unions and many host countries raised concern that these multinational companies carried out their activities without giving any considerable and attention to host countries where they subcontracting or outsourcing their clothing factories to the economic and social development of those countries. This endless criticism by a number of activists from all over parts of the world led to the establishment of voluntary labour codes of conduct by these multinational companies (White and Taft, 2004).
This report therefore is a result of the search of literature review regarding the upholding of human rights standards by large clothing retailers in their day to day operations, both within their countries of origin and overseas.
1.2 Aims and Objectives
The general aim of this report is to examine the trend of large clothing retailers in upholding human rights in their operations with particular emphasis to those operating in the United Kingdom. These multinational large clothing retailers in question are: Nike, Gap, Marks & Spencer and Levi Straus.
To realize the desired aim, the report focused on the following objectives:
· To explore the historical background with regard to textile sector and their compliance to human rights.
· To examine the rise of the ethical business and the effects of Voluntary Labour Standards (Codes of Conduct) in the textile industry.
· To examine the role played by these multinational large clothing retailers in upholding human rights as well as challenges facing them.
2. LITERATURE REVIEW, ANALYSIS AND DISCUSSION
2.1 LITERATURE REVIEW
2.1.1 Human Rights, Ethics and Business Ethics defined
Human rights, ethics and business ethics defined in differently ways by different authors and all the definitions in the essence of the same thing. According to Rory Sullivan, he define Human rights as a moral right that apply to all employees in all nations regardless and acknowledge and protects those rights in the sense that human right are said to be unchangeable. On the other hand, Boddy (2005) argues that human rights means the idea that people have fundamental rights and liberties, and affected, those rights include consent, privacy, conscience, free speech, fair treatment and to life and safe. Similarly, the United National Universal Declaration for Human Rights (UDHR) defines human rights as a way of the incorporated economic, social cultural rights, such as right to work, right for educations, respect for their culture and a decent standard of living (Rude Mares). Crane (2007) refers as the ethics as the study of morality and the application of reason to explain special rules and principles that determine right and wrong for a given situation at given time, those rules and doctrine are called ethical theories.
However Fritz et al, (1999), and Hunt et al (1989) define ethical company as the conduct of conduct which are positively related to employee's organizational commitment. Boddy (2005) define ethics as code of right principles and values that guide the actions of people and groups through set standard of the behaviour which is acceptable, especially when an action or decision can harm others. Taylor (1975) define business ethics as the business environment and basis of right decision, principles, and set of laws of the ways of carrying out the businesses activities between different parties within the organization, such as employees, customers, suppliers and the shareholders in the determination of the what is right or wrong to all parties. White and Taft (2004) indicate that ethics have been divided into two main categories, namely: teleological and deontological. With teleological ethics the emphasis is on the consequences or results of actions. This approach to ethics takes no account of whether actions are rights or wrong but rather depends on whether harm or good results from the action. On the other hand, the teleological theories, includes utilitarianism, egoism, and care. The essence of the approach maintain that acts do not have intrinsic value but should be evaluated on the basis of the actions they produce and their effects others.
The utilitarianism approach is based on the early ideas from Jeremy Bentham's belief in empiricism and that of John Stuart Mill in the 18th - century (Rosenstad, 1997; Velasquez, 1998). Utilitarianism takes a societal perspective on costs and benefits of ethical choice, indicating that any action should be evaluated in terms of its consequences. The idea is to determine how much good or harm it causes and the effects it impart on all parties. Utilitarianism is thus meant to promote the welfare of all persons by minimizing harm and maximizing benefits. This approach gives much attention to achieving desirable effects to many people taking into consideration human rights. The recent United States health care policy is seen as one of the utilitarian-driven public policy decision, in which the change is geared to a system that provides fundamental health and illness services to everyone.
With deontological approach to ethics, White and Taft (2004) explain that an action or a decision in itself has intrinsically good or bad (or right or wrong) and thus it can't be judged by the mere results. Rights, justice, fairness, truth-telling, and virtue ethics form the deontological approach of reasoning. For example, a moral person would based on what is rights to her or him in making an ethical decision, putting into consideration the moral principles, rules or regulations, regardless of the circumstances of results.
2.1.2 Sourcing in the Textile Industry
Christerson and Appelbaum, (1995) pointed that during the nineties there was a massive shift in the manufacturing of clothing to low wage countries throughout the world. International companies sourced products internationally in order to achieve a cost advantage. Traditionally, the framework of competition in the textile/clothing sector is described by dividing operators into two different strategic groups in terms of production management models. Firstly, there is a group identifiable as clothing operators (either manufactures or retailers). This group is primarily concerned with designing, modelling, forecasting and contributing to the development of fashion trends. Firms in this category are busy working on marketing strategies of product designed and proposed long before the actual time of consumption. The second group includes firms that compete with one another on the basis of their ability to adjust to the fashion trends imposed by others. By doing this they ensure speed and reliability to their already secured markets. These firms compensate for the lack of product planning by virtue of a production management model whose main characteristics are rapidity and flexibility. The two groups, therefore, have different factors that lie behind their success. In the first group, priority in their operations is to make sure that they have good command and influence fashion trends associated with a strong brand image. In the second group, the emphasis is on effective marketing strategies (Hathcote and Nam, 1999).
Stiff competition, shaped by globalization, clothing retailers and brand manufacturers were forced to sourced their produce and manufactured goods to low-wage, economically less developed countries (Crewe, 2004; Klein, 2000). Consequently the late 1980s and early 1990s saw traditional European and U.S. based garment and footwear companies start off shoring and outsourcing much of their production from developing countries (Jones, 2005). This trend was particularly visible in low-skilled industries, such as the garment, footwear, and toy industries (Christerson and Appelbaum, 1995; Hathcote and Nam, 1999).
Under conditions of competition, individuals cannot comply with moral norms. This leads to higher costs which in turn leave them worse off than their competitors. Situations like this systematically lead to an erosion of compliance with moral norms. Via evolution, individuals behaving 'morally' will be signed out. Karl Marx and Max Weber saw this problem clearly. Both pointed out that competitive market makes it impossible for single individuals to follow the calls of morality and self-interest at the same time. The structures of society have changed in modern times, but ethical concepts and categories have - at least to a large extent - not changed. Most conceptions of ethics still require us to be moderate, to share, to redistribute, to sacrifice. They call for altruism, for the priority of common good and the like. The pursuit of self interest, of individual advantages, is often still ultimately seen as something like and evil drive that needs to be tamed (Christoph, 2005).
Globalization has therefore been one of the factors for previous human rights violations in many multinational companies (Misol, 2006). Ambitious to mass super profits, these multinational companies embarked on child labour exploitation, suppression of labour rights in their supply chains. This led to persistence public outcry that helped to amplify global awareness about the injustices and human rights violations done by multinational companies in their chain supply production.
2.1.3 The Rise of Ethical Business and Corporate Social Responsibility
There is a wide spread attention and interest in self-regulation, corporate social responsibility that continually press many companies to adhere to human rights in their operations. Ethical business, involving corporate codes of conduct for worker welfare and environmental protection, it is a subject that has attracted significant interest from academicians, the media and nongovernmental organizations (NGOs) for many years now (Hughes, 2005). (Crane et al 2007) indicate how the importance of business ethics it is, in attracting different massive amount attention for various people example the shouter of the consumers and pressure groups that appearing to have an increasing of the challenging the firms in the asking of the more ethical and reasonably ways of doing business.
Ethical business has emerged since the early 1990s as a specific example of corporate social responsibility, most commonly involving the establishment of minimum labour standards for producers in supply chains (Hathcote and Nam, 1999). Blowfield (1999), however, highlights that the issue of ethical business is broadened to incorporate a wider range of standards, including those concerned with the environment. Furthermore corporate social responsibility stand in the implementation for set core values that includes avoiding human rights abuses, upholding the right for the workers to join or form labour unions, elimination of compulsory and child labour and avoiding workplace discrimination (Cavusgil, Knight and Riesenberger 2008)
However people like the later Rev. Leon Sullivan had been much concerned about code of conduct of human rights in workplace and in 1999, he developed a set of guidelines for corporate social responsibility, he argue that for the companies operations around the world should support and follow the Global Sullivan of corporate social responsibility. The aim and objectives was to maintain economic, social, and political justice by companies where they are doing business, to support human rights and to encourage equal opportunity at all levels of employment in developed and developing countries (www.thesullivanfoundation.org).
Concerns in the early 1990s over child labour, physical and verbal abuse and violations of core labour rights in the production of toys, soccer balls, rugs, and garments marked the beginning of a wave of anti-sweatshop protests and media campaigns (Varley, 1998). Some of the earliest campaigns focused on production in China - for companies like Levi Strauss and others, where the Tiananmen Square massacre in 1989 and U.S.-China trade negotiations drew special attention to human rights abuses. Bonacich and Appelbaum (2000) mentioned other anti-sweatshop protests that brought remarkable attention regarding human rights violations were those that showed child labour in the production of soccer balls in Pakistan, rugs in India, and garments in Bangladesh and Honduras. One of the most dramatic early sweatshop scandals occurred in the U.S, in the Los Angeles, California suburb of EI Monte. It was there, in 1995, that government inspectors discovered Thai immigrants working as indentured servants in an apartment complex, sewing garments to be sold by major retailers, including Montgomery Ward, Target, and Sears (Su 1997). The next year, labour rights activists brought sweatshops further into the American media spotlight, by exposing child labour in a Honduran factory producing Kathie Lee Gifford's line of clothing for Wal-Mart, as well as a New York City sweatshop also producing Kathie Lee Gifford's brand (Bonacich and Appelbaum 2000). Further to this, the suppression of labour rights in Indonesia, El Salvador, and several shocking instances of physical abuse in other parts of the developing world raised concern.
In the early 1990s activists first accused footwear companies like Nike, Wal-Mart, and the Gap of profiting from exploitation, child labour, and the suppression of labour rights in their supply chains. These companies, however, responded by denying the responsibility (Hughes, 2005). According to Cavusgil, Knight and Riesenberger (2008) activists also accused International business specifically in the case of the multinational companies for ignores human rights by exploited workers around the world mostly in labour standard; low wages factories in developing countries by create substandard working conditions, example for the sweatshops in Asia where they imported clothing and auto workers in Mexico.
Jenkins et al (2002) argue that the rise of voluntary corporate code of conduct in the 1990s can be linked to some extent to the processes of globalization. They mention the specific drivers of voluntary ethical trading initiatives as being: a) the growth of global supply chains that extend beyond the reach of national governments; b) the rise in the power of corporate brands and reputation, which makes large companies vulnerable to negative publicity; c) an increase in public awareness of overseas production conditions via improvements in global communications; and d) the growing importance to the investment community of ethical performance on the part of public companies.
Furthermore, there were various initiatives concerned with labour and environmental issues that were categorized as ethical business. These included: (1) Multistakeholder organizations such as the UK Ethical Trading Initiative (ETI), the Dutch Fair Wear Foundation, and the Fair Labour Association and Worker Rights Consortium in the USA, which all set minimum labour standards for producers; (2) labelling initiatives such as the Kenya Flower Council, which cover industry-specific environmental and labour standards; (3) individual corporate initiatives for establishing minimum standards in supply chains (Blowfield, 1999).
These early initiatives were among the significant steps in promoting ethical business. Blowfield (1999) and Jenkins et al, (2002) argue that these initiatives also developed within the context of the United Nations Global Compact such as international standards which aimed to promote corporate citizenship in the global economy. Despite the organizational differences between existing ethical trading initiatives, most companies used some kind of code of conduct as the key tool for establishing workplace standards.
2.1.4 Voluntary Labour Standards (Codes of Conduct)
Pressures on multinational companies by anti-sweatshop groups, labour unions, shareholders, activists, and consumer groups played an important role for companies to adopt labour standards. 'Standards' refer with corporate code standard mention International by ILO (International Labour Organization) to the extent to which is explicitly or implicitly can either be done through the inclusion of the basic provisions of international organizations' in the corporate codes standards (Van Tulder & Kolk, 2002).
Similarly, there were also greater pressures from governmental campaigns all over the world. Where in European countries, some of the government such as France were be advocating for greater attention to human rights in the sphere of international business. Along with such efforts from various countries, the European Commission had been carried out a research in the international subcontracting companies' about the social aspect of textile clothing and footwear firms. Aiming to the extent in which the researches discover that these multinational companies adhered to human rights in their operations (Kolk and van Tulder, 2002).
In 1996, President Clinton Launched the White House Apparel Industry on Workplace Standard (AIP), he launched the AIP after seen the violation of human rights in the clothing industries by multinational companies, the aim was to established standards and to ensure apparel and footwear were not made under sweatshops working conditions (Meyer and De Wit (2004). Due to the human right violation in textiles sectors precisely in the sweatshops conditions, The Clinton Administration established campaign against sweatshops in the clothing Textiles worked under sweatshops conditions in USA, the campaign was called No-Sweat and was introduced for the purpose fighting against sweatshops in which resulted to establishment of the Trendsetter List of companies in the Textiles Clothing and Footwear Factories. The campaign was aiming for the Clothing Textiles Factories to respect human rights and labour legislation in the production and marketing activities of the clothing and footwear in general, to make sure that both the clothing companies and their subcontracting companies as are, they must significant put into consideration and respecting these rights. The lack of the about not respect the rights, a number of labour legislation and human rights had been identified by the Department of Labour in the Textiles Clothing and Footwear factories, in subcontracting in particular of apparel production, facing the multinational companies, that was exploitation with a number of cases involving in human rights particularly the immigrant workers in sweatshops established on the United States regional, took steps to clean up the sectors.
However, United States boundary put up on the sweatshops issue, took up steps to clean the sector (Elliot and Freeman (2001). Specifically in the area of child labour and, for example, the United States Government took a number of steps to alleviate the problems. Between 1994 and 1996 because of the important of the issue, the Bureau of International Labour affairs managed to organize three public gatherings to have views on child labour. These public platforms brought together a number of activists and the public at large to discuss various issues related to child labour. Specifically, they focused on the worst conditions of child abuse in the less developed countries that they exported products to the United States. A number of resolutions were made but all geared to put to end the merciless violations of human rights and child labour (Elliot and Freeman (2001).
The Association of the Clothing Manufacturers of the USA and the Amalgamated Clothing Textiles Workers' Union in 1995 agreed to have a National Branch for Collective Agreement. The agreement among other things included: the need to establish minimum standards regarding number of working hours, wages, and working conditions. In addition, the agreement also focused on a number of issues ranging from non-intolerance forced work, child employee, liberty of association, to occupational safety and health (White and Taft, 2004; and Giwerth, 1982). This was a trend in many parts of the world. Several national and multinational organizations and trade unions endeavoured to draw attention to respect human rights. Pressures from activities increased the formation of human rights association and in 1998 established of the Fair Labour Associations (FLA) to the overseas compliance, the Workplace Code of Conduct. The goals of Fair Labour Association (FLA) were for the companies required to monitor their own factories and their subcontractors to make sure there is compliance of the Code of Conduct in the textile factories (Meyer and De Wit, 2004).
Klein (1999) pointed out that many firms had invested heavily in branding and reputation capital and therefore any high profile scandals and political pressures could tarnish their reputation. In the face of such pressure, it was not surprising that firms adopted voluntary standards to try to deflect criticism, pre-empt regulation, and signal their social responsibility to consumers and investors. The important factor in adoption of voluntary labour codes was to uphold public image which the company wanted to project to its customers, employees, suppliers and shareholders. Thus the clothing retailer's public image became important than anything else. These multinational companies worked hard to clear their images and had no option but to promote codes of conduct. The public image was particularly important because it determined the extent to which the company's products could be bought. Given the rapidly growing competition in the global markets and communication in technology, it was essential for a company to improve the working conditions in its operations and retain its good image to customers (Kolk and van 2002).
The United Nation Universal Declaration of Human Rights was adopted by the General Assembly in 1948 (Schulz, 2001). The declaration proclaims on the issue of the slavery or servitude subjected to inhuman or degrading treatment or punishment put them into detention or exile and arbitrary arrest subjected. Moreover the declaration goes on to proclaim that everyone needs to live in liberty and everyone have a right to security, everyone have equal protection against any discrimination, and everyone have a the rights for work, everyone have free choice of employment, to just and favourable conditions of work, and to protection against unemployment as a result of discrimination has entitled.
The international Labour organization (ILO) was created in 1919 as a tripartite organization of government, business, and union representatives from 174 nations. Since then, it has adopted 177 lengthy labour conventions or standards. Seven of these are considered fundamental human rights, addressing issues such as forced labour, equal pay for men and women, discrimination in the workplace, and the minimum age for employment (White and Taft, 2004).
Organizations such as Amnesty International have specified clearly workers right such as freedom of association, the right of collective bargaining and working conditions and soon. The organization is for Human Rights and as Watch Report on human rights well being all around the world and strives to ensure the protection and progression of them as well. Amnesty International is an organization whose vision was derived from the United Nation's Universal Declaration of Human Rights, was adopted by the General Assembly Resolution in 1948. It is adopted for the reasons monitoring the protection and standard of human rights as were established in thirty articles that later set the primary foundation to the policies and standard that carried out by NGOs and other agencies with the purpose to protect and promote fundamental rights (www.amnesty.org).
The Social Accountability International (SAI), established in 1977, is an organization that for promotes human rights for workers around the world. Its SA8000 standards are obtained from the Universal Declaration of Human Rights and the International Labour Organisation (ILO) convention. The standards are designed to make workplace more humane and also to offer more benefits for the companies and its employees. Employees that work under SA8000 standards they have profit from the enhanced opportunity of collective bargaining and to organize trade unions. Also, employees become more educated about their rights which in turn, commits to have assurance for a better work environment. The companies as whole, benefits from the SA8000 guidelines because it strengthens and put company values into action and enhances the company reputation (Krage, 2007).
The International Labour Organization Declaration (ILO) on the Fundamental Principles at work were adopted in 1998 and was an expression of commitment by governments, employers and workers organizations to uphold basic human rights (Kolk et al 2001).The Declaration covers four areas; liberty of the trade union and the right to collective bargaining, elimination of forced and compulsory work, Abolition of child employee and elimination of discrimination of human rights.
The Voluntary Principles on Security and Human Rights were developed by governments of the U.S. UK, Norway, Netherlands and NGOs, who all were have the common interest in human rights and corporate social responsibility (voluntaryprinciple.org).
There were six principles that all participants agents agreed on in order to promote and protect human rights in multinational companies. The six Voluntary Principle as stated on their website are as follows: acknowledge that security is a fundamental need; Understanding that governments have the primary responsibility to promote and protect human rights; Particularly those set forth in the Universal Declaration of Human rights; Emphasizing the importance of safeguarding the integrity of company personnel and property; Taking note of the effect of those companies, activities and decisions affect the local community; Understanding that useful, credible information is a major component of security and human rights.
The Global Reporting Initiative (GRI) is multi-stakeholder governed institution that provides global standards for the promotion of sustainable development. Judy Henderson, immediate past-Chair, Board of Directors says The GRI is a unique, multi-stakeholder organization founded on the conviction consistent, regular and comparable reporting, provides transparency and can be a powerful catalyst to improve performance (globalreporting.org). There are nearly 1000 organization in over 60 countries that have established their involvement with the GRI reporting framework. This reporting framework guides corporations and organizations on the reporting their sustainability performance to promote company progression and improvement in all area of business. The reporting guidelines contain principles, guidance, and standard disclosures that formulate a structure that cooperating organizations can voluntarily adopt (www.globalreporting.org).
The UN's Global Compact is a purely voluntary guide to promoting responsible corporate citizenship. Its two main objectives are: to mainstream its ten (10) principles in business activities around the world and initiate actions to support United Nations goals (www.unglobalcompact.org)
2.1.5 Adoption of Voluntary Labour Standards (Codes of Conduct) by Multinational Companies and their Impact
The rapid diffusion of labour standards (codes of conduct) stems from the response to external pressures (actual or threatened) from media, activists, government, and consumers (Shaw, 1999). In a like manner, (Hughes, (2005) argues that in order to balance between low production costs and upholding their good social image, the multinational companies in the Textile Cloth and Footwear sectors had no option but to adopt labour standards. In 1995, the American apparel company, The Gap was responsible in his suppliers' factories in El-Salvador for having poor working condition. Gap inc. a large one retailers in the world, specialty with more than 3,100 stores. Accusations of beating, verbal abuses, sexual harassment and harsh repression of union organization were a few of the many human rights violations the corporation was facing. Negative attention by the media and human rights put Gap Inc. in a questionable position. The protesting of Gap stores, the company only agreed to the anti- sweat activities demand was ended (Misol, 2006). Also in 1996, Nike another American apparel company, faced allegations of serious human rights violations in its Vietnam factories. Abuse, sexual harassment, and intolerable working conditions were reported activities occurring inside Nike factories. Nike also faced criticism for its use of child labour in Cambodia for the production of soccer balls. The global growth of the economy brought on these pressures for corporations like Nike to produce faster in order to stay internationally competitive but in the exchange of lower human rights standards (Sullivan, 2003).
A number of the multinational companies were adopted the codes of the conduct of practices in which define the ethical standard include a number of the principle variables. Those general principals, while, for example of such as of the non intolerance of the concepts, number of a cases and the social practices which the company wishes to see is for the services and sales of goods and in the production company market respected with a details description. The important of codes make explicit indication to the International labour Organization (ILO) Conventions, those concerning in particular with the human right in work. Based often on the established reference of the principles more indirect, even if the fundament with (ILO) Convention in some cases. Krage, (2007), it is further argued, the intergovernmental international organization, at the drawn up the codes and that the ILO in particular in the social policy sphere, subsequent initiatives taken unilaterally which were of a voluntary kind by the individual companies.
The United State companies have played a pioneering respect role. There was constant pressure from activists who demanded multinational firms to adopt labour standards and put to end human rights violations. For example, Elliot and Freeman (2001) identified over forty anti-sweatshop organizations in the late 1990s based in the US alone. In another study by Langlois and Schlegelmilch (1990) in the late 1980's, which compared the US and Europe, it was also found that the adoption of corporate codes which started much earlier and was more widespread in the US. Japanese multinationals were lagging behind and reluctant to adopt those codes, compared to the United States, in Europe and Japan, the trend was not fast. However, there was a considerable efforts attached to this matter especially in headquarters of the major European multinational companies. In the developing countries, few initiatives of this kind have been taken place.
According the study by the U.S. Department of Labour in 1996, they identified 36 apparel manufacturers and retailers which were adopted labour codes of conduct for their supply chains. These included firms that had been at the centre of highly visible sweatshop scandals, like Wal-Mart, Nike, the Gap, and Kellwood (the manufacturer of Kathie Lee Gifford's line), as well as firms that had largely escaped activists attention, such as Fruit of the Loom, Jones Apparel, Talbots, and VF (maker of Lee, Wrangler, and many other brands (United States Department of Labour, 1996).
The efforts by multinational companies to adopt voluntary labour codes were an attempt to convey message to consumer of their ethical consideration and adherence to human rights. The idea was to give different picture to consumers that the final products by these companies were not in anyhow involved in brutal exploitation of workers. These multinational companies had to implement voluntary codes rather than risk their credibility to customers (Kolk and van Tulder, 2002).
With such realization, multinational textile companies adopted voluntary labour codes to escape the endless voices of Trade Unions and the media. The Trade Unions and the media had greater impact and far reaching negative effect to the image of these companies. The adoption of voluntary labour codes became a mandatory issue for these multinational companies (Campaign for Labour Rights 1997; Shaw 1999).
In textile sectors the importance have been given to the subcontracting practices, A company which adopts a code of conduct, it is clear that takes a number of risks, for that reason a company which will fail to respect the code, which is well known by media or trade unions will have a negative effect and result in correspondingly the greater impact.
The code of conduct helps to explain the importance and the application the code of conduct in which was a reason for some companies to prefer to maintain a low profile and avoid from the giving too publicity to the code of the conduct. Thus, major retail network have become more aware of the importance of a adopting a responsibility in ethical in order to maintain a good image, without foregoing the possibility of stepping up their relations with subcontractors producing in the third world countries behaviour (Kolk and van Tulder, 2002).
Many studies have attempted to deal with the willingness of consumers to pay more for products with acceptable ethical features, especially with respect to labour standards. For example, several studies conducted at Marymount University (1999) found that 75 percent of consumers would avoid shopping in a store if they knew the goods were produced under bad conditions. More importantly, these consumers indicated that they would pay $1 more for a $20 item that was made under good conditions. Similar results were obtained from University of Maryland and studies (2000) in which roughly 75 percent of consumers said they would pay $5 more on a $20 item if they knew it was not fabricated in a sweatshop (Marymount University (2000). There is more evidence from Elliott and Freeman (2001) according to their study for the behaviour, they found that consumer were willing to pay for more as far is produced or made under good condition where there is no discrimination of the human rights.
In 1996, the Department of Labour conducted a study to ascertain the influence of voluntary labour codes emulated by United States retailer companies on child labour. The study drew together forty eight retailer companies in the production and marketing of clothing based in the United States. Among other things the study revealed that the adoption and application of voluntary codes of conduct reduced child labour and in the subcontracting enterprises established in the less developed countries (Shaw, 1999).
The study further noted that the effect was particular in Central America a number of factors led to the improvement of child labour. The most notable effect was due to the increasingly adoption of labour codes by the multicultural companies. Other factors that contributed to the improvement of child labour were the greater awareness of the problems of child labour across the globe pioneered by the activists and the media (Shaw, 1999).
Sullivan (2003) pointed out that even the less developed countries through the globalized economy contributed very significantly in the awareness of upholding human rights. The international business mandates that less developed countries maintain human rights to have commercial linkages with industrialized countries. As such, it was not possible for the less developed countries to ignore sensitive issue such as human rights.
Consequently, often with more assistant from, a number of governments have been endeavoured on the International Labour Organization (ILO) for the purpose of reducing obstacles of these fundament standards and their effective application to be ratified. The child labour sphere has been most made dramatic progress, through benefit of the coverage from broad media and against which is greater in the context in the trade liberalization. Through International Programme for the Elimination of the Child labour (IPEC) in particular, an important part of the role had been played by ILO as a catalyst, in cloth textiles and footwear sectors, within the framework of this Programme and with the Cooperation with UNICEF, and some of the trade association such as Exporters Association (cloth) and that the Bangladesh Garment Manufacturers' for example signed and agreement with the government and local government organizations support to end up the employment of the children of school age to be discontinue in the apparel companies and to provide for the children to participate in special education programmes. This kind of the progress was one important aspect codes of conduct which establishments took and more elaborate an account of the steps towards the international trade new social requirements. (CEP, 1998).
2.1.6 United Kingdom Large Clothing Retailers and their Compliance to Human Rights
Large Clothing retailers in the United Kingdom have been found to be operating highly sophisticated and manipulative forms of supply chain management, particularly in the sourcing of their own-brands goods from economically less developed countries. Retailer's demands on clothing suppliers, in terms of dictating pricing and payment terms and requiring strict compliance with their specifications for product development and delivery times, has made for worsening conditions of work for overseas labourers, who already experience low wages, restricted rights in the workplace and barriers to joining trade unions (Crewe, 2004; and Freidberg, 2004). Rio Tinto (2001) argues the need of guidance for the human rights in order to protect and monitoring the well- being and rights of freedom of the people not to be violated by some multinational companies.
Since the mid-1990s the role played by United Kingdom based retailers in exacerbating poor conditions of work at sites of export production has become the focus of high-profile companies by Non Governmental Organizations (NGOs) as well as the target critical media attention. Christian Aid and Oxfam, for example, have focused their campaigns on the supermarket chains and the adverse effects of their global supply chains on own-brand producers in developing countries (Orton and Madden, 1996; Raworth, 2004). The Labour behind the Label (LBL) initiative also continues to operate in the United Kingdom as a part of the campaign that leading to clean cloth international and which was supported by various Non Governmental Organizations and trade unions.
The main way in which the United Kingdom food and cloth retailers responded to the pressure from Non Governmental Organizations (NGOs) and trade unions was for them to become members of the United Kingdom Ethical Trading Initiative. This international organisation established in 1997, as a civil initiative sponsored by the United Kingdom government Department for International Development. By 2003, this multistakeholder organisation had 34 (thirty four corporate) members, 17 (seventeen) Non Governmental Organizations and representatives from 4 (four) international trade unions (Ethical Trading Initiative, 2003).
One of the first tasks of the Ethical Trading Initiative (ETI) was to establish a code of labour conduct that could be used by all corporate members to be a guide to the implementation of responsible business standards in the context of the supply chains of all members. The base code consists of nine provisions which take much of the core International labour organization (ILO) Conventions. Firstly, the Ethical Trading Initiative made it clear that employment should be freely chosen by workers as long one has qualifications. Secondly, all workers should have the right to of well being, liberty of association and joint negotiating at the workplace. Thirdly, the Ethical Trading Initiative (ETI) directed that working conditions for all workers should be safe and hygienic. Fourthly, with regard to child labour, the Ethical Trading Initiative (ETI) stressed that no child labour is allowed under any circumstances. Fifthly, every retailer company should see to it that it pays living wages. Other provisions were standard working hours; prohibition of any kind of injustice; provision of regular employment; and to make sure there is no harsh or inhumane treatment to workers is allowed.
All cloth retailers are signed as the members of the Ethical Trading Initiative (ETI), and that should attend and engage in various events and meetings. The challenge to the top level management were not fulfilling the roles required as per the requirement of the Ethical Trading Initiative (Ethical Trading Initiative, 2003).
Levi Strauss is frequently regarded as a pioneer in the field of corporate social responsibility, especially because it was the first company to develop a code of conduct that placed the management of the ethics and labour rights in the context of international supplier relations. Levi Strauss had developed the first code of conduct covering Labour conditions in its suppliers' factories in 1991, and by the mid 1990s these sorts of voluntary commitments were nearly ubiquitous in the apparel and footwear industry (CEP, 1998).
Gap is one of a leading international large clothing, accessories, and varied personal care products for children and babies, men and women as well as. Gap operates with more than 4,200 stores worldwide. It boasts of a number of magnificent stores in more than five countries. Gap has stores in the United States, Canada, France, Japan, Netherlands, Germany, and the United Kingdom. Gap has its headquarters in the San Francisco Bay Area, in the United States of America. Located around the globe, it has stores in various parts of the world, distribution centres are the backbone of Gap's worldwide operations. Gap has a list of countries approved for product sourcing, located in five main areas: Africa/Middle East, Europe/Mediterranean, Southeast Asia, East Asia and Americas.
Upholding fair labour standards, environmental protection, and charitable giving are part of the organization's statement of social responsibility (Gap Inc., n.d). In 2007, Gap inc. was among the many international companies evaluated as one of the 100 with ethical companies. Gap inc., managed to secure number 25th from the Corporate Responsibility Officer (CRO) magazine. The CRO magazine is one of successor to the business ethics industry publications magazine. Gap inc. was thus credited for its efforts in upholding human rights in its operations (Wokutch, 2001; Krage, 2007). Also factories that produce Gap apparel must pledge in writing to abide by the standards outlined in their Code of Vendor of Conduct based on International Labour organization Conventions. Gap monitors factories on regular basis through Ethical trading Initiative(ETI) and as an active member, Social Accountability international (SAI) as well as an active participant in Global Compact, and Global Reporting Initiative (GRI) (Gap Inc, n.d).
Nike Inc. in 2000, the company had a total of subcontracted over 500 different factories in footwear and apparel factories around the world (Meyer et al 2004). Nike, another early adopter, has been singled out for NGO'S campaigns because of market leadership, high profile image and extensive marketing. Since 1992, it had revised its code of conduct several times, which is also conspicuous for the exceptionally high minimum age to employment (18 years at the footwear, and 16 years at apparel, accessories and equipment (Wokutch, 2001). Nike is also featured on the Business and Human Rights Resource Centre list for the Top 21 Best Human Rights Reports by Companies in 2005 for their Social Responsibility Report. In addition, it directs and make close follow-up to contractors to make sure they train employees about their rights and obligations. Nike also is an active participant in Global Alliance for Workers and Communities, and sponsors a work after-hours education program (Van Tulder & Kolk, 2004).
Marks & Spencer is one leading company in UK's leading on clothing, foods, household items and financial services, serving 10 million customers a week in over 350 UK stores. In later 1985 the company had more than 800 suppliers, half of the suppliers were for food products and half for the clothing from different countries mostly from developing countries and overseas sourcing.
The Company also trades in 30 countries worldwide. In total M&S have more than 544 stores around the world. In 1999 M&S changed part of its policies in order to transform and adapt itself to the evolutions affecting the entire textile apparel industry. Rationalized its supplier base, with efforts for sourcing and the acceleration of the design to store lead time. However, these initiatives bring new challenges as, with suppliers. Marks&Spencer now manages a complex international supply chain involving 650 factories worldwide. Their priority is to maintain the quality of fabrics and clothes wherever they are manufactured. To support this objective, M&S has established quality audit teams in Morocco and Sri-Lanka, China and Turkey (Wokutch, 2001).
2.1.7. ANALYSIS AND DISCUSSION
Effects of Labour Standards (Codes of Conduct) in Upholding Human Rights due to the pressures from various angles, many firms had no option but to adopt voluntary Labour standards. Ever since the adoption of voluntary labour standards there have been some notable changes in upholding of human rights. For example, In 2006, an online advocacy group, Gap the large retailers accused by Behind the Label and issued a report, naming called The Gap a top -rated company among UK retailers was evaluated a by a group working together with Labour Behind the Label, the Cap, they have a problem about the supply chain compliance that as it was reported, although the report not complete, they had seen as the most sophisticated significant steps has been taken by the company for the decision systematic, making for the abuse behind the label, as was against the violation human rights of the workers. Gap through the Joint Initiative on Corporate Accountability and Workers Right, independently assessed by the Social Accountability International (SAI) participates actively.
The Gap encourages its certified vendors to be by SA800. Gap came on agreement to inspect its internal condition standards of their factories. These compliance standards, was a work contract that must be accordance with the clear wages payment, regular, working hours, and not to employ a person under age 14, and do not permit physical buses (www.cleanupfashion). In few cases, for example, in Latin America companies that seriously engaged in voluntary labour standards at work somehow facilitated the recognition of independent unions in factories in Mexico. It is however argued that the success to recognition of these trade unions depended on other factors such as grassroots union movements, strong cross-border civil society linkages, and international trade pressures on domestic governments (Rodriguez-Garavito, 2005). With regard to empowering workers and altering the power relationships in the workplace, researchers agree that voluntary Labour standards have proven useful only in rare cases. Frenkel (2001) found no evidence of collective worker empowerment, and also Sum and Ngai (2005) found evidence that voluntary codes were sometimes used against workers, as a tool of managerial discipline.
In one of the empirical studies to examine wages and employment, Bhagwati (2004) revealed that anti-sweatshops pressures in Indonesian factories led to wage gains in textile industries.
In 1998 the International Labour Organization (ILO) conducted a study to evaluate the labour codes from various multinational companies. The codes were collected by the International Labour Organization from multinational companies, trade unions and nongovernmental organizations (NGOs), and through publicly available information. The selection of these codes included all labour codes known to be operative in 1998, addressing human rights issues, child labour among others.
A higher proportion of these labour codes (more than 80 percent) belonged to multinational companies, primarily based in developed and industrialized countries. These labour codes were developed by industry associations and employers' organizations, while others were developed by companies together with workers' Association and/or nongovernmental organizations (NGOs). A total of 215 (two hundred and fifteen) codes of conduct and 12 (twelve) social labelling programmes showed significant discrepancies in content and operation. The review focused on labour practices reflecting fundamental principles and human rights standards such as freedom of association, right to joint negotiating, abolish of all forms compulsory, forced work, and child employment, and the abolish of injustice in the employment and occupation on wage levels and occupational health and safety.
The study further revealed that of the 75 percent of the codes reviewed, occupational health and safety was the most frequently addressed issue. Discrimination in hiring or terms and conditions of employment was variously addressed in approximately two-thirds of the codes reviewed. Elimination of child labour or to work with companies that did employ children appeared in 45 percent was reviewed by the code. Similarly, the prevention of forced labour or refusing to contract with companies that used forced labour was found in only 25 percent was also review by the codes. But concerning about the collective bargaining and liberty of association were also addressed, in varying degrees, 15 percent only was reviewed by the codes.
The study further concluded that the content and implementation of these labour codes depended on two important factors. Firstly, the content of the codes often appeared to be largely decided in non-transparent and non-participatory processes, which were determined by multinational companies or through ad hoc negotiations between parties with varying degrees of access to information and bargaining power. Secondly, concern for particular labour problems also varied from one sector to another, reflecting the specific nature of the industry or service concerned its degree of exposure to negative publicity (ILO (1998a).
Along with the adoption of voluntary Labour standards by these multinational companies, there was also a wave of dissatisfaction regarding their efficiency in up keeping human rights by multinational companies in their operations. An outcry from many some organizations showed that the mere existence of codes of conduct was not enough. Activists challenged them as purely symbolic responses that were radically decoupled from conditions in factories (Campaign for Labour Rights 1997; Shaw 1999). Some companies attempted to verify compliance by sending internal auditors or hiring accounting firms, non-profit organizations, or firms from the growing industry of specialized labour standards auditors to inspect factories around the world. Activists quickly challenged the adequacy of this response as well.
A study by O'Rourke (1997) revealed that some multinational companies hired different agencies to monitor the implementation of their codes of conduct in various places where they operated. For example, Ernst & Young was hired by Nike to carry out factory monitoring. But it was further learnt that auditors overlooked a variety of occupational health and safety hazards and failed to gather accurate information from workers. One specialized auditor, Cal Safety Compliance Corporation, turned out to have monitored the California manufacturer that was funnelling some of its production to the El Monte slave shop, raising questions about the quality and integrity of this auditor (Esbenshade 2004).
Furthermore, many studies still doubt the effectiveness and efficiency of voluntary labour standards (codes of conduct) are actually being implemented or were merely strategies to shun away from criticisms. For instance, while Frenkel (2001) found that Chinese footwear firms producing for two major brands were largely in compliance with the basic workplace standards set by those companies, Egels-Zenden's (2007) study of Chinese toy factories found no factories (out of nine studied) in compliance with voluntary standards for working hours, and less than half in compliance with standards for Labour contracts (namely, that contracts exist), minimum wage, and overtime. Neither is it clear that sustained monitoring significantly improves rates of compliance. In one innovative study utilizing Nike's internal ratings of factories, Locke et al. (2006) found that even as Nike engaged in a great deal of monitoring, the vast majority of factories (around 80%) failed to improve over time, and some actually experienced a decline in their compliance rating. It is clear that monitoring has not brought about radical shifts in production practices, although it may be improving compliance with basic health and safety measures and preventing the most egregious forms of physical abuse.
One of the sharpest criticisms of ethical trade concerns its voluntary nature (Kimerling, 2001). Although ILO conventions form the basis of most labours codes of conduct (Murray, 2002), as in the case of the Ethical Trading Initiative, there is no global institution set up to regulate and monitor the implementation of these standards. Companies can therefore opt into or out of ethical trading initiatives according to their own strategic needs. Some retailers have been specifically targeted by NGOs and the media to a greater extent than others, often because they are more high - profile brand names and are therefore most easily recognized by the consuming public (O'Riordan, 2000).
The existing evidence, though highly fragmentary, suggests that the impact of voluntary codes of conduct, factory monitoring, and certification systems on wages, working conditions, and worker empowerment has been modest at best. No research has systematically demonstrated positive impacts, and certification and monitoring associations themselves have begun to express serious doubts about the efficacy of their work. In 1996 Nike faced allegations of serious human rights violations in its Vietnam and Indonesia factories. Abuse, sexual harassment, and intolerable working conditions and low wages example a woman had paid 14 cent per pair of shoes compare with the high price of shoes, reported activities was occurring inside Nike factories. Nike also faced criticism for its use of child labour in Cambodia for the production of soccer balls. The global growth of the economy brought on these pressures for corporations like Nike to produce faster in order to stay internationally competitive but in the exchange of lower human rights standards. The poor image of Nike was publicly exposed and policy change was highly recommended (Sullivan, 2003; Meyer et al, 2004).
A recent report from the Ethical Trading Initiative cited cases of audit fraud and declared a growing crisis in ethical trade auditing (Ethical Trading Initiative 2006; Fair Labour Association 2007). Many studies noted shortcomings in the monitoring process. The notable weaknesses lie in monitoring and enforcement has hampered the achievement of changes that are possible within the limits of these systems. Part of the problem lies with the auditing process. Early critics of factory monitoring showed that some auditors lacked training in labour relations or occupational health and safety and questioned their ability to collect accurate data from workers due to cultural differences (Murray, 2002; Kimerling, 2001).
Some scholars have argued that voluntary labour standards could have consequences that are unintended and harmful, by disrupting markets, artificially inflating the price of labour, and reducing employment levels (Bhagwati, 2004). Again, the evidence to evaluate these arguments broadly is not currently available, but proponents of this view have been unable to point to the cases in which employment has declined as a result of voluntary labour standards. One of the only empirical studies to address this question examined wages and employment in Indonesian factories and found that sectors subject to anti-sweatshop pressures did experience wage gains that outpaced those in other sectors (in part because they started at very low levels) but these were not offset by declines in employment (Harrison and Scorse, 2006).
Some activists have argued that voluntary Labour standards could have constructive effects if they had commitment from top-level firm management. The corporate strategy and the values held by the top-level management in particular, affect a retailer's commitment to ethical business. This argument concurs with wider theories on the power of corporate strategy held by (Bowman and Helfat, 2002; Schoenberger, 2003; and Westphal and Fredrickson, 2001).
There is no concrete evidence that voluntary standards have dramatically transformed working conditions or power asymmetries at the point of production. Nor have the potential market benefits fully materialized for companies with the possible exception of private benefits accruing to those in the burgeoning social auditing industry. Corporate participation has remained low, and no market for independently verified sweat free apparel or footwear has emerged. Unfortunately, it is not possible to measure the value that certification programs have had for companies in terms of protecting their brand reputation or pre-empting more stringent regulation, surely membership has had some privileges. But social movement pressures and reputation threats have not disappeared, and certification associations themselves have had to defend their credibility on many occasions (Harrison and Scorse, 2006).
Certification and monitoring associations represent a potential solution to end human rights violations (Garcia-Johnson, 2001; Spar and Yoffie, 2000). By certifying or otherwise recognizing firms that are found to be in compliance, such systems seek to sort out firms that violate human rights in their operations. The challenge, however, is the cost implications involved. In a study by Hughes (2005), it was found out that some multinational companies do not commit themselves to ethical business because of the cost involved. For example, it was learnt that a simple one-day audit of a single production facility conducted by an independent organisation amounts to approximately £1000. The costs are likely to rise if a more detailed inspections and extensive interviews with workers are carried out. Thus the financial success or failure of a firm can strongly influence the amount of funding available for social auditing. Tim (2007) noted that companies that participate in these labour standards (codes of conduct) incur extra costs to fund external monitoring and/or certification of factories. In addition these companies are likely to incur costs in rectifying problems that are identified. However portions of these costs are to be borne by supplying factories.
There are however, different views regarding the costs incurred by these companies. Some scholars argue that it is not fair for the local suppliers to pay the costs from their usually tiny profits (Anon, 1995). The argument here stems from the fact that labour costs are only a very small percentage of the final consumer price. Anon (2000, 1995) indicated that the total labour costs in 1995 amounted to less than 4 percent compared to the final product of the Nike shoe. Similarly, the same calculations for the Republic of China showed the total labour costs compared to the Nike shoe to be less than 1.5 percent (Anon, 2000). Ironically, local contractors benefit more when they use child labour in their operations. A s
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